The Truth About Scaling Fitness & Beauty Chains with Julian Barnes | The Owner Seat

Speaker A: Welcome back to the Owner's Seed podcast where operators get the truth about what's coming next in fitness, wellness, longevity and beauty and what it means for growth, margins and survival. Today's guest is Julian Barnes, co founder and CEO of the BFS Network, the intelligence layer for growth, stage, fitness, wellness and beauty operators making high stakes decisions. Julian's path into this work isn't typical. He's the UNC School of Law JD alum who became COO at Melt Method, founded and ran the NYU Institute in Entrepreneurship and Small Business Management, taught fitness marketing and management at the Swedish Institute College of Health Sciences and sat on the USTA investment committee managing a AH200 million portfolio. He now sits on the board of Tufts Friedman School of Nutrition Science and Policy and serves as Manager Director of Global Leadership Council for Salons, Spas and Med spas. The translation for you all out there is Julian doesn't think like an industry insider or finance lifer. He thinks like a multidisciplinary advisor who spent the last eight plus years inside closed door rooms with founders CEOs of uh, 2 million to 50 million plus multi location brands trying to scale without breaking what made them valuable in the first place. BFS isn't a conference, it isn't a coach, isn't a consulting firm. It's a pure intelligence network with proprietary benchmarking data and member only forums where the conversations happen that don't happen on LinkedIn or main stage panels. So today we're going to dig into what's actually breaking at multi location scale. And while founders like you almost always become the bottleneck, what buyers really pressure test when a brand goes to the leadership translation from operator to enterprise CEO that almost no one prepares for and where the entire fitness, wellness, beauty, healthcare category is heading next. Julian knows it. Julian, so excited to have you on. Welcome to the ownersy podcast.

Speaker B: Albert, thank you for having me. And listening to that uh, very generous greeting makes me sound like I actually know what I'm doing.

Speaker A: You are crushing it. I've been all over the reports that BFS sends out there. I tell you I need them as I'm spending time with those that I work with. You all are doing a great job. One thing that I love about what you post about on LinkedIn, sir, is how speaking of generosity, you are such a people person, you support and you recognize. I saw a ton of recent posts. You know, I think of uh, rtr, Pilates and some of the different members members that are a part of BS BFS and I just appreciate that about you that you take the opportunity. You're a very businessman. You take the opportunity to stop and recognize those that are seeing success and pushing through. So keep up the great work, sir.

Speaker B: Well, thank you very much. I mean, that's easy to do. It's easy to acknowledge, um, when others are doing great work. I mean, if we're not doing that, like, why are we in this industry? Right. We're in this industry to help people live healthier lives. And just so happens that when our members are delivering impact, I want to identify and showcase them so the world knows, um, who they are.

Speaker A: I love it. Well, I do want to move the spotlight and showcase you because you're up to a lot of great things. But I thought we'd start with the origin. You went from UNC Law to teaching fitness marketing at the Swedish Institute. As I mentioned, at the top. Then you became the chief operating officer at Melt Method, and then along the way built bfs. What kept pulling you back into the industry?

Speaker B: Yeah, well, see, you started at, uh, age 21 when you say I went from UNC Law. So you forget the first 40% of my life.

Speaker A: Yeah.

Speaker B: So the question you ask is a common one because people don't know what happened before. He's 21, age 6, my mother started volunteering at the YWCA in White Plains, New York. And as an only child, if mom is at the ywca, where do you think I was? Yeah, I was at the YWCA. So literally from age 6 to 10, I'm at the YWCA until my after school sports career started. If she was volunteering two or three days a week, then that's where I was. So I physically and literally grew up in the ywca. You fast forward. When I was in high school, my mom was elected chairwoman of the board of the Y. So my entire ages, six through, well, six through 20, part of the dinner conversations on the mom's side were, and these issues may sound familiar to you, how do we find new members? How do we keep our members? What's our programming? How do we recruit staff? What, uh, what classes should we have on the schedule? How do we raise money? Those were the YMCA dinner conversations as a kid. And then on the other side, dad was a finance exec, worked at companies like ABC and PepsiCo and General Motors. And when he was at ABC, he helped, uh, them acquire ESPN. Half of the one third of the dinner conversations were what's happening in business? One third was what's happening at the Y. And the other third was Politics and sports. So. So those were the dinner cows. So. And then I was a competitive tennis player, USTA tournaments throughout the Northeast. And then when I graduated from Tufts is when I started my teaching career. Started teaching tennis that summer before I went to Chapel Hill for law school. And after my first year at Chapel Hill, I started teaching at Chapel Hill Tennis Club. And then I went down to Atlanta and got my certification as a USPTA tennis instructor. All of that happened before I graduated from law school. So the years that I practiced law, the three years I practice, those years were the exception. My entire life has been around the business of fitness and of sports and fitness.

