In the previous post, I was writing about some of the new projects we are pursuing at elements group…. Believe it or not, there was too much to fit into one post, so this is a continuation of the previous, “upward momentum” story…. it is certainly an exciting time to be in the fitness space, and each of these projects adds additional depth to our consumer experiences, and additional revenue for our franchisees…

Intranet Goes 2.0
Believe it or not, elements is the only fitness brand to offer a full service information and training intranet.
The owners intranet has served us well, and we have added literally 1,200 training tools, resources, tips, mini-handbooks, and forms. We have been researching new technologies that will allow us to transform the intranet into a “dashboard” for all clubs, franchisees, and central team members. The “dashboard” would include a better-organized access to the hundreds of training options, as well as a better way for us to deliver news, updates, and brand items to you and your entire team. It will have varying security levels to allow, for example, front desk employees to access certain levels of information, while owners can access a complete set. Overall, the “dashboard” will provide a better-organized way for us to manage the growing amount of training tools, enabling club managers to understand and easily access these resources.

We will also be developing video training for some key sales, marketing, and operational topics, which will greatly assist in staff development at the club level.

The official Workout of ______ Hotels!
We are working to secure a deal with a major international resort chain to brand their fitness and lifestyle amenities as “elements living.” Brand-name amenities improve a guests experience at a resort, and for us, it is a powerful way to expose thousands of upscale guests to our brand. There are many synergies that can develop from this relationships… and we will keep you posted

For more information on business opportunities including obtaining a stock prospectus on elements group, click here.

As the weather chills and the Holiday lights go up, the end of the year provides a great time to reflect, and to plan for upcoming 2009. Last week, I was writing a letter to our franchisees about some of the new projects we are investing in. When I was finished, I re-read the letter, then again, and found myself impressed (I am tough toimpress!) with the momentum and the positive direction and tremendous growth the elements fitness brand is experiencing.

We have been hard at work to continue to grow and position elements as the leading fitness and lifestyle brand for women. I thought it would be great to share a listing of some of the exciting projects that are currently in our development pipeline.

- elements stories - a new “social” website which will connect the corporate site, magazine, and BalanceD. elements is a special brand - we are a collection of people who are making it happen…. entrepreneurs, survivors, motivators, leaders, mothers, daughters…. although each of us id different there is so much which is similar…. We will be “weaving” stories throughout this site….. stories of our club owners, members, friends, family members… women who are transforming their lives through being a part of the elements movement….. We will be taking all of the member testimonials (and continually adding) to create a dynamic, interactive experience….. My thinking is that this will be an incredible membership sales tool, a entertaining website for current members to visit and interact on, and a market differentiator for us - elements will be the only fitness brand with a live, growing social network. before/after pics, stories, motivation, overcoming…. from across the country, we will see the bonds that tie, and watch a community be built (Jan 2009 launch)

- New supplement line! - we have some great developments in store here! The line is coming together nicely… we are still asking for as many survey responses as you can get - my goal is to have 500 individual surveys prior to making any development decisions on the products - we would like (if possible) a true cross-sampling from all clubs, all ages, and all potential buyers…. this will be a significant revenue center for your club, we want to ensure the new brand and products is the best possible fit! (Projected Mar/Apr 2009 launch, products will be available for purchase in-club and also commissioned online)

- elements television network - We are about a month from announcing “elements TV” - a full entertainment system and network inside the clubs. Music videos (with top selections for our target audience), tips from the advisory board, healthy tips, and branded “shorts” - commercials set to music that you can select and run for all things elements: the latest magazine issue (more readers is better exposure and retention for you), personal training ads, testimonials, diet coaching ads, supplements (once launched), specialty classes and more. elements TV is a complete, expertly branded entertainment experience which will take the club experience to the next level - best news is we are working on a major corporate sponsor (Victoria’s Secret, lancome, or Estee Lauder type) to underwrite 80% of the ongoing cost of the network, implementation and production! (Ready in-club Mar./Apr 2009)

NEW CLUBS! We are very excited for our newest club openings… Columbus, Ohio and Madisonville, KY are already in presale. We will very soon have some great new cities coming online including… Aventura, Orlando, Toronto, Greenwich, and California. In addition, we have some exciting developments in the works…Expect some big things in 2009!

