It was great to be able to have good business news to share last week, among with the flood of bad news from Wall Street. elements has announced more locations under development this month than many other fitness brands combined - over 28 in total! No doubt that we are in a serious growth streak, we are also on the verge of announcing some additional strong international locations in Australia, Canada, and (once again) India. I was especially happy to see two of our original elements club owners upgrade to become Regional Developers (meaning that they will now be entrusted with the development and support of clubs in a specific geographic region - adding a nice level of local expertise to our already-strong franchisee support. It is great to see our partners grow.

Below is the news release we sent from our Central Offices last week:
Miami Beach, FL – 09/26/08 – elements™ has announced the addition of two new regional developers and 20 new proposed franchise locations throughout the Ohio and New England areas, marking tremendous growth for the upscale women’s fitness brand.

Two elements™ club owners, Lisa Whitmyer (Cleveland, OH) and Brenda Perkins (Exter, NH), have become Regional Developers for the fast-growing women’s fitness and lifestyle chain. As regional developers, the executives will facilitate and manage growth in the regions of Central Ohio and New England for the elements™ brand, including providing local training and support to geographically centric locations. The company estimates over 20 new elements™ locations will be developed between the two developers within the next 3-4 years.

Elements has created a platform for women to come together in an environment of health and wellness. The upscale fitness brand differs from other health club providers with its balanced approach to a healthy lifestyle: body, beauty and mind. Elements also features a very popular online magazine and media channel, elements living, an full-service interactive diet, BalanceD, and a acclaim retail line.

Brenda Perkins is owner of an elements™ fitness in Exeter, NH. She became an owner after leaving her job as an executive at a Fortune 100 company and participating in a missionary program in the orphanages of India. She originally chose to open an elements™ franchise to help direct profits to social causes she thought needed addressing.

Lisa Whitmyer previously acted as a sales executive for a NASDAQ-traded healthcare company before becoming owner of an elements™ franchise in Colombus, Ohio. Lisa chose to open an elements™ franchise based in part on her mother’s breast cancer diagnosis and her own commitment to women’s health topics and well-being. Being at risk for breast cancer changed Lisa’s perspective on fitness and overall health, and she made the commitment to turn a traumatic life experience into a motivational one. Lisa also began training as a triathelete more than six years ago.

For more information about business opportunities with elements™ or the new regional developers, please contact our elements Central Offices at 866-893-9603 click here.

[caption id="attachment_262" align="alignleft" width="168" caption="Franchisee: elements, Exeter, NH"][/caption]

We were very excited this week to announce two new Regional Developers to the elements for women franchise system. We began the national growth of our Miami-based upscale fitness brand about three years ago, and now have over 70 locations worldwide under development. One of the most rewarding and exciting aspects is to see franchisees succeed, and expand into larger roles, such as becoming a Regional Developer. We have had two such cases - a good testament to the strength and skill of our club owners. elements is becoming the category leader in fitness clubs for women, through no small part the hard work of our team members, management team, and franchisees across the country.

The article at left tells about one of our elements club owners who is using her business as a vehicle to give back to a charitable mission. This is a great foundation for a business, and an excellent way to build community - Brenda Perkins has done both.

[caption id="attachment_242" align="aligncenter" width="300" caption="At IHRSA trade show in Las Vegas"][/caption]

As you may know, Wall Street has seen two major events occur over the
weekend, including the meltdown of Lehman Brothers, a 150+ year old
founding financial institution and the takeover of Merrill lynch, an equally large
brokerage.

This is very likely to have people talking about the instability of the
financial system, many analysts have said we are one step away from a financial
meltdown.

Of course the leaders of companies all across the country (and world) have been carefully analysing with their finance team the implications and outlook for their companies. I thought I would share our thinking on the economy with you…

How this news affects elements:

1. Franchising, or the ability to own your business as part of a proven brand, is a tremendous stabilization step for so many affected by an economic crisis. Many become disillusioned with the stock market after a market crisis. We naturally feel as if we were “doing the right thing” by investing our savings into institutions, but fast realize that we have no power over our own investments and savings. Many investors at this point seriously consider owning their own business, making an investment in themselves.

The timing is excellent at this stage, because potential ownes actually gain more confidence in themselves, and realize an important truth - no one will ever watch your money closer than you. It is common to see a surge in franchise sales for strong brands, because, as a franchisee, someone can invest their money in themselves, but have the stability and security of a proven team behind them.

Many very qualified owners are in fear of losing their jobs, or their investments, and business ownership now seems not only like a logical choice, but also as a better option.

Hard financial times are one of the most popular times for savvy buyers to invest in both real estate and businesses.