Speaker A: Amazing. I love that. And thank you for sharing that. And I can only imagine how fun those conversations were, starting at 6 years old. That's so cool. I mean, and have an idea of your athletic.

Speaker B: More like bewildering. What are we talking about? What. What's retention? What do you mean, retention? Auv. I mean, you know, I'm six. I'm 10. It was fun, though.

Speaker A: And so what, um, you know, coming up with that background and those conversations at the table, what made you go into law?

Speaker B: I can't add. And we didn't have ChatGPT back then and Claude and all these models, you know, we had, you know, Casio calculators. No, but seriously, my strengths are, um, are written communication, oral communication, strategy analysis. So those are good skills to become an attorney. It's just I'm not the type of person who wants to sit in a windowless office reading case law all day, every day. It's just not lie. Not for me. It's great training. And I. And I use my legal training, my analytical skill development, and my communication skills. I use all that in what I do on a daily basis. But, uh, I'll leave the practice of law to people who actually love the law.

Speaker A: I love it. That's awesome. Well, we have a lot of operators listening and watching in, tuning in. And, you know, one thing that I didn't know about you, and I don't know how I missed this, but you were the chief operating officer over at mel. Can you walk us through that journey? And how did that make you a better operator? And even as you're leading the way, um, at bfs, I can't wait to chat about that as well. But how did that allow you to impact more people nowadays on.

Speaker B: So I've known. So this is the melt method, which is myofascial release. The founder is Sue Hisman, who is a longtime friend, an incredible entrepreneur, and Businesswoman. And uh, sue and I have been talking for years just casually and I, I think it was 2019 when maybe 2018. She needed a project that I was able to help her with and that gave me insight into the business. And she's a typical founder, right? She's a visionary and she really needed someone to come in and help her um, run day to day operations of the business so she could do what she does. And when I say brilliant, a term is often overused, but she's brilliant master educator. Like she's someone who can uh, jump into the science books about anatomy, physiology and physiology and then create this program and then create trainings for people to learn the program. So she needed to stay in that space, focus on creating the training programs. And I was able to then relieve, jump into the CRO seat to run the day to day operations of the company to free her up to ah, be the founder visionary that she is.

Speaker A: Amazing.

Speaker B: We were able to grow the company. I was there from the year before COVID to the year two years into the pandemic. So it wasn't so much a growth mode time as much as a stabilization. And the company grew because we completely shifted the training programs from in person to online. And sue wrote all those programs during 2020 and uh, we actually grew our team during the same time. We didn't let anyone go, uh, from the Melt method core team. And the training grew because once you could go virtual and you could have more people in the trainings. So it was pretty incredible time to be, to be running that business. And I was doing that at the same time that I was running bff. So when I hear people talking about making sourdough during COVID I'm like, that was not my experience. I was running two businesses. Those sourdough.

Speaker A: I gotta say though, for those that do make that sourdough, it is so good. Especially when you put like the chocolate chips in it. It's like, where does this come from? This is amazing. Uh, that's an amazing story. I didn't know that about you. I did know about bfs. I've been following you for some time. We got an opportunity to meet finally in person at. What was that? The Beyond Active event. And so good to spend time with you. And then I've been listening to you for quite some time and then watching BFS and you know, after eight, eight years of running BFS and you get an opportunity to sit with a lot of people right behind closed doors in private rooms, um, and you're listening to their stories and you're hearing what some of the challenges that they're facing. What's the, what's the patterns? What are the operator patterns that you spot as you start to get in some of these conversations, you start to just identify, okay, I know, I know where this is going, or you're starting to see some trends.

Speaker B: Two words. Founder dependency.

Speaker A: Mhm.

Speaker B: And the beautiful thing about that framework is it cuts across industry. That is what has allowed us to scale beyond boutique fitness into beauty and med spa and recovery. Because the issue is the same. It's most founders in the fitness space have a passion for fitness. Many of them a good portion. Probably 30 to 45% of them, if not more, are uh, actual instructors. And so they come to this from the perspective of being the technician. If we want to go back to E Myth. Technician, manager, CEO. Most people entering the fitness space enter from the technician mode. Uh, and, and I would say as a percentage of all founders, it's a very small percent that open this business with the intent to scale immediately. Very small percent have that mindset. That's the Ann Melon mindset. That is the exception. I'm opening on day one with the intent to open 100. That's not what most founders say when they open. It's more like, I'm tired of teaching for someone else. I want to have my own space. Right. And they really love teaching and there's absolutely nothing wrong with that. There's no, I'm going to make some, some distinctions today, but there's no judgment in the distinctions, just clarity. Right. So founder dependency means you get to the point where you're really good at teaching. You've, you've developed a following. You're, you've been successful financially, but you're doing a lot of the work. Even m, if you open up a second location or a third location, you've hired people to help you do that. Founder dependency means all of those questions. Every important question comes through you. M. So you can't take a one week or two week vacation because the business would collapse without you being there. That's founder dependency. And that's fairly normal. Regardless of whether you are teaching yoga classes, Pilates classes, cycling classes, whether you are cutting hair, painting nails, providing massages, giving facials. It's the same thing. If you are the bottleneck, the person whom all answers must come from. That can't scale. Yeah, let me refer in a pre AI world now that we can actually start to close with aviations, that might scale. But historically, prior to the dawn of AI it didn't scale.