Stock Offering:  Miami Beach, FL – 11/01/08 – elements™ is pleased to announce the launch of their new stock offering program through our parent company, ELEMENTS GROUP. Franchisees, vendors and investors will now be able to purchase stock and own a piece of the fast-growing fitness and lifestyle brand.

Set to correspond with the introduction of the new stock offering program, elements™ has also created a robust corporate business website at www.elementscentral.com to keep investors informed and generate interest for potential investors. The “elements central” site will offer real-time announcements, annual reports, brand previews and strategic information about all facets of the company.

For more information on business opportunities including obtaining a stock prospectus, click here.

What an exciting time of the year to be able to announce our expansion into the consumer products space.   elements has been growing steadily since 2004, to emerge as the category leading fitness brand for women. We have been heavily investing into the creation of consumer portals and networks, such as our elements living magazine, our All Star Fitness Advisory Board, BalanceD interactive Diet, elements living TV (coming soon!).  Possibly one of our most exciting announcements comes at the end of this year… the birth of Oceånica, by elements.  Our creative team has developed a genious offering with Oceånica products….  the beautiful, smartly designed line will feature organic and very potent anti-aging, slimming, and health enhancing ingredients. Over the next few months you will see a very exclusive line of weight loss products unveiled.

Having an exclusive, well-designed line will help the elements brand in many ways, including adding a powerful new revenue stream for franchisees, a great addition to the wellness experience for members, and an important “star” to allow elements into some of the top fashion and lifestyle books.  Look for many exciting announcements to be coming about Oceånica, our products, and our launch parties very soon!

Over the past two weeks, elements has received three formal proposals from major landlords offering free rent, and up to $60 per sq ft in “key” money to locate our clubs in their plaza. Doing some quick math, if you take a (typical) 6,000 square foot space, that means the landlord will contribute over $360,000 to cover the cost of buildout, allowing a franchisee to virtually just move in. As if this wasn’t strong enough, we are seeing these offers coupled with generous free and reduced rent periods to ensure that a club has a good jump-start. Only the best landlords can (or will) afford to do this strategy, but since our clubs are located in top centers, it has put many potential elements franchisees in a unique, and very lucky situation.

Many first-time business owners do not know that, in commercial real estate, it is normal for a professional landlord to pay “TI” (tenant improvement) money as an incentive to attract popular national tenants to their center. The more favored a brand is, the more “TI” money the landlords are willing to pay to attract that brand to their center.

This makes good sense for landlords, the best “anchor” tenants quickly define the image of the Plaza, and the ultimate long-term success. Many landlords do not want to re-invent the wheel here, so they will follow the lead of other successful landlords and plazas nationally. Owners of great brands can offset a larger portion of their initial startup and construction expenses through a landlord contribution. elements has been very popular with landlords since the beginning. Our clubs have great curb appeal for a plaza, and attract one of the top buying demographics (upper income women, age 30-65) to the plazas on a repeat basis. As a result, elements and our startup team has always had excellent results with landlord negotiations. (we help to negotiate all leases on behalf of our franchisees)

I have said many times that we believe this is one of the best times in history to open a business in the US. Economic trends have converged to make this an excellent time to negotiate a lease, as landlords are sweetening their deals to attract key tenants to sign leases. We are seeing “TI” amounts double what they were last year, and long free rent periods, typically one year or more. Wow… what an exciting thought for any business owner -being provided a “turn-key” space, and a full year of no rent expense.

I heard one time that the definition of luck is luck is when preparedness meets opportunity. Successful entrepreneurs will think themselves very luck to be able to launch their businesses this year.

I was speaking to a well-respected executive from the franchise industry today. I really enjoyed our call, and I thought I would share some of the conversation with you - it really shows the process of buying a franchise from the other side of things…..

In business, you can either let or make things happen. Successful people make things happen, and are confident in the decisions and choices that they make (both in business and in life). This conversation became especially relevant because, as the end of the year approaches, many aspiring entrepreneurs will be following their dream of owning a businesses a reality this year. And other will not… they will blame the economy, the holidays, their jobs, family, or a whole host of other factors which will cause them to procrastinate their decision making until next month.

Why is January a better month to make a decision than December? What will change between now and then? If an entrepreneur is at the point where they have collected all the information, it is very unlikely that anything will materially change within the next months. In fact, going through the notes and checklists they have developed along the process should confirm they have all the information you need to make a sound decision.

