John Klein - Pause Studios & Building a Wellness Lifestyle Brand

Hey everybody, welcome to the Future of Fitness, a top-rated fitness industry podcast for over three years and running. I am your host, Eric Malzone, and I have the absolute pleasure of talking to entrepreneurs, innovators, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. Please stop by futurefitness.co to subscribe and learn more. Anthony, Joe, and the team do great work, from wearables to health optimization to the latest updates from companies like WooP and Strava. FitInsider is one of the few newsletters that I actually look forward to seeing in my inbox. Plus, the platform also includes a weekly podcast, jobs board, investment fund, and resources for health tech operators. Check out the latest issue and subscribe at fitinsider.com. That's F-I-D-T Insider.com. Hey friends, if you follow this show, you may have picked up on my passion for heart rate variability when it comes to recovery, performance, and longevity. I track it religiously and I'm always looking for ways to improve. Over the past few months, I've been taking this new supplement called HRV Plus by mode and method. Over that time, I've experienced significant improvement in sleep quality, faster recovery, and an objective uptick in my average HRV. About two to three points on average. That's a big deal. HRV Plus is the world's first expert-curated, carefully sourced blend of all natural micronutrients to optimize recovery, increase performance, and boost heart rate variability. Formulated by some of the world's leading experts, HRV Plus combines their proprietary hemp extract with omega-3 oil, magnesium, and curcumin extract to target inflammation, improve sleep, and supercharge our endocannabinoid systems. I encourage you to give it a shot. Go to modemethod.com and enter discount code Eric15. That's modemodemethod.com and enter code Eric15 for 15% off. Go get it. All right, we are live. John Klein, welcome to the future of fitness.

Eric, thanks so much for having me. I really appreciate uh the time to talk to you and your audience today.

Likewise, and uh I appreciate the time you're taking as you're sitting in OHI, uh California, one of my favorite places uh in California, really, as we were talking about, just just a physically beautiful, but something about that area that you live in, man, is just relaxing and calming, and it's special. I, you know, I don't know. You tell me, why do you think it's so special?

I I think it's you know, the the the access to nature, the greenery, the hills, the mountains are just so accessible and so visible from everywhere. There is, you know, a theory of there's a healing vortex in the valley of Ojai, and a lot of you know, in the 60s and 70s healers, you know, moved up to this region because of that. But yeah, it's just a great quaint community. And you know, Mother Nature is at your fingertips where you can go on an awesome hike. Um you know, or you know, especially after the heavy rain rains, there's the streams are flowing. So if you want to do an ice bath or a coal plunge in in you know, Mother Nature's streams, those are that's available to you as well. Um, something that I'm fond of. Um but yeah, it's just it's an amazing place to to experience. So for those who haven't uh come to OHI, you know, you should definitely try to put on your calendar over the next few months.

Yeah, yeah, it is one of and I I love the oak trees too. I think that's one of my favorite things. Uh, but you know, enough about OHI. There's a lot to talk about with you, uh, John. And and uh you are the I mean you've been in in the industry for a few minutes, right? And you are the founder of Pause Studios, which is uh, I love the I guess modalities that you serve up there and and just you know the whole wellness uh you know brick and mortar category, I think is is just really exciting. So uh let's start with this. If you don't mind, John, just give us some of your background and then we can uh we can go from there.

Yeah, absolutely. So, you know, as you said, I've been in the health wellness space essentially my entire career. Most of it was spent at Equinox uh running real estate and growth for them from 2002 to 2016. Even prior to that, I was with a company in New York City called Town Sports International doing uh real estate acquisitions and club acquisitions for them. Um so you know, 25 plus years in the health-wellness space. Um and, you know, very passionate. You know, I'm a user of you know all of our modalities and you know, train three to five times a week, whether it's with a trainer or hiking in the hills of OHI. So it's just it's in my blood, and and I'm super passionate about you know all things health, wellness, and fitness.