Speaker A: Bottleneck. Get to that for sure. And I, I love that you brought up not only founder dependency in the bottleneck, but what breaks when you're founder.

Speaker B: Uh, breaks.

Speaker A: The founder breaks.

Speaker B: Yeah, exactly, breaks. So yesterday we had one of our peer network meetings and after the meeting I asked one of the members to stay on and I could tell that she was struggling emotionally and I gave her permission to just let it all come out. And like the tears just came out. All of it. You know, she's got three locations and recently lost a grandmother and thought she'd be further along and all this new competition and this is a strong woman who owns her business, you'll love that. Owns the building. She owns the building of one of her. So I'm m not talking like some, some flake here. Tough woman, uh, experienced woman and literally I had to give her permission to just let it all come out. So the founder will break. Ultimately we're not robots.

Speaker A: Well, we're going to talk about multi location scale. But before I do or uh, before we do know one of the things that you did with the Global Leadership Council is expanding into salon spas and med spas. And you know, we talk about beauty and longevity and wellness. Clearly you're seeing something happen, something's shifting or evolving in the fitness and wellness space. What do you, what are you seeing in the category? What's, what's, what's going on right now?

Speaker B: So let's be clear. Everything I'm about to say, I'm reciting data, ah, that is published from companies like McKinsey going back three years. Lululemon issued a report in 2023 that was um, a global, I forget the exact global well being report. McKinsey issued their first report in the wellness space, summer of 2023. Uh, Dan from the uh, New Consumer has been writing about this for a long time. So in this case I am, I am the aggregator and the analyzer of this information that's in the public markets. I'm not coming up with this new idea that convergence is happening. I am the one chronicling and communicating on forums like this. And again, thank you very much for the opportunity. I'm reading all the trade publications that the typical operator doesn't have time to read. And since the summer of 2023 message has been a couple messages have been clear. We are entering a world of convergence of fitness, wellness, beauty, healthcare and tech. Fitness, wellness, beauty, healthcare and tech. The research has been consistently clear that people are less interested in specific fitness Goals and more interested in health span, how they feel. And so, uh, and all this corresponds or all this I should say is a direct result of the pandemic, that two year period where we all started learning new words like core morbidity and realizing that, oh, wait a minute, my health actually puts me at risk for some diseases or my strong immune system, which is, which is, uh, developed apart from my, my, my good physical habits and my sleeping habits and my eating habits makes me less at risk. Once people started realizing all of that, 2020 to 2023, it was like a national epiphany went off that I actually need to be thinking about my health. Spanish and so, and then you had the rise of the super influencer. Whether it's. I'm going to only mention the Doctors, whether it's Dr. Hyman. Dr. Um, um. Damn, I just forgot the guy's name. Huberman. Huberman, yeah. Hyman Huberman. Stacy Sims, Rhonda Pispatra, Gabrielle Lyons, Bill Campbell, all of those people, we don't talk about him no more. He did that himself.

Speaker A: I heard. Yeah, I know, I've seen, I feel. Well, um, I don't feel bad, but

Speaker B: it's itself all of those doctors started educating the consumer through their videos and podcasts and Instagram posts. And so that consumer now walks into a brick and mortar business where they take yoga or hiit or workout, and they're no longer asking, what is hrv? Now they're asking, how do I improve my hrv? Because they're more educated and they realize this, uh, this healthy living journey requires me to do more. And what, what do I mean by do more? Again, none of this. I'm, I didn't, I'm not, I didn't create any of what I'm sharing with you. There's a general understanding that total well being includes more than movement.

Speaker A: Mhm.

Speaker B: Total well being includes at least, let me emphasize, at least, at least movement, nutrition, sleep, mental health. Now think about all of the places where the average person works out. How many places that can you think of that help their members with all four of those? Now how many of those places help their members with more than two of those? Or at least two of those? Very few.

Speaker A: Still slim.