In business, it is important to identify what it is that holds you back. If it is the fear of the unknown - recognize that this is entirely normal, as with any big decision. There will always be reasons not to buy, not to invest, or not to grow, but if you are serious and have a passion for businesses, it is important to look for reasons to buy as well.

From our seat, many prospective franchisees do not realize that delaying their decision without good reasons sending the wrong message to the franchisors, who are evaluating you as a potential Developer. Franchisors (your partners) are looking for passion for the model and business savvy which includes decisiveness.

As an entrepreneur, you want to be in the position of having options. In other words, you want to be awarded the franchise and have the option of saying No. Delaying in decisions often removes that option for the candidate. As December approaches, elements will be announcing several great new club locations, and new Regional Developers - we are proud that our new partners understand that success comes from within, and possess the drive and determination that come hand-in-hand with success.

We gave congratulations this week to our three Atlanta gyms, for winning the prestigious “Best of Atlanta” award. It was notable to mention that this was the second “Best of” award elements had won in two weeks. To me, this is notable because it shows that consumers and members are really expressing their loyalty and affinity for elements. We get countless requests each week from potential members across the country (and sometimes world) requesting or inquiring about club locations. This growing database is becoming a major asset to the brand, especially since prospects receive our “elements living” magazine free of charge, where they can interact with our fitness experts, keep tuned-in to the latest fitness and lifestyle tips and trends, create a customized diet, and download video workouts. This “element experience” is being enhanced again next year with the addition of a full supplement line and robust online store. Consumers are able to “experience elements living” at home, and also at their Award-winning local elements club… what a concept!

Isn’t it nice to be rewarded for a job well done? Isn’t it even nicer to have good business news to share in the midst of all of the media hype on the economy?

We were very pleased to read today that elements for women was named “Best of Alpharetta.” Our growing presence in Southern markets such as Atlanta has really started to create a buzz. Consumers are frequently seeking the best health club, the newest innovations, or the best franchise to join. With our stylish clubs, convenience locations, and exclusive features such as smartcard workouts and customized coaching, it was really no surprise that our clubs are really gaining popularity… it is however, a very nice surprise to read the growing number of customer feedback, testimonials, stories and awards we are beginning to receive.

Elements Diet & Fitness Receives 2008 Best of Alpharetta Award

U.S. Local Business Association’s Award Plaque Honors the Achievement

WASHINGTON D.C., November 19, 2008 — Elements Diet & Fitness has been selected for the 2008 Best of Alpharetta Award in the Health Clubs & Gyms category by the U.S. Local Business Association (USLBA).

The USLBA “Best of Local Business” Award Program recognizes outstanding local businesses throughout the country. Each year, the USLBA identifies companies that they believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and community.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2008 USLBA Award Program focused on quality, not quantity. Winners are determined based on the information gathered both internally by the USLBA and data provided by third parties.

I like reading interviews… for me they provide a great insight into the mind of the subject. While an article is generally the opinion of the writer, an interviewer is almost like having an actual conversation with the person. I was interviewed for a fitness business magazine several months ago (I remember it being extremely warm that day). I thought it might be nice to re-publish the interview here, as these are questions which are asked of me frequently…

Catching up with elements brand director Chris Palumbo

Chris Palumbo, founder of elements fitness | diet | lifestyle has a compelling startup story. From humble beginnings in an NYC office, the brand has since transformed into an international sensation and the leading fitness brand for women. elements currently includes 54 upscale health clubs under development, an online magazine and media channel, a multi-million dollar interactive online diet portal, and an All-Star Fitness Advisory Board.

We caught up with Palumbo in his Miami Beach home to discuss the rapid success of the elements brand, his take on franchising, and general tips for startups.

How did you get started with elements?

The idea for an upscale, national women’s fitness brand began with some consumer research we were doing in the fitness industry, back in 2003. We noticed that there was a void in the important full-service women’s gym category. As a student of branding, I began to assemble a small think tank to discuss what a new, international fitness brand for women might look like, and how we would be different from current offerings. Once we felt that we had a solid concept with much growth potential, I began to recruit industry experts to help engineer the operations and software platform, the back office of the system. Putting the pieces together, complimented by a very slick consumer marketing presentation, and elements was born! We began with one club in Atlanta, and have grown steadily and quickly for the past 4 years.