So give us you know some of your background, like as far where did the impetus, the concept, the aha moment come when you're like, okay, I I think I have a concept here, and that turned into pause. When when did that all start? That's a great question.

Um so the actually the aha moment, I was um walking the streets of Vancouver. We were developing a club up in the Vancouver area in 2014, 2015, and I was stayed over um for a long weekend, and I was walking the streets and I saw this business called Float House. Shout out to the guys from um from Float House in in Vancouver, and I walked in there and it was a nine-room float studio. And I was surprised, you know, being that I'm in the space for a long time, I hadn't heard of floating or sensory deprivation tanks. Um, and I was intrigued by it. I actually asked to do a session, but they were completely sold out both Saturday and Sunday. And that's kind of when the light pole went off. I was like, wow, nine rooms sold out for over the weekend. And I came back to LA and started researching float studios, and there wasn't anything in LA proper. There was one like an hour away. Um, and I drove to it, I visited it, I floated, and it wasn't, you know, the experience was okay, but it was kind of mom and pop. It wasn't warm and safe and inviting. And I said, there's got to be a better way to serve this up and serve up more than just one modality. You know, learnings from Equinox is if you think about Equinox, they have eight or nine businesses under one roof, you know, yoga, spinning, Pilates, Cafe, retail, spa, fitness. Um, they have so many different revenue channels or different business channels under one roof. And, you know, that was when the concept kind of um started. It's like, how can we put together a holistic healing facility, you know, kind of preventative healthcare services under one roof, multimodality, which is a great value proposition for the consumer. Um, you save them time and you save them money, which are the probably the two most important aspects of people's lives. And that's that's really how it started. Um, and then we went down the path of, you know, kind of white, white spacing or whiteboarding out the name and the concept and which modalities we wanted to start with. We didn't start with all the modalities we had today because there were learnings along the way to where we are today in terms of the nine separate, sorry, seven separate uh modalities and revenue streams that we have at our facilities today. But we started with flotation and and sauna, and those were an overnight hit, um, and then added um coal plunges. So we were the first studio in probably the country and certainly LA to offer contrast therapy in private rooms, and we're the first you know, nationally expanding uh franchise business now to offer contrast therapy and individual suites, and you know, that is our number one selling service. You know, our cons our members love that service. And then slowly added you know, vitamin IVs and cryotherapy and LED to get to what the model is today. Um, so that that's how it started, and you know, that's where we are today in terms of our our offering to our to our community and to our members.

And that was uh when you the first studio was if I'm from memory, it was 2016, is that right?

Correct. We we opened up our studio in Venice in in 2016 and you know, had a lot of learnings over two or three years and tinkered with it and added those modalities, and then got enough confidence um and traction in the business to raise a little capital to do our second unit. And we signed that lease late in 2019 and filed our plans for permits in early 2020, and then March 15th hit. Um, and you know, the world shut down, and and we were actually able to stay open because we have nurses on staff doing our medical services, our vitamin IVs, and our intramuscular injections. So we checked in with the health department and we were able to stay open. Um, so we put the the second unit on pause, no pun intended, and just kind of took a wait and see approach to what was going to happen to our business. And then definitely took a little bit of a dip in revenue in the first three or four months of the pandemic. But then we saw a surge of utilization and spend through our facilities. Um, so that gave us the confidence to go forward with the second studio. And long story short, we got that unit open, you know, masks on in April of 2021, and it just rocketed out of the gates. And that's when we knew we were really onto something. So we went back to our investors, raised more capital. We raised about we raised about six million dollars over the last, you know, really since inception of the business. Um, but did another raise in early 2021. Um, and that fueled uh the the existing the studios that we have opening now. We just opened one in the South Bay uh in in June of 2022. Um as you and I talk here in late January, we're about to open our fourth unit in February of 2023 in Brentwood, and we're opening up our fifth corporate unit um in the summer in an area of LA called Studio City. So by this time next year, we'll have five corporate units firing all cylinders. Um, and then the you know, the the business channel we haven't even discussed yet is that we decided to launch a franchise model to rapidly scale pause nationwide about this time last year. Um so we've you know taken initiatives, you know, hired out the team and still hiring the team to support our first franchisees that are going to open up um Q1 of 2024. We've already sold multiple markets around the country, and we have Discovery Days happening each month. We're we're seeing three to five candidates you know fly in, um, each one looking at multi-unit deals, you know, around the country to have their own own pause in their own committed community, whether it's in Austin or you know, we sold units in Bettonville, Arkansas. Um so we expect to sell you know hundreds of units over the next three to five years, and ultimately be a national chain with partners in in these you know amazing communities offering these amazing services to to their members.