Speaker B: Very few. So we're at the early stages of consumers are being educated from the super influencer, that longevity is important. And what are the two key drivers of longevity? According to research, VO2 max and strength. So if you're only doing strength training, you're not improving your VO2 max. If you're only doing running, indoor treadmills or indoor cycling, you're not improving your strength. If you're only doing hiit, you're not improving your grip strength. The point is, my understanding of, um, what the research says is that total wellbeing and total longevity requires a multidisciplinary approach. So if you're a business that's only selling one thing, one type of movement or movement alone, then you're not serving your client's total wellbeing needs. And all of the, uh, research out here is saying that again, we're very early. I, ah, still recognize only 25% of the population has a gym membership. 75% of people still need to do the basics. I get all that. But when you take the people who, who are living active lives, who are listening to the super influencers, those people are saying, okay, I need to do more than simply whatever my favorite exercise was. That's not enough. We know Pilates is hot. We know Pilates is a great low impact strength training workout. Pilates does not help you improve your grip strength. Pilates does not help you increase your VO2 max. So you need to do Pilates and something else. So all of that is to say convergence. Convergence is what we're starting to see.

Speaker A: Yeah, I love that word, convergence. And the ecosystem, right? And I think the consumer right now, to your point, very few are providing the ecosystem, all of those different modalities. You know, I think of the four deadly horsemen and all of the things that we can do to be preventative, proactive lifespan. I love that you said that. How, like for an operator listening to this. Because I'd imagine they come to bfs, right, and they're thinking, how do I grow? Like they, they have a growth problem or don't know necessarily how to attack this ecosystem, this convergence. What's your recommendation for those that are listening and watching this? What can they go do this week, this month, this quarter, this year to play that game?

Speaker B: Number one, you start talking to your members. Let's acknowledge that there's no one way, right? There's no one way to increase your VO2 max and to increase, uh, your strength. And in fact, you're probably familiar with, um, Is it Bill Johnson's longevity test?

Speaker A: Oh, yeah, yeah.

Speaker B: You know, the woman who's winning is some, some mid-40s woman in Arizona who spends like $100 a month, right? So you don't have to spend money on all these things. Bill, uh, Johnson, I think, right? You don't have to spend money on all these things to win. So I want to say there's no one way, having said that, the best way for a brick and mortar business to win in their very specific neighborhood geographically is to ask their members what do they want. It's a combination of educate and ask. Right. Part of it is the Steve Jobs mindset. They don't know we need to tell them. The other part is you have to give your members, ask your members a few questions, some options so you can make sure you customize the longevity and wellbeing program for them. So here's an example. Had this conversation yesterday with hot yoga studios thinking about adding some longevity treatments. And my first suggestion to them was they need to interview their members and ask them what their members want. And I gave them an example. There's a, there's a, there's a bath house in Seattle that has five protocols on the wall when you get there. So each protocol is for five different outcomes. Are you here because you need more energy? Are you here because you need to improve your mental focus? Are you here because you want to increase your, you know, VO2 max? Whatever the outcome, they had five different outcomes and for each different outcome they created a sequence. So do the infrared sauna first for X minutes, do, then do cold plunge for X minutes, then do steam room for X minute and then do dry sauna for X minute, then go back to cold plunge. That's a recipe, recipe prescription protocol. That's what I mean by educate. Because if I just walk into a bath house and just do my own thing, I don't know what I'm doing. Yeah, right. So you, so one part you need to educate, but the other part you need to ask your members, hey, do you want infrared sauna? Here are the benefits of that. Do you want dry sauna? Here are the benefits of that. Do you want cold plunge? Do you want, want infrared therapy? Do you want compression? So you don't just buy the tools and put em in, in a room and, and uh, help hope that they're gonna figure it out. You need to ask them what they want and explain to them the benefits of each. So you, you're giving them what they want. It never works. To sell what you think they should have, you need to sell them some combination on what they want and educate them on how that benefits them. And just another example, or same example, but another point, the average consumer doesn't know. The research that came out last summer about dry sauna, uh, four days a week, 20 minutes per session decreases, all cause mortality by 20 minutes. By 40% four times a week, 20 minutes reduces all cause mortality by 40%. The average person doesn't know that. So when I say educate your members, you would say hey, we're thinking about adding sauna to our facility and here's why. Um, would you be interested? And we would have to add another tier to the membership. It would be another X dollars. And here's when you could use it, here's how you use it and here's why you you would use it. So educating is part of the sale process rather than saying hey, we think we might get a sauna, it's going to cost you an extra 50 bucks. That's a very different message from we're thinking of adding a sauna because you using it three to four times a week can decrease your all cause mortality and we will need to increase your membership by X. Those are two very different questions even though it's the same type A question.

Speaker A: So good. Ask your members. Right. And educate. And I think yeah, we're definitely in that time where there's a lot of these amazing studies coming out. There's all these different modalities. But what I'm hearing is the consumer is a little overwhelmed or they just don't know to your point. And it's our obligation and duty. Right. As the operator. Especially if you want to grow your business. As we were mentioning, gotta ask them.

Speaker B: You gotta ask them and tell them.

Speaker A: Right.

