31 Dec 2014
Franchising Opportunities: Franchising a Traditional Business
Since Hong Kong is a rather small place, home-grown brands using the franchising model for local expansion is less common than in big economies with significant regional disparities. Still, there is a number of home-grown brands that adopt the franchise model targeting the local market, to utilise the franchisees’ financial resources and personal networks.
|Transforming Muay Thai into a Franchise Business|
Enthusiasm for a traditional martial art form inspired Daniel Yeung, the founder of Fighting Arts Center, to create a franchise system that combines Muay Thai boxing and a workout gym.
In 2008, Yeung studied Thai boxing at a traditional Muay Thai club in Yuen Long where, once students completed a course, they seldom came back for more. “There should be a way to keep the students and it could become a business,” Yeung thought.
He invested in the Muay Thai club in 2011, and transformed it into a flagship for the Fighting Arts club, using a membership system to create and sustain a revenue stream. Members receive basic Muay Thai training while at the same time they can sign up for advanced courses or for personal training programmes. The synergy between Thai boxing and fitness equipment maximises sales growth.
The formula turned out to be very successful, and Yeung wanted to expand the business quickly using the franchising model. He then learnt how to develop a franchise system. With help from franchising consultants, he set up a team to provide one-stop-shop support ranging from visual/brand identity application, and store layout/design to the accounting system. The franchisor is responsible for supplying the club managers and personal trainers so franchisees do not need to worry about staff recruitment. Apart from the capital investment, franchisees are required to follow the rules set by the franchisor.
Most Fighting Arts clubs are located in the industrial districts where rents are lower and competition is less fierce. Within a very short period, the franchise model received a lot of interest from investors, some of whom came from its club members. Fighting Arts currently has nine clubs in Hong Kong, seven of which are franchised. It plans to have 21 clubs by 2017. Yeung will exhibit at a Hong Kong fair to explore opportunities to franchise the brand overseas.