Uh that's really exciting, John. Uh you know, it's it's so with every great success story, there's always you know some some luck involved, right? And you've you've been around, you know that. And you know, I look at the fact that you're able to be um, you know, open during the pandemic is is critical, right? I mean, that would have set you back years, or maybe just you know, completely you you may have just lost interest. I mean, when when you realize that, I can't I mean, walk me through that moment, it must have been such a relief.

Yeah, yeah, it was it was a relief to to us and our staff and and most importantly our members. Um, and you know, we were we had launched vitamin IVs, you know, a year prior. So we people were getting, you know, nutraceuticals and vitamins to our vitamin IVs to optimize their immunity. They were jumping in our saunas and coal plunges to you know optimize immunity and and you know, overall health optimization, stress management. They were floating in our float tanks for you know anxiety and stress management. So it was it was a relief for not only our staff, but our our communities, and um, you know, we managed through it and and um yeah, it was it was it was you know trying times and frightening times, definitely some sleepless nights, you know, but that probably applies to everyone. But we got through it and you know our our business is so much stronger. And you know, the one thing I will say is the pandemic certainly accelerated the awareness for all these services, these holistic healing, you know, preventative health care services, um, where it's no longer you know an afterthought, it's a primary thought. You know, I think it's becoming as important as fitness or as nutrition, like it in if you listen to you know the the Andrew Huberman's or the Dave Aspreys or the or the Ben Greenfields, it all starts with sleep. Like if you're not optimizing your sleep, you can't perform that workout the next morning at 100%. You certainly can't perform in the boardroom at 100%. So managing stress and anxiety, which consequently will manage sleep, and if you're not getting you know great, you know, seven to eight hours of sleep each night, none of this stuff you're not going to perform at your best, whether it's you know a hard workout or a challenging day at work or you know, spending time with your family. And you know, the beauty about our services, whether it's floating or sauna or even cold plunge, um, most of them manage stress, anxiety, and optimize for sleep.

Yeah, I mean, I I every one of those modalities that I've experienced, I've loved already. And I'm I'm very like I said in the beginning of this, I'm not just kidding, I'm very excited for the overall category, which actually brings me to you know a segue on this. Is like this is me saying a category, right? Like I think of Pause Studios, uh Restore Hyper Wellness, Um, Remedy, Serotonin Center is kind of this new category. Do you do you see it that way? Do you see it as a category, or do you see yourself doing something different and unique? Like, how how do you see this whole portion of the market evolving?

