G O T S TA R T U P Q U E S T I O N S ?

JOHN FOLEY ANSWERS LIVE AT ENTM.AG/FOLEY, JUNE 5th @ 1PM EST

BUY IT! P LU S
Amazon’s
for Any Budget Jeff Bezos
P.49
Drybar’s
BUILD IT! Alli Webb
3 Steps to Finding
a Cofounder Actor
P.26 Terry Crews
SELL IT!
Email Marketing,
Done Better
P.22

Learn from the LEARN FROM

$1 Billion Man
John Foley built Peloton into the buzziest startup in fitness.
His formula: Do what others say you can’t.

Spring 2018
DISPLAY UNTIL 6/18/18
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 CONTENTS
FEATURES
SPRING 2018

28
RUNNING MAN
In five years, John Foley
grew Peloton from a
crazy idea into a
billion-dollar fitness
brand. Now comes the
hard part—topping his
initial success.
BY STEPHANIE SCHOMER
P H O T O G R A P H J E R RY M . L A N G E
34
THE POWER OF
CUSTOMERS’ LOVE
Businesses aren’t charities,
of course. But what happens
when they fall on hard times,
and reach out to their
customers for help? The
answer: amazing things.
BY LISSA HARRIS
40
CAN YOU SERVE
THE “SANDWICH
GENERATION”?
They’re a group of people
simultaneously caring for
young kids and aging parents.
They need an extra hand. And
they’re looking for businesses
to help them out.
BY JON MARCUS
66
BOOM TIME FOR
FITNESS
The U.S. fitness market brings
in about $31 billion annually.
Here’s how a hot industry is
about to get even hotter.
BY CLINT CARTER

pg. 28
John Foley of
Peloton just
unveiled a
$4,000 treadmill.

(On the cover and this page) Photographs Floto + Warner Grooming Elizabeth Yoon S TA R T U P S S p r i n g 2 0 1 8 1
CONTENTS

pg. 74
Amol Kohli started
washing dishes
at Friendly’s.
Now he owns 16
restaurants.

DEPARTMENTS
7
OPPORTUNITY
16
MONEY
22
MARKETING
49
THE LIST
80
CLOSING
How Drybar’s Alli Webb Six tests every investor Read this and you’ll Top franchises for under THOUGHTS
created a new category. must pass before you never think about email $50K, $100K, and $150K. Why you should always
BY STEPHANIE say yes to their cash. marketing the same BY TR ACY learn new skills—even if
SCHOMER way again. STAPP HEROLD you have no idea what
BY LISSA HARRIS they’ll be good for.

12
GET STARTED
18 26 74
FRANCHISE
BY JASON FEIFER

TRANSITION
What four startup TEAM SUCCESS
Athlete, actor, author,
founders learned from How to find a cofounder From ambitious teen to
designer—how
working for Amazon’s who helps (not hinders!) restaurant owner; a
Terry Crews keeps
Jeff Bezos. your startup dreams. salon for second chances.
reinventing himself.
BY J.J. MCCORVEY BY NINA ZIPKIN
BY JOE KEOHANE BY ADAM BORNSTEIN

2 S p r i n g 2 0 1 8 S TA R T U P S Photograph Benjamin Rasmussen

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4 S p r i n g 2 0 1 8 S TA R T U P S
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 OPPORTUNITY

THE QUEEN OF In 2008, after five

years as a stay-at-home

BLOWOUTS CAN
mom, hairstylist Alli
Webb was ready for
some grown-up time. She started
P H O T O G R A P H BY C A M E R O N W EB B / D RY B A R

traveling from home to home in

HANDLE THE HEAT

Los Angeles, providing affordable
blowouts (that’s a wash, a dry,
and a style, gentlemen) to other
moms who, like her, were eager
for a small break from nonstop
ALLI WEBB opened the first Drybar in 2010, thinking women responsibilities. Nearly a decade
would love a blowouts-only salon. But when she unintentionally later, Webb’s brainchild has grown
sparked a new business category, she had to learn how to stay into Drybar, a blowouts-only salon
ahead of the competition. chain beloved by women across
BY STEPHANIE SCHOMER the country.

S TA R T U P S S p r i n g 2 0 1 8 7
OPPORTUNITY

The bar-themed business—

styles offered include the Drybar’s Alli Webb
Cosmo (loose curls) and the with a client.
Mai Tai (beachy waves)—is chic
and girly, and serves up as
many mimosas as hairstyles in
a given day. As the business
works toward its 100th
location and eyes international
expansion, Webb is the first to
admit that she and her
cofounders—who are also her
husband and her brother—are
still learning as they go.

Drybar has grown to 92

locations in just eight years.
How do you keep the service
consistent at scale?
It’s one of the biggest chal-
lenges we face. We’ve learned
how to make good stylists great
through our training programs
and audition processes, but it
is tough, especially in some
smaller cities. New York and
L.A. are ripe with stylists with
a lot of experience, but we
definitely have challenges in
smaller cities. And we don’t
run an actual school—not yet,
anyway—but we’ve got a robust
training program to teach our
signature tricks and styles. The
best compliment I can get is
from a woman who travels a
lot and can depend on Drybar
in any city.

The company has made

blowouts ubiquitous and
inspired quite a few copycat
businesses along the way.
It’s funny, because when we P H O T O G R A P H BY M A C K E N Z I E R O U S E / D RY B A R

first opened, customers would
come in and I would tell them
literally everything about the
business because I was so
proud. And then we started
seeing similar models open up.
People actually copied
the model and opened
shops where Drybar
already existed?
Yes! One woman came in,
asked me a bunch of questions,
and then opened her own
store. She even wrote me a
letter almost apologizing,
saying I was so generous with
my time and she was feeling
guilty. But we always knew that
if this took off, there would be
competition. We didn’t know
people would take actual
verbiage from our website and
put it on theirs, which has
happened, but we knew there
would be competition. But you
can’t really duplicate what we
do. We’ve got a secret sauce.
The Drybar experience really
is unique, from the chick
flicks that play on a loop in
the salons to the actual
cocktail-themed hairstyles.
Do you ever worry about it
feeling gimmicky?
Oh, I worry about that. I’ve
always worried about that.
When we were starting out,
my brother thought naming
the styles the Manhattan or
the Cosmo was cheesy. My gut
told me women were going to
love it, but moving forward we
have tried to maintain a kind
of sophisticated whimsy.
There are a lot of checks and
balances to keep it from
feeling silly. If my husband
shows me something new for
branding, there have been
times when I’ve had to say, “I
don’t know, babe; it’s a little
too far.” When we talk about
ideas among us three cofound-
ers, if one of us really doesn’t
like it, we don’t do it.

8 S p r i n g 2 0 1 8 S TA R T U P S
 Store Count
800

700

600

500

400

300

200

100

2012 2013 2014 2015 2016 2017

STORES OPENED
STORES COMMITTED

Average AnQual Company

Store Sales
*As of 12/31/16, there were 275 UBREAKIFIX locations in operation. As published in Item 19 of our Franchise Disclosure
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OPPORTUNITY
Do you feel pressure to
expand beyond blowouts?
Everyone asks me that
question. From our investors’
perspective, we have this
captive audience of 100-plus
women a day coming into each
shop—we can probably sell
them a lot of things. But it feels
like it would take away from the
authenticity of the brand.
Nobody likes being solicited to,
and I don’t want to upsell
people. And from our custom-
ers’ perspective, a lot of women
have asked me, “Can’t you just
give me a manicure while I’m
sitting here getting my hair
done?” And, sure, we could. We
could offer a lot of services and
probably be OK at all of them.
But I’d rather be really great at
this one thing. We’ll never do
anything outside of blowouts.
Not in Drybar. Tools and
products make sense—you want
to replicate your hairstyle—but I
couldn’t sell you, say, a lipstick
in good conscience.
You started selling your own
haircare tools and products
a few years ago. The growth
was rapid, and they’re now
sold in your shops as well as
Sephora and Ulta. Are those
retail outlets helping people
discover Drybar?
Absolutely—and the products
account for almost 30 percent
of our revenue now. When we
started taking off, we were
courted by a bunch of hair-
product companies that
wanted to create a cobranded
line with us, but Janet
Gurwitch, one of our investors
at [private equity firm]
Castanea Partners, told me to
do it alone. Janet had founded
Laura Mercier Cosmetics, and
her guidance became instru-
mental in product develop-
ment. She opened a lot of
doors for us and introduced
me to all the best labs. I always
say: Find people who know
how to do the shit you don’t.
Without Janet, these partners
would not have talked to us.
In 2014 you replaced your
brother and cofounder,
Michael Landau, as CEO and
brought in John Heffner, who
had served as president at
OPI. How tough was that
decision?
It wasn’t one I was particularly
excited about. Our equity
partners at Castanea started
that initial conversation with
Michael and me, and at first, I
was like, “No.” I was kind of a
brat about it. I thought it
would change the company
culture, and I didn’t think a
professional CEO would be
able to do anything we weren’t
already managing.
So what changed
your mind?
It wasn’t until we met John—
whose exterior does not match
his interior. He walked into our
office in a suit, looking very
corporate, and my initial
thought was Ugh, no. But after
five minutes with him, Michael
and I were both pretty much in
love. [Landau remains
chairman of the board.] Unlike
a lot of people we had spoken
to, John really wanted to
partner with us. He didn’t
want to come in and totally
shake things up, because we
didn’t need that. Castanea’s
thinking was, if this thing was
going to get huge, we weren’t
going to know how to deal with
it. And they were right.
What’s different under
Heffner’s leadership?
We were on a rocket ship a little
bit, opening stores so fast. And
as entrepreneurs, we didn’t
have the skill set to scale a
business. But John did—and he
immediately put systems in
place, hired great people, and
let them do their job. He also
hit the brakes; we slowed down
on openings and made sure all
the trains were running on time
in terms of operations. He
helped create a calming sense
throughout the company. It’s
like the adult in the room of this
very family-run business.
It can’t be easy running
a company with your
husband and your brother
as cofounders.
I’d say 95 percent of the time,
it’s really great. They’re my two
best friends, and we all have
very specific skill sets and really
trust each other. That said,
there have been fights. There
are times when we disagree,
and the family-ness of this all
gets crazy. Sometimes if I’m
being really nice to my
husband, he’ll be like, “Are you
fighting with Michael? Is that
why you’re being nice to me?”
But we’re good about hashing it
out—especially my brother and
I, because we grew up in a
family where you don’t let
things linger. My husband grew
up kind of differently. But that’s
probably another interview.
You’re very transparent
about changes within the
company, from service
changes to internal changes.
Why is that?
We’ve always taken that
approach, instinctively. Just be
straight with people. When we
had to raise our prices from
$40 to $45, we emailed
customers and explained that
the increase was because our
rent was raised, and our
utility costs were increasing—
it’s to stay in business, not to
try and get richer. And if we
mess up an appointment or
someone is unhappy with
their service, they need to
know we’re working to fix it.
I’ve answered so many emails
personally. In this day and
age, when you can easily
reach a founder via email or
Instagram or whatever, it’s
our job to not feed people
bullshit—because they can see
through it.

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GET STARTED

MASTER
MENTOR
What four entrepreneurs learned from
working side by side with Jeff Bezos.
BY J.J. MCCORVEY

Amazon has grown into the

largest internet retailer in
the world; it’s home to an
Oscar- and Emmy-winning
production studio; its subscription
service, Amazon Prime, reached

P H O T O G R A P H S BY C H R I S T O P H E R PAT E Y/ G E T T Y I M A G E S
90 million members last year (up from
58 million in 2016); and it’s made
founder Jeff Bezos one of the richest
men on the planet. This success
alone—to see opportunities where
others haven’t, and move into them
faster than others can—makes him one
of the most daring entrepreneurs of
all time. But alongside that, Bezos has
proven himself adept at taking on
totally unexpected challenges. Case in
point: Last year’s purchase of Whole
Jeff Bezos, Amazon
founder and CEO. Foods markets and his stewardship of
The Washington Post. f

1 2 S p r i n g 2 0 1 8 S TA R T U P S
GET STARTED
In sum, Bezos doesn’t just
buy a company—he uses
it to rethink an industry. To
understand how his impact
spreads beyond his own
operation, we asked four
Amazon alumni—all of whom
now head up their own
companies—to share the
priceless lessons learned from
the boldest man they know.
LESSON 1
Don’t worry about
the money.
“My first year at Amazon, I was
in charge of ‘space manage-
ment,’ which meant overseeing
how the storage was used in
our warehouses. I made a
mistake and placed too much
product at the very top of our
shelves, and when orders came
in, workers couldn’t bring
items down fast enough to
fulfill them. It was a massive
mistake, so I presented Jeff
with a plan to save us money
[while canceling the least
number of orders]. I was proud
of myself—I thought I was
saving the situation. He looked
at me and said, ‘Stop. Don’t
worry about the money. Ship
everything you can as fast as
you can; don’t miss a single
order. Figure out how much it
cost us, and make sure it
doesn’t happen again.’
Don’t worry about the money?
Most companies claim the
customer is the most import-
ant thing, but they’ll do what’s
right for the company. For Jeff,
it’s genuinely what’s right for
the customer.”
—Nadia Shouraboura,
founder and CEO, Hointer
LESSON 2
Be a leader, not just
a decider.
“Back in 2003, I was one of a
handful of people who got the
chance to start Amazon Web
Services, which [provides
cloud-computing applications
and] today is a very large
1 4 S p r i n g 2 0 1 8 S TA R T U P S
business. I was tasked with
figuring out how to monetize
Web Services, and I got to work
fairly closely with Jeff. About a
year in, my team had an idea
for a loyalty program. Our CIO,
Rick Dalzell, set up a meeting
with Jeff, who said that it
wasn’t a good idea for Amazon.
As meek as I was, I actually
asked him, ‘Can you explain
why?’ He could have easily
dismissed me, but he very
patiently and articulately
described why our idea wasn’t
good for the company but
would be good for other
businesses implementing
loyalty programs at the time. I
took away two very big things.
One was the clarity of thought
I saw from Jeff. It forced me to
think—and that’s the kind of
clarity of thought I aspire to.
Second, it strengthened my
belief in him as a leader,
because he used the moment
to educate me.”
—Vikas Gupta, cofounder
and CEO, Wonder Workshop
LESSON 3
Forget the output,
and focus on input. 50 CEOs in the past year during focused on the needs of the
“When you look at how Jeff sales meetings, and it customer. And the way you do
Bezos interacts with Wall unsettles me how the majority that is to organize your
Street, he says, ‘Look, I don’t of them are so emphatic about workforce into small teams
care about revenues and growth and revenue or profit that are close to the customers.
profits. If you want to hold me but don’t think too much In the early days of Amazon
accountable for revenues and about the inputs it takes to Web Services, my team was
profits, then Amazon is not the achieve these things.” very focused on customers
stock you should be buying.’ —Guru Hariharan, who wanted payments, while
Instead, he focuses on the founder and CEO, other teams were focused on
inputs: how new initiatives Boomerang Commerce customers who needed
integrate with Amazon Prime, storage. That notion of small
the number of U.S. households LESSON 4 teams, to maintain a tightness
he delivers to, the number of Even as you grow, with customers, was alive even
warehouses he’s built. If you find ways to stay small. within the bigger team that
look at scriptures and mytholo- “If I were to summarize the was AWS. At [cloud communi-
gies, many of them talk about gist of what it’s like having Jeff cations platform] Twilio, we’ve
warriors doing their duty and Bezos as the leader of the adapted this as ‘Wear the
not worrying about the company, it would be ‘Think customers’ shoes.’ Everywhere
outcome. It’s a very powerful big.’ Amazon’s internal slogan you walk in our offices, you see
concept, being at the top of actually became ‘Work hard, actual shoes sent in from our
your game with the things you have fun, make history.’ Come clients. It’s a constant
can control and not worrying with big ideas, but be thorough reminder of how to succeed.”
about what’s out of your in how we can achieve them. —Jeff Lawson, cofounder
control. I’ve talked to maybe The key is to keep everyone and CEO, Twilio
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MONEY
2 THEIR REFERENCES
THE
CHECK OUT.
“I ask potential investors for an
introduction to a portfolio com-
pany that isn’t a high performer
or that has been challenging to
support. Every early-stage inves-
tor, at some point, struggles with
INVESTOR
a company, because startups
have big ups and downs. Do a
reference check with the portfo-
lio company’s founder to under-
stand their point of view on
working with the investor. This
will give you a greater under-
standing of the investor’s sup-
TEST
port during contentious
moments.”
—Milana Rabkin, cofounder
and CEO, Stem
3 THEY SEE YOUR
STRENGTHS.
“The Riveter is a coworking
space for women entrepreneurs.
Finding someone to support your business
We had a pretty obvious litmus
is about more than facts and figures on a term test for investors last year, as I
sheet. So we asked six entrepreneurs: was pregnant with my third
How do you know when an investor is the right fit? child. Some investors expressed
pretty antiquated ideas of what
it means to be a mother, and
1 YOU DON’T HATE THEM. those sentiments were nonstart-
“I ask myself what I call ‘the airport question.’ ers in terms of moving forward.
I imagine I’m stranded at the airport and my flight Outdated definitions don’t
is delayed by three hours. If I saw this investor reflect our reality, which is that
in the airport, would I walk right up to them and say, ‘Great, mothers are powerful leaders.
we get to spend some time together!’ or would I turn away We need to work with investors
and hope they didn’t notice me? If I can’t emphatically say who walk the same line.”
it’s the former, they aren’t the right fit.” —Amy Nelson, cofounder and
—Patrick Quinlan, CEO, Convercent CEO, The Riveter
1 6 S p r i n g 2 0 1 8 S TA R T U P S
4 THEY COMMUNICATE!
“I text them, usually something
time-sensitive but not critical. If
they respond quickly and are
comfortable with this communica-
tion stream, then I know two
things. First, they are interested
and want to move to a more
‘direct’ conversation. Second, I
will be able to keep them updated
on business developments so our
board meetings won’t be spent
recapping. An unexpected thing
happened recently: A VC texted
me first! It made me want to
accept her firm’s term sheet.”
—Gina Ashe, CEO, ThirdChannel
5 THEY’RE CURIOUS.
“In more than one meeting, we
walked through our launch
strategy and business model, and
the investors voiced their
agreement. Things like ‘This
makes a lot of sense’ and ‘I really
like the approach’ came up over
and over again, but there weren’t
a lot of thoughtful questions.
When we followed up, they did a
complete 180 in terms of how
they thought about our strategy.
The lack of thoughtful questions
was actually one giant red flag.
Now we know.”
—Josh Wiesman, cofounder and
CEO, Smilo
6 THEY DO THEIR
HOMEWORK.
“It’s essential that our investors
consider health and wellness to be
important. To ensure they truly
get it when it comes to the need
for healthier skincare options, I’ll
ask about the products they use
daily. This is pretty fun—most of
these investors are male and have
never shared their skincare rituals
with anyone. One investor took
it super seriously and reported
back that he tried tons of our
products compared with
conventional options—he even
tried on our lipsticks and
compared them with his wife’s.
Now that was commitment!”
—Tara Foley, founder
and CEO, Follain
Illustration Andrea Ucini
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TRANSITION
NO EXPERIENCE?
NO PROBLEM!
What TERRY CREWS—pro athlete, artist, actor, author, and
now celebrated furniture designer—has learned about
taking chances, harnessing creativity, and barreling ahead…
even when people think you’re crazy.
BY JOE KEOHANE
1 8 S p r i n g 2 0 1 8 S TA R T U P S
We’re past the point
where we should be
surprised by anything
Terry Crews does. The
former NFL player and current actor
(Brooklyn Nine-Nine) and author is
now in the design business—both
as a patron and an acclaimed furni-
ture designer. In the process, he has
learned a lot about the nature of
creativity, the art of managing cre-
ative people, and the exhilarating
terror of entrepreneurship.
Photographs Benjo Arwas
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TRANSITION
How’d you wind up in the
furniture business, Terry?
It’s amazing what happens
when you just go for things. I
have a friend who studied
design. Ini Archibong. We
would always bump into each
other in Pasadena and talk art,
talk design, the whole thing.
And then we fell out of
contact—I went my way, and he
went his. But once I started
getting a little more success as
an actor, I started thinking
about doing some more things
artistically. I found him through
LinkedIn, to see what he was up
to. He was getting his master’s
in luxury in Basel, Switzerland.
I said, “I’ve never been to
Switzerland. I’m going to come
out and meet you.” And I was so
impressed. I said, “Look, man,
whatever you want to do, I’m
going to fund it. I have a budget.
Whatever you want to do within
this budget, let’s do it.” I spent a
ton of money. [laughs] I actually
ended up spending three times
what the budget was. But we
took it to [legendary furniture
fair Salone del Mobile in] Milan,
and it was a hit. I was so happy
to help this guy.
How’d you get from there to
designing your own stuff?
I went to New York for all the
furniture festivals. I was
looking for new designers, and
I bumped into the president of
Bernhardt Design at a function
at MoMA, and he was in Milan
and saw what I had done with
this guy. He said, “Terry, I
want to do something with
you.” In my mind I was like,
OK, let’s find another designer.
He was like, “No. I did my
homework. I know you are an
artist, and I want you to come
up with your own designs.”
And I just said yes. I didn’t
have time to think it over.
Why do you think they
wanted you for this?
What I realized was that they
were looking for something
they hadn’t seen before.
People who were in that world
tended to do what everyone
else was doing. Whereas I
didn’t have that. I literally was
coming off the blank page, in
the blank space.
When you gave them
your sketches, were you
freaked out at all?
I knew some of them were
gonna suck. I did. I knew the
sofa I designed to look like an
elephant was going to look
ridiculous. [laughs] But I
presented it anyway. See,
because it may be ridiculous to
me, but it may not be ridiculous
to them. I realized that you
have to have the courage to
look bad. If it sucks, that’s OK.
And sometimes even something
that sucks might contain a seed
of something that might be
good. That was my whole thing.
The good thing, too, is that I’m
older. I’ll be 50 this year. I don’t
really give a damn. I’ll be
honest with you; I just don’t
care. I realized a long time ago
that I’d rather live with
disappointment than regret.
How’d the line do once you
got it to market?
It’s doing amazing, man.
My sofa got the award for best
sofa at [industry showcase]
NeoCon in Chicago. I’m
actually working on my second
collection right now. And this
is a world I’m never leaving.
It’s so satisfying, because it
doesn’t have anything to do
with Hollywood. It’s mine.
It’s like every piece I make is
my own production. It’s my
own movie.
You also run your own
firm, Amen & Amen,
which patronizes young
artists. What have you
learned about managing
creative people?
You have to create the
boundaries. I tell people all the
time: Life has no limits, but it
should have plenty of boundar-
ies. [laughs] With artists, it’s
like trees. You have to let them
grow, and then you have to
prune, and then it becomes a
beautifully shaped tree.
But how do you
prune without seeming
adversarial?
The first thing to do is always
talk about what’s right. Always.
Because they’re already
crushed about anything you
don’t like. And I never talk as if
I know what I’m doing,
because we’re all figuring it
out. Where I see creativity
killed, even with a director or
a boss, is when someone acts
as if they know everything.
Then it’s done, man. It’s fried.
You’re doing a ton of stuff
right now. What’s the
hardest part of your life?
It’s that I don’t know. You want
to know how everything’s
gonna turn out, and you want
to feel some measure of
security. [But] I don’t know
where I’m going to be working
next year. I don’t know what
the future holds. Every
entrepreneur has that. You face
the fact that things may not
work out. And you go anyway.
I go back through my life,
and I look at all the times I felt
that way, and I look at how it
turned out. And I go, Wow, you
know what? It didn’t fall apart.
I actually got better, and I got
bigger, and I learned this and I
learned that.
I’ve been working job to job
since 1991. I was playing
football. Getting cut, getting
picked up again, getting cut,
getting picked up again. Then
I start a little acting: a job here,
a job there. I’ve never known
what I’m going to be doing in
the next year—since 1991. But
I always trust that if I just stay
liquid and be open, I’ll be
ready to move. A lot of people
have rejected the future. I’m
always like, “Try it. Do it.”
That’s the deal, man. I like to
take those chances. I love the
risk involved, because that’s
where the rewards are.

