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Growing Lean
Building a Fitness Empire: Insights from Industry Titan Eric Levine
Ever wondered about the pros and cons of franchising versus forging your own brand? Eric spills the beans. He dives deep into his ventures, illuminating his journey with insights gathered from his illustrious career. From facing down industry shifts and economic changes, to maintaining unshakeable optimism amidst challenges, Eric's advice is invaluable for any budding entrepreneur. With an infectious passion for preparation, confident leadership, and the necessity of a stellar team, Eric serves up a feast of real-world lessons. Don't miss out on this unique opportunity to learn from a master of entrepreneurship, as Eric Levine shares his extraordinary journey and abundant wisdom.
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Welcome back to the growing Lean podcast sponsored by Lean Discovery Group. This is your host, dylan Burke, also known as Deage. I'm very happy to be here with Eric Levine, a global entrepreneur with businesses in 20 countries and part of a partnership that's sold for a whopping $1.75 billion. He's currently still involved in chains around the world. Welcome, eric, let's talk about you.
Speaker 2:Hi Dylan, thank you for having me.
Speaker 1:Awesome. So, to get us started, can you give us a bit of a history of yourself and how and why you ended up where you are today?
Speaker 2:Sure Well, I actually started my entrepreneurship when I saw on the back of my Superman comic when I was five years old that if I sold seeds I could get a new baseball mitt. So I got on my tricycle and I sold seeds around my neighborhood, ended up selling enough seeds to get the baseball mitt, and I realized at that time that, wow, I could do whatever I wanted to do it whenever I had time.
Speaker 2:I didn't need anybody to help me and I just loved when they said yes and gave me the money. It was a high, it was an adrenaline rush and I said this is a good thing and I put that imprint into my mind, you know, and at that young age it really makes a difference. So that was my first foray into entrepreneurship. Later on, my father was an entrepreneur and my father was an athlete as well, so fitness was his life. He was a professional volleyball and water polo player, so we went to the gym every weekend and I loved the fact that he could do whatever he wanted in his business. If we want to go on vacation, no problem. If you want to buy a new car, up to him. He called all the shots and I marveled at that as well.
Speaker 2:From there I went into the fitness business. I got a job in a spa because at the time, when I was 17, you could men and women. You never worked out together. So Monday, wednesday, friday were men, tuesday, thursday, saturday were women, and I got my start. I don't even know what I was supposed to do. I was kind of like hired right away. He asked me if I had a pair of running shoes and I did and he said okay, you're hired. So that was my in-depth training and I started as an instructor. And about a week later he said every guest you take on a tour, they sign up for a membership. And he says it's just great, would you like to be a salesperson? So I said sure, and remember, this is 17. To give you a correlating situation of how much money was A brand new Corvette was 5,000 Canadian dollars. I was born Montreal and I was making almost $4,000 a month selling 50% of your ships.
Speaker 2:They promoted me to assistant manager, manager, and there I was sitting making a Corvette every six weeks at a 17. And I just loved it. So that was kind of the early stages and getting my feet wet on how much money I could make based upon my own efforts and even though I worked for a company. It was kind of entrepreneurship on how I made the money. And then from there I left there, believe it or not, making such good money. Although I left on top, I was the number one person when I left. So the door was open.
Speaker 2:And then I spent four years at Club Med. Club Med were fantastic resorts all over the world where adults went to play, and I learned all about their branding, their hiring, their marketing and I got a PhD in that. For instance, the faculty recht Rooms were three-star, the food was three-star, the sports were three-star, the entertainment was three-star. But when everyone was leaving at the end of the week, in the parking lot they were crying. They weren't gonna get on the bus to go back to the airport, back to the old reality.
Speaker 2:And that's what I learned. It had nothing to do with the hard stuff. It had to do with the feeling that they got and the value that they got was 10 times, 100 times greater than any cost that they had paid for their vacation. It was much more than a vacation and I watched how we did it and how we accomplished that and we were sold out, oversold, every week for the four years that I spent all over the world with Club Med. So I had a real great training with them. And after that am I talking too much? Do you wanna interject?
Speaker 1:No, no, keep going, I'm loving it.
Speaker 2:Okay, from there I went and I was the first person to buy the name Gold's Gym, the bald-headed muscle man. They only had one location and I brought that to Canada in Toronto, where I thought was the highest consciousness for Canada, and I opened up one of six locations and a few in California and I bought the name for $2,500. And in my first year I sold half a million dollars of just T-shirts with the logo.
Speaker 1:That's insane. What year was this in?
Speaker 2:What year was it? 1980?
Speaker 1:You did half a million dollars in 1980.