No, it's definitely a category. It's definitely, it's definitely a category. You know, it's it's category unto its own, like you know, fitnesses or fitness studios. Um, and these these categories synergize incredibly well with with fitness. But like I said, if if if you're not if you're not rested, if your immunity system is not optimized, um you know, on a on a cellular level, you're not gonna have you know a great class at Barry's or OTF or SoulCycle. You know, that quality time you're you're looking to have with your family is is you know not gonna be what you want it to be. Um so it's it's definitely you know, holistic healing, athletic recovery is definitely a separate category. And the brands that you you've mentioned are the the early movers. We all, you know, Restore is definitely out in front. They've sold a ton of units and they're opening up a lot of units. So that's great because they've paved the way and they've proven on a national level that there is demand for these type of services. Um, and so you know, brands like Paws who are doing it a little bit differently, a little more experiential, a little more branded, different service offering. Like I said, we're the only brand scaling nationally with you know private contrast therapy suites, and hands down, that's our number one selling service by by far on an amazing margin. Um, flotation therapy, you know, no one else has that on a national basis. And, you know, that's probably our second most popular service. Again, you know, if you have you ever spent an hour in a float tank floating in a thousand pounds of magnesium sulfate, you know, your body's absorbing the magnesium. Most people are deficient in magnesium and the cells won't work, you know, or be optimized if you're short on magnesium. Um, you know, it's amazing for uh athletic recovery, um, back pain, sleep stress. You know, more people tell us they've had the best night's sleep ever after they've floated. Um, stack that with a little CBD and you're gonna sleep like a baby for eight hours. Um, so long way of answering your question. It's 100% a new category, and we're just warming up. And the way I kind of look at it is, you know, fitness, boutique fitness was certainly the rage, you know, in the 2010s and the 2020s, which we're only, you know, three, it's really two years into, is the decade for this category, this holistic healing preventative healthcare category, um, in a in an experiential way. Um, so we're we're warming up, and I think we got a lot more innings to go and a lot more years to go before it even becomes you know semi-mature.

And you know, coming from the the pure fitness background, John, like at Equinox, you know, as an operator, what what significant differences do you see between you know the traditional health club fitness model and what you're doing now? Um, yeah, like I said, from an operational standpoint.

Yeah, that's a good question. There are actually a lot of similarities. Um, but I guess the biggest difference is you know, fitness clubs or fitness studios want to energize the consumer, you know, and from the beginning of the journey, at Equinox, we always talked about the journey. It's really from the, you know, the moment you walk through the door, it's high energy. The music is, you know, at a certain cadence in a certain level. Uh the staff, you know, is high energy because you need that energy to perform, you know, at a great, you know, class, whether it's cycling class or you know, strength training class or working out with your personal trainer. Um, at pause, you know, and the name says it all is we're trying to get you to pause an hour out of your busy day. Um, you know, whether it's running around with your family or charging hard at work or taking a high-intensity HIT class is hit the pause button and decelerate. Literally, we want your, you know, what most of our services do is stimulate, you know, the parasympathetic nervous system to down-regulate your system, you know, mentally and physically, so you can recover and you know, wake up the next day and perform, you know, at your optimal level. So I'd say one of the bigger biggest differences is like the energy level, the mood, it's serene, it's calm. You know, we train our employees to kind of talk in a lower tone because once you walk into pause, we want to start to downregulate your nervous system, trigger the parasympathetic nervous system, and actually starts the minute you walk through the door. And then once you get into that flow tank or that sauna or that LED bed is when it really can accelerate and you're, you know, slowing down your heart rate, slowing down your brain waves. And there's great science around showing what you can do that on a regular basis, um, you're actually optimizing your health and and you know coming out the other end stronger, more you know, cute, acute and fit.

Yeah.

And I know you have besides the corporate locations and then your plans for franchising, um, which, you know, given the goals that you've stated here, like those that's many lifetimes of work ahead. But you you have a uh a vision for this being a lifestyle brand overall. And uh that can mean a lot of things, right? But what does that mean to you when you look at the the long-term vision of where pause can go?