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MARKETING
BROADCAST
FAR AND WIDE
The case for treating email like a TV
commercial rather than direct mail.
BY LISSA HARRIS
Don’t annoy your customers.
If there’s a cardinal rule of
email marketing, that’s it. Thus,
most marketers describe the
ideal email strategy as a careful balancing act
between frequency and engagement. Sure,
you need to send enough emails to stay on
the customer’s radar. But send too many and
your subscribers will flee, your click and
open rates will plummet, and you will find
yourself branded a common spammer.
2 2 S p r i n g 2 0 1 8 S TA R T U P S
For a time, Dela Quist
shared this fear. Quist, CEO of
British and U.S. email market-
ing firm Alchemy Worx,
“started out where everyone
else did, worrying about open
rates and trying to get them as
high as possible,” he says.
Then he began digging into the
numbers, looking at client
campaigns for evidence that a
business could get better
results by sending less email.
“What we found was, no
matter what we did, more
email generated more revenue.
You could not stop that
happening,” he says. So, data in
hand, Quist began preaching a
different gospel: Nothing is
likely to make you more money
than sending another email.
In essence, Don’t worry
about annoying your customers.
The data says they don’t hate
email. Quist’s “more is more”
attitude makes email market-
ers nervous, but he gets
results. Alchemy Worx’s client
list now includes names like
Tesco, Expedia, and Hilton.
One client, the U.K. insurer
Aviva, saw the number of
insurance quotes requested
grow 48 percent after rolling
out a strategy to email
customers more often.
Quist’s philosophy comes
from a simple insight—that
email isn’t mail. It’s natural to
think of email as the digital
cousin of the bulk mailer:
expensive to send and a
mailbox-clogging misery to
receive. But, Quist argues,
that’s the wrong way to think
about it. Given how cheap
email is to send—and how
painless it is to ignore—it
makes sense to treat it like
television. Once you start
thinking about email as a
broadcast medium, Quist says,
you can begin to fret less about
taking up precious space in a
finite inbox, and think more
about maximizing how many
people your message reaches,
and how often.
“The Sermon on the Mount
would never have happened if
Jesus had had to wander
around and tell everybody
individually,” he says. “Some-
Illustration Viktor Koen
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MARKETING
times broadcast is a good thing.”
Of course, it’s true that when email
frequency goes up, your click and open
rates for your campaign typically go down.
But that doesn’t tell the whole story, Quist
says. If you look at the numbers over a
longer time span—say, a year—sending
more email will ultimately reach more
customers and give the ones you have
more chances to do business with you.
A better way to look at engagement is
to focus on customers, not campaigns. If
you can boost the percentage of your
customers who have ever opened or
clicked on an email, you will most likely
boost your revenue as well—and if you
email your list more often, that’s exactly
what will happen, Quist says.
And even if your email never gets
opened or clicked on, it still makes an
impact. Fleeting glances at subject lines
can add up to a powerful brand impres-
sion over time. “Receiving an email is a
primary driver of sales,” he says. “People
“RECEIVING AN EMAIL IS A PRIMARY
DRIVER OF SALES,” QUIST SAYS. “PEOPLE
WHO DON’T OPEN EMAILS ARE MORE
LIKELY TO BUY THAN PEOPLE WHO DON’T
GET THE EMAIL AT ALL.”
who don’t open emails are significantly
more likely to buy than people who don’t
get the email at all.”
To test this, Quist charted one client’s
revenue over the course of two weeks from
customers who got, but did not open, an
email. Sure enough, there was a dramatic
spike in revenue from non–email openers
the day after a campaign was sent.
Businesses often underestimate how
much of their revenue can be traced to
email campaigns, because purchases
psychologically driven by email show up
in other channels like web search and
physical retail. In a 2013 paper in the
Journal of Digital & Social Media Market-
ing, Quist looked at the data for a major
U.S. retailer over the course of a year and
found that on days when an email blast
was sent, revenue from non-email
sources was boosted anywhere from
10 to 40 percent.
But what about segmentation—the
increasing number of tools at entrepre-
neurs’ disposal allowing them to carve up
and microtarget their email lists? Over-
rated, Quist says. Segmentation can be a
powerful way to tailor the right message to
the right type of customer. But if you’re
using it to cut down on the number of
people getting a particular campaign,
you’re probably doing it wrong.
If you have a good message to send, “you
could send it to one person, or you could
send it to a million,” Quist says. Picking just
a segment of your list to send it to might
get you better open and click rates, but
you’re also missing out on potential
customers. If even one of those nontar-
geted customers might buy your product
because of your email, it’s probably worth
it to broadcast far and wide.
Tailoring messages to different groups
is fine, Quist says—but the more you
segment, the more time you’ll spend
crafting your individual messages for
each segment of your list. That time
could probably be better spent on
making high-quality messages for your
whole list. “It’s so much easier to find
one thing that entertains a million people
than a million things that entertain one
person each,” he says.
Quist also believes that the widespread
fear that customers will misinterpret
frequent mailings as spam is similarly
misguided. Whether or not people
consider an email to be spam has more to
do with what they think of the business
than with how often the business talks to
them, Quist says. Unless a business is
refusing to honor the “unsubscribe”
option, there’s no reason it should worry
about spamming its customers. “Spam is a
thing of the past. The only email you get is
stuff you signed up for,” he says.
Even unsubscribe requests—the
supposed kiss of death to email market-
ers—aren’t always a bad thing, Quist says.
Often, when people unsubscribe from a
list in response to increased email
frequency, it’s because they weren’t
interested in buying your product to
begin with.
Email service providers tend to be wary
of Quist’s gung-ho attitude, but their
research sometimes backs him up. A
broad 2016 internal study by MailChimp—
whose advisers caution businesses to
keep a close eye on click and open rates,
and avoid unsubscribes—found that
subscribers who never opened their email
were surprisingly valuable to a business’s
bottom line. As a result, MailChimp
changed its tune on the wisdom of
pruning inactive subscribers regularly.
If more really is more in the world of
email marketing, why do so many email
experts insist that you have to balance

REINVENT THE
getting your message out with not
harassing customers too much? Quist says
some of the industry’s fretfulness about
the preciousness of the inbox can be
traced to the age of the average digital

WAY YOU WORK

marketer: too young to have spent much
time in the broadcast trenches, where the
rules of “reach, frequency, and impact”
that he lives by were forged.
“It’s Groundhog Day for a lot of market-
ers,” he says. “I’m kind of older. I’m
blessed to have been in the right place at
the right time in terms of digital exposure,
but old enough to have real-world
marketing experience. That tells me that
the reality is in the numbers.”
Since he decided to stop worrying and
learned to love the “send” button, Quist
has been on a mission to change the way
people think about email marketing,
through speeches, columns, studies, and
other forms of evangelism, but it’s been a
slog. “I find myself embroiled in an
Buy The Book
endless game of whack-a-mole,” he says.
“I just can’t kill it.” Still, he’s open to
being proved wrong. “If I’m that crazy,
and if I’m that wrong, surely it would be
™

easy to disprove me with data,” he says.

“I’m putting out data all day.”
visit entm.ag/innovationmentality
TEAM
HOW DO
I FIND A
COFOUNDER?
A business partnership is like a marriage.
Embrace the courtship.
BY ADAM BORNSTEIN
I’m about to start a business,
but I want someone to help
juggle the responsibilities.
How do I find a cofounder who’s the
right fit? —ELIZABETH L.
TO COFOUND or not to
cofound? It’s a complicated
question many entrepreneurs
face, and the search for a
partner can feel more like a
2 6 S p r i n g 2 0 1 8 S TA R T U P S
game of roulette than a calcu-
lated business decision. Do
you need a cofounder to suc-
ceed? Not necessarily. But if
you want to build a dynamic
duo, there are several factors
to consider.
Elizabeth, if you were
located in Denver, I’d have
you sit down for coffee with
Andrew Schremp, a friend of
mine and the founder and
CEO of Health Sqyre, a
patient-oriented online mar-
ketplace for medical equip-
ment. He went through a
valuable breakup with a
potential cofounder—and I say
“valuable” because it
occurred before anything
permanent was arranged. Use
his lessons to guide you.
“With the long hours it takes
to get a startup off the
ground, you’ll spend more
time with your cofounder
than your spouse,” Schremp
says. “Create criteria, be
patient, and do not cut cor-
ners.” And consider your
weaknesses.
“So much of finding a
cofounder is understanding
where you’re not strong,”
says Cameron Herold,
founder of the COO Alliance,
a company that develops and
guides “second-in-command”
leaders. If you’re a strategy
person, find someone to
focus on execution. If you’re
introverted, find an extrovert.
“A cofounder is the yin to
your yang,” Herold adds.
“They should be doing all the
extremely important stuff
that drains you of energy.”
Schremp suggests starting
with your own network. Talk
to friends and acquaintances
with successful businesses
and see if they would recom-
mend anyone. “Six degrees of
separation” is in full effect
here—you’re unlikely to find
the best person for the job
within your inner circle, but
you’re probably one or two
steps from prime candidates.
Referrals streamline the pro-
cess, helping you avoid folks
who will waste your time.
Specify three critical
criteria—for example, you
could want someone who’s
great on small teams, focused
on tech, and comfortable
with higher equity and a
lower salary—and use them to
develop an early list of candi-
dates. Then dig deep. Start
with three to five references
for each candidate, and ask
every question imaginable,
from work style to conflict
resolution to simple personal-
ity traits. Basic questions with
no apparent correct answer—
Does Jane like long or short
meetings? Is Mark a beer
drinker? How much time does
Kevin spend on his personal
health?—can provide a win-
dow into what it would be
like to spend every day with
this person. “Intelligence is
the most overrated cofounder
trait,” Herold says. “If they’re
not a good match with the
founder, it just won’t work.”
After you’ve zeroed in on
your top choice, it’s a matter
of trust. Schremp recom-
mends a minimum six-week
work arrangement. Have the
candidate sign a proprietary
information and inventions
agreement (so you can sleep
soundly), then get to work and
see if it’s a fit. Sure, there will
be a honeymoon period, but if
there are cracks in the founda-
tion, you’ll see them quickly.
Are there any guarantees?
In business, never. But if you
follow these steps, you’ll
remove your own selection
bias and find the best person
for your company. After all,
it’s one of the biggest deci-
sions you’ll make. “Any
cofounder is going to be a
boulder that you drop into a
pond,” Herold says. “It’s
going to make waves, so you
have to make sure the ripples
are good.”
Adam Bornstein is the founder
of Pen Name Consulting, a mar-
keting and branding agency.
Illustration Federico Gastaldi
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John Foley,
Peloton
cofounder
and CEO.
 F
O
R
Y
O
U
R
L
I
F
E