Speaker B: Why it's good for them. What's the difference between infrared sauna, uh, and dry sauna? When should you do cold plunge? When should you use infrared therapy? When should you do compression? When should you rest? You know. Right. The average person is going to look at their instructor and the owner of their studio or gym as their, you know, our uh, pastors and rabbis are our spiritual leader. Well the person who we see most often in the places of exercise, regardless of whether they're qualified for it, we look at them as our fitness and wellbeing leader. And now they're coming to us. Well, not me, but the consumers are going to their instructors and their coaches and and the owners of their gyms and studios with more specific detailed question. Hey, I saw my whoop did this for the last three days or my aura ring said that or my apple watch said this or what should I be eating? Like the world of trainer, coach and instructor is changing.

Speaker A: Mhm.

Speaker B: In a good way.

Speaker A: Yeah. You brought up founder dependency earlier and I wanted to circle back to that because I saw something that you posted and I really liked what you were saying, but if you could share it with the audience. You mentioned the founder becoming the system. What does that look like for a founder that's looking to expand, get into the multi unit side of things. Right. And we're talking multi unit, 5 mil, 15 mil plus. You talk about the system a lot. Can you walk us through what that means?

Speaker B: The system is the mindset. That's the most important thing. We said this earlier. Very few people open studio number one with an expectation of opening a hundred. That's what's, that's what distinguish Ann Naom from almost everyone else that she was clear on day one what she wanted to do. So it's the mindset. The system is the mindset of knowing I want to build a business at scale that delivers impact at scale. And the only way for me to do that is to teach and train and coach a team to support my growth ambitions. It is a mindset recognizing that the most people think the biggest limitation of scaling is capital. And I believe the biggest limitation of scaling is a combination of people and systems. People first and then CISOs right over. I think most founders overlook the role of people the entire hiring life cycle. So when I talk about the founder dependency in the system, I'm talking about someone with the mindset to understand they need to build repeatable processes that are implemented by humans and increasingly AI by humans to run the same play over and over and over again consistently. That's what I'm referring to.

Speaker A: Right. I'd imagine a lot of the founders and C suite listening to this. The operators, the owners, uh, are going to want to learn more about BFS and so what should they be prepared to bring to you and to your team for the conversation to be useful? Let's say they want to grow. Let's say they're struggling with A, B or C. Right. And they're just, they're just stuck. And they know as they've listened to you and watched the BFS posts and they learn everything about the reporting out there that you. The benchmark. I mean it's amazing. It's amazing data that you had mentioned earlier. I'm all over it as well. What should they bring to the table so that it's useful? You mentioned mindset. Is there anything else?

Speaker B: Humility, hunger, ambition?

Speaker A: Mhm.

Speaker B: All those things we. So I'll answer your question by telling your story. I think. I hope you'll find it. Uh, Didactic started working with um, well, I'll work backwards. So I'm on the board of a company, uh, of A fitness business based in the Middle East. And I recently joined the board. I started working with the founder this time last year, literally today before Memorial Day weekend, it's been one year. And, and this, this woman built a multi million dollar, multi location business while working full time. And she had already planned to stop working full time before she met me. And six weeks into working with me was her last day working full time. And by the way, she was running the Middle east business from London. So she was working full time in London, living in London full time. And she built in business generating more than 2 million per location in multiple locations. Okay. And so we started working together and I still, I still tease her about this today, a year later, one of her questions was, what am I going to do with all my free time once she stops working full time? And we laugh about that because what she's realized with her, the free time that she thought she's going to have, she's become a full time student. So you asked, what do businesses need to bring when they come working with me? They need to come prepared to read M. They're going to read a lot. I give a lot of reading assignments. Um, I have my, my tried and true favorites. And then there are ones that are very specific for their particular need. Um, for this woman I'm referring to, uh, I highly recommend it that she get a, a Harvard Business Review subscription, which for anyone listening is the best money you can spend. It's like $99 a year.

Speaker A: Yeah.

Speaker B: And you get access to their entire archives. It's a ridiculous amount of quality information. So she realizes that she's spending about one fourth of her time reading just reading how to Become a Better Leader, how to Become a Better Manager, how to Improve sales and marketing, and now there's the whole AI thing. Right. So you need to come prepared to learn. And that's why I say humility. Because if you think you know the answers, then you don't need to work with us.

Speaker A: Right.

Speaker B: But if you come, um, recognizing that what got you here isn't good enough to get you there, and you come to us because you want help getting there, then great. We love working with people who are, who are both confident enough to know that they, they're really good at what they do and they're humble enough to know that there's a whole world beyond where they are that they're trying to get to. And so when they come to the BFS network, they're going to be either going to work with me or one of our Advisors, one on one or they're going to join a peer network team with their peers of other people who are similarly situated, meaning multi location, multimillion revenue, profitable, with a very strong growth mindset. So a lot of our members are the most successful studio in their, in their neighborhood. And so all the other studios come to them and they end up mentoring a lot of their competitors, but they don't have any place to go where they can talk to people at their level. That's why they join bfs, so they can be in a room with other people like them at their level. And very few of our members are still involved in day to day ops. They have a senior leader on their team who handles that. And that frees up our members to focus on really the three key roles of any CEO of any business, which is setting the vision building team to implement that vision. Keeping money in the bank, I. E. Sales. That's your job, right. Every. Everything else can be outsourced.