Did you ever envision the brand growing the way it has?

The simple answer is yes. And no. Every entrepreneur has aspirations and dreams for their idea to thrive and grow, and many entrepreneurs even plan for this. However, the doing part is the toughest, as we know. Truly getting ahead in startup business is always 5 parts hard work, and one part luck.

Why did you decide to launch elements from Miami?

There is a saying that “geography builds credibility” with a brand. Having a Miami Beach base allows us to infuse more culture and credibility to our fitness and lifestyle offerings. We set up our headquarters on the busy and very stylish Lincoln Road, amidst restaurants, shops, and theaters. It is a great, very friendly pedestrian atmosphere which is great for hosting meetings and potential franchisee visits.

Miami is also an important gateway market to Latin America, where we plan heavy expansion. We are one of the few fitness brands to maintain a multi-lingual staff.

How much travel do you log in a year?

I am very lucky to be surrounded by a great team. Many brand directors travel far more than I do. I mostly toggle between Miami and NYC, and have frequent stops in Chicago and LA. Most of the work I do is with higher-level strategy ideas, small group training, and media relations so I am lucky to be able to focus purely on those areas.

Our team logs in thousands of miles, traversing the country (and now the world). We are very hands-on with the brand and locations.

You recently hired Nike/Warner Bros Executive Bruce Fabel to be the CEO of elements. Was it a tough decision to give up the reins of your company?

You know, I am a true believer in team building. My vision was never to sit on top of a mountain and direct the company. My style is much more organic, and I love working directly with all team members and mentoring. Bruce brought a top-level corporate background and structure to the company, including our much-coveted “human resource planning” model. I also believe having a Nike Exec on the team has opened many doors for our lifestyle brand.

The fitness and weight loss marketplace is pretty crowded. How do you make your brand stand out from the others?

elements for women started as the only full-service fitness brand for women. We still remain the only full-service fitness brand, meaning members can get a variety of amenities such as workouts, personal training, diet coaching, classes such as yoga and Pilates, and much more, all in one location.

A brand is distinct when it offers a unique consumer experience. The experience is the cornerstone of any business, and any brand that doesn’t engineer its systems from the consumer upwards is going to have a tough time with sustainability. elements has a full-time team to do consumer modeling and testing, prior to us rolling out a program at the clubs. It definitely translates into a better consumer experience and a distinct fitness brand.

One of the things which really defines elements is your All Star Fitness Advisory Board. How have you been able to attract such a high level of fitness and health celebrities to the company?

I think people know a good thing when they see it. Not only have we attracted great experts, but we have been successful in attracting and hiring real leaders, such as our CEO, a former VP from Nike and Warner Bros, as well as top executives from other fitness brands, such as Gold’s Gym corporate. We have also had great success with attracting experienced, highly-qualified franchisees who add tremendous value to our operations and training with the insight and experience they bring to the system.

We have created a very organic brand, which by its very architecture fosters interaction, creativity, and celebrity. The elements brand itself is becoming a movement.

Can you elaborate on that point?

At some point, you want your brand to become “sticky” with consumers. Our tagline for elements is “Make it Happen!” This can relate to everyone associated with the brand – consumers can make it happen with a new outlook, a new diet, or a new body, franchisees and team members can make it happen with a new career, new opportunities. It’s a strong message of empowerment that works to create a robust community, one that continues to grow each day.

I notice elements gets quite a bit of media attention in almost every fitness trade magazine. How does your team generate so much media placement?

It’s true, we do generate a lot of buzz. I learned the power and importance of the media early on in my career, and it is something we teach to each team member in the brand. We are always looking to create unique experiences, classes, programs – and the press likes that. We have had several of our trainers nationwide showcased in top women’s lifestyle publications such as Woman’s World, and the investor community has taken note also with a recent article in Investor’s Business Daily.

Neutrogena founder Cristin Bardin has recently been invited to join your Board of Directors. Can you tell us more about this?

I can say that our mission is to have the best team in the industry, bar none. A brand is only as great as its people, and this holds true for our corporate team as well as our franchisees and local club staff. We have been very lucky to be positioned as a category-leading brand in the fitness and wellness industries, and have certainly caught the attention of the right people.