Peloton is a company worth $1.25 billion in the insanely competitive

fitness market. And everything is riding on its second-ever product,
a high-tech, $4,000 treadmill it kept a secret for 18 months—until this year.
Can Peloton keep the pace? by STEPHANIE SCHOMER
Photographs Floto + Warner S TA R T U P S S p r i n g 2 0 1 8 2 9
J
ohn Foley can’t find his desk.
The cofounder and CEO of
Peloton is showing me around
the Manhattan headquarters
of his company—which streams
boutique-style cycling classes
to high-tech, at-home exercise
bikes—and explains that the
open floor plan was recently
rearranged. It’s something they
do every six months to keep the
space feeling fresh and get dif-
ferent departments talking, he
says. It’s a practice he loves, and he stands
by it. Though it can be disorienting.
“Oh, here it is!” He practically giggles.
It turns out his desk is now next to Hisao
Kushi’s, one of his cofounders. As our tour
continues through the offices, Foley is warm
and affable with the ever-increasing number
of staffers. The company moved here a year
and a half ago and took up two full floors;
today it occupies six. In turn, those staffers
seem at ease with their leader. More than
one pokes fun at his new mustache.
“Oh, hey, John, nice…’stache,” remarks
an employee who flies past us on the stairs,
her tone a mix of confusion and irony.
“Thank you; it’s new!” Foley shouts back.
Foley is not what comes to mind when
you envision the CEO of a fast-growing tech
company. He’s neither a serial entrepre-
neur nor a hoodie-wearing millennial. He’s
a 46-year-old father of two whose business
experience stretches from manufacturing
at Mars, Inc., to CEO of Evite, to heading up
e-commerce at Barnes & Noble, where he
most recently served as president. His suc-
cess can be traced back to humble begin-
nings—his first job was at McDonald’s, when
he was 14. By working the fast-food circuit,
he put himself through college and eventu-
ally landed at Harvard Business School.
“I had barely heard of Harvard Business
School when I was 28 years old,” he says. “I
came out understanding that no one is really
smarter than anyone else, which gave me a
lot of confidence in the business world.”
When he launched Peloton in 2012, it
was to replicate the type of boutique fitness
classes Foley loved, but in one’s home—like
bringing SoulCycle to your living room. The
market opportunity seems there; fitness
is a $31 billion industry, and Americans
are spending more money but less time on
fitness each year. Hence the rise of the bou-
tique fitness industry. But Foley reasoned
that people would most happily invest their
hours and dollars in something they could
do at home, so long as it was perfect. That’s
what he’s proposing: Buy a $1,995 Peloton
bike, and for an additional $39 a month
3 0 S p r i n g 2 0 1 8 S TA R T U P S
receive on-demand access to classes. Join a
live class, or choose one of 8,000 archived
classes based on instructor, length, music,
or intensity. Whatever workout you’re look-
ing for, Peloton believes it has it.
But this is just the beginning, Foley
insists. “We don’t want to be a stationary-
bike company,” he says. “We want to be a
disruptive tech company.” In his vision for
the next 10 years, the bike is only one of
many tools Peloton would deliver to users’
doors. “It’s called ‘fitness as a service.’
Everyone is going to pay $100 or $200 a
month to have the best fitness equipment
in their home. And whatever combina-
tion of devices you have, we’ll always be
upgrading them. We’ll come in and swap
out the latest bike or the latest treadmill or
the latest something else to make sure you
always have 10-out-of-10 equipment.”
That may come a decade from now, but
Peloton’s numbers today tell the story of a
company at a crossroads. Over the past six
years, Peloton has sold 200,000 bikes—a
small number of customers compared
with membership numbers at national
gym chains, which encourages critics’
arguments that Peloton’s bike is nothing
more than a niche product for the elite. But
Peloton and its investors are happy with the
bike’s traction and believe it proves the mar-
ket for Foley’s vision of the future. It raised
nearly $444 million through five rounds of
fund-raising, revenue for 2016 reached $170
million, and the company’s unicorn-status
$1.25 billion valuation has it eyeing an IPO.
Now, to move toward that vision of
“fitness as a service,” Peloton must move
faster than its pedal-pushing customers.
Throughout 2017, Foley armed himself for
the future.
First he built a deeply experienced
team—and in true “we’re not a fitness
company” form, their backgrounds may
be surprising. In February of last year, for
example, he recruited his former Barnes &
Noble colleague William Lynch, previously
CEO of the bookseller, to join Peloton as
president and help steer the ship. Foley
calls him a more mature, measured leader.
“There aren’t that many entrepreneurs
who like running a 12-person startup out
of a garage and also have the leadership
and management capabilities to run a $100
billion company,” Foley says. “I want to be
both. I believe I can be both, but I care too
much about Peloton to risk it.”
And earlier this year, Peloton made its
biggest, riskiest, most expensive bet yet.
On January 9, at the Consumer Electronics
Show (CES) in Las Vegas, it introduced the
Peloton Tread—a pricey, futuristic, at-home
treadmill that will stream interval fitness
classes. It’s Peloton’s second-ever product
and one the company hopes will project
its true disruptive potential. In fact, it’s so
important to the company’s future that for
more than 18 months, it was code-named
Aurora and kept behind a locked door,
accessible to just a few of Peloton’s 700
employees—and then me, the first reporter
in the room.
When the Peloton Tread starts entering
consumers’ homes this fall, it will truly test
what this unicorn is made of. It will either
reaffirm nonbelievers’ most stubborn mis-
givings about Peloton or bring the company
boundless profits, and take it one step
closer to pushing conventional gyms out of
business. So far, so good: The company sold
more Treads in the first week of preorders
than it sold bikes in its first year in business.
Under Foley’s leadership, the Peloton
team is betting the success continues.
“John talks about us becoming a more
impactful company than Apple is, and it
sounds like hyperbole,” says Tom Cortese,
COO and one of Foley’s cofounders. “But
he so honestly believes it. And that seeps
into people’s blood in a way that motivates
this team to do what has mostly been an
impossible feat. He can propel talent in a
way that helps them achieve more than
they would anywhere else.”
The word peloton is a cycling term that
refers to the main group of riders in a race.
“The concept is, you’re stronger together,”
Foley explains. “If you’re breaking the
wind by yourself, it’s hard, but if you’re in
the peloton, it’s more efficient.”
Back in 2011, when Foley first shared
his idea for Peloton with Cortese, it was a
vision to solve a problem that was driving
Foley crazy: Cycling classes were expen-
sive and in such demand that it was almost
impossible to reserve a bike. “There had to
be a way to give every customer the best
seat in the house with the best instructor,”
he says. To make that happen, he wanted
to partner with brands like SoulCycle and
Flywheel and ask them to create videos of
great instructors leading classes. Peloton
would then figure out how to deliver them
to customers’ homes.
G R O O M I N G , E L I Z A B E T H YO O N
Peloton approached both companies,
but a deal never materialized. (Flywheel
did submit a term sheet, Cortese says, but
it didn’t work out.) “This may be overly
romanticized, but in tech there’s a little
bit of comfort around sharing, or at least
an understanding that ideas are cheap
and execution is what matters,” Cortese
says. “We were trying to embrace this
S TA R T U P S S p r i n g 2 0 1 8 3 1
new [fitness] industry with open arms,
and it just resulted in a lot of rejection.”
Cortese even says he was blacklisted from
SoulCycle: “I checked into class one day
and soon after got a tap on my shoulder.
A very nervous employee from the front
desk told me I had to leave because my pro-
file had been flagged.” (SoulCycle did not
respond to a request for comment.)
So instead of partnering, Peloton set out to
build every part of the experience on its own.
Investors balked. “We couldn’t get any insti-
tutions to give us money,” Foley says. “I’m a
confident guy, but after 400 institutions tell
you no, you really start to question yourself.
Maybe you are the idiot, you know?”
Still, he soldiered on, eventually cobbling
together funding from more than 100 angel
investors. With this money, Peloton built its
bike—and the state-of-the-art tablet that’s
attached to it—from scratch. It built its own
distribution network: If you order from one
of its 31 retail showrooms, the bike will likely
be delivered to you in a Peloton truck and set
up in your home by Peloton employees.
Of course, the biggest hurdle wasn’t finan-
cial or technological. If Peloton was going to
flourish, it had to find a way to replicate the
things that inspire such fierce loyalty among
customers of SoulCycle, Flywheel, and other
boutique fitness brands—that specialized,
personalized experience where you get to
know your instructor as well as the folks
exercising next to you. Peloton had to make
riders pedaling alone in their living rooms
feel like they were surrounded by 60 other
sweaty, inspired people. And this, Peloton
found, would be far more complicated than
filming a class and streaming it to a tablet.
Not far from Peloton HQ, there’s a block
of Manhattan’s 23rd Street packed with
boutique fitness offerings. Orangetheory
Fitness is to the left, a Rumble boxing gym
to the right. And in the middle is the Peloton
studio, looking like just one of many.
There’s a small Peloton retail space up front,
a well-equipped lounge and locker room, a
class studio, and a juice bar serving up
$9 smoothies. But downstairs, in one corner
of the basement, there’s something very
different: a control room with a complicated
array of boards and screens all lit up like
a spaceship, manned on this day by three
young women doing what I’m told would
be the work of 12 employees at a traditional
TV studio. This basement is home to the
Peloton production team, capturing classes
that are beamed to bikes around the world.
It didn’t always look this way. In the early
days, a small office with a makeshift stu-
dio—a 10-by-10-foot box with a store-bought
3 2 S p r i n g 2 0 1 8 S TA R T U P S
stationary bike and a single camera—was
used to recruit and audition instructors.
“It was a janky place,” says Robin Arzón,
Peloton’s head instructor and VP of fitness
programming. A former corporate litiga-
tor turned fitness author and personality,
Arzón was drawn to Foley’s vision for
Peloton as a way to improve lives, as well as
how the company gives instructors salaried
positions and equity.
“It’s the best gig in the world,” she says.
“But teaching here is harder than teaching
anywhere else. You’re a fitness authority,
and you’re hosting a television show while
you’re working out. You have to learn your
camera angles, and you have to break that
fourth wall to engage with the thousands of
people at home.”
To do that effectively, Arzón works closely
with Fred Klein, Peloton’s chief content
officer and a media vet who previously led
strategy for Fuse. Klein assembled a team of
producers, each of whom works with a sin-
gle instructor to develop programming. “A
big part of Peloton is achieving a level of col-
“WE DON’T WANT TO BE
A STATIONARY-BIKE
COMPANY,” FOLEY SAYS.
“WE WANT TO BE A DISRUPTIVE
TECH COMPANY.”
laboration that is atypical of any kind of fit-
ness environment,” Klein says. “To import a
robust production team from the television
world, place them into a tech company, and
get them to work efficiently and happily with
people who come from a fitness instruc-
tional background has definitely required a
lot of determination and diplomacy.”
Every interaction a rider has with a
Peloton bike is collected as data that feeds
the experience. The company is paying
attention to what songs riders like, what
instructors they prefer, what type of work-
out they gravitate toward, what ratings they
give individual classes. Peloton uses that
data to compare rider profiles and suggest
(and create) better, more targeted content.
During live classes—in which instructors
and riders alike can track participants’
progress up and down the leaderboard—a
community of virtual friends develops.
Instructors in New York can acknowledge a
rider in Boise, Idaho, by name, encourage
them to pedal a little faster, or congratulate
them on taking their 100th ride.
But the classes are also designed to boost
brand loyalty, capturing that same feeling
Foley observed in SoulCycle and Flywheel
attendees. As an on-camera instructor,
Arzón routinely sees how this plays out when
her far-flung class members encounter her
in person. “I’ve been stopped at the Geneva
airport; I’ve been stopped at Burning Man,”
she says. Just the day before, two riders flew
in from Florida to take a class of hers in per-
son; they’d been tuning in remotely for three
years. “A few years ago, a woman handed me
a card after class and then ran right out. It
was this long note about how Peloton’s rides
helped her leave an abusive relationship. I
was stunned. We’re really delivering a life
experience. And we can scale that. We can
scale that life experience.”
This is the mission Peloton sees in Tread.
It’s about way more than fitness.
One afternoon this past fall, I head to the
Peloton offices to get a peek at Tread. It’s not
easy: It’s locked in a room accessible only via
facial recognition. “I tried to get in with a pic-
ture of my face, and it didn’t work,” Cortese
says with relief. With his supervision, I’m
granted access. Inside is a room, its walls
covered with inspirational shots of products
and materials, and three MakerBot machines
are 3-D printing what Cortese guesses could
be anything from weight prototypes to unof-
ficial toys for an upcoming office party.
And then there’s the treadmill, smack
in the middle. Cortese, who previously
founded the now-defunct social network
Proust.com, hops on and spends nearly an
hour talking through every painstaking
detail. It looks, frankly, like a treadmill—
though a very nice treadmill, with only one
button (to turn it on), soft white LED lights
emanating from two knobs that control
speed and incline, and a 32-inch flatscreen
complete with a built-in sound bar. Cortese
stresses that each touchpoint has been
obsessed over, tested, tweaked, retested,
and tweaked again. Its controls are meant to
be intuitive; the slat-deck running surface,
made of carbon steel and thick rubber, is
designed to have less impact on a runner’s
body than the flimsy single-band tracks
most are used to. There’s a secret storage
compartment on the machine’s base, for
workout accessories or sneakers.
“It was always clear that John and his
cofounders weren’t going to leave all their
eggs in the basket of cycling,” says Klein,
the chief content officer. After all, Foley
maintains his vision of “fitness as a service”
with constantly refreshed home equipment.
The only question was: What comes next,
and when? Product development is slow
and expensive, and Peloton didn’t want to
rush it. So for a while, it focused on adding
new programming. “The bike has been a
sort of Trojan horse that emanates other
forms of programming,” Klein says. The
company, for example, has experimented
with a small number of streaming yoga
classes, dubbed Beyond the Ride.
But by 2016, four years into the bike’s
existence, Peloton knew it was time to start
working on new hardware. And there was
no debate as to what was next. “The tread-
mill market is five times bigger than the
bike market, and customers were asking
for it,” Foley says. “And we can scale the
retail, logistics, and streaming infrastruc-
ture we have in place, so we’re not totally
starting from scratch.” Many at Peloton
described the treadmill to me as “obvious,”
and a way to connect with runners who
don’t like cycling. So for 18 months, the
company spent millions of dollars devel-
oping the device—along with, critically, the
experience surrounding it. That includes a
brand-new studio in the West Village and a
duplicate staff of instructors and producers.
By this past November, when I first see
Tread, the Peloton team is feeling good
about it. They’re less confident in exactly
how to present it to the world. At CES, where
they’ll debut it, instructors are scheduled to
give a demonstration of the product—which
seems simple enough. But unlike Peloton’s
bike, on which riders sit for the entirety of a
course, the treadmill’s classes require run-
ners to step on and off the device repeatedly,
with weight training exercises conducted
on a mat positioned behind the treadmill.
At a meeting of 11 staff members, the con-
cerns are many, and the conversation runs
in circles. Will audience members be able to
see instructors if the mat is behind the device?
Should the device be elevated on the platform?
Will a stool then be needed to help instructors
mount the machine? Will customers think the
stool is something that comes with the device?
“Yes, and the stool costs $5,000,” dead-
pans Bud Intonato, VP of product. The
room bursts into laughter. (For the record:
No stool is required.) But Peloton employ-
ees know they’ll have to justify the cost of
the treadmill, just as they’ve had to justify
the cost of the bike; the company has been
giving Americans sticker shock for years.
Peloton’s bike costs $1,995. The tread-
mill will be $3,995. The company has long
grappled with how to explain this expense,
though Foley says it’s necessary. Theirs is
a premium product, and it’s expensive to
produce. “Two thousand dollars is crazy
for a bike, but our bike does all this other
stuff and doesn’t exist anywhere else,” he
says, clearly having had this conversation
hundreds of times before. The treadmill is
a larger, more complicated product, and in
turn, it carries a higher price tag. Foley’s
only defense is to make sure Peloton effec-
tively communicates the long-term value
of owning this equipment—which may not
soothe consumers who can’t afford the
upfront costs, though some analysts do
agree with him.
“If you look at how much a single
SoulCycle class costs compared with the
unlimited access to fitness you get with
your Peloton bike, it can be really econom-
ical,” says Anya Cohen, a fitness industry
analyst at IBISWorld. Say a customer buys
a Peloton bike and over the next 18 months
takes 200 classes. In total, that year and a
half of exercise will cost $2,697 (combining
the costs of the bike and monthly subscrip-
tion). At a brick-and-mortar studio where
one class is $35, it would cost $7,000.
Foley was never surprised by pushback
on the price, though he has evolved how
Peloton responds to it. The treadmill is a
part of that. If you own the bike and buy the
treadmill, your $39 monthly fee covers both.
“One of the ways we plan to stave off com-
petition is to not be greedy from a business
model perspective,” he says. New workout
programs are constantly being added. He
compares Peloton’s approach to that of
Amazon Prime, where Jeff Bezos is always
adding new perks for the same subscription
price. Greed, he says, will do a company in.
“Pigs get fat, hogs get slaughtered,” he says.
Peloton is also actively exploring new
ways to get people on its products at no
or low cost. In early 2017, it introduced a
program to place its bikes in luxury hotels,
apartment buildings, and universities
around the world, to allow nonsubscribers
to experience Peloton’s classes at no charge.
(Peloton hopes some of those people even-
tually buy their own bike.) And in October of
last year, Peloton launched a financing pro-
gram for its bikes, in which payments resem-
ble the cost of a weekly Flywheel habit.
Nevertheless, even as it expands its
product offering and its community, price
will remain a vulnerability for Peloton. And
competitors have taken notice.
In November 2017, Flywheel introduced
Fly Anywhere, an at-home bike that streams
studio classes. It starts at $1,699, plus a $39
monthly subscription; the more affordable
bike syncs with your current iPhone and
iPad to display content. It came seven years
after Peloton first attempted to partner with
the brand, and since then, Flywheel has
expanded to 42 studios across the country.
“We’ve had more than half a million people
ride with us in our studios, but there are
40 million people in the U.S. who fit the same
profile but don’t necessarily have access to
one of our studios,” says CEO Sarah Robb
O’Hagan, who joined Flywheel in February
2017, having previously served as president at
Equinox. When I ask what makes Flywheel’s
effort different from Peloton’s, Robb O’Hagan
has a quick and simple answer. “We are a
fitness company enabled by technology,” she
says. “Not the other way around.”
There, the two brands are in agreement.
Foley believes his tech-first approach will
keep Peloton at the front of the fitness
pack—enabling it to build out a system of
interconnected workout tools, with the
content to match. “We do not believe that
Flywheel is going to be a meaningful compet-
itor,” he says. “‘Not impressive’ is a dramatic
understatement.”
Apple, Amazon, Nest, GoPro, Tesla—these
are the companies Foley cites as inspiration,
and perhaps even competition. They are, after
all, companies that come into your home, and
are actively looking for more ways to engage
consumers wherever they go. Perhaps that’s
why he constantly references them to inspire
his team. “We’re worried about Amazon,” he
says. “That’s really the only people we think
could compete with us.”
And yet much like Amazon, Foley sees his
company as completely changing consumer
behavior—bringing fitness fully into the home
and making the retail space increasingly
irrelevant. After all, who needs a gym when
the gym comes to you? A change like this
would leave plenty of casualties in its path, so
I ask point-blank if Foley wants to put gyms
out of business. He pauses before answering.
“Henry Ellenbogan at T. Rowe Price told
me once that Peloton will do to fitness what
gaming consoles did to gaming. In the ’80s
you went to the arcade. Today they’re gone,
because you get a better experience at home,
interconnected with the world, and you get a
better value because you don’t have to pay
25 cents every time you die,” he says.
With the launch of the treadmill, Foley will
see just how much of his vision people are
ready to take home.
Stephanie Schomer is Entrepreneur’s senior editor.
S TA R T U P S S p r i n g 2 0 1 8 3 3
3 4 S p r i n g 2 0 1 8 S TA R T U P S Illustrations SHOUT
 CUSTOMERS
WHO

LOVE
YOU CAN

SAVE
YOU
In business, success and failure can seem binary. Some small businesses make money and flourish; others lose
money and close. But there’s a third camp: companies that lose money but also forge deep, enduring connections with
their customers. So deep, in fact, that when they’re in trouble, they can turn to those same customers
to help save them. And sometimes it works. Here’s a look at a very curious kind of small-business success.
by LISSA HARRIS

S TA R T U P S S p r i n g 2 0 1 8 3 5
 THE
BUILDING
ON
CONOVER
STREET
in the Red Hook section of Brooklyn that
houses Sunny’s Bar isn’t much to look at—
just a squat utilitarian block of red-painted
brick with a sign hanging over the front
door that announces, helpfully, BAR. In the
froth and churn of Brooklyn real estate,
buildings like it go down all the time to
make way for offices and condos. But for
owner Tone Balzano Johansen, widow of
beloved longtime proprietor Sunny
Balzano (who died in 2016), it’s sacred
space. It’s 100 years of Balzano family
history, the place teeming with the ghosts
of longshoremen and artists, a place where
live music is something you do, not listen
to. It’s a piece of old Brooklyn still
doggedly refusing to knuckle under to the
new world order.
In 2012, Sunny’s Bar was wrecked by
Hurricane Sandy. The flooding closed the
place for 10 months and nearly drowned
Johansen in her own basement. In the
aftermath of the disaster, she raised more
than $100,000 to fund repairs for the
collapsing shell of the building, rallying the
bar’s motley crew of regulars again and
again for fund-raising events, and running
campaigns on both Kickstarter and
Indiegogo. She did this while living like a
squatter with the elderly Balzano and their
preteen daughter in a cold and often
electricity-less apartment next to the bar,
huddling in a long, puffy down coat while
workers put the ruined building back
together from the foundation up. One day,
it was so cold in the building that her
computer froze under a plastic tarp. It was
a brutal slog, with Johansen publicly
cheerleading all the way while privately
grappling with a complex knot of intercon-
nected business problems that lay beneath
the waterline of public view, like the bulk
of an iceberg. “We were gutted. Both
3 6 S p r i n g 2 0 1 8 S TA R T U P S
Sunny and myself,” Johansen says.
There were days when she couldn’t
stop crying.
Still, she had to persevere. To stop was
to fail. And in fund-raising—perhaps even
more than in business—it’s vital to keep
your game face on.
“My job in all of it was saying, ‘This
needs to be done now.’ That was my job, to
convey the urgency of it,” she says.
Sunny’s Bar is not an isolated case. Many
owners of beloved local businesses,
especially in pricier cities, have been
forced to swallow their pride and appeal to
their customers in times of crisis—a process
streamlined by the rise of online crowd-
funding platforms. While the reasons
behind these campaigns are as varied as
the businesses themselves—tax woes,
health troubles, rising rents, market shifts,
acts of God—what they all have in common
is an unshakable core belief on the part of
both owners and customers that the
business is invaluable, even if it’s not a
conventional success. Even if it’s a
conventional failure.
Just look at Cambridge, Mass., ice cream
maker Toscanini’s, whose owner, Gus
Rancatore, racked up $167,000 in back
taxes over eight years. In 2008, the business
was seized and closed by the Massachusetts
Department of Revenue. Within a week,
customers had raised more than $30,000
through donations, giving Rancatore the
boost he needed to come up with a
payment plan and get back in business.
Or take the Clermont Lounge, a
famously divey Atlanta strip club that has a make it all the way through a fund-raising
black-duct-tape-topped bar and a reigning campaign, declare success, and then
superstar, Blondie, with almost 40 years of discover that it wasn’t enough.
career experience in crushing beer cans Sunny’s Bar, for instance. By midsum-
between her legendary breasts. In mer 2013, most of the major repairs were
February 2017, the Clermont was forced to finished. Against steep odds, the bar
shut down during a months-long construc- opened for business. Regulars rejoiced.
tion project at a nearby hotel. A GoFundMe Local newspapers ran glowing headlines.
page that was started to ensure that the Sunny’s was saved. But then long-
women got paid during the hiatus cleared simmering family tensions began to boil,
almost twice its $5,000 goal. and Johansen had to start all over again.
That said, making a charity cause out of a That’s when it got really hard.
for-profit business isn’t easy. Running a
fund-raising campaign is a grinding, A DECADE AGO, crowdfunding services like
time-consuming business unto itself. Indiegogo and Kickstarter launched as plat-
Reaching out for help can take a psychologi- forms for bringing new things into the
cal toll on proud, independent business world: creative projects, products, tech.
owners. The failure rate for fund-raising But lately, online crowdfunding campaigns
campaigns is high, and when campaigns fall are becoming an important source of
short of their goals, they often fall far short, capital for brick-and-mortar local busi-
making a tough disappointment downright nesses in need of help, says David
crushing. Hardest of all, a business might Mandelbrot, CEO of Indiegogo.