Yeah, to me, you know, a lifestyle brand, and and Equinox, you know, was amazing at not only coining the phrase, but actually becoming a lifestyle brand is it's not something you just dabble in. It it is it is an it becomes an integral part of your lifestyle because you see the benefits of it and you appreciate the benefits of it, and you want to share the benefits of our services with your family and your friends and your community. So, you know, if you float once every quarter, that's okay. But if you really want the benefits of down regulating your system and rest and recover, you know, you should be floating, you know, at least once a week. The same applies to you know contrast therapy or cryotherapy, whatever it is you're trying to solve for, you know, you know, when you come to pause. Some people are coming to pause for athletic recovery and they're jumping in a cryo chamber that's negative 180. Degrees. And some people are coming in for vitamin IBs because they may feel like a little cold coming on, or they're about to travel across time zones and they want to optimize their immunity because they're going to they know they're going to be exposed to more germs than their normal daily traffic pattern. So, you know, lifestyle brand to me means like somebody is using your products or services on a daily basis. It becomes an integral part of their lifestyle that they really can't live without. You know, whether it's you know good nutrition or a brand that supports good nutrition or a brand that supports and offers good fitness, it's something we're going to do on a daily, or if not daily, weekly basis to you know optimize our health.

Yeah. And tactically, I've heard you talk about the things that you want to do, like uh live events, um, all kinds of different things. What so when you start looking at building that lifestyle brand, what are some of the things outside of the Birk and Mortar that you're you're hoping to launch and accomplish?

Yeah, that's a great question because those are conversations we're having now. We do we do events, you know, regularly. We just did a, you know, partnered with a brand in LA called Motion LA, which, you know, we were the recovery aspect of it. They were the fitness aspect of it at Equinox, and over 150 people attended, and 150 people did the fitness class, and 75 people did ice baths and breath work with us. So it's a great way to extend the brand out to the community and get brand awareness out to the community and show people you know different ways to recover. So there's certainly, you know, pause mobile, if you will, the event, the event side of it. Um, we're launching uh a breath work program that's specific to each one of our modalities that will launch with the opening of our studio in uh in February in Brentwood. So you'll be able to, there'll be an iPad next to a coal plunge, and there'll be a very specific breath work program for you know, prepping you to get into the coal plunge, which you know is kind of a uh a mental mental anguish, you know, the minute before you're thinking about jumping into 50-degree weather to water, it's it's a battle. And then staying in for the first minute is really difficult for a lot of people who haven't done a cold plunge or don't do cold cold water immersion often. So there's there's gonna be words of affirmation, coaching, and certainly breathing technique to help you sustain that two to three minutes in the cold plunge. And then we'll roll it out for all of our modalities for floating. There's actually audio in our float tanks, so we're gonna take advantage of that. There's audio in our saunas, um, there's audio in cryotherapy. So we're working with some experts in the breath work category to launch you know, multimodality specific breath work program. And then once we have that, you know, that will lead into other things like meditations and sound baths to really round out the content. And then there's product, right? Because if you envision um 300, 400, 500 pause locations, which is what we envision over the next you know, half a decade to decade, that's a natural distribution network for product. Um, product now in our stores represents about 8 to 10% of revenue, and we don't do a good job at it. We think we can increase that over time in terms of um ratio of revenue. Um, and it's all third party right now. We sell a lot of great brands like Moon Juice and Beekeepers and Osaia and Florin Bast. Um, and all our products are geared to stack with our services. So I wasn't joking, like if you want to get into if you want to optimize your float experience, you should definitely take you know some CBD half hour before, and you'll get in, you'll get into a deeper state of relaxation. So we know what sells best on our shelves right now. So we're gonna start to um white label our best sellers um with pause branded product and over time, you know, take back 20, 30, 40 percent of the shelves with pause branded product. And you know, it's a small business today, but when you have a distribution network of 300, 400, 500 units, you know, over the next decade, it could become a real uh meaningful business in and of itself. Um and then lastly, we merchandise, you know, we'll we'll we're selling merch now, but we'll expand that. You know, people want to wear our wear our logo, it's a badge of honor. Um so you know, those are the verticals that we're thinking about, you know, extending the brand beyond the four walls, um, which again supports the lifestyle brand um that pauses.

Yeah, awesome. You know, I'm out of curiosity too, John, out of these seven modalities that you offer currently, and I'm sure that's gonna expand over time, uh, what do you use most often? What's your favorite?