Speaker 2:In just T-shirts? That's wild, yeah, yeah. And then from there I joined my mentors, named Ms Ray Wilson. We opened up 72 locations called Family Fitness Centers in California and Nevada and then, after that, we sold to 24-hour Nodalus. We amalgamated the name to 24-hour Fitness, we kept our shares, but we went over to Asia and I opened up a chain called California Fitness Centers in Hong Kong, Singapore, Taiwan, Thailand, Korea, Vietnam, Malaysia, China, and sold back to the P firm that bought 24-hour and became part of that worldwide company which we were. At that point we had 475 clubs, four million members, one million revenue and we had 25,000 staff.
Speaker 1:That's crazy.
Speaker 2:And then we later sold 24-hour fitness for $1.75 billion about 14 years ago.
Speaker 1:That's amazing.
Speaker 2:That's a little history.
Speaker 1:Amazing. And what are you currently doing now with your time and your expertise?
Speaker 2:Well, I'm teaching. I do global seminars. You can reach me at EricLivingGlobalcom. I teach all over the world master classes. I had a big event in Beijing last little over a year ago. There was 200,000 people and I did it in front of 20,000, which was very fun. And I'm still an investor in UFC, the fighting gyms, and we have crunch clubs in Australia. We have 20 of those and we have 20 clubs in Mexico with the New York Yankee baseball player, alex Rodriguez. So I'm still in the fitness game as well.
Speaker 1:Okay, amazing, and I love that. You've had such an accomplished life and now you're going out and sharing your expertise. I think that's super admirable and I really like that. So, eric, over the years you've obviously been through everything. How have you adapted to changes in industry, in people, because you've gone through the internet bubble, you've gone through the economic downturn in 2008. So how have you adapted to all these changes and can you give advice to anyone on like your mentality to stay focused?
Speaker 2:Well, that's a great question, Bill. And yes, I've been through many wars. I've been through a lot of things. When I take my shirt off, you'll see all the scars that I have. That's part of being an entrepreneur, you know, it's we. We are usually very optimistic, we take chances, we jump when we see an opportunity, and sometimes we jump too fast without having the necessary Data and experience to handle that.
Speaker 2:I'm very guilty of that as well. But and yeah, we got like in this past, covid, for instance, our Australia club. We have 20 locations, 30,000 square foot average. Australia was close for 28 months. Legally, nobody can work out, and yet the best deal you could make with the landlord was half back rent. Well, you figure that out at 50,000, 50,000 a club, so 1.2 million. Half of that is 600,000 times 28 months, talking about 16 million dollars of debt. So we're still trying to, you know, get it out of that. We will slowly, but it took five or six or seven years Off of our exit.
Speaker 2:Right, we've had many types of Challenges from SARS, covid, and we've had a lot of challenges. You know we've had a lot of problems. We've had a lot of economic downturns and you have to, you know you have to have reserves, you have to have a great team. You, as the leader, the entrepreneur, have to always Stay With that Confident, look on your face, regardless of the fire the leader. So I tried my best to do that.
Speaker 2:I wasn't always a success in doing that because I'm a human, but if you're in an industry that is built on helping people like the fitness and yoga. We make people the best versions of themselves, whatever it is that they want to be. So we had that going for us. So my industry, it's not going to ever die. Of course, it goes up and down with what's going on in the world, but it's coming back and we're almost at levels where we were pre-COVID. So you have to be aware, you have to be able to make changes and you've got to be informed of what's happening. Of course, there's things that just happen that you're not prepared for, but as a leader, entrepreneur, you have to be able to make quick decisions, long-term decisions and aware of what's happening and what you believe is going to happen three months, six months, one year, two, three, five years down the road 100 percent.
Speaker 1:You've got to be prepared and know that. You've got to reserve, you've got to have a backup and a net to fall in, because no one could have predicted COVID. And it's like in South Africa it destroyed our economy, it set us back probably like four or five years. It was crazy and I guess if some businesses had had a reserve they could have been able to push through, but we lost a lot of our businesses. It was a really tough time, but now people know that things can happen and it's not unlikely that a Black Swan event like this will happen. And I think it's just about being prepared and hoping for the best. But preparing for the worst is the same. That's true, exactly. So I just wanted to ask, as an accomplished serial entrepreneur, what are your next steps? Are you planning to do anything big again, or where are you at at the moment?
Speaker 2:You know I'm very sensitive to market trends and openings and holes in different countries. They should have this. They don't. Yet I follow the consciousness clock as well as good as I can, so I'm not sure exactly. Currently I'm in California, but I'm looking to go back to Asia and I'm not exactly sure what my next entrepreneur endeavor will be. But I'm always keeping my eyes open and my instinct on fire. An opportunity, I'm going to jump.
Speaker 1:OK, amazing, you're an opportunist. I love that.