“With a lot of these smaller businesses,
they don’t need the hundreds of thousands
or millions of dollars that some of our
larger competitors need to launch a
product. They need a few thousand dollars
to make rent, or to replace some equip-
ment,” he says.
Sometimes the circumstances are even
more unusual. Take Manitoba’s, a bar in
New York’s East Village. Until he was
served with legal papers a couple of years
ago, things were going fine for Richard
“Handsome Dick” Manitoba, Sirius XM
radio personality; former front man of ’70s
punk legends the Dictators, now called
Manitoba NYC; and, since 1999, proprietor
of Manitoba’s.
Manitoba’s is a living, breathing, grubby
little museum of a punk rock dive on
Avenue B, where you can plunk down $3
for a can of PBR, fire up the well-stocked
jukebox, and peruse the extensive
collection of punk memorabilia lining the
walls. Noise complaints and rising rents in
fast-gentrifying neighborhoods have laid
claim to many similar places, but Manitoba
always managed to keep his head above
water. What almost did the place in, in
2015, was a complaint filed by a wheelchair
user who had sued several dozen busi-
nesses for violations of the Americans with
Disabilities Act (ADA).
Manitoba won’t name the Florida
personal-injury law firm that litigated the
suit. (He says he doesn’t want to get in
trouble with his lawyer.) But there are a
few firms in the business who are behind
most cases like Manitoba’s. Serial ADA
lawsuit filers have plagued small busi-
nesses across the country and have
become especially pernicious in a few
states, including New York. A peculiarity
of the interplay between state and
federal law has made it legal—and
lucrative—for law firms to recruit
disabled plaintiffs to sue businesses for
infractions of the ADA, then press
business owners to settle out of court.
The sums typically run into the tens of
thousands of dollars, though they’re still
only a fraction of what it would cost the
business owner to go to trial.
Manitoba says he would gladly have
fixed any violations on the spot if he’d
been given the option. “It was a scam, and
a chance for a lawyer to put $20,000 in his
pocket. And that’s what I did, and then he
went away,” Manitoba says, with some
heat. “I don’t have $20,000 cash sitting
around to hand someone. It eats me up; it
really eats me up.”
He launched a Save Manitoba’s!
campaign on Indiegogo to raise $25,000.
The description of the bar’s predicament
was vague, alluding to the owner being
“forced to reluctantly settle a case with a
private individual,” but the message was
clear: We either pay or shut down.
To sweeten the pot, Manitoba put up a
grab bag of rewards for backers: Dictators
swag, bobblehead dolls, T-shirts, posters,
even a couple of guitars autographed by
Joan Jett and Debbie Harry. In a month, the
campaign raised more than $32,000.
At first, Manitoba says, he was nervous
to reach out. “In the beginning, my gut
feeling was, it’s tough asking people for
money. People might talk shit,” he says. “If
I was a bad businessman and I couldn’t pay
my bills, I wouldn’t say, ‘Save Manitoba’s!’
If I couldn’t run my business well enough,
I wouldn’t run my business.”
The depth of the community’s support
stunned him. “I knew people liked us. I
knew people had a good time. But the
outpouring of caring—people said, ‘You
know what, dude, you gave your heart and
soul to this culture we love so much. You
need a few bucks, you got it,’ ” he says.
Besides settling the lawsuit, Manitoba
hired a consultant to come in and go over
every last inch of the bar, every doorway
and faucet and table and fixture, and fix
any potential ADA violations that might
still be lurking. Now that the bar is out of
financial danger, he’s thinking about
making a few cosmetic upgrades in
keeping with the spirit of the place and
the people who helped save it.
“I want to fix the bar up a little. Not with
white couches, like some of these assholes
in the neighborhood—like you’re not cool
enough to come in here,” he says. f
S TA R T U P S S p r i n g 2 0 1 8 3 7
WHILE SOME OWNERS are forced to turn
to customers for a one-time bailout, others
try to take their campaigns even further—
using the crisis to try to raise capital to not
only save their faltering businesses but
scale them.
One of these businesses is Philly’s Black
and Nobel, one of the last remaining
black-owned independent bookstores in
the country. Earlier this year, founder
Hakim Hopkins was on the verge of
shutting down the hulking, 15-year-old
shop. Book sales were down, and the bulk
of Black and Nobel’s revenue—currently
about three-quarters, Hopkins says—came
from shipping books to prison inmates, a
business that can be run without a pricey
brick-and-mortar location. “That’s why
we’re still here. They’re still reading in
prison. They still have time,” he says.
There was only one problem with
Hopkins’ plan to wind down the business:
His customers wouldn’t let him. “I’ve been
fighting for the past few years to keep the
doors open. The younger people were like,
‘No! This place saved my life!’”
So in June, he launched an ambitious
$250,000 campaign on GoFundMe to keep
Black and Nobel’s doors open and
maintain the bookstore’s vital role as an
event space, supporter of independent
black writers and artists, and community
hub. The campaign has gotten plenty of
local press, and support from a few
high-profile local artists and athletes. But
by the eight-month mark, Black and Nobel
raised just shy of $10,000, a far cry from
what Hopkins was seeking.
At a glance, the Black and Nobel
campaign appears doomed. But Hopkins
says he’s just getting started. He is planning
a neighborhood block party to raise more
funds, and he wants to launch a series of
promotional videos. “I’m not just gonna
brush it off after six months,” he says.
If he can make it to the $250,000 goal,
Hopkins has big plans: buying his own
building, renovating and expanding the
bookstore space, buying a tour bus to put
Black and Nobel’s programming on wheels
and take it around the country. And
although the campaign has a long way to
go, he’s heartened by the progress he’s
made. “Mainly we started it to keep up with
rent,” he says. “It’s getting to the point now
where I feel like we’re going to be open,
because we do have people who care.”
Promoting the fund-raising campaign is
a bit like having a second job, Hopkins
3 8 S p r i n g 2 0 1 8 S TA R T U P S
says—a sentiment shared by many
campaign founders. “It’s very draining. It’s
like begging. And I’m an earner,” he says.
Hopkins, who started his business as a
street vendor with a table and a box of
books, says he’s never had a bank loan or
even a credit card. Every dollar he spends
on his business is a dollar he earned.
But Black and Nobel is too important to
give up without a fight, he says. He’s
watched elementary school kids who saw
the bookstore as a haven grow up and
graduate from college, and he feels his
store made a difference in their lives.
“We helped build the community,” he
says. “It’s more than a bookstore.”
CROWDFUNDING CAMPAIGNS frequently
fall far short of their goals, research shows.
Estimates of failure in the industry vary,
but study after study reveals that more
than half of campaigns fail—and those that
fail, fail hard. A 2014 study by the Wharton
School’s Ethan Mollick of about 48,500
Kickstarter projects found that among the
failed projects, the mean amount of funds
raised was just north of 10 percent. Only
3 percent of the projects that failed to reach
their goal made it to the halfway point.
On its face, the campaign to save Brasslab,
a New York City musical instrument repair
shop that operated for almost 35 years, was
a failure. The company was founded in 1983
by Chuck McAlexander, a master mechanic
in the art of brass instrument repair, and his
wife, Cynthia Keane.
For decades, Keane says, Brasslab’s
success rested on McAlexander’s reputa-
tion in a small, elite, tight-knit community
of professional musicians. He was the best,
and that was all there was to it. Wynton
Marsalis went to McAlexander. So did Joe
Alessi, principal trombonist in the New
York Philharmonic. McAlexander fixed
horns for the evangelical church House of
God, the United States Marine Band, the
Salvation Army. People mailed horns to
Brasslab from Greece and Scandinavia and
Australia and Japan. Once, Keane says,
they got a tuba in the mail that had been
accidentally dropped off the side of a
bleacher on a Tuesday and had to be
shipped back uncrumpled and good as
new for an event on Friday.
“We didn’t care who was famous. It
would sometimes get us other customers,
but they didn’t get special treatment,”
Keane says.
The first inkling of trouble arrived in
1989. Keane, who had been handling
Brasslab’s tax forms, got a notification
from the New York State Department of
Taxation and Finance that they owed
several quarters’ worth of back sales taxes,
plus penalties and interest. There was an
ultimatum: Pay $10,000 within 24 hours or
they’d close the business immediately.
Keane knows that she missed a few
quarterly filings early on; she chalks it up
to inexperience and lack of a business
background. But by the time she realized
the business owed back tax, she says, the
interest and fees had begun to snowball
beyond her ability to keep up with them.
In the end, she says, the bill came to
$94,000, only about a third of which was
the original sales tax.
Making things worse, over the years of
wrangling back and forth with the tax office,
the people assigned to her case kept
disappearing. Every time she got a new
agent, she had to start again from square
one. “I lost count at six agents,” she says. “I’d
set up deals and payment plans and they’d
go away, get transferred, fired, change jobs. I
would never hear from them again.”
Her long tax battle with the state has left
her with tanked credit and a suspended
driver’s license. Keane, who is also a
lawyer in solo practice, is assembling an
appeal. But before she could even begin to
bring a case against the state, she says, she
had to pay off the outstanding balance. So
Keane, desperate and at the end of her
rope, reached out for help on GoFundMe
last December. And Brasslab’s customers
came to her aid.
“It was fast. It was easily $5,000 the
first couple hours,” she says. “I was
just stunned.”
In the end, the campaign collected
about half of its goal—$26,000, enough to
pay off the back taxes—but not enough to
save the shop. In April 2017, Brasslab closed
its doors for good, and McAlexander and
Keane sold off much of their equipment.
They are still operating an online store,
where they sell a handful of small,
hand-tooled instrument parts, and
McAlexander is still taking on a few smaller
jobs, like making custom valves for
trombones—something he’s known for.
The campaign’s failure, however, was in its
way an unusual success. A business with no
events and no gathering space for customers
was able to rally its clientele to the cause,
even though they were spread across the
globe, and some of them had never even met
the owners in person. The fund-raiser
brought back long-lost customers and made
potentially valuable new connections.
McAlexander was approached by an old
customer, an instrument mechanic who now
works at the brass repair shop in West Point.
He’s interested in striking out on his own,
Keane says, and he wants to hire McAlexan-
der to come upstate and work with him on
weekends. If the situation upstate comes
together, McAlexander can pass on some of
the skills he’s spent a lifetime refining.
“He’ll finally have a place for his legacy,”
she says.
Even though the company didn’t make it,
Keane is still moved today by the outpour-
ing of support. She says the fund-raiser
brought in donations from people they
hadn’t been in touch with for years.
“You find out, when you’re in trouble,
who your friends are,” she says.
IT WASN’T LONG after Johansen’s successful
bid to keep Sunny’s open that another
storm started brewing. A bitter dispute
between Johansen and the 17 other owners
of the building—all members of Balzano’s
family—had begun to simmer after the
Sandy flood. The cousins thought the
building would be condemned, and they
wanted to sell. They brought the first
potential buyer to look at the building
while Johansen was showing a New York
Times reporter around her flood-wrecked
basement, hoping to drum up some
publicity for the bar’s battle for survival.
“They listed the building without our
consent,” she says of the cousins. “You
just have to kind of try to keep it as cool
as you can.”
When Balzano died of a brain embolism
in 2016, the dispute over the property
intensified. Soon after, Johansen—whose
stake in the building amounted to about
4 percent—was faced with a choice: Watch
as the family forced a sale of the building at
the auction block, or come up with a way
to buy them out.
“Then a whole new battle started—the
battle to do as much business as humanly
possible, to grow the business as fast as I
could, so I could show our earnings
potential to the banks,” Johansen says.
She reached out for help to the business
community first. A major bank wouldn’t
touch it, so she forged relationships with a
few smaller community banks, including
the Harlem-headquartered Carver Federal
Savings Bank. With help from an adviser at
the local Small Business Development
Center, and a business consultant working
with a Sandy flood-aid group called
Restore Red Hook, Johansen crafted her
first real business plan.
“I hardly knew what a profit-and-loss
statement was before this,” she says. “I
don’t come from a business background;
I’m an artist. I realized if I was ever going
to be taken seriously by financial institu-
tions, I needed to show that I was serious
about what I was doing. And I feel like that
was invaluable. It’s almost like business
therapy, more than anything else.”
About six months after Balzano’s death,
Johansen and the cousins came to a detailed
agreement to sell. Then they raised the
asking price by $1 million. “That was their
last attempt to push me out,” she says.
Johansen figured that if she could come
PROMOTING THE FUND-RAISING CAMPAIGN
IS LIKE HAVING A SECOND JOB,
SAYS BOOKSTORE OWNER HAKIM HOPKINS.
up with the down payment, the business’s
cash flow could handle the higher
mortgage. She didn’t have 10 percent of
$1 million in her back pocket. But the
deadline was looming, so she said yes,
figuring she could find a way. That’s when
the second fund-raising campaign to save
Sunny’s Bar was launched: a last-minute,
seat-of-the-pants effort to meet the family’s
terms. Johansen didn’t even have time to
craft an online campaign video. On the
advice of her bar manager, she decided to
take payments over Venmo.
The campaign got an assist from a few
prominent local personalities. Johansen, a
sculptor herself, got Duke Riley, Steven
Skollar, and Paul Jacobsen to donate works
for an art auction. Gersh Kuntzman, a
reporter for the New York Daily News,
declared, “New York is not losing Sunny’s
Bar—not on my watch” and challenged
other local journos to take up the cause.
When all was said and done, the second
campaign to save Sunny’s raised $68,000.
On July 25, in a complicated $2.6 million
transaction that involved 13 deeds, three
banks, and a 1031 exchange, Johansen closed
on the building at 253 Conover Street.
“Imagine you’re pretending to be a
robot, signing papers for five hours
straight. That’s what I did,” she says. It was
the end of almost five years of nonstop
hustling, which had taken a toll on
Johansen both physically and spiritually,
and had at one point driven her into the
arms of a Catholic relief organization
offering free counsel for PTSD-afflicted
flood victims. After the closing, Johansen
went home, drank an entire bottle of
Champagne, and fell asleep with her clothes
on. A few days later, her real estate attorney
confessed to her that she’d fallen asleep in
the cab on the way home from the closing
and had to be woken up by the driver.
Now, when Johansen gets up in the
morning on Conover Street, the building is
all hers, although that hasn’t quite sunk in
yet. After all the drama and toil, just
leading a more or less ordinary life with
her teenage daughter feels like a miracle.
“Normal is just the most beautiful thing
ever,” she says. “There’s food in the fridge.
I open the fridge. I make her a sandwich. I
ask her what she wants on the sandwich.
All of those things are so beautiful.”
To business owners in her predicament,
she offers this advice: Don’t give up easily.
“If this means something to you, fight,”
she says. “Fight tooth and nail. And this
has been the good fight.”
Lissa Harris is a science writer and digital
news entrepreneur who has written
for Technology Review, Grist, and
The Scientist. She lives in the Catskill
Mountains in upstate New York.
S TA R T U P S S p r i n g 2 0 1 8 3 9
Illustration Burn & Broad
FRANCHISES
M A N Y O F T O DAY ’ S PA R E N T S A R E PA R T O F W H AT ’ S K N OW N A S T H E “ SA N DW I C H G E N E R AT I O N . ”

FOR THE
T H E Y’R E R AISING YOUNG KIDS , CARING F OR A G I N G PA RE N TS , A N D WORK I N G F UL L-TI ME J OBS .

STRESSED

OUT
T HEY NEED A LOT OF HELP HOLD I N G I T A L L TOG E TH E R. A N D I N CRE A S I N G LY,

T H E Y ’ R E G E T T I N G T H AT H E L P F R O M F R A N C H I S E S . by JON MARCUS

S TA R T U P S S p r i n g 2 0 1 8 41

IT’S a weekday morning
and Howard
Mierau’s 2-and-a-
half-year-old granddaughter is paddling in
a heated pool at the Goldfish Swim School
franchise in Needham, Mass. The blond-
haired, blue-eyed toddler, clad in a
baby-blue swimsuit, spends two or more
mornings a week here learning water
safety and swimming techniques, while
her grandfather watches from the
tiki-themed viewing area. And when
they’re not at Goldfish, they’re at another
franchise, Gymboree Play & Music.
This all looks quite different from when
Mierau raised his own daughter decades
ago. Back then, his wife stayed home while
he worked as a computer programmer. But
that daughter grew up, got married, and
had a child of her own—and because she
and her husband work full time and want
to make sure their daughter is fully
occupied and looked after, Mierau began
commuting from his home in Tampa to
help out. “[Her parents] want her to be
happy, they want her to be healthy, and,
4 2 S p r i n g 2 0 1 8 S TA R T U P S
yeah, they want her to be exposed to other
kids,” Mierau says.
Which is where the franchises come in.
Franchisors have always tried to find
and respond to unmet market needs—say,
the urge to grab a quick meal when you’re
on the road. But these days, some of the
greatest unmet needs are coming from a
growing population called the sandwich
generation. Defined by Pew Research as
people with kids under 18 and parents over
65, and who increasingly work full time,
this generation represents an unprece-
dented social and demographic shift that is
driving growth across the economy—and,
by extension, the franchising landscape.
THIS GENERATION REPRESENTS A
SHIFT THAT IS DRIVING GROWTH
ACROSS THE ECONOMY.
Class time at a
Goldfish Swim
School franchise.
The shift is easily visible on Entrepre-
neur’s 2018 Franchise 500® list. Parents of
young children are turning to franchises
like Goldfish Swim School (#55 in Entrepre-
neur’s rankings), Primrose Schools (#27),
Kumon Math & Reading Centers (#20),
School of Rock (#163), and trampoline park
Sky Zone (#81) for children’s enrichment
and entertainment, while at the same time
relying on companies like Right at Home
(#49) and Nurse Next Door (#50) to care
for their aging parents.
Behind this growth are several inter-
twined demographic trends. The average
age at which women have a first child is
the highest on record, the Centers for
P H O T O G R A P H BY J E S S E C H E H A K
Disease Control reports, with
more of them waiting until
their late 30s or early 40s to
start families. And nearly half
of couples both work full time,
up from fewer than a third in
1970, according to the U.S. Census
Bureau, driving businesses that give
children something to do on the weekdays
after school, when kids once stayed home
and played. (Franchises also help parents
cut down their children’s screen time—and
their guilt about it.)
Older moms and dads are further
removed from their own schooling than
their parents were, too—which, in a
hypercompetitive age, can be a source of
anxiety. “They look at their kids’ homework
today, and the methodology for getting to
the answer is completely different,” says
Frank Milner, the president of Tutor Doctor.
“There’s just this drive to give our kids
every advantage we possibly can, to give
them the best shot at success in life.”
The franchised elder-care industry is
seeing a similar explosion in growth. Some
10,000 Americans are turning 65 every
“IT’S NOT THE TRADITIONAL FAMILY
WHERE ONE PARENT WORKED
AND THE OTHER STAYED HOME.”
4 4 S p r i n g 2 0 1 8 S TA R T U P S
day, Pew estimates—a trend
known as “the silver tsu-
Mike
nami”—creating a vast market
Bidwell of more than 79 million
seniors needing home
healthcare and other services.
“The demographic part of this
is huge,” says Peter Ross, cofounder
and CEO of Senior Helpers, which offers
services that range from light housekeep-
ing to personal care. “You have all these
trends happening—people aging at record
levels, people living longer, people
wanting to live at home, parents working
two jobs.”
These social shifts are also creating a
surge of business for home-services
franchises. “It’s not the traditional family
where one parent worked and the other
stayed home and the father was a very
handy guy,” says Mike Bidwell, president
and CEO of Dwyer Group, which owns
Mr. Handyman in the U.S. and 16 other
home-services franchises, more than half
of which it acquired since 2010. Now his
customers are often affluent parents who
need hired help around their house.
Frank Milner
“Whether they can do it or not, they don’t
have time. And many younger people can’t
do it. Many don’t even own a hammer.”
Which, of course, is good news for him.
SOCIAL SHIFTS may be creating new
business opportunities, but those opportu-
nities aren’t seized on their own. The most
forward-thinking franchisors are heavily
investing in data-tracking age, household
income, education, professional status,
and other characteristics of potential
customers on an almost house-by-house
basis, to gauge demand to a degree that
wasn’t possible before.
Senior Helpers, for instance, uses data
about age and earnings to pinpoint where
that silver tsunami most needs services—
creating maps of territories with at least
20,000 people 75 and older (clients are, on
average, in their early 80s) who have
collective household incomes of roughly
$400 million. This takes some of the
guesswork out of growth, says Ross, who
has a sales and marketing background. The
way he sees it, franchising offers the fastest
way to capitalize on this data.
“Data plays a huge role,” says Milner of
Tutor Doctor, which helps parents keep
their children on academic track and gives
them a leg up in the all-important college
application process. “There is a ton more
data available today than even 10 years ago
when we were getting started.” This sort of
data mining has helped the company
expand from 41 franchises in the United
States and Canada to more than 500 in
18 countries since 2009, with plans to add
100 more this year.
Goldfish, meanwhile, tracks the age of
parents, age of children, driving distance
to potential locations, and retail and
educational spending habits. It has more
P H O T O G R A P H BY M A R T I N KO L D I T Z / T U T O R D O C T O R
than doubled the number of locations
since 2015, to 63.
Demographics and data can’t be destiny
for everyone, however. Some experts
warn that dramatic generational and
social changes are luring more franchisors
into a market that threatens to go from
underserved to overcrowded. Ross is
already seeing it; he says 40 new senior
home-care franchises have cropped up
since he started his in 2002. And by
growing to 311 locations globally, adding
an average of three to four a month,
Senior Helpers itself is adding to that
market saturation.
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 “A lot of people
are coming to the
same conclu-
sions,” says Nick
Nick Neonakis, CEO of
Neonakis The Franchise
Consulting Com-
pany and author of
The Franchise MBA. “So
now everybody’s fighting over those
10,000 people a day” who are turning 65
in the United States.
Because many “sandwich generation”
franchises provide care directly to
people—whether they’re children being