What do you think are the most important factors in the relationship between a franchisee and franchisor?

Trust and confidence.

How do you think franchising has changed over the past 20 years?

Overall there is a greater push for credibility. Federal regulations, disclosure laws, and UFDD revisions have really made the industry stronger by weeding out the franchisors who were undermining the industry. I feel the industry now has the freedom to be a little less sales-oriented. I think a good system will sell itself…investors are always watching and researching.

What questions should potential franchise buyers ask when shopping for a franchise?

A good franchisor should be your partner, your coach, and your cheerleader. Track record is important. So is personality and flexibility. Potential franchisees are investing into the benefit of the years of experience, research, and forecasting that the brand should have built. Make sure you “click” with the team. Ask yourself the hard questions early on. Most franchise agreements last 10 years… Are these the people you want to do business with for that period of time? Where will the brand be in 10 years? Does that add value or detract value from what you are building today?

How do you train your franchisees?

We believe training, education, and growth is a continual process for a business owners, not a one-week gig. I would encourage any potential franchisee to really pay close attention to the training and ongoing support provided by your prospective franchisor. Site selection, construction advice, budgeting and building pro-formas are all vital for your early success. elements has one of the most robust training platforms that I know of. We begin with pre-training (concept, must-reads, meeting other owners, getting familiar with the vendors) then schedule owners or operators to come for our ELI (elements leadership institute), a 5-day hands-on workshop training.

We focus our initial training on teaching how to hire and staff correctly, how to run a business by the numbers, and community building/marketing. Once an owner has attended the initial training, they are assigned a personal business coach, and given a full set of 8 training manuals. The coach meets with them weekly (over the phone) to help guide the process of opening along, and to assess what other assistance might be needed. We find that this really helps to keep our projects on time and budget, and provides a complete support option for owners. Of course, there are other training tools, such as our owners online information library, intranet, ordering websites, and Advanced Phone Training conducted bi-weekly.

In both the short- and long-term, higher training and support levels directly translate to higher revenues and profits for a business.

What is your opinion of using Regional Developers to build a brand?

I think, if done properly, Regional Developers can be critical partners that can help support and foster total growth. Unfortunately, this industry has seen more than its fair share of franchisors who were not properly qualifying their developers, rather selling to anyone who came forward with a checkbook. RD development has to be done right. elements has a strict policy that each Regional Developer must first begin as a franchisee and develop a showcase club in their market prior to being named as the RD.

Are you concerned that the ramp up time might be too long to attract experienced developers?

We haven’t seen this to be an issue. elements has a great real estate and design team, and we are able to get units open fairly quickly. If we have a very experienced, qualified group who our Board feels very comfortable with, we might allow them to purchase an option which will hold those rights for a period until their club is open.

How much working capital do you recommend a franchisee to set aside for their new venture?

The general rule of thumb is to take your monthly rent and multiply by 7 to 10, depending on the level of competition in your market. This is a good measure to go by. We make sure each franchisee has funds set aside for working capital.

Does elements offer assistance with financing to its franchisees?

As a franchisor, I believe that you have to. I have seen many cases of people eager to get into business, and making poor financial decisions as a result. It is important to develop the business plan and the project costs with a franchisee, and then to provide them with a way to obtain the capital needed at a reasonable rate. elements has established a relationship with 2 private banks who handle the majority of the business loans for the brand. The banks are very comfortable with our model, and know the team is active with site selection and lease negotiation, which gives lenders a higher comfort level. In many cases we are able to offer a 90% loan to value, including working capital.

What do you see in the future for elements?

Given the momentum we have had, and the infrastructure that has been built, we are well positioned to dominate the women’s lifestyle category. We have built an exclusive platform of multimillion dollar web portals, magazines, and experts, complimented by well-placed, highly developed bricks-and-mortar locations.

Our 6 year growth objective is for 800 units nationally, and another 800 units internationally. Our recent stock offering has opened up several important investment channels, allowing us to own and grow more corporate owned showcase locations, and to fund expansion programs including our new online marketplace and consumer review blogs that compliment the consumer experience in the clubs.

What tips do you have for an aspiring entrepreneur?

Surround yourself with great people, listen to what they have to say – but make your own decisions. Just because something has not been done yet does not mean that it cannot be done.