Speaker A: Yeah.

Speaker B: So that's what they should bring. Humility, confidence, hunger, ambition, mindset.

Speaker A: So good. Well, I want to switch gears into capital. Right. You mentioned earlier, not uh, most don't get into it thinking about how they can scale and even the words exit readiness. Right. And so for the founders that come to you into your team, the owners that come to you and they start talking about, well, I want to be sellable, I want to be ready. We're in this private equity cycle right now, right. Probably for the next three years. There's been a lot of, you know, big wins out there. One of them being EOs. Right. And some others. But they say, I want, I want to be sellable, I want to be prepared. Albert's telling us get two, you got to be prepared two years in advance, three years in advance. What are the things that, for those listening right now that are in that position or thinking about it, what are the two to three things that they should go do that can move the needle there?

Speaker B: People, systems and net income.

Speaker A: People, systems and net income. I love that.

Speaker B: So, so let me quote Sir Richard Branson said, you focus on your team, your team focuses on your clients. So number one, build a team that can run your business. Make sure your team is tight. That team will then make sure that the systems are in place to drive profitability. Emphasis note. I'm saying drive profitability, not drive revenue. Drive profitability. You build the team, you coach up that team, you keep that team hungry, you keep them, you keep them learning. Continuous training process and you make the outcome or the target Very clear to the team. You hold them accountable. Hitting that target. You do that two years in advance. You tell the team, I expect us to grow to increase net income 1% every month. Just think about it, 1% every month. What's required to increase net income? Um, it's the small things. But it's not the founder's job to actually hit to do those small things. It's the founder's job to set the goal, to build the team, to train the team, hold the team accountable to hitting that goal and then developing consistency. 1% growth in net income every month for, for 24 months. You just increase your net income by 24%. If that company walks in your door and says, now I'm ready to be sold, what's your response going to be, Albert?

Speaker A: Um, yeah, we're ready.

Speaker B: Right? One. One percent a month.

Speaker A: One percent. I love that. So people, systems and profitability.

Speaker B: People plus systems equals net income.

Speaker A: I love that. I used to say team member experience to the member experience will drive financials. And if you do it backwards, good luck. It only lasts so long.

Speaker B: Yeah. And you can engineer profit short term. You're talking about selling a business. You've got to hit top line revenue, you have to increase net income. And unless you want to be locked up for three years post sale, you have to demonstrate that the business can run without you. Mhm. Which is why the people part of this is so vitally important.

Speaker A: Speaking of framework and systems, I get this question a lot and I was curious on what you're seeing, what the data's showing. It's this. Should I invest in the franchise system or should I go more independent or corporately owned? What model do you think? As you look out and where we're going, where the industry is going, is there a big winner here? Is it split in between? What do you think?

Speaker B: I'm going to give you a two part answer. Um, based on what I can recall. Let me emphasize that here's the math I'm aware of. Ann Maam sold her shares in solid core for 100 million. One person. She got to keep 100 million. She was corporate. Wow. Uh, Elizabeth cut Elizabeth Cutler, Julie Rice sold their shares and Soul Cycle to Equinox and they got 90 million each. They were corporate owned. Jay Gluzo, Stacy Selden, Ruth Zuckerman sold their shares in Flywheel to a PE investor. People often confuse the fact that it was the second PE investor that really had struggled to operate Flywheel. But um, Flywheel was a profitable business. When Stacy and Jay sold It, Yeah, they were. That the amount was undisclosed. They were a privately held business. So those are three facts. Not, ah, privately held, corporate owned. So we know three corporate owned businesses with 90 million, 100 million and undisclosed sale prices. Then what do we have on the franchise side? We have Orange Theory merging with Anytime Fitness. Um, don't know what the, what the financials were there. We have F45 being delisted. The two.

Speaker A: Buck the two.

Speaker B: Right. We have Exponential doing a fire sale of half of their brands and now they're up for sale. So just straight math. Anytime. Anytime Planet Fitness doing very well. Crunches is uh, franchise, but still privately held. So I'm sure there are people out there, the Pete Moore's of the world, the Jay Galuzzos, the Brian Smiths, the Artie Kapoors, who can answer this question better. Maybe there's a deal. Maybe there's an example of a French of a fitness franchise that has had an exit comparable to Solid Core and Soul Cycle, but I can't think of it. I'm not aware of it, are you?

Speaker A: It's, it's slim pickings for sure. It's. And if, if there is some success stories, it's within the franchise system.

Speaker B: You're not talking about a, uh, franchisee selling tech units to another franchise, right? Okay, now, so I guess we should consider that as an option. But we're talking about. I understood your question to be the platform, the system. Yeah, exactly. So my answer is the examples we have of the greatest liquidity events came from corporate owned businesses.