P H O T O G R A P H C O U R T ES Y O F I N D I A N A U N I V E R S I T Y K EL L E Y S C H O O L O F B U S I N E S S / T O D D S A X T O N; P H O T O G R A P H C O U R T E S Y O F S E N I O R H E L P E R S
tutored or elders being helped at home—
they have to also contend with an
ever-changing regulatory landscape.
Regulations and safety standards may
change, or vary in different states, and
particularly in elder care, franchisees face
a shortage of trained caregivers. “It’s
definitely a huge category. But not an easy
category,” Neonakis says.
Data may also have an unexpected
downside for franchises: It enables a lot of
strong competition. Because franchises are
generally run by locals who have solid
knowledge of their laws, people, culture,
real estate, and demographic trends, the A Senior Helpers
employee assists
franchise industry has typically connected a customer.
with communities better than nonfranchise
corporations have. But Todd Saxton, an
associate professor of strategy and
entrepreneurship at the Indiana University
Kelley School of Business, believes data
could change that—giving centralized
corporations the same window into local
SOME 10,000 AMERICANS TURN
needs that franchises have traditionally had.
“In some ways that trend toward the use
65 EVERY DAY, A TREND KNOWN AS
and availability of data is counter to why
franchisors have historically used the “THE SILVER TSUNAMI.”
franchise model,” Saxton says. “They had
to rely on the franchisees for knowledge
about, for example, what neighbor- backdrop of a colorful mural of basketball.
hood to put the McDonald’s in.” sea life. Several of the moms “I like that it’s so flexible,” she says. “I
In this respect, the genera- here are using the opportunity can come in the morning and be available
tion of aging Americans the to telecommute on their for the other kids in the afternoon—and for
franchise industry is hastening Todd laptops while their kids are in parents who work, it’s open on the
to serve, and the franchise Saxton class. weekends, too.”
industry itself, may share Julie Steinkrauss isn’t on a At that, Steinkrauss pauses, a little
something in common: The laptop. She’s here with her ambivalent about how the world has
world they once knew is changing 3-year-old, Jackie, who wears a changed. Her life, she says, is “definitely
at a stunning pace. giant backpack and Mickey Mouse more hectic than our parents’ lives were.”
swim clogs. These weekday morning
BACK AT THE Goldfish Swim School, there lessons free up Steinkrauss to spend time Jon Marcus is a Boston-based journalist
are no suggestions of such a looming with her daughter, since she is so busy the who writes for The Atlantic, The
menace. The loudest noise is the happy rest of her days chauffeuring her three Washington Post, The New York Times,
splash of kids in a pool, against the older kids to dance, SAT tutoring, and The Boston Globe, and others.

4 6 S p r i n g 2 0 1 8 S TA R T U P S
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TOTAL UNITS
the top franchises that can be started for less than $50,000, FRANCHISED/CO.-OWNED:
less than $100,000, and less than $150,000. And because 560/0
where you spend your time can be as important a consid-
eration as how you spend your money, we’ve also 6 Anago Cleaning Systems O
Commercial cleaning
identified the franchises on this list that can be run from STARTUP COST
home or from a mobile unit, without the need for an office or retail space. $10.4K-$68.5K
These franchises are ranked based on the scores they received in TOTAL UNITS
FRANCHISED/CO.-OWNED:
Entrepreneur’s 2018 Franchise 500 ranking, determined by a comprehensive 1,503/0
analysis of more than 150 data points in the areas of costs and fees, size and
growth, franchisee support, brand strength, and financial strength and 7 Vanguard Cleaning
Systems O
stability. Our listings are not intended to recommend any particular company, Commercial cleaning
but rather as a starting point for your own research. No matter how much a STARTUP COST
franchise costs, you should always carefully read the company’s legal $10.9K-$39.4K
TOTAL UNITS
documents, consult with an attorney and an accountant, and talk to current FRANCHISED/CO.-OWNED:
and former franchisees before you invest. 3,237/0

8 Stratus Building
Solutions O
Environmentally friendly commercial
1 HomeVestors of America O cleaning
Home buying, repair, and selling STARTUP COST
STARTUP COST $3.5K-$48.4K

TOP 100
$44K-$347.3K TOTAL UNITS
FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: 1,325/0
851/0
9 Rooter-Man O

FRANCHISES
2 Jan-Pro Franchising Plumbing, drain, and sewer cleaning
International O STARTUP COST
Commercial cleaning $46.8K-$137.6K
STARTUP COST TOTAL UNITS

FOR LESS
$3.99K-$51.1K FRANCHISED/CO.-OWNED:
613/22
TOTAL UNITS
FRANCHISED/CO.-OWNED:
8,486/0
10 HomeTeam

I N T R O P H O T O G R A P H BY G E T T Y I M A G E S / C. J. B U R T O N

THAN
Inspection Service O
3 Cruise Planners O Home inspections
Travel agencies STARTUP COST
STARTUP COST $48.8K-$75.5K
$2.1K-$22.9K

$50,000
TOTAL UNITS
FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: 167/0
2,564/1
11 Dream Vacations O
4 Jazzercise Travel agencies
Group fitness classes, conventions, STARTUP COST
apparel, and accessories $3.2K-$21.9K
STARTUP COST TOTAL UNITS
$3.7K-$32.8K FRANCHISED/CO.-OWNED:
1,119/0
TOTAL UNITS
FRANCHISED/CO.-OWNED:
9,077/2

5 0 S p r i n g 2 0 1 8 S TA R T U P S
 OBusiness can be run from home or mobile unit

12 Property 27 Champs Chicken O

Management Inc. O Fried chicken, fried fish, sides
Commercial, residential, and STARTUP COST
association property management $9K-$349K
STARTUP COST TOTAL UNITS
$19.9K-$86.8K FRANCHISED/CO.-OWNED:
TOTAL UNITS 397/0
FRANCHISED/CO.-OWNED:
199/1
28 Mosquito Squad O
Outdoor pest control
13 Chester’s STARTUP COST
Chicken $29.6K-$69.6K
STARTUP COST TOTAL UNITS
$12K-$296.6K FRANCHISED/CO.-OWNED:
TOTAL UNITS 220/0
FRANCHISED/CO.-OWNED:
1,156/0
29 Skyhawks Sports &
Supertots Sports Academy O
14 NaturaLawn of America Sports camps and programs
Organic-based lawn care STARTUP COST
STARTUP COST $25.8K-$58.4K
$47.5K-$112.7K TOTAL UNITS
TOTAL UNITS FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: 62/63
78/7

30 H&R Block
15 My Gym Children’s Tax preparation, electronic filing
Fitness Center O STARTUP COST
Early-learning/fitness programs $31.6K-$149.4K
STARTUP COST 19 Fiesta Auto 23 Jet-Black O
TOTAL UNITS
$36.8K-$249.7K Insurance and Tax Asphalt maintenance FRANCHISED/CO.-OWNED:
Insurance and tax-preparation services STARTUP COST 4,027/6,655
TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST $43K-$100.98K
503/0 $49.7K-$107.5K TOTAL UNITS 31 Destination Athlete O
TOTAL UNITS FRANCHISED/CO.-OWNED:
Youth sports apparel, equipment,
FRANCHISED/CO.-OWNED: 104/8
16 Jantize America O and services
175/0
Commercial cleaning STARTUP COST
STARTUP COST 24 Soccer Shots $31.3K-$144.1K
$8.2K-$49K 20 Lendio Franchising O Franchising O
TOTAL UNITS
Small-business financing Soccer programs for ages 2 to 8 FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST STARTUP COST 41/0
157/0 $40.2K-$106.5K $35.6K-$48.1K
TOTAL UNITS TOTAL UNITS 32 Leadership Management O
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
17 National Property Leadership and organization training
21/0 183/8
Inspections O and development
Home and commercial STARTUP COST
property inspections 21 Buildingstars 25 TSS Photography O $20K-$27.5K
STARTUP COST International O Youth sports, school,
TOTAL UNITS
$43.2K-$47K Commercial cleaning and event photography FRANCHISED/CO.-OWNED:
461/0
P H O T O G R A P H C O U R T ES Y O F H & R B LO C K

TOTAL UNITS STARTUP COST STARTUP COST

FRANCHISED/CO.-OWNED: $2.2K-$53.2K $20.4K-$74.3K
224/0
TOTAL UNITS TOTAL UNITS 33 Window Gang O
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
Window, gutter, and dryer-vent
735/0 187/0
18 Drama Kids cleaning, pressure washing,
International O chimney sweeping
After-school drama classes 22 Alternative Board 26 Oxi Fresh Franchising O STARTUP COST
and summer camps (TAB) O Carpet, upholstery, hardwood floor, $34.4K-$81.2K
STARTUP COST Peer advisory boards, business tile, and grout cleaning
TOTAL UNITS
$28.8K-$49.5K coaching STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS STARTUP COST $41K-$69.2K 90/102
FRANCHISED/CO.-OWNED: $45.4K-$94.5K TOTAL UNITS
233/0 FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: 337/3
226/28

S TA R T U P S S p r i n g 2 0 1 8 5 1
FRANCHISE

34 Sit Means 50 Complete

Sit Dog Training O Weddings + Events O
Dog training Photography, DJ, video, and
STARTUP COST photo-booth services
$49.8K-$145.9K STARTUP COST
TOTAL UNITS $26.4K-$48.7K
FRANCHISED/CO.-OWNED: TOTAL UNITS
119/1 FRANCHISED/CO.-OWNED:
194/2

35 Fit Body Boot Camp

Indoor fitness boot camps 51 Padgett Business
STARTUP COST Services
$37.7K-$87.5K Financial, payroll, consulting,
and tax services
TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST
405/0 $20.2K-$99.98K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
36 Estrella Insurance 356/0
Auto, home, and business insurance
STARTUP COST
$49.95K-$84K 52 Christmas Decor O
Holiday and event lighting
TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST
126/0 $19.6K-$62.3K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
37 Foliage Design Systems O 257/0
Interior plant sales, leasing, and
maintenance
STARTUP COST 53 Colors On Parade O
$44.4K-$64.4K Mobile auto paint and dent repair
TOTAL UNITS STARTUP COST
FRANCHISED/CO.-OWNED: $33.8K-$103K
27/3
TOTAL UNITS
FRANCHISED/CO.-OWNED:

38 Paul Davis 42 Kinderdance 46 Acti-Kare O 224/11

Emergency Services O International O Nonmedical home care
Emergency restoration Children’s dance, gymnastics, fitness, STARTUP COST 54 Pronto Insurance
STARTUP COST and yoga programs $33.9K-$52.99K Insurance
$49.1K-$213.9K STARTUP COST TOTAL UNITS STARTUP COST
TOTAL UNITS $17.95K-$46.1K FRANCHISED/CO.-OWNED: $33.8K-$89.1K
FRANCHISED/CO.-OWNED: TOTAL UNITS 118/0
TOTAL UNITS
97/0 FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED:
134/2 46/126
47 Merle Norman Cosmetics
39 Aire-Master of America O Cosmetics and skin-care products
Restroom odor-control and maintenance 43 WIN Home Inspection O STARTUP COST 55 Novus Glass O
STARTUP COST Home inspections $34.8K-$186.5K Auto glass repair and replacement

P H O T O G R A P H C O U R T E S Y O F K I N D E R D A N C E I N T ER N AT I O N A L I N C.
$39.6K-$142.4K STARTUP COST TOTAL UNITS STARTUP COST
TOTAL UNITS $44.3K-$67.5K FRANCHISED/CO.-OWNED: $46.2K-$241.9K
FRANCHISED/CO.-OWNED: TOTAL UNITS 1,182/2
TOTAL UNITS
109/7 FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED:
191/0 1,967/32
48 Realty Executives
40 HappyFeet Legends Intl. Svcs. O
International O 44 SuperGlass Real estate 56 Happy Tax Franchising O
Soccer programs for ages 2 to 18 Windshield Repair O STARTUP COST Tax preparation
STARTUP COST Windshield repair, glass scratch $23.5K-$171K
removal, headlight lens repair STARTUP COST
$22.5K-$29.4K TOTAL UNITS $30.4K-$66.5K
STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS
$9.9K-$31K TOTAL UNITS
FRANCHISED/CO.-OWNED: 481/0 FRANCHISED/CO.-OWNED:
116/3 TOTAL UNITS 101/0
FRANCHISED/CO.-OWNED:
332/0 49 Challenge Island O
41 Duraclean O Educational enrichment programs 57 Maid Right O
Carpet and upholstery cleaning, STARTUP COST Residential cleaning
disaster restoration, mold remediation 45 TGA Premier $47.6K-$62.5K
Youth Tennis O STARTUP COST
STARTUP COST TOTAL UNITS $4.7K-$48.8K
$38.7K-$117.9K Youth tennis programs
FRANCHISED/CO.-OWNED:
STARTUP COST TOTAL UNITS
TOTAL UNITS 54/3
FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: $21.5K-$62.8K
244/10
274/9 TOTAL UNITS
FRANCHISED/CO.-OWNED:
43/1

5 2 S p r i n g 2 0 1 8 S TA R T U P S
 OBusiness can be run from home or mobile unit

58 ACFN-The 65 Touching Hearts 69 FRSTeam 73 Mint Condition

ATM Franchise Business O At Home O Restoration dry cleaning Franchising O
Automated teller machines Nonmedical home care for seniors STARTUP COST
Commercial cleaning,
STARTUP COST and people with disabilities $33.4K-$380.5K building maintenance
$39.4K-$64.8K STARTUP COST TOTAL UNITS STARTUP COST
TOTAL UNITS $49.4K-$71.1K FRANCHISED/CO.-OWNED: $4.7K-$32.4K
FRANCHISED/CO.-OWNED: TOTAL UNITS 39/8 TOTAL UNITS
239/0 FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
56/0 340/0
70 Surface Specialists O
59 Town Money Saver O Bathtub repair and refinishing,
Direct-mail and digital advertising 66 Shine Window Care tub liners, bath remodeling 74 Home Cleaning Centers
STARTUP COST and Holiday Lighting O STARTUP COST of America
$5.7K-$17K Window cleaning, pressure washing, $43.2K-$56K Residential and commercial cleaning
holiday lighting installation STARTUP COST
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST FRANCHISED/CO.-OWNED: $32.8K-$34.8K
49/0 $23K-$98.8K 45/0 TOTAL UNITS
TOTAL UNITS FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: 32/0
60 Young Rembrandts 19/0 71 Mighty Kicks O
Franchise O Mobile soccer programs
Drawing classes for ages 3 to 12 for ages 2 to 12 75 Lil’ Angels Photography O
STARTUP COST 67 Interior Magic O STARTUP COST School, childcare,
$41.3K-$48.1K Auto appearance reconditioning $10.2K-$16.2K and family photography
STARTUP COST STARTUP COST
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: $33.1K-$100.1K FRANCHISED/CO.-OWNED: $36.3K-$40.8K
105/0 TOTAL UNITS 34/1 TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
51/0 57/1
61 GarageExperts O 72 Help-U-Sell Real Estate O
Garage cabinets, floor coatings, Real estate
organization products 68 Jackson Hewitt STARTUP COST 76 Just Between Friends
STARTUP COST Tax Service $23.3K-$39.8K Franchise Systems O
$48.5K-$86.4K Tax preparation Children’s and maternity
TOTAL UNITS consignment events
STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: $39.7K-$105.4K 102/0 STARTUP COST
47/0 TOTAL UNITS $32.8K-$45.4K
FRANCHISED/CO.-OWNED: TOTAL UNITS
4,065/1,772 FRANCHISED/CO.-OWNED:
62 Engineering for Kids O 153/5
STEM activities
STARTUP COST
$27.3K-$93.7K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
171/1

63 Computer
Troubleshooters O
Technology consulting and services
for small businesses
STARTUP COST
P H O T O G R A P H BY J O E D I C K I E / T O U C H I N G H E A R T S AT H O M E

$12.2K-$27.9K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
315/3

64 Mr. Sandless/
Dr. DecknFence O
Interior and exterior sandless
wood refinishing
STARTUP COST
$26.8K-$87.4K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
247/0

Touching Hearts
At Home

S TA R T U P S S p r i n g 2 0 1 8 5 3
FRANCHISE

77 Bloomin’ Blinds O 85 Proforma O 89 Bar-B-Clean O 93 SandFree O

Window covering sales, Printing and promotional products Barbecue cleaning Wood floor refinishing
installation, and repairs STARTUP COST STARTUP COST STARTUP COST
STARTUP COST $4.7K-$39.7K $36.95K-$50.1K $40.6K-$64.7K
$49.1K-$105.2K TOTAL UNITS TOTAL UNITS TOTAL UNITS
TOTAL UNITS FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: 654/0 30/1 15/1
39/1

86 Duct Doctor USA O 90 United Country 94 Coffee News O

78 Rhea Lana’s Residential and commercial Real Estate O Weekly newspapers
Franchise Systems O air-duct cleaning Real estate distributed at restaurants
Children’s consignment events STARTUP COST STARTUP COST STARTUP COST
STARTUP COST $41K-$136.5K $16.7K-$45.4K $9.8K-$10.8K
$19.1K-$38.95K TOTAL UNITS TOTAL UNITS TOTAL UNITS
TOTAL UNITS FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: 26/0 417/0 801/5
78/3

87 PortraitEFX 91 ActionCoach O 95 Little Kickers O

79 Men In Kilts Photography Franchise O Business coaching Preschool soccer programs
Window Cleaning O Photography STARTUP COST STARTUP COST
Window and exterior cleaning STARTUP COST $47.96K-$466.8K $23.2K-$34.6K
STARTUP COST $22.5K-$43.6K TOTAL UNITS TOTAL UNITS
$47.5K-$108K TOTAL UNITS FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
TOTAL UNITS FRANCHISED/CO.-OWNED: 758/3 278/2
FRANCHISED/CO.-OWNED: 46/7
26/0
92 Amazing Athletes O 96 Certified Restoration
88 Assist-2-Sell Educational sports programs DryCleaning Network
80 TGA Premier Junior Golf O Discount real estate STARTUP COST Restoration of textiles and electronics
Youth golf programs STARTUP COST $30.9K-$43.9K STARTUP COST
STARTUP COST $24K-$45.5K TOTAL UNITS $45.6K-$235.5K
$21.5K-$62.8K TOTAL UNITS FRANCHISED/CO.-OWNED: TOTAL UNITS
TOTAL UNITS FRANCHISED/CO.-OWNED: 96/0 FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: 162/1 153/0
55/2

97 Class 101
81 Payroll Vault Franchising O College planning and educational
Payroll services services
STARTUP COST Men In Kilts STARTUP COST
$37.2K-$82.6K $40.5K-$57.9K
TOTAL UNITS TOTAL UNITS

P H O T O G R A P H BY B U C K A S H O T P H O T O G R A P H Y/ M E N I N K I LT S W I N D O W WA S H I N G
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
35/1 23/1

82 Abrakadoodle O 98 IceBorn O
Art-education programs Ice and water vending machines
STARTUP COST STARTUP COST
$37.9K-$80.6K $27.1K-$213.5K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
353/2 76/103

83 Club Z! In-Home 99 You’ve Got Maids

Tutoring Services O Environmentally friendly
In-home tutoring residential cleaning
STARTUP COST STARTUP COST
$33.8K-$57.8K $36.4K-$107K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
384/0 78/0