Um you know, I it's it's I look at it as like a toolbox. So a toolkit. So if I was, you know, 48 hours in New York for a business meeting, you know, beat up jet lag, and I'm sleep deprived, I'll jump in a float tank. You know, they say float floating for an hour is equivalent to like sleeping for five or six hours. Um if before that flight, you know, as I talked about, I want to optimize my immunity. So I'm getting, you know, an IV with you know extra vitamin C and it and amino acids and minerals to support my immune system. You know, days I have to perform, you know, at my best or give a presentation, or these discovery days that we're doing each month. Um I've I've created a ritual of jumping in my cold plunge. I have one in my house, and my cold plunge is a little colder than pauses because you know we gotta be, we got to solve for the average of averages of people coming in a pause. So they're about 50 degrees. My cold plunge is in the low 40s, high 30s. So I jump in that thing around 7 a.m. and it's it's better than the strongest cup of coffee you've ever had in your life. You know, there's research now that supported that you get a 250% increase in dopamine, a 500% increase in noreineprinephrine. There's no cup of coffee out there. There's no synthetic drug out there that can give you that surge of feel-good emotions or or hormones that tie to your you know, feel good, you know, emotions. Um, so it's really what I I need to solve for that day. But you know, the the short answer is I use them all, depending on what my needs are that day.

Yeah, and uh I I'm a huge proponent of cold water immersion. I've been taking a cold shower every morning for years. And when I have the opportunity to do a plunge, I do it. But it it just changes, you know, if I wake up anxious or nervous about something that's gonna happen that day. And, you know, if you're an entrepreneur and you're in business for yourself, there's always something cornered to be anxious about. Uh, it really helps, man. It's it's better than any medication. It's better than, you know, I it it's just it's incredible what it does. I've had people on the show talk about it from the scientific standpoint. Rob Wolfe had really good insights on that as well. So it's it's great. I'm I'm a believer overall. Uh, I want to, you know, shift a little bit into like the I guess the the business side of things for lack of a better term, but you you partnered with uh the repum group. Yep. Right? Um tell me about the relationship with them, or maybe particularly companies like them and what they bring to um to you know emerging franchises like your own.

Yep, great question. Um so the repum group is what's called a FSO franchise sales organization. So the Repum group in particular is an amalgamation of former executives from driven brands, which is Meineki, thousands upon thousands of units nationwide, and a few executives from the St. Gregory's group. Um the St. Gregory's group is interesting, you know, because they were an FSO that exponential fitness initially contracted with back in the days, you know, before they were the behemoth that they are today. And St. Gregory's put them on the map in terms of getting their brands out there in an expedited way. Because what the FSOs do is tap into the business consultants or business brokers or franchise brokers. And their clients are people who are looking to get out of the typical kind of avatar is, you know, I've been in corporate America for 25 years, I made a little money with stock options or a lot of money with stock or stock options. I'm sitting on a nest egg and I'm not passionate about being the you know the SVP of operations for this big conglomerate anymore. And I love health and wellness. I I, you know, I do a I do coal plunge, I get vitamin IVs, and I want to research what kind of businesses are out there that I could own myself and bring to my community. So you tap into that broker, and that broker is talking daily with our team, you know, by way of example at Repum. And so you have to, it's definitely you got to pay to play. You have to pay to get into the network, and you have to pay Repum. They take a portion of our upfront fee. Um, but it's definitely a way to accelerate the growth of your franchise business very, very rapidly. Um, so we made a deal with Repum, you know, spring of last year, heads down for you know months to prep for our first um Discovery Day, which happened in October. So we've actually had you know three discovery days thus far. Um, and it works. You know, that you get high quality candidates coming through the system, showing up at um your discovery day who are fully vetted from an operational perspective, capital perspective. You know, really what's most important to us is the passion perspective. Like if you're not passionate about what we're doing and our brand, you know, we probably won't choose you as a franchisee because that's what drives this business. Um, and so yeah, so we made a deal with Repum, and you know, we're gonna sell a lot of licenses this year with their help.