Speaker A: Right.

Speaker B: I am not passing judgment on, um, the franchise model. And maybe the franchise model in other sectors have had more wins. I just am unable to identify a fitness franchise that has had a significant liquidity event comparable to the Soul Cycle, Solid Core Flywheel liquidity events.

Speaker A: Right? Yeah, no, it's a good point. It's interesting as we're all thinking about where we want to invest our money. Right. And where we want to spend our time. So I wanted to ask you a couple last questions. I know you're super busy and thank you so much for this.

Speaker B: I'm having fun.

Speaker A: Uh, yeah, this is great. I'm pretty vocal on LinkedIn about the conference game and what I mean by that is we all go to these conferences and there's so many amazing ones, by the way. Great partners out there. They do. I mean they work so hard. If people only knew the behind the scenes of these, you know, these conferences like HFA and Beyond, Active and Athletic. I mean, it's just there's A lot going on. It's uh, I don't know how they do it. Right. I'd be stressing out. I'm not a big event planner for a reason. But a lot of people will go, I'll go. And I get excited. Right? People get excited. They're learning a ton. They listen to panels, they listen to all of the different new and exciting things. They touch the equipment and then they come back home alone and it's kind of like okay, then what? Right. And I've been following BFS and I just see, wow, this is a. You're not a conference, you're advising people as you're explaining here today. And I just see so much more value in the hand to hand combat including the network effect that you were mentioning earlier as peer to peers get to.

Speaker B: But you need both. Yeah.

Speaker A: Ah, tell me more about that because I'm just not sold on the confidence perspective.

Speaker B: I've seen your post on this.

Speaker A: I get in trouble for those by the way.

Speaker B: I would say I think you might be missing part of it.

Speaker A: Tell me, tell me.

Speaker B: So full disclosure. We produced eight conferences between 2018 and 2023. Chose to, to stop producing conferences but we produced big 500 person conferences in Midtown Manhattan and LA and Chicago and D.C. and it is a very involved process. Um, you can't even. It's a wedding times three because when don't have speakers, don't have. Right. So people um, have no idea how ungodly expensive it is to produce a conference. So you have to start with that the cost of producing a conference are based on the venue. And if you have want to go to even a decent venue. Right, decent. Not world class, not mind blowing. Just a decent venue has a lot of built in pricing that's not negotiable. Uh right. Coffee, lunch, all that stuff.

Speaker A: I'm um, glad you started there because if people only knew those, those options that the, some of these venues, these hotels will give you that they make a lot of money on that. On the food and the coffee.

Speaker B: Yeah. The Marriott made a mistake and telling me Marriott Marquis when I did a tour of their venue. But four years ago. Yeah, four years ago she said and I quote, coffee is our money maker. Unquote. Okay. So. So, so people who attend conferences generally don't think about the cost to produce a conference. So I am in conference defending mode from this perspective because I've done it.

Speaker A: Yeah.

Speaker B: Um, an average conference for 500 people is going to cost you a quarter of a million dollars. Quarter of a million dollars for One day. I know, because we did that.

Speaker A: Yeah.

Speaker B: So now you have to find sponsors to cover that cost and you have to charge an amount for registration where the combination of the registration fee and the sponsor fee covers the cost of the event. And oh, by the way, the whole purpose of, uh, producing a, the whole purpose of being in business is to make a profit, right? So you're not trying if the conference costs quarter of a million, you're trying to make at least 300,000 for 20%. Right? This is a business. And so that is why you see most of the registration fees are about the same thing, somewhere between 750 and 1500, because that's the baked in cost. To use another analogy, if you travel a lot around the country, you realize no matter where you go for breakfast, you know, breakfast is about the same things. 20 bucks, you know, eggs, bacon and a sandwich. No matter where you are, it's 20 bucks. Uh, well, no matter where you have a conference, the cost of the conference is about the same. So that's a little explaining the cost to produce the conference. So then the conference organizer has to figure out how do they get that money, right? And so some choose the pay to play model, which I can't, I can't, um, complain about. Someone's got to pay that $300,000. Must pay the bill. Someone's got to pay the bill. And unless you like, um, I'm not calling them out in any negative way. Just as an example, Global Wellness Institute produces a, uh, conference every year. They're the one we all cite when the new wellness figures come out every November. They're announcing that at their conference every November their registration fee is $5,000. Well, that's prohibitive for the vast majority of people. So if you're a conference organizer and you don't want to charge $5,000 for a registration fee, then you have to find money from someplace else. Someplace else is going to be a sponsor. And in exchange for that sponsorship money, the sponsor is going to want an opportunity to talk about what they do. So that's a little bit about the business model around conferences. And I say all that. And I'll still say that whatever the agenda is at a conference, no matter how great the speakers are, that's only one third to one half of the value of attending a conference. The major value is in connecting with your peers in person. I like to call it LinkedIn comes to life. Like you and I. There's no substitute for the in person conversation. And the best part of a conference Is for me is meeting someone I didn't know or connecting with someone who I know of. But I get to meet them in person for the first time. And we're walking in the hallway, we have that impromptu conversation in the hallway. That's the fun part, not the scheduled part. Like I know I'm going to go to these sessions, I know I'm going to go to these industry events, but it's the meeting people I don't expect to meet. That's the fun part. And I guess I'll add it's the serendipity. Serendipity doesn't happen on Zoom. Every meeting on Zoom. We all have our calendar open. We all know what the next thing we need to go to is. I've had some of my deepest conversations with people I know at conferences because even though we're on a schedule, there's more time for. What's the word? There's more time for a deeper, more involved conversation in person at a conference versus me getting the 30, uh, to get 30 minutes on your calendar. You know, I know that you're thinking about what's your next meeting? I'm thinking about my next meeting. We don't really have a chance to go deep, so. So I am pro conferences for, for their value in the ecosystem of uh, bringing people together.