84 BirthdayPak O 100 TapSnap O

Direct-mail advertising Digital photo booths
STARTUP COST STARTUP COST
$34.5K-$135.8K $48.4K-$123.5K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
21/0 136/0

5 4 S p r i n g 2 0 1 8 S TA R T U P S
 OBusiness can be run from home or mobile unit

1 uBreakiFix 4 Matco Tools O

Electronics repairs Mechanics’ tools and equipment
STARTUP COST STARTUP COST

TOP 100
$60.4K-$220.9K $91.4K-$269.6K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
307/18 1,755/2

FRANCHISES
2 Kumon Math 5 Merry Maids
& Reading Centers Residential cleaning
Supplemental education STARTUP COST
P H O T O G R A P H C O U R T ES Y O F F I R EH O U S E S U B S

STARTUP COST $86.8K-$123.8K

FOR LESS
$69.8K-$141.4K TOTAL UNITS
TOTAL UNITS FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: 1,667/3
25,827/32

THAN
6 Firehouse Subs
3 CPR-Cell Phone Repair O Subs
Electronics repairs and sales STARTUP COST
STARTUP COST $94.8K-$1.1M

$100,000
$58.2K-$176K TOTAL UNITS
TOTAL UNITS FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: 1,049/37
365/4

S TA R T U P S S p r i n g 2 0 1 8 5 5
FRANCHISE

7 Baskin-Robbins
Ice cream, frozen yogurt,
frozen beverages
STARTUP COST
$93.6K-$401.8K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
7,892/0

8 Mosquito Joe O
Outdoor pest control
STARTUP COST
$66.6K-$127.5K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
234/2

9 The Maids
Residential cleaning
STARTUP COST
$76.1K-$164.4K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
1,236/111

10 Right at Home
Home care, medical staffing
STARTUP COST
$78.3K-$137.9K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
MaidPro
553/0

11 Weed Man O
Lawn care
14 BrightStar Care 18 Pop-A-Lock 22 Restoration 1 O
STARTUP COST Medical/nonmedical home care, Franchise System O Water, fire, smoke,
$68.5K-$85.5K medical staffing Mobile locksmith and security services and mold restoration
TOTAL UNITS STARTUP COST STARTUP COST STARTUP COST
FRANCHISED/CO.-OWNED:
$94.2K-$176.6K $99.7K-$134.3K $77.95K-$182.1K
335/0
TOTAL UNITS TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
12 FirstLight Home Care 311/4 558/3 109/0
Nonmedical home care
STARTUP COST 15 MaidPro O 19 ASP-America’s Swimming 23 Chem-Dry Carpet
$97.7K-$141.7K Residential cleaning Pool Company O & Upholstery Cleaning O
TOTAL UNITS STARTUP COST Swimming pool maintenance, Carpet and upholstery cleaning, tile and
FRANCHISED/CO.-OWNED:
$57.6K-$207.5K repairs, and renovations stone care, granite countertop renewal
154/0 STARTUP COST STARTUP COST
TOTAL UNITS
FRANCHISED/CO.-OWNED: $96.2K-$143.3K $56.5K-$161.96K
13 Visiting Angels 242/1 TOTAL UNITS TOTAL UNITS
Nonmedical home care FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
254/0 3,536/0
STARTUP COST 16 Ikor International
$77.99K-$102.3K Patient advocacy and guardianship for
TOTAL UNITS seniors and people with disabilities 20 Patrice & Associates O 24 Weichert Real
FRANCHISED/CO.-OWNED:
STARTUP COST Hospitality, retail, and sales recruiting Estate Affiliates
585/0 $86.5K-$138.1K STARTUP COST Real estate
P H O T O G R A P H BY L E E PA R K / M A I D P R O

TOTAL UNITS $84.95K-$93.9K STARTUP COST

FRANCHISED/CO.-OWNED: TOTAL UNITS $50K-$364.7K
63/0 FRANCHISED/CO.-OWNED: TOTAL UNITS
107/0 FRANCHISED/CO.-OWNED:
323/129
17 Signal 88 Security O
Private security guard 21 Valpak Direct Marketing
and patrol services Systems O 25 Yesco O
STARTUP COST Direct-mail and digital advertising Sign and lighting service
$73K-$268.4K STARTUP COST and maintenance
TOTAL UNITS $80.6K-$200.8K STARTUP COST
FRANCHISED/CO.-OWNED: TOTAL UNITS $65K-$352.2K
416/7 FRANCHISED/CO.-OWNED: TOTAL UNITS
129/14 FRANCHISED/CO.-OWNED:
57/49

5 6 S p r i n g 2 0 1 8 S TA R T U P S
 OBusiness can be run from home or mobile unit

26 Cornwell Quality Tools O 34 Dale Carnegie Training O 39 Fibrenew O 44 The Tutoring Center
Automotive tools and equipment Workplace training and development Leather, plastic, and vinyl Franchise
STARTUP COST STARTUP COST restoration and repair Tutoring
$52.5K-$223.8K $51.2K-$186.5K STARTUP COST STARTUP COST
TOTAL UNITS TOTAL UNITS $93.3K-$104.8K $91.5K-$136.2K
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: TOTAL UNITS TOTAL UNITS
643/0 271/2 FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
241/0 90/0

27 Senior Helpers 35 Miracle Method

Personal, companion, Surface Refinishing 40 9Round 45 Precision Door Service
and Alzheimer’s home care Kitchen and bathroom Kickboxing circuit-training programs Garage-door repairs and installation
STARTUP COST surface refinishing STARTUP COST STARTUP COST
$83.3K-$117.3K STARTUP COST $75.2K-$116.8K $67.8K-$515.4K
TOTAL UNITS $83.4K-$127.99K TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: TOTAL UNITS FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
291/1 FRANCHISED/CO.-OWNED: 533/6 86/1
144/1

28 Tutor Doctor O 41 GoliathTech O 46 Realty One Group

Tutoring 36 Molly Maid Foundation systems Real estate
STARTUP COST Residential cleaning for the construction industry STARTUP COST
$68.5K-$101.7K STARTUP COST STARTUP COST $53.3K-$220K
TOTAL UNITS $89.2K-$137.2K $72.9K-$176K TOTAL UNITS
FRANCHISED/CO.-OWNED: TOTAL UNITS TOTAL UNITS FRANCHISED/CO.-OWNED:
531/1 FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: 60/23
466/0 160/0

29 N-Hance 47 Two Maids & A Mop

Wood Refinishing O 37 Pinot’s Palette 42 Orion Food Systems Residential cleaning
Wood floor and cabinet refinishing Paint-and-sip studios Fast-food systems for STARTUP COST
STARTUP COST STARTUP COST nontraditional markets $56K-$136.95K
$62.2K-$160.9K $63.4K-$204.2K STARTUP COST TOTAL UNITS
TOTAL UNITS TOTAL UNITS $59.5K-$140K FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: TOTAL UNITS 55/2
479/0 135/4 FRANCHISED/CO.-OWNED:
996/0
48 TeamLogic IT
30 1-800 Water Damage 38 Poolwerx O IT managed services for businesses
Restoration Pool and spa maintenance, service, 43 Color Glo International O STARTUP COST
STARTUP COST remodeling, and supplies Leather, vinyl, fabric, carpet, and $94.6K-$137.3K
$79K-$262.4K STARTUP COST surface repair and restoration
TOTAL UNITS
TOTAL UNITS $78.5K-$288.5K STARTUP COST FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: TOTAL UNITS $56.3K-$61.4K 115/0
55/2 FRANCHISED/CO.-OWNED: TOTAL UNITS
131/2 FRANCHISED/CO.-OWNED:
142/0 49 ServiceMaster Clean/
31 911 Restoration ServiceMaster Restore*
Residential and commercial Commercial/residential cleaning,
property restoration disaster restoration
STARTUP COST STARTUP COST
$70.1K-$226.9K $93.2K-$299K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
138/0 5,023/10

32 Assisting Hands 50 Amada Senior Care

Home Care Home care and assisted-living
Medical/nonmedical home care, placement
temporary staffing STARTUP COST
STARTUP COST $85K-$178.2K
$70.6K-$147.5K
P H O T O G R A P H C O U R T ESY O F 9 R O U N D

TOTAL UNITS
TOTAL UNITS FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: 74/0
105/3

51 Best in Class
33 Painting with a Twist Education Center
Paint-and-sip studios Supplemental education
STARTUP COST STARTUP COST
$89.3K-$188.3K $62.8K-$121.9K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: 9Round FRANCHISED/CO.-OWNED:
285/4 48/0

*ServiceMaster’s commercial/residential cleaning business models can be started for less than $100,000, but its disaster restoration model cannot.

S TA R T U P S S p r i n g 2 0 1 8 5 7
FRANCHISE

52 Signarama 56 Kitchen Tune-Up O 60 Transworld Business 68 Expense Reduction

Signs Residential and commercial kitchen Advisors O Analysts O
STARTUP COST and bath remodeling Business brokerages; franchise Business consulting
$94.4K-$292.5K STARTUP COST consulting STARTUP COST
TOTAL UNITS $71.9K-$105.2K STARTUP COST $66K-$85.9K
FRANCHISED/CO.-OWNED: TOTAL UNITS $69.6K-$91.9K TOTAL UNITS
683/0 FRANCHISED/CO.-OWNED: TOTAL UNITS FRANCHISED/CO.-OWNED:
190/0 FRANCHISED/CO.-OWNED: 708/6
210/0
53 College Hunks Hauling Junk/
College Hunks Moving 57 Mr. Rooter O 69 Our Town America O
Junk removal, moving, Plumbing, drain, and sewer cleaning 61 Border Magic/ Direct-mail advertising to new movers
and labor services STARTUP COST Boulder Designs O STARTUP COST
STARTUP COST $74.3K-$180.2K Concrete landscape edging, custom $63.3K-$86.3K
$89.3K-$208.2K rocks and boulder signage
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: 276/0 $78K-$138K 63/0
82/3 TOTAL UNITS
FRANCHISED/CO.-OWNED:
58 HouseMaster O 163/0 70 JEI Learning Centers
54 Apex Fun Run O Home inspections Individualized supplemental education
Elementary-school fund-raising STARTUP COST STARTUP COST
programs $61.1K-$106.2K 62 Tutu School $63K-$105K
STARTUP COST Children’s ballet schools
TOTAL UNITS TOTAL UNITS
$80.5K-$113.2K FRANCHISED/CO.-OWNED: STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS 312/0 $68.3K-$135.2K 301/246
FRANCHISED/CO.-OWNED: TOTAL UNITS
92/0 FRANCHISED/CO.-OWNED:
59 360 Painting O 25/3 71 Caring Senior Service
Residential and commercial painting Nonmedical home care
55 Executive Home Care STARTUP COST STARTUP COST
Home healthcare $76.7K-$123.7K 63 HomeWell Senior Care $58.6K-$107.5K
STARTUP COST Home care
TOTAL UNITS TOTAL UNITS
$99.7K-$169.9K FRANCHISED/CO.-OWNED: STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS 82/0 $67.5K-$133.2K 56/4
FRANCHISED/CO.-OWNED: TOTAL UNITS
18/1 FRANCHISED/CO.-OWNED:
63/0 72 Fully Promoted
Branded products and marketing
services
64 Window Genie O STARTUP COST
Apex Fun Run Residential window cleaning, $92.8K-$248.4K
window tinting, pressure washing
TOTAL UNITS
STARTUP COST FRANCHISED/CO.-OWNED:
$90.8K-$145K 283/0
TOTAL UNITS
FRANCHISED/CO.-OWNED:
121/0 73 The Screenmobile O
Mobile window and door screening
STARTUP COST
65 Furniture Medic O $83.8K-$164.2K
Furniture and wood restoration, repair,
and refinishing TOTAL UNITS
FRANCHISED/CO.-OWNED:
STARTUP COST 102/1
$80.4K-$90.7K
TOTAL UNITS
FRANCHISED/CO.-OWNED: 74 The Entrepreneur’s
348/0 Source O
Franchise/business coaching P H O T O G R A P H BY J O A N I E S I M O N /A P E X F U N R U N
and development
66 Home Care Assistance STARTUP COST
Nonmedical home care $74.3K-$103K
STARTUP COST TOTAL UNITS
$77.8K-$245.3K FRANCHISED/CO.-OWNED:
TOTAL UNITS 108/0
FRANCHISED/CO.-OWNED:
116/32
75 Creative Colors
International O
67 Bin There Dump That O Leather, vinyl, fabric, and plastic repair,
Residential-friendly dumpster rentals cleaning, and dyeing
STARTUP COST STARTUP COST
$72.2K-$127.6K $94.98K-$122.3K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
121/0 72/4

5 8 S p r i n g 2 0 1 8 S TA R T U P S
 OBusiness can be run from home or mobile unit

76 Bio-One O 93 Preferred Care

Crime-scene and at Home O
trauma-scene cleaning Senior home care
STARTUP COST STARTUP COST
$80.8K-$124.5K $62.5K-$84.5K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
42/0 74/6

77 ComForCare Home Care 94 The Glass Guru

Nonmedical and skilled home care Window and glass restoration,
STARTUP COST repair, and replacement
$76.7K-$175K STARTUP COST
TOTAL UNITS $64.2K-$183K
FRANCHISED/CO.-OWNED: TOTAL UNITS
200/0 FRANCHISED/CO.-OWNED:
90/0
78 Maid Brigade O
Residential cleaning 95 Junk King
STARTUP COST Junk removal
$85K-$124K STARTUP COST
TOTAL UNITS $79.7K-$197.9K
FRANCHISED/CO.-OWNED:
83 Money Mailer Franchise O 88 Handyman Matters
TOTAL UNITS
455/0 Direct-mail advertising Franchise O FRANCHISED/CO.-OWNED:
STARTUP COST Residential and commercial repairs, 87/1
$65.2K-$77K restoration, and maintenance
79 Zerorez Franchising Systems STARTUP COST
TOTAL UNITS
Carpet and surface cleaning
FRANCHISED/CO.-OWNED: $66.8K-$116.9K 96 Caring Transitions O
STARTUP COST 186/42 Senior relocation, online auctions,
TOTAL UNITS
$76.3K-$182.1K FRANCHISED/CO.-OWNED:
and estate management
TOTAL UNITS 129/0 STARTUP COST
FRANCHISED/CO.-OWNED: 84 The Cleaning Authority $58.1K-$80.8K
45/0 Residential cleaning
TOTAL UNITS
STARTUP COST 89 Office Pride Commercial FRANCHISED/CO.-OWNED:
$71.2K-$153.2K Cleaning Services O 192/0
80 Nutty Scientists O Commercial cleaning
Science enrichment TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST
and entertainment programs
214/1 $59.5K-$107.2K 97 Gateway Newstands
STARTUP COST Newsstand and sundry stores
TOTAL UNITS
$50.7K-$263.1K FRANCHISED/CO.-OWNED: STARTUP COST
85 Relocation Strategies 131/0 $55.9K-$501.8K
TOTAL UNITS
FRANCHISED/CO.-OWNED: Corporate transition consulting,
TOTAL UNITS
271/5 project management FRANCHISED/CO.-OWNED:
STARTUP COST 90 Real Property 365/0
$62.5K-$88.2K Management
81 Assisted Living Property management
Locators O TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST 98 Sparkle Wash
Senior-care referrals $86.8K-$113.8K International*
16/1
and senior-living placement Pressure washing, restoration, and
TOTAL UNITS
STARTUP COST preservation services
P H O T O G R A P H C O U R T ES Y O F L A P E L S D RY C L E A N I N G F R A N C H I S E

FRANCHISED/CO.-OWNED:
$61.95K-$74.6K 86 Lapels 274/3 STARTUP COST
Dry cleaning and laundry services $47.1K-$96.5K
TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST TOTAL UNITS
64/3 $86.5K-$609.9K 91 Mr. Appliance O FRANCHISED/CO.-OWNED:
Residential and commercial appliance 82/2
TOTAL UNITS installation and repairs
FRANCHISED/CO.-OWNED:
82 American Leak STARTUP COST
76/0
Detection O $60.8K-$139.5K 99 U.S. Lawns**
Concealed water, gas, and sewer Commercial grounds care
leak-detection TOTAL UNITS
87 Steamatic O FRANCHISED/CO.-OWNED: STARTUP COST
STARTUP COST Insurance/disaster restoration, 210/0 $39.8K-$81.3K
$76.8K-$259.6K cleaning, mold remediation
TOTAL UNITS
TOTAL UNITS STARTUP COST FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: $74.4K-$173.5K 92 Outdoor Lighting 252/0
163/53 Perspectives O
TOTAL UNITS Residential, holiday, and hospitality
FRANCHISED/CO.-OWNED:
170/0
lighting 100 Five Star Painting
STARTUP COST Residential and commercial painting
$61.7K-$133.1K STARTUP COST
TOTAL UNITS $69.7K-$179.3K
FRANCHISED/CO.-OWNED:
TOTAL UNITS
56/2 FRANCHISED/CO.-OWNED:
161/0
*The low end of Sparkle Wash International’s investment range is based on third-party financing of vehicles and equipment. Without financing, startup costs will be more than $50,000.
**The low end of U.S. Lawns’ initial investment range applies only to the conversion of an existing business. Franchisees starting a new business will invest more than $50,000.

S TA R T U P S S p r i n g 2 0 1 8 5 9
FRANCHISE

1 7-Eleven* 4 Supercuts
Convenience stores Hair salons
STARTUP COST STARTUP COST

TOP 100
$37.6K-$1.1M $144.3K-$296.9K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
61,086/1,019 1,721/944

FRANCHISES
2 RE/MAX** 5 Budget Blinds O
Real estate Window coverings, window film,
STARTUP COST rugs, accessories
$37.5K-$225K STARTUP COST

FOR LESS
TOTAL UNITS $105.1K-$225.9K
FRANCHISED/CO.-OWNED: TOTAL UNITS
7,560/0 FRANCHISED/CO.-OWNED:
1,104/0
P H O T O G R A P H C O U R T E SY O F R E / M A X

THAN
3 Great Clips
Hair salons 6 Mathnasium
STARTUP COST Learning Centers
$136.9K-$258.3K Math tutoring

$150,000
STARTUP COST
TOTAL UNITS
FRANCHISED/CO.-OWNED: $102.8K-$143.6K
4,091/0 TOTAL UNITS
FRANCHISED/CO.-OWNED:
892/14

*While 7-Eleven’s initial investment range varies widely based on different circumstances, most first-time franchisees’ startup costs will be $100,000 and up.
**The low end of RE/MAX’s initial investment range applies only to the conversion of an existing business. Franchisees starting a new business will invest more than $100,000.