Obviously, in terms of business, the best investment is always the best brand, or category leaders who offer more market potential for their franchisees

How it affects sales in elements stock:

Private companies, such as elements, are excellent options for stronger investors when
the financial markets are faltering, because our performance is generally independant of markets, and we can offer some level of stability (and often much higher multiples) to investors. While some shy away from all but government investments in general, others will look to widen their portfolio. The idea of taking a small portion and investing into a earlier-stage business with great momentum and track record.

As is the case with elements - there are several acquisition transactions in our timeline which could dramatically increase the valuation of the company - during this “first round” the owners are able to buy at the lowest starting point. This type of exponential growth is very apprealing to some, who understand that any investment comes with its pluses, and minuses.

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As the chairman of elements group, I have the privilege of collaborating in many diverse areas of our brand’s growth. Franchise training is one of my most favorite, and one of our most important jobs, as we continue to build a brand described as “the category leader in fitness clubs for women.”

The following is an excerpt from a training exercise I did, which could relate to any business trying to improve its visibility within a market…

Is your club famous yet? Lets talk today about how to really build
buzz locally, and drive more traffic to your elements club organically.

We have mentioned the importance of the web in consumer’s buying
patterns. Women use the web to research, explore, and 78% make buying
decisions prior to ever visiting your club (or business).

Web 2.0 is a term given to the new, interactive nature of the web,
focusing on Social Networking, blogging, and consumer reviews.

Not only is it important for your business to have a great, clear
website, but it is equally important to compliment a website with local
business presence, and consumer reviews.

The more (positive) consumer feedback you have on your business, the
more credible the business becomes, and the more confident a consumer
will be in making a decision to join on her first visit.

We spoke last week about how to build and maximize your Local Yahoo
Listing, and how to add consumer reviews.

This week, I would like to focus on one of the internet’s top
Consumer Review websites, www.kudzu.com. Kudzu, names after the
voraciously fast-spreading vines the grow in the south, is a great way to
describe the effects of consumer reviews.

Having your club listed on sites such as Kudzu will increase your
exposure locally. By following our guidance on how to properly setup the
listing, consumers who type keywords such as “Atlanta fitness, local
gym Atlanta, great fitness club, etc…” will be able to quickly locate
your club, and ad.

The more times your club is mentioned, the higher your listing will be,
and the greater the chances of being prominently displayed.

To begin, build you free listing on Kudzu. Next, choose one of their
Annual Optimization packages:

Tell your story and get more exposure for only $750/year:
· Higher placement in search
· Add photos and video — to showcase
your work
· Marketing description — to tell your
story
· Your information submitted to major
search engines

Stand out from the competition for just $2000/year:
· Highest placement in search
· Maximum exposure to your profile
· Quickview preview — to stand out in
results
· Enjoy phone support

In a smaller market, I believe an enhanced profile is fine. If you are
in a more competitive market, or larger urban area, elements recommends
you invest into a “preferred profile”

We can provide to you photos, videos, and other items which will create
a more complete listing.

After your listing is complete, you will want to print and distribute
the attached form to prospects and members, asking them to rate their
experience. You will want to diligently check your reviews, and
personally comment on any which may need to be better explained.

Our team will also be adding periodic reviews and comments to help
support the listing, and your optimization (placement) levels.

Both Kudzu and yahoo require a business to have a physical location
prior to being advertised. We recommend building the listings AS SOON AS
you have a signed lease. There are many ways to begin consumer reviews,
building prospect lists, and selling to consumers (BalanceD or Online
store) prior to opening.

There are many advantages to being part of a franchise. In my opinion, the ongoing and in-depth training, on each and every aspect of your business, is one of the most important. An important part of your due diligence, before purchasing into any franchise, would be to really understand the types of support and training that is provided both prior and after you open your doors…. this is the secret that separates the good franchise systems from the truly great ones.

[caption id="attachment_209" align="alignleft" width="300" caption="Features a story on elements founder Christopher Palumbo"][/caption]

It was excited to see myself and read about elements for women in Investors Business Daily today! I was flying back to Miami from a visit to Detroit, and picked up a copy in the new (and very beautiful) airport. The article was about following your dreams, and the inevitable happiness that results from such. Randy Pausch, a well known professor at Carnegie Mellon University (my alma mater), and the author of “The Last Lecture.”   Pausch recently died of cancer at a very young age, but prior to his death began a national lecture series to share his belief that pursuing your dreams helps build a fulfilling life.

Click here to read the article.

pon entering the building, I noticed the use of “living walls,” one of the design features that we use throughout many of our elements clubs… the designers has used it to add character to the building exterior, as well as add intrigue to the space. It was a great evening, a delicious gourmet Italian meal, and a nice opportunity

Im not sure why I was so surprised to see the cover of Time magazine… I mean, we all know that obesity is one of the top killers of Americans… we know that each generation is producing heavier and heavier children. Still, you must admit, there is something very in-your-face about the cover of Time magazine.