Speaker A: That's good. Well, you're convincing me. I don't know what I would love to see more of is. And to your point, these, these, like our conversation today can happen at a conference. I'd love to see more workshops. I'd love to see. So would I. I think there's just a lot of people out there. For instance, I love, I'd love some workshop for all those that use mindbody. Let's pull it up and we're going to go through the reporting and we're going to figure out what the heck's going on with your business or P and L workshops. Right. Because I see a lot of, or uh, not even just P and L, but balance sheet cash flow. I think we need more of that and I just don't know how, how we do that in such a large setting. But I'm hoping we get there.

Speaker B: Have you ever been to the International Franchise Association?

Speaker A: I have and I just had someone from Sitchin Cooperman tell me, you gotta go. That's. You're gonna get that.

Speaker B: You should go. I went for the first time this year and it was clear to me that that is a, that is a conference. People tend to learn. Mhm. Let me Say it differently. That is a conference. People attend because they want to learn something. And why do I say that? Because I saw general sessions going until 5 o' clock where the room was full.

Speaker A: Love it.

Speaker B: Because people were there to learn. So next year, Mandalay Bay, late February. Highly curved.

Speaker A: I'll see you there. That's so cool.

Speaker B: Absolutely.

Speaker A: Well, I want to ask you one last question, by the way. Thank you. Thank you for that. Thank you for challenging me. I appreciate you seeing the post. Yeah. So glad we chatted about this because it's been one that's been bugging me a bit and so, um, I appreciate that for those listening and one last question for you. For the founders, for the owners, for the CEOs. I'm talking about those that are multi location and they're wanting to continue to expand and scale. You talked about founder dependency in the bottleneck again. What is. What would you want to leave them with today? What can they go do this week to impact their business in a positive way?

Speaker B: Read the 25th anniversary of John Maxwell's 21 irrefutable laws of leadership. I love that. The law of the lid. The law of addition 21 laws. Read that. If that doesn't change how you think about your business, I don't know what will. That.

Speaker A: This is so good.

Speaker B: Well, and then go back and uh, reread e Myth. You gotta get into the love that book. You have to stay in the founder lane. You can't be in the technician lane. If everything comes through you, you're not going to scale.

Speaker A: So good. Well, for, for people that want to learn more about your work, Julian and uh, learn more about the BFS network and be able to be a part of the benchmarking and all of the data and the reporting that you release. Where can they connect with you? Where can they find this?

Speaker B: So it's bfsnetwork.com is the website I am active on LinkedIn. Julian. I think it's Julian A. Barnes. Uh, but you can find me Julian Barnes, BFS Network on LinkedIn. Email will be infofsnetwork.com and Instagram is julianbarnes nyc. So I'm all over the place. Start with the website and start by listening to. Well, you are listening to this podcast Find me online website, Instagram, LinkedIn.

Speaker A: Excellent. And by the way Julian, I remember I'm not the big fashionista but you gave me some advice, uh, when I saw you last. I'm not wearing it today for those that are watching but um, the pocket square game, there's no one better out there than Julian Barnes. The pocket square game, you just got it on point.

Speaker B: It just adds a little touch, a little splash.

Speaker A: The flash and the flare. I love it. Well, I got mine in the drawer, so I put it on. Well, thank you for everyone tuning in and watching. This has been another episode of the Owner Seat podcast. As always, I'm your host, Albert Ramos. If this is your first time tuning in, we release episodes every Monday and Friday at 8am Central. So make sure to subscribe and tune into all the major platforms, all the podcast platforms out there. Julian, such a pleasure. Thank you so much for your time. This has been amazing.

Speaker B: Albert, uh, thank you. Really enjoyed this.

Speaker A: My, uh, pleasure, sir. Thanks. Thanks, everybody.