6 0 S p r i n g 2 0 1 8 S TA R T U P S
 OBusiness can be run from home or mobile unit

7 Mac Tools O 14 Interim HealthCare 21 Minuteman Press 26 Mainstream Boutique

Automotive tools and equipment Medical home care, medical staffing International**** Women’s clothing, accessories, gifts
STARTUP COST STARTUP COST Printing, graphics, and marketing STARTUP COST
$103.2K-$256K $125.5K-$198.5K services $115K-$241.5K
STARTUP COST
TOTAL UNITS TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: $64.2K-$164.5K FRANCHISED/CO.-OWNED:
1,146/20 561/0 TOTAL UNITS 75/2
FRANCHISED/CO.-OWNED:
965/0
8 Nurse Next Door 15 Waxing the City 27 School of Rock
Home Care Services O Facial and body waxing Music education
Medical/nonmedical home care STARTUP COST 22 AdvantaClean STARTUP COST
STARTUP COST $108.2K-$491.4K Environmental services, disaster $136.9K-$339.1K
$105.1K-$199.4K restoration
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: 75/1 $105.2K-$240.5K 180/20
151/1 TOTAL UNITS
FRANCHISED/CO.-OWNED:
16 PrideStaff 236/1 28 Spring-Green
9 Express Employment Staffing Lawn Care O
Professionals STARTUP COST Lawn and tree care
Staffing, HR solutions $112.6K-$237.5K 23 Line-X STARTUP COST
STARTUP COST Spray-on truck-bed liners, truck $109.1K
TOTAL UNITS accessories, protective coatings
$130K-$206K FRANCHISED/CO.-OWNED: TOTAL UNITS
72/3 STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: $125.6K-$319.8K 109/26
761/0 TOTAL UNITS
17 Fyzical Therapy FRANCHISED/CO.-OWNED:
& Balance Centers** 553/4 29 Glass Doctor
10 Pirtek O Physical therapy, balance and Auto/residential/commercial glass
Hose service and supply centers/ vestibular therapy, preventative installation, repair, and replacement
mobile services wellness services 24 City Wide Maintenance STARTUP COST
STARTUP COST STARTUP COST Commercial cleaning, $128.8K-$265.5K
$113.6K-$633K $82.3K-$390K building maintenance
TOTAL UNITS
STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: $122.1K-$200.1K 180/0
484/4 252/17 TOTAL UNITS
FRANCHISED/CO.-OWNED:
51/1 30 Jiffy Lube International*****
11 Kona Ice O 18 British Swim Oil changes, preventive maintenance
Shaved-ice trucks School USA*** O STARTUP COST
STARTUP COST Swimming lessons 25 Huntington $71.7K-$450K
$120.2K-$143K for ages 3 months and older Learning Centers
Tutoring and test prep TOTAL UNITS
STARTUP COST FRANCHISED/CO.-OWNED:
TOTAL UNITS
FRANCHISED/CO.-OWNED: $92.2K-$179K STARTUP COST 2,089/0
894/14 TOTAL UNITS $110.1K-$225.7K
FRANCHISED/CO.-OWNED: TOTAL UNITS
103/0 FRANCHISED/CO.-OWNED:
12 Two Men and a Truck 245/35
International*
Moving services 19 Labor Finders
STARTUP COST Industrial staffing
$95K-$666K STARTUP COST
TOTAL UNITS $128.5K-$217.96K
FRANCHISED/CO.-OWNED: TOTAL UNITS
300/2 FRANCHISED/CO.-OWNED:
193/0

13 Lawn Doctor O
Lawn, tree, and shrub care; 20 101 Mobility
mosquito and tick control Mobility and accessibility
P H O T O G R A P H C O U R T ESY O F KO N A I C E

STARTUP COST equipment sales and services

$101.9K-$115.9K STARTUP COST
TOTAL UNITS $116.6K-$215.1K
FRANCHISED/CO.-OWNED: TOTAL UNITS
537/0 FRANCHISED/CO.-OWNED:
173/2

*Although Two Men and a Truck International’s investment range starts at $95,000, startup costs will usually exceed $100,000. Only the company’s “mini market” opportunities can be started for less than $150,000.
**The low end of Fyzical Therapy & Balance Centers’ initial investment range applies only to the conversion of an existing business. Franchisees starting a new business will invest more than $100,000.
***Although British Swim School’s initial investment range starts at $92,200, the company desires franchisees to have at least $100,000 cash liquidity.
****The low end of Minuteman Press International’s initial investment range applies only to the purchase of an existing store. Franchisees starting a new business will invest more than $100,000.
*****The low end of Jiffy Lube International’s initial investment range is based on financing/funding assistance. Without that assistance, total expenditures start at $149,000.

S TA R T U P S S p r i n g 2 0 1 8 6 1
FRANCHISE

31 CMIT Solutions O 39 L&L Hawaiian Barbecue 44 Security 101 49 Digital Doc

IT and business services for SMBs Asian-American food Commercial security systems Electronics repairs, sales,
STARTUP COST STARTUP COST and accessories
STARTUP COST
$127.2K-$173.2K $133.7K-$527K $103.3K-$206K STARTUP COST
TOTAL UNITS TOTAL UNITS $128.2K-$195.5K
TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: TOTAL UNITS
175/0 184/0 36/2 FRANCHISED/CO.-OWNED:
30/3

32 Fish Window 40 Multivista 45 Precision Tune Auto Care

Cleaning Services* Visual documentation services Auto repair and maintenance 50 Mighty Auto Parts
Window cleaning for the construction industry STARTUP COST Wholesale distribution of auto parts
STARTUP COST STARTUP COST $127K-$253.6K STARTUP COST
$83.2K-$146.2K $128.5K-$541.5K TOTAL UNITS $144.1K-$372.4K
TOTAL UNITS TOTAL UNITS FRANCHISED/CO.-OWNED: TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: 281/45 FRANCHISED/CO.-OWNED:
271/1 62/5 102/4

46 CertaPro Painters O
33 Brightway Insurance 41 Handyman Connection Residential and commercial painting 51 Snap Fitness
Property and casualty insurance Home repairs, remodeling STARTUP COST 24-hour fitness centers
STARTUP COST STARTUP COST $134.8K-$169.5K STARTUP COST
$107.7K-$160.3K $101.8K-$159K TOTAL UNITS $148.2K-$458.5K
TOTAL UNITS TOTAL UNITS FRANCHISED/CO.-OWNED: TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: 365/0 FRANCHISED/CO.-OWNED:
152/1 82/0 1,376/42

47 Sanford Rose Associates

34 Spherion Staffing 42 Seva Beauty International O 52 Tint World
Staffing, recruiting Eyebrow shaping, eyelash extensions, Executive search and recruiting Auto accessories, mobile electronics,
facials, tinting, makeup, spa services STARTUP COST security, window tinting, appearance
STARTUP COST
and products $108.3K-$143.6K services
$100.5K-$167.9K
STARTUP COST STARTUP COST
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: $114.7K-$301K FRANCHISED/CO.-OWNED: $118.1K-$199.7K
182/0 TOTAL UNITS 80/0 TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
180/0 55/0
35 milliCare 48 Freedom Boat Club
Flooring, carpet, Membership boat clubs
and textile maintenance 43 ARCpoint Labs STARTUP COST 53 Any Lab Test Now
Laboratory testing, HR services $144.2K-$193.7K Health, drug, alcohol, and DNA testing
STARTUP COST
$106.2K-$149.9K STARTUP COST STARTUP COST
TOTAL UNITS
$145.3K-$249.3K FRANCHISED/CO.-OWNED: $103.1K-$179.6K
TOTAL UNITS
FRANCHISED/CO.-OWNED: TOTAL UNITS 121/19 TOTAL UNITS
77/0 FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
105/2 166/0

36 Wild Birds Unlimited

Bird-feeding supplies 54 Aussie Pet Mobile O
and nature gift items Mobile pet grooming
STARTUP COST STARTUP COST
$146.7K-$228.4K $139.9K-$148.9K
TOTAL UNITS Wild Birds Unlimited TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
316/0 245/0

P H O T O G R A P H C O U R T E S Y O F W I L D B I R D S U N L I M I T E D I N C.
37 Experimac 55 Dippin’ Dots
Electronics resales and repairs Franchising O
Specialty ice cream, frozen yogurt,
STARTUP COST
ices, sorbet
$144.4K-$316.1K
STARTUP COST
TOTAL UNITS
FRANCHISED/CO.-OWNED: $112.2K-$366.95K
97/3 TOTAL UNITS
FRANCHISED/CO.-OWNED:
212/1
38 Rosati’s Pizza
Pizza, Italian food
STARTUP COST
$131.2K-$1.2M
TOTAL UNITS
FRANCHISED/CO.-OWNED:
127/13

*Although Fish Window Cleaning Services franchises can be started for less than $100,000 in small markets, startup costs more commonly exceed $100,000.

6 2 S p r i n g 2 0 1 8 S TA R T U P S
 OBusiness can be run from home or mobile unit

56 Mr. Handyman
International
Residential and commercial repair,
maintenance, and improvement
services
STARTUP COST
$105.1K-136.7K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
209/0

57 Ledo Pizza
Pizza, subs, pasta
STARTUP COST
$126.3K-$442K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
102/0

58 Ben’s Soft Pretzels O

Soft pretzels, dipping sauces,
beverages
Fantastic Sams
STARTUP COST
Cut & Color
$117.3K-$332K
TOTAL UNITS
FRANCHISED/CO.-OWNED:
70/14
63 CKO Kickboxing 68 Cookie Cutters 72 TacoTime
59 Cost Cutters Kickboxing fitness classes Haircuts for Kids Mexican food
Family Hair Care STARTUP COST Children’s hair salons STARTUP COST
Family hair salons $112.99K-$378.4K STARTUP COST $144.7K-$814.1K
STARTUP COST TOTAL UNITS $100K-$260K TOTAL UNITS
$139.4K-$290.2K FRANCHISED/CO.-OWNED: TOTAL UNITS FRANCHISED/CO.-OWNED:
74/1 FRANCHISED/CO.-OWNED: 274/0
TOTAL UNITS
FRANCHISED/CO.-OWNED:
42/1
382/236
64 Fantastic Sams 73 Fleet Clean USA O
Cut & Color 69 Martinizing Mobile commercial-fleet washing
60 Fox’s Pizza Den Hair salons Dry cleaning and laundry services STARTUP COST
Pizza, sandwiches, wings, salads STARTUP COST STARTUP COST $100.9K-$346.4K
STARTUP COST $145.4K-$317K $125.8K-$693.5K TOTAL UNITS
$111.6K-$210.1K TOTAL UNITS TOTAL UNITS FRANCHISED/CO.-OWNED:
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: 22/6
TOTAL UNITS
FRANCHISED/CO.-OWNED:
1,045/3 379/0
230/0
74 Fitness Together
65 Good Feet Worldwide 70 Tubby’s Sub Shop Personal training
61 Wireless Zone Arch supports, related products Subs STARTUP COST
P H O T O G R A P H C O U R T ES Y O F FA N TA S T I C S A M S F R A N C H I S E C O R P.

Wireless devices, services, and STARTUP COST STARTUP COST $125K-$190.8K

accessories $117.7K-$183.2K $102.9K-$283.5K TOTAL UNITS
STARTUP COST TOTAL UNITS TOTAL UNITS FRANCHISED/CO.-OWNED:
$142.5K-$328.5K FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: 147/0
119/9 59/0
TOTAL UNITS
FRANCHISED/CO.-OWNED:
75 Philly Pretzel Factory
335/0
66 Snip-Its 71 Amramp O Soft pretzels
Children’s hair salons, party services Wheelchair ramp rentals and sales STARTUP COST
62 Concrete Raising STARTUP COST STARTUP COST $131.99K-$368.2K
of America* O $129.98K-$239.4K $130.8K-$211.3K TOTAL UNITS
Concrete raising, leveling, stabilizing, FRANCHISED/CO.-OWNED:
TOTAL UNITS TOTAL UNITS
and repairs; cement grout injection FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: 173/10
STARTUP COST 62/2 48/2
$34.9K-$249.4K
76 Bricks & Minifigs
TOTAL UNITS 67 Home Instead Lego resale stores
FRANCHISED/CO.-OWNED:
Senior Care STARTUP COST
11/0
Nonmedical senior care $108.5K-$276.4K
STARTUP COST TOTAL UNITS
$108.9K-$124.9K FRANCHISED/CO.-OWNED:
TOTAL UNITS 34/1
FRANCHISED/CO.-OWNED:
1,077/6

*The low end of Concrete Raising of America’s initial investment range applies only to the conversion of an existing business. Franchisees starting a new business will invest more than $100,000.

S TA R T U P S S p r i n g 2 0 1 8 6 3
FRANCHISE OBusiness can be run from home or mobile unit

77 Concrete Craft 94 The Max Challenge

Decorative concrete coatings 10-week fitness and nutrition programs
STARTUP COST STARTUP COST
$112.9K-$190.6K $131.9K-$280.6K
TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
19/0 54/1

78 The Great Frame Up 95 Fun Bus Fitness

Custom framing and wall decor Fun on Wheels O
STARTUP COST Mobile children’s fitness
$111.97K-$182.6K and entertainment
STARTUP COST
TOTAL UNITS
FRANCHISED/CO.-OWNED: $140.5K-$171.8K
78/0 TOTAL UNITS
FRANCHISED/CO.-OWNED:
25/1
79 Color Me Mine
Enterprises
Paint-your-own-ceramics studios 96 Sharkey’s Cuts For Kids
STARTUP COST Children’s hair salons
$146.1K-$193.8K You Move Me STARTUP COST
TOTAL UNITS $124.9K-$151.99K
FRANCHISED/CO.-OWNED: TOTAL UNITS
131/10 FRANCHISED/CO.-OWNED:
84 fab’rik 89 Instant Imprints 53/1
Women’s clothing Embroidery, signs, banners
80 Hoodz International O STARTUP COST promotional products
Commercial cleaning, maintenance, $113.7K-$190.8K STARTUP COST 97 You Move Me O
and repairs $139.8K-$304.3K Moving services
TOTAL UNITS
STARTUP COST FRANCHISED/CO.-OWNED: TOTAL UNITS STARTUP COST
$106.5K-$181.8K 37/5 FRANCHISED/CO.-OWNED: $104K-$192.9K
TOTAL UNITS 53/1 TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
128/10 85 Jazen Tea 37/0
Fruit and bubble teas, slushies, 90 Max Muscle
smoothies, snacks Sports Nutrition
81 Apricot Lane Boutique STARTUP COST Sports nutrition products, weight-loss 98 Paciugo Gelato Caffe
Women’s clothing, accessories, gifts $118K-$197.5K consulting, athletic apparel Gelato, pastries, beverages
STARTUP COST STARTUP COST STARTUP COST
TOTAL UNITS
$135.9K-$341.8K FRANCHISED/CO.-OWNED: $114.6K-$281.3K $103.5K-$455K
TOTAL UNITS 7/11 TOTAL UNITS TOTAL UNITS
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED:
73/0 127/0 32/4
86 Re-Bath
Bathroom remodeling
82 Trend Transformations STARTUP COST 91 Preppy Pet 99 Le Macaron
Residential and commercial remodeling $123.9K-$330.7K Pet daycare, boarding, grooming French Pastries*
STARTUP COST STARTUP COST Macarons, pastries, gelato, chocolates,
TOTAL UNITS specialty coffee and tea
$123.9K-$470.3K FRANCHISED/CO.-OWNED: $100.95K-248.2K
TOTAL UNITS 114/0 TOTAL UNITS STARTUP COST
FRANCHISED/CO.-OWNED: FRANCHISED/CO.-OWNED: $91.8K-$373.5K
156/0 15/1 TOTAL UNITS
87 Family Financial Centers FRANCHISED/CO.-OWNED:
Financial services 43/5
83 Auto-Lab Complete STARTUP COST 92 Meineke Car Care Centers
Car Care Centers $149.7K-$303K Auto repair and maintenance
Auto repair and maintenance STARTUP COST 100 Splash and Dash Groomerie
TOTAL UNITS
P H O T O G R A P H C O U R T ES Y O F YO U M O V E M E

STARTUP COST $123.1K-$572.4K & Boutique

FRANCHISED/CO.-OWNED:
$130.8K-$313.5K 44/0 Pet products and grooming
TOTAL UNITS
FRANCHISED/CO.-OWNED: STARTUP COST
TOTAL UNITS
FRANCHISED/CO.-OWNED: 915/11 $118.3K-$218.5K
25/0 88 Advanced Maintenance
TOTAL UNITS
Commercial-fleet maintenance, repair, FRANCHISED/CO.-OWNED:
and management services 93 Boomarang Diner 16/0
STARTUP COST Franchising
$117.7K-$174.6K ’50s-and-’60s-themed restaurants
STARTUP COST
TOTAL UNITS
FRANCHISED/CO.-OWNED: $109.8K-$508.1K
12/2 TOTAL UNITS
FRANCHISED/CO.-OWNED:
48/0

*While it is possible to open a Le Macaron French Pastries mobile cart for as little as $91,750, the investment for most carts and all kiosk and traditional locations will exceed $100,000.

6 4 S p r i n g 2 0 1 8 S TA R T U P S
THE
FUTURE
OF
FITNESS
WILL BE FRANCHISED
ONLY ONE IN FIVE AMERICANS BELONGS TO A GYM.
But with aggressive expansion strategies and low membership costs,
clubs like Planet Fitness, Crunch, and Anytime Fitness think they can double
(or even triple) that, and franchisees are lining up to get in on the action.
By CLINT CARTER

6 6 S p r i n g 2 0 1 8 S TA R T U P S Illustration Andrea Ucini

BACK
IN
FEBRUARY
2012,
Anna Dey called her dad in Cleveland with
what seemed like an impulsive request.
“You’re not happy with your career, and
you’re still 10 years away from retiring,” she
said. “I want you to help me open a gym.”
His reply? “Hell, no.”
She’d expected as much. Her dad, Von
Hollingsworth, had spent 30 years in the
electronics-distribution industry. He had a
comfortable, stable career, and he wasn’t
going to throw it away on a lark. But to Dey
this was no lark. Then 24 and just two
years out of college, she was a sales
manager for Altria, which used to be
known as Philip Morris. Basically, she sold
cigarettes. But her real passion was fitness.
All day, she thought about her workouts.
And when she worked out, she envied the
manager of her gym, thinking, Gosh, I wish
I had that job. She hired a personal trainer,
then got certified as a trainer herself.
Eventually, Dey decided she wanted to Von Hollingsworth
and Anna Dey in their
open a gym of her own. The way she saw Anytime Fitness gym.
it, she had the drive and sales-training
charisma to be a successful gym owner.
She just needed someone with business
smarts and the savings to pitch in. Her
father fit the bill.
“ WE KNOW HOW BENEFICIAL THIS
A month after the initial rejection, Dey
sat her parents down for a formal pitch.
HAS BEEN FOR OUR LIVES.
She presented cash-flow and startup-cost
estimates for different gym models, along
FRANCHISING IS THE BEST DECISION P H O T O G R A P H C O U R T E SY O F A N Y T I M E F I T N E S S

with reports showing that Americans were

becoming increasingly interested in fitness.
She showed them a building she’d picked
out in Concord, Ohio, and she compared
the nearby residents with those in
Columbus, which was similarly affluent but
boasted far more gyms per capita. Finally,
to prove her commitment, she told her
parents, “If you provide the startup costs,
I’ll move back home and work 12-hour days
for free until we start turning a profit.”
Hollingsworth paced while his daughter
spoke. The plan seemed too wild, too
WE MADE. ”—ANNA DEY, ANYTIME FITNESS
expensive. He was ready to shut it down
until his wife turned to him. “You need to
make this work, Von,” she said.
That was it. Within a few months, the
father-daughter team was in contract with
Anytime Fitness, a Minnesota-based outfit
with 4,000 locations globally. They signed
a lease on the 5,500-square-foot building
Dey had picked out and started stuffing
grand-opening flyers into newspaper boxes
around town. By the time the gym opened
later that year, they’d already secured
196 one-year memberships. A year later,
they had 1,000 members, and Dey and her
dad were both earning more than they had
at their previous jobs. Plus, they were
happier and healthier.
“We both know how beneficial this has
been for our lives,” Dey says. “Franchising
is the best decision we made.”