The article (and countless studies) went on to detail the various factors to blame… increased portion sizes, trans-fats, and parents failing to teach proper eating and healthy lifestyle tips to their children.

It doesn’t take a scientist to recognize that there is a dangerous trend at work. I believe that most parents with overweight children are aware of the dangers, but are lacking easy solution on how to adapt a change. Let’s face it, parenting is tough work, having to gingely coach a child into exercising and eating right, on top of the other 1,000 challenges just makes an already challenging job that much tougher.

One proven solution is to be a positive role model. Many published studies show that overweight parents are more than 100% more likely to have overweight children than their fit-an-trim counterparts. Again, this really makes sense- a child grows up seeing the importance of exercise, watching their mom and dad make time for the gym, selecting healthier options. Exercise can (and should be) a family acitivity. Healthy cooking can be a part of an everyday lifestyle. At elements and BalanceD, few of our clients initially realize that hiring a personal trainer or a diet coach can also be a true benefit to their families, they generally will begin coaching or a weight loss program for a personal solution. While this is great, it is a true bonus in my opinion when that knowledge is shared to create a healthy lifestyle for the family. Our lifestyle coaches make shopping lists, suggest recipes, and can even adapt your family’s favorites into a lighter version. Parents making better food and cooking choices makes for a healthier (and slimmer) family. What more compelling reason could their be to begin a wellness program today?

[caption id="" align="alignnone" width="300" caption="elements-for-women-discover-wellness-campaign-banner"][/caption]

Going green is the buzzword these days… rising fuel costs has made it not only politically correct, but often necessary to consider environmental and efficiency issues in our everyday lives.

Going green comes from our inherit desire to do good… recycling, conserving, and helping others ultimately make us feel better about ourselves. The most successful, or more established we become in our own lives, the stronger the desire is to give back, and do good for the community. It is not surprising to me how many executives are drawn to elements because of the desire to franchise or own a business which can do good for others. The fitness and wellness industries are very lucrative, due to their explosive double-digit growth and re-occurring membership revenue model, but I still maintain that the true success stories in our industry are those owners who truly enjoy what they do, and who are proud to own a business which does so much good for the community.

elements was featured on ABC news today, for our technologically advanced Smartcard Workouts… click here to watch the video

Turn on any radio or television, read any newspaper, and the stories all have a similar tone… steep price jumps in groceries and gasoline, two important staples and a powerful indicator of economic performance.

One of the primary functions of a strategist is to forecast economic trends, well prior to them happening, and set the company course accordingly. As far as I know, elements is the only non-publicly traded lifestyle or fitness company to have a strategist as a part of the brand team. This foresight allows us to outperform many competitors on both a club and corporate level. The corporate performance is especially important for our franchisees and stockholders, as a powerful “mother ship” helps to ensure the success of all local clubs, programs and franchisees.

We had predicted the economic softening many months ahead of its arrival, and has also predicted that in the diet and fitness sectors, consumer purchases under $300 would hold fairly streadily, and consumer purchases under $100 would actually increase. This is attributed to several factors including the high perceived value from a fitness membership, especially at a premium club such as elements. It is also attributed to Americans canceling larger leisure purchases, such as golf outings and trips, in favor of smaller ticket, value driven purchases, such as fitness club memberships and weight loss programs. Even though elements is perceived as an upscale brand by consumers, it is not considered a frivolous or luxury purchase (such as a $700 pair of Gucci shoes), rather a necessity to maintain a healthy lifestyle.

We have taken several steps ahead of time to rally during this economic downtown, including focusing more of our corporate resources on developing and acquiring company owned stores and fitness clubs. This type of economy makes a great acquisition scenario for experienced operations team such as ours, and allows the company to derive more revenue from consumer-driven purchases, such as our BalanceD online diet and local club operations. This diversity in income makes elements significant more recession-resistant than our competitors, many of which have announced significant closings and cutbacks, while we continue to scale in the other direction. I do also attribute this to our prudent strategies on acquisitions and contracts, and my personal belief that each deal must stand on its own, and make sense on its own merits.

For well educated entrepreneurs, an economic downturn is absolutely the best time to start a business. Many long term agreements, such as real estate leases can be well-negotiated, sites are easier to come by, and contractors are more eager for the job, making prices more flexible. It takes 5-10 months to get a club open, start to finish, so the new location will be very well positioned upon opening, and will have a very solid financial foundation. We will be announcing several expansion deals this month including Nashville area clubs, Columbus Ohio regional development, and several very upmarket cities in the Northeast. Although the areas are diverse, each of the groups shares one common component, a well educated entrepreneur at the help.

I am heading to Charlotte, North Carolina this week, as we prepare to announce the expansion of our uptown Charlotte location, and the development of a company owned BalanceD Diet store, in uptown’s banking district.