Speaker 2:Yeah.
Speaker 1:And I just thought of this now. I was chatting to a friend today about the pros and cons of franchising versus building your own brand, and you obviously did very well with franchising. So could you speak about the pros and cons of buying a franchise versus building your own brand?
Speaker 2:Yeah, well, that's another great question, dylan. Franchises are much safer, but there's, you know, tons of franchises that go bankrupt. Also, you know, look at their track record, whatever a franchise it is, and remember you've got to choose something that you love, that you're passionate about. For me, fitness I can spend all day in the gym. I love the sounds, the smells, the people, the music, and I can't fly spy. So choose something first that you like, that you want to be in, that resonates with you You're passionate about. To their track record and have your own.
Speaker 2:If you're going to fight into franchises, have a franchise lawyer on your team. Look over everything, because sometimes they're flexible, sometimes they're not, but sometimes they're overbearing or they'll give you a street. You know this is your territory and another one can come on the side of you and take half your customer base right. So each franchise is different.
Speaker 2:I think good franchises are a great way to start because they have a formula and they have a track record so you could look. They have to disclose what the average franchise see is making on a yearly basis so you'll see and they'll also tell you how much it's going to cost as a startup. So you'll be able to calculate real life, real time numbers versus going out on your own where nothing is. You know you don't have a formula, you think you do but you don't. It's going to cost you a lot more to get started than a franchise usually, and you know, if you're an expert at something and you've worked your way like I worked my way up in the fitness industry for cleaning whirlpools, you know to doing every facet of a fitness center.
Speaker 2:Plus I was in great in marketing and I was a good, great salesperson, so it wasn't that much of a stretch for me. Like when I bought the name Goldschimp, it wasn't a franchise, it was a license. The difference, a huge difference, between franchise and license Franchise they tell you everything. You know how much, where to get the chocolate for the chocolate ice cream and Baskin Robbins, what the sugar content is, what the colors are, how big everything is. In a license, you buy the name and you're on your own. So I was basically on my own.
Speaker 2:I bought the name because I thought it was a great logo and it started to get a little bit of a reputation. Arnold Schwarzenegger and I thought it was the right time and I combined men and women working out together. I was the first one I believed to do that, and so for me it worked out. But I would have to say that getting your feet wet in a solid franchise probably has more safety for a new entrepreneur than going out on your own. You're still an entrepreneur when you buy a franchise. That's what's really bothering me A lot of things you have to figure out, and so I tilt a little bit towards looking at top franchises that resonate with you Okay 100%.
Speaker 1:Yeah, that was my thinking as well. It's easier to find a brand that's already got a proven model than to start your own brand. And not saying that starting your own brand wouldn't work. It would just take you a bit longer to establish yourself.
Speaker 2:It's a bit longer, Thank you. You have the freedom to create your brand, which is very costly because you're paying for that marketing. When you exit, that brand can be worth a lot. When you exit a franchise, usually there is a fixed denominator what you can get for it and it may also be regulated by your franchise agreement, where they have the right to buy you at a certain strike price. That's why you need your own franchise employer.
Speaker 1:Yeah, 100%, 100%. So, eric, we are running out of time here, but before we go, what advice would you give to other business owners looking to succeed, let's say, in the fitness industry? Or well, yeah, because that's been your biggest industry. What advice would you give to business owners looking to succeed in that industry?
Speaker 2:Well, you need to be passionate about whatever industry you're in. You need to know it. It's not like, okay, I like to exercise, I'm going to open up a gym. No, you've got to work in that, whatever, and start as receptionist. Learn every single everything you can. Don't belittle yourself because you're making $15 an hour. It's an education and you're going to learn so much. It's going to save you so much. But you may say, hey, this isn't for me or, yes, I can do that. So get your feet wet, get in it, work at the similar thing that you're going to start and, again, you're going to spend most of your life in it until you sell it. And think about what your exit is going to look like when you get started. Membership, automatic dues they sell for many multiples of EBITDA or profit. Others don't sell for a lot if you're always taking the cash. So passion, passion, passion 100%.
Speaker 1:I appreciate that and thank you for your insights, Eric. It's been very inspirational. I've loved chatting to you. Thank you Quickly, before we sign off. What's the best way for people to get in touch with you or follow your story? What's the best way for them to reach Eric Levine?
Speaker 2:Well, my best way to email me is ericlevineglobalcom. That is my website, ericlevineglobalcom, which you could see everything, and my email is eric at ericlevineglobalcom. Amazing, and I'll answer any questions that I possibly can.
Speaker 1:Amazing. Thank you so much for your time again, Eric. I've really enjoyed this.
Speaker 2:You're welcome. My pleasure, Dylan. Thank you.
Speaker 1:All the best.