6 8 S p r i n g 2 0 1 8 S TA R T U P S
IT’S AN EXCITING time to be selling fitness:
The U.S. market currently brings in about
$31 billion annually. About one in 10 of
those dollars comes through a franchise,
but in recent years, franchise growth has
outpaced the overall industry. According to
the market research firm IBISWorld, the
fitness market as a whole will grow at
1.5 percent between now and 2022, and
franchise brands will grow about twice that
fast, as they become stronger and entrepre-
neurs look for more turnkey opportunities.
Analysts categorize Anytime Fitness as a
midmarket fitness club, which means that,
alongside its franchise competitor Snap
Fitness, it offers memberships in the
$25-to-$74-a-month range. While these gyms
are thriving in many locations, the biggest
growth is happening at the high and low
ends. A report from the International
Health, Racquet & Sportsclub Association
(IHRSA) found that in 2015, memberships to
midmarket clubs grew by 2 percent, while
during that same period, premium clubs
(with $75 to $99 dues per month) experi-
enced 21 percent growth, and budget-club
memberships (less than $25 per month)
shot up by an astonishing 69 percent.
On the luxury side, brands like Equinox
charge $100 or more per month for fitness
bundled with spas, cafés, and juice bars.
These tend to be corporate-run facilities
that don’t franchise. But on the budget
end, franchise opportunities abound.
Growth is robust among low-frills, high-
positivity gyms selling memberships for
$10 and $20 a month.
Since it began franchising seven years
ago, Crunch, which starts memberships at
$9.95 a month with the option to attend
group classes for an extra $10 a month, has
opened about 200 clubs, and it has another
550 more under contract. Retro Fitness is
poised to open 20 gyms this year, and Blink,
the newest member in the low-cost game,
expects to open its first franchise location
“ I THINK THE FITNESS INDUSTRY IS
GOING TO GET STRONGER WHEN
WE SEE THREE HEALTH CLUBS ON A
CORNER. ” —VINCE JULIEN, CRUNCH
by the end of the year. (Blink is owned by
the people who own Equinox, which goes
to prove the industry’s faith in bifurcation:
Even the leader of luxe wants a piece of the
budget game.)
The pioneer of the low-cost model—and
by far the biggest player—is Planet Fitness,
which today claims more than 10.5 million
members. Of its more than 1,300 fran-
chise gyms, more than half opened in
the past four years, and the company
expects expansion to be even faster for
the next four.
What’s behind these growth numbers?
Chris Rondeau, CEO of Planet Fitness,
points to a couple of drivers, the first being
what analysts hail as the death of retail. As
brick-and-mortar merchandise brands
suffer, commercial vacancies rise, making
it easier for service industries like fitness to
scoop up real estate. “Seven or eight years
ago, it was much harder to get good sites,”
Rondeau says. “We were fighting with Best
Buy and Barnes & Noble. Now landlords
are looking for new business to drive
traffic, and we’re getting much better
locations at cheaper costs.” In other words,
gym-goers show up several times a week.
That’s routine patronage that strip-mall
and shopping-plaza landlords can use to
entice other businesses to stick around.
The second driver, Rondeau says, is
wellness mania. People want to look and
feel better, and to make that happen,
they’re deploying wearable fitness
trackers, meditation apps and services,
weekend mud races, organic-food delivery
services, and fitness centers. But it’s not a
zero-sum game. Rather than choose one
service—or one gym—consumers are
increasingly combining several tools and
memberships to build a custom wellness
plan. The piecemeal approach is what
Bryan O’Rourke, a brand consultant with
20 years of fitness-industry experience,
calls “lifestyle design,” and it’s where
budget models have an advantage:
Consumers view $10 a month as a bargain,
even if they work out only occasionally.
There’s also ample room for growth.
For every person who belongs to a gym,
there are four more who do not, and
many of the latter group could greatly
benefit from working out. “Despite the
unbelievable growth in the fitness space,
more Americans are unhealthy,” says
Chuck Runyon, CEO of Anytime Fitness.
“They are not eating properly, they’re not
sleeping very well, and they’re not
moving very often.” While nobody is
celebrating this situation, unfit people do
create opportunity, along with a shared
sense of purpose, within the industry.
“Everybody realizes that we’re not
fighting each other,” says Vince Julien, a
38-year industry veteran with 12 Crunch
clubs in Georgia and Florida. “The
competition is the 80 percent of people we
haven’t gotten off their asses yet.”
So confident is Julien in the industry’s
ability to motivate these people that he’s in
contract to quadruple the number of gyms
he owns. “For 30 years, people have said
that as the gym business becomes more
crowded, it’s starting to become a
commodity,” he says. “I don’t think so. It’s
just becoming more fragmented, which
means it now reaches a bigger percentage
of the population. There are more options
for more people.” He likens fitness to other
industries. “If you look at a Home Depot,
you often see a Lowe’s across the street.
And when you look at a McDonald’s, you
see a Wendy’s or Burger King nearby. I
think the fitness industry is going to get
stronger when we see three health clubs
on a corner instead of one.”
FIVE YEARS IN, Dey’s experience seems
to bear that out. After her first year in
business, the competitors moved in. A
dozen or so boot-camp and CrossFit-style
studios opened up, as did an Orange-
theory, a Title Boxing, and a Planet
Fitness—the latter just six miles away and
charging $25 less per month. Despite that,
Dey’s memberships are down only slightly
from their peak, which likely means that as
health club competition heats up, more
people are growing interested in fitness.
That leads to a couple of conclusions.
First, as competition builds in Dey’s
community, more people sign up. And
second, customers see value in the add-on
services she provides—services they can’t
find at more bare-bones competitors.
Each gym franchise offers a unique
value proposition that aims to pull in
people with perks like towel service, steam
rooms, group fitness classes, and so on.
For Dey’s Anytime, the higher dues afford
members the option to work out one-on-
one with a trainer. Dedicated instructors
(who pull in $20 an hour) not only help
people reach their fitness goals but also
create personal relationships that keep
them coming back.
In other cities, flexible franchise
agreements have allowed owners to install
daycare centers or even racquetball courts
if that helps them stand out from the local
competition. Planet’s budget model, on the
other hand, is a strict numbers game: Pack
the building with sweaty members by
cutting out potential loss leaders and
maximizing the number of machines.
The fact that Dey’s Anytime Fitness had
higher fees may have even worked to its
advantage. With fewer people crowding
the gym-room floor, one-on-one services
became even more attractive. “Our
personal-training growth has always offset
any membership decline we’ve seen,” says
Dey, who notes that nearly two in 10 of
her members now pay extra for the
service. “Our business is actually
healthier now than it was before those
competitors came to town.”
IF A FRANCHISE gym seems too good
to be true, it’s only because you’ve yet to
consider the startup costs. For a full-size
studio complete with machines, free
weights, and a trained staff, you need
roughly $500,000 to $2.5 million.
(Anytime and Snap are generally smaller,
so they run a little less.) But from the
moment you sign your franchise agree-
ment, you’re still six to 18 months from
opening your doors. You’ll scout locations,
send out letters of intent, and spend two to
four months negotiating before calling in
architects and working with the city to
secure permits. Once green-lit, you’ll
solicit bids from contractors, who will
need a couple of months to turn your
empty space into a fitness mecca.
It’s a tricky and often stressful process,
which is partly why franchise brands give
preference to growth-minded partners
who are willing to sign on for multiple
locations. “If you’re a franchisee with a lot
of experience running your own business,
then you’ll be much more efficient than
somebody who just left the financial
industry because they wanted to be their
own boss,” says Ben Midgley, CEO of
Crunch. The average Crunch franchisee
owns nearly 12 gyms, and only about one
in 10 Planet Fitness locations is opened by
a first-time franchisee.
That’s not to say newcomers can’t follow
their fitness dreams. “If you have the drive,
we can teach you,” Midgley says. “We’re
not going to let you screw up on your
payroll model, place the wrong marketing,
or pay too much for your flooring. That’s
the benefit of a franchise model.” And the
upside is reliable cash flow: For a big-box
gym, annual revenues between $1 million
and $3 million are common.
But if the initial investment sounds daunt-
ing, boutique studios offer an easier inroad
to fitness. Franchises with buzzy brands like
Orangetheory, Pure Barre, Tough Mudder
Bootcamp, and 9Round have smaller
footprints, and although they generally
don’t pull in as much cash as their Best
Buy–size counterparts, they don’t require as
much up front, either. These brands are
growing rapidly by tapping the same tribal
devotion as CrossFit: A report from the
IHRSA found that while memberships in
traditional health clubs grew by 5 percent
between 2012 and 2015, membership to
boutique studios grew by a whopping 70
percent. And that’s despite typical fees of
$20 to $40 per visit.
Luke Catenacci, 36, went the boutique
route. After 10 years as a portfolio
manager for a hedge fund with stints in
Tokyo and Hong Kong, the New Jersey
native moved back to the U.S. to start his
own business. “I was thinking about
getting into the fitness industry, but I
didn’t have any direction,” he says. He
explored the options and decided on F45,
an Australian-based chain built on
complex high-intensity workouts made
easy by flat-screen TVs mounted along
every wall in the studio. The screens
project looped demonstration videos of
the day’s exercise class so clients can see
how to swoop medicine balls over their
shoulder or lurch sideways, Slinky-style,
while swinging kettlebells between their
knees. (On-site trainers help and motivate
anyone who needs it.) “It’s the kind of
workout I was looking for, but it also
made sense from a business angle,”
Catenacci says. “It filled a gap between
typical boutique fitness and CrossFit.”
Despite having nearly 500 locations in
Australia, only a couple of F45 branches
had opened in the U.S. Catenacci emailed
the corporate office, and the next day, the
CEO called him. “I’ll be in Las Vegas next
week,” he said. “Would you like to meet
me there?”
Catenacci flew out, and within a few
weeks, he’d landed on the ground floor of
the company’s U.S. expansion plan. He
partnered with his brother, Jeff, and then
counterintuitively decided to lease a
storefront in a fitness hot zone in Manhat-
tan with nearly a dozen other established
boutiques in a two-block radius, like
Barry’s Bootcamp, SoulCycle, and Fhitting
Room. “I wasn’t worried about competi-
tion as a negative factor,” Catenacci says.
“It’s a high-foot-traffic area, and people are
already used to working out here. I felt the
exposure could only help us.”
The brothers drummed up $250,000 for
a buildout that added locker rooms and
five shower stalls. On its opening day in
March 2017, F45 had more than a hundred
people show up for its first five classes.
Daily attendance dropped slightly after
membership-drive discounts expired, but
it’s been upward growth since, with
workouts at popular times nearly hitting
the studio’s 36-person capacity.
Of course, there’s a risk with boutiques.
They’re at the mercy of shifting consumer
interest. Remember step aerobics? Or Billy
Blanks’ Tae Bo? As fads come and go,
studios devoted to one approach can fall
out of fashion. It’s impossible to know
which ones will still thrive in a decade. But
at least for the moment, the overall trend
toward joining and opening fitness clubs—
large or small, budget or luxe, specialized
or general—appears to have legs. “It’s a
great time to be in this industry,” Runyon
says. “There are still plenty of growth
opportunities for all of us.”
Clint Carter is a Brooklyn-based writer and
editor who covers health and fitness.
FRANCHISE SUCCESS
After graduation, he returned
to the business he knew inside
and out and became a franchi-
see. Now Kohli owns 12
Friendly’s locations in the
Philadelphia area, as well as
four Tilted Kilt pubs. As the
30-year-old navigates the
business world, he’s learned
how to connect with communi-
ties, motivate his team, and
help employees find their own
paths to success.
How has your history with
Friendly’s influenced your
approach as a franchisee?
If you’re a waiter, you don’t
necessarily understand the
pressures a cook feels, or a
manager, or a host. Yet all
these groups work together to
deliver a great customer
experience and get people to
FAST-TRACKED
come back again. I started as a
server and worked my way
up—I cooked, scooped ice
cream, washed dishes. It gave
TO SUCCESS
me a real sense of how the
business functions operation-
ally, and it helped me appreci-
ate each department. Now, at
my restaurants, we’ve
developed a culture where no
AMOL KOHLI used to wash dishes at job is too big or small. If you’re
Friendly’s as a teenager. Fifteen years later, he going to tell somebody to do
something, be prepared to
owns 16 restaurants—and he still draws
show them how to do it
on those early lessons to be an effective leader. yourself. This business is about
BY NINA ZIPKIN managing people; it’s not
about managing a concept, or
a brand.
When Amol Kohli took his first job at a
What are some ways
Friendly’s restaurant in Philadelphia, he you help guide your
was 15 and had one goal in mind: work his employees into
way up to manager, so he could beef up his management positions?
college applications. He set out to become indispens- When we have an internal job
able, learning every position in the restaurant. Need a opening in management at a
restaurant, we ask all our GMs
server? Kohli was there. Down a dishwasher? Kohli
to send recommendations
filled in. Short a cook? He could do that, too. His bosses from their teams. If our GMs
took notice, and he earned that manager position, come back and don’t think
working until he departed for college. anyone is quite ready, we’ll go
74 S p r i n g 2 0 1 8 S TA R T U P S
to the employees themselves
and ask if anyone is interested
in exploring a management
role. That message lets them
know that we’re here to help
develop their skill sets. A lot of
our young employees are
entering the work environment
for the first time. We have to
serve as coaches first, to help
develop staffers. Your best
employees often end up being
your best managers.
You became a franchisee
right out of college.
What challenges have
you faced as you’ve
grown your business?
When I started, my age was a
major factor—people would
think, Oh, he’s just a kid, and I
don’t want to work for a kid.
One of my first transactions
was when I was 22, and I
bought an existing block of
restaurants. But what I
completely underestimated
was, the family I purchased it
from had been in business for
15, 20 years, running these
units in their community. I was
so excited, but everybody else
didn’t trust me. The commu-
nity didn’t know who I was. I
had no credibility.
What did you learn
from that experience?
I realized very quickly that I
needed to surround myself
with people who would believe
in me and in the organization,
and then represent us out in
the field. At the time, I thought
simply buying the stores gave
me credibility. They’re mine!
But you have to earn the
respect of your staff, as well as
your reputation in the
community. It doesn’t come
with ownership—and that
lesson is something money
can’t buy.
Photograph Benjamin Rasmussen
 Cra Your Own Success
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More than 50% of
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FRANCHISE SUCCESS
They ended up building
successful careers across
varied industries, such as
healthcare, hospitality,
consulting, and magazine
publishing. In 2013, they
became Waxing the City
franchisees, and they vowed to
do everything they could to
provide career opportunity to
all women in their community—
pointedly hiring those who
have battled obstacles from
illness to legal trouble and
poverty. Does that make
staffing more difficult?
Sometimes. But does it also
help them tap a neglected
source of great talent?
Absolutely.
When you decided to
become franchisees,
what was appealing about
Waxing the City?
JANE HAUBRICH: The company
SECOND
allows us to offer our employ-
ees real career paths, regard-
less of their backgrounds. We
can pretty much throw out the
hiring rule book. Most of the
CHANCES, INC.
people who are interested in
working for us have very
different histories than Jo and
I, who have completed higher
education and worked at some
pretty high levels in business.
JANE AND JO HAUBRICH know how the But the women who come to
business world underestimates women. That’s us deserve as much of a chance
why, as Waxing the City franchisees, they’re as anyone else. Even more so
in some cases.
betting on the most underestimated of all.
BY NINA ZIPKIN You’re dedicated to hiring
women in need, who might
be overlooked by other
Waxing the City salons are all about mak- employers. How has that
shaped your hiring process
ing a woman feel like the best version of and your team?
herself. But for Jane and Jo Haubrich, the JO HAUBRICH: Out of the 17
owners of two franchise locations in staff we have, more than half
Minnesota, that mission applies to their customers and have been on some very rocky
employees. The sisters grew up in a farming family of roads. But as an employer, we
want to help them go further
eight, and while they dreamed of taking over the farm,
and achieve their goals, and we
their father told them that the agriculture world was can help them get there.
no place for women. Undaunted, they looked for JANE: We do use background
opportunities elsewhere. check software for applicants,
7 6 S p r i n g 2 0 1 8 S TA R T U P S
but we realized very quickly
that a nonviolent, nonfelony
crime shouldn’t disqualify an
extremely talented person. It
just says that somewhere along
the way they made a mistake,
and you can see how they’ve
worked to overcome that
deficit. They are people who
have proven themselves.
They’re tenacious. They’re
passionate about taking care of
skin and waxing and knowing
about the best products to care
for your body. And we mentor
the heck out of them.
Can you tell us about their
backgrounds?
JANE: Some are single moms,
some are women looking to
start over at midlife. One time
a candidate didn’t show up for
an interview I had scheduled at
a local restaurant. (I do
interviews in public places to
make them feel less formal and
rigid.) About a week later, I
found out that she had actually
been in jail. I gave her an
opportunity to interview again,
and she showed up like a
champ. We ended up hiring
her, and she was truly one of
the best. People have all kinds
of difficulties in their lives, and
we can’t fix them all. Have we
been burned? Yep. But we’ve
had a lot of success. We are
always looking for extraordi-
nary talent.
How have your customers
responded to this practice?
JO: We never share our
employees’ personal stories
with our customers—we train
on professional boundaries,
and we respect their privacy.
However, if our employees
want to share their own
journeys, we don’t have a
problem with it, as long as they
feel comfortable. And when
they have shared their stories,
they’ve been met with great
support from our community.
Photograph Juliana Sohn
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BACK PAGE
Did I know how to podcast?
Not a clue. But it seemed like a
fun idea. A friend gave me a
used microphone, I teamed up
with a guy I met on Twitter,
and I googled for what
software to use. Then I spent
three months making the first
episode of a show called
Pessimists Archive. When it
came out, I thought, Hooray!
I’m a podcaster! And then I
realized I hadn’t even begun
making a second episode. That
took another two months. It’s
been more than a year now,
going on like this, often
laboring at night after my son
goes to bed.
I haven’t made a dime on it.
But I’ve kept at it. It’s still
exciting. And more important,
THE POWER
I’ve learned that a project like
this—in which I hone a new
skill, even with no foreseeable
payoff—can have benefits in the
OF TRYING
most unexpected of ways. I
learned how to produce a
podcast on the fly and how to
build a small team around a
passion project. (Four of us
now work on the show.) I also
Want to try something new but not sure learned how to build an
audience from scratch, which I
it’s worth it? Trust me: It is.
never had to do working for
BY JASON FEIFER, EDITOR IN CHIEF, ENTREPRENEUR magazines. Best of all, as I
continually tweak how we
make the show, I’ve gotten into
In 1894, a New York Times writer warned the habit of questioning how
against the dangers of riding a bicycle, and why I do everything.
predicting that it would lead to “weakness And after a year, the
experience paid off in a more
of mind, general lunacy, and homicidal direct way, too. In 2016, my
mania.” In 1925, the dean of Princeton University Entrepreneur colleagues began
asserted that cars would make young people “look talking about building a
lightly at the moral code.” For years, I’ve kept a collec- podcast network. Thanks to
tion of these bonkers predictions. They’ve always struck my past experience, I was able
to help guide the conversation.
me as funny—and, critically, as proof that innovation
Then I developed the first
isn’t as scary as it seems. I think about them anytime show we launched. It’s called
someone confuses “new” with “threatening.” And then Problem Solvers, a weekly
one day, it hit me: This would make a great podcast. series about entrepreneurs
8 0 S p r i n g 2 0 1 8 S TA R T U P S
solving unexpected problems
in their businesses. I love how
open entrepreneurs are about
their challenges, and I wanted
to create a show that captures
that honesty and ingenuity.
When we learn how smart
people think, we all get
smarter. (Forgive the quick
sales pitch: Search for Problem
Solvers on iTunes or wherever
you get your podcasts. I think
you’ll like it!)
But the biggest takeaway
from my little experiment is
that we have to take leaps.
Some people think only in
terms of ROI; they want to
know that time invested will
lead to a direct payout. I get it.
But the fact is, we can never
know exactly how, when, or
why something we do will pay
off. Our careers and businesses
aren’t straight lines; they aren’t
predictable or perfectly
controllable. They’re simply a
series of opportunities—and
when a great one comes along,
we need to be able to say,
“Sure, let’s give it a shot.”
That’s why I think we all
should keep jumping into
projects like this, even if we
don’t know how (or if ) they’ll
pay off. Entrepreneurs need to
play a long game. The future is
P H O T O G R A P H BY G E T T Y I M A G E S / EM M A I N N O C EN T I
unknowable, but we do know
this: The more wisely we
spend our time today—the
more we take risks, and search
for new passions, and figure
out new things as we go,
stumbling around in the dark
until we’re better and smarter
and more skilled than we were
before—the more versatile and
capable and satisfied we’ll be
tomorrow.
Come to think of it, maybe
that’s the subject for another
good podcast.
 FASTSIGNS of Long Beach, CA

When Did You See The Sign? ™

As a growing $29 billion industry, signage and graphics will be in demand

as long as businesses need to be seen. FASTSIGNS® will be there to create
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• 675 locations in 8 countries • Professional business clientele

• 30+ Years Proven History
• Business-to-Business Hours
• Low staffing requirement
• Strong brand name recognition
• Seeking Domestic & “FASTSIGNS continues to be the
International Franchisees perfect business model for us to reach
our personal financial goals. With the
TM
brand awareness, operational
support, and training resources,
FASTSIGNS positions us to be the
predominant visual communications
2018 leader in the market.”
Best in Category Mark & Shawn Glenn | Dallas, TX

VISIT US AT IFE IN NEW YORK CITY! BOOTH #214

For more information: Mark Jameson | 214-346-5679 | mark.jameson@fastsigns.com
 This is home.
It’s a place called satisfaction.

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franchise@pillartopost.com
877-963-3129

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