Awesome. Awesome. Uh you know, this conversation came up with a good friend who's a franchiser as well. We're we're just catching up yesterday. And uh he was like, man, the the real estate market is tough right now for franchises. And you know, you kind of explained to me a little bit about why and why maybe different than a year or two years ago. But you know, being that that, especially at Equinox, that that was a huge part of your role there. Maybe give us some insights as we look into this year of 2023. What what is the real estate market like? Is it challenging and and if so, why? It is challenging.

Um, you know, if you uh there was report on economic news this week, you know, GDP grew, retail sales grew in the last quarter of last year. The consumer is still out there, they're still they're still spending, despite all the chatter about potential, you know, negative news in the economy. The the consumer is spending. They're spending a little more, you know, selectively, um, but that's driving retail brands. And that there, therefore, that's driving demand for retail space. And um, you know, the shoe hasn't fallen off yet. So it is competitive. There's usually you know multiple brands bidding on one space. However, you know, one brand will win that space. And what what do landlords look for? They look for credit, right? And so you have to have a balance sheet, you know, in this case as a franchisee. And the good news about our franchisees is they've got balance sheets, you know, our our spend to launch a pause is you know definitely higher than the average franchise because you're building, you know, your infrastructure that is required to build a pause is definitely more comprehensive than your average franchise. So we're attracting quality franchisees with good balance sheets, and that's part of our selection process. So they have to show those balance sheets to landlords to prove that they're credit worthy. So you've got to check that box. But then landlords are definitely selective and interested in the right brand, the right lifestyle brand, the right lifestyle brand is gonna attract the right consumer to their product. And landlords are more conscientious than ever about what is the demographic of your member or your client or your consumer that's gonna come to my project. And that's where we win because we are demographic. We have actually a broad swath of demographics. We track 25-year-olds up to 55-year-olds. Um, you know, we see almost 2,500 people a month through our studios. So we drive traffic, but we also bring that lifestyle, you know, oriented consumer to the landlords or developers' project who's not only going to use pause, but cross-shop to other retailers in their project. And landlords are more focused on that than ever right now. Um and so that is one of our competitive advantages, is being that lifestyle consumer service brand. Obviously, we're not a retailer, that landlords are interested in having in their product, the kind of the cool factor and the right demographics on a daily basis coming to their project is is definitely appealing to landlords and developers. And we check that box along with you know the creditworthiness of their tenant, which is our franchisee.

Yeah, that's really interesting insights, uh, the way you look at that and see it. You know, uh, I want to get into the numbers too. And this is funny because I learned something from every interview I do, at least one thing, usually three, four, five things. Um, but you you were kind of telling me I was like, well, you know, please, you know, this is prior to our our recording. I'm like, well, you know, if you want to achieve, you know, share whatever business metrics you've got, that'd be great. You're like, well, it's it's out there, Eric. And uh, so explain to me what what you're referring to and uh what you taught me earlier.

Yeah. Um, you know, like you we talked about, most private companies don't want to share their numbers, and we fall into that category. However, if you're a franchise or you have to file an annual FDD and show when you're small, you show individual numbers, and when you're larger, you show kind of an AUV. Um so we we at our size today are showing individual numbers. Um we can only talk about you know the the kind of the line in the sand with franchising, franchise or conversation with franchisees. You can only talk about what you did yesterday. You can't talk about what you think you're gonna be tomorrow. So our numbers are in the FDD. Our 2021 FDD is public now, our 2022 FDD will be published in the next 90 days. Um, and so just kind of thinking about this, I can really only legally talk about what we've shown to date. And, you know, that's an AUV, you know, in that $1.5 million range. However, you know, and I'm not sure when this podcast is going to drop, it might drop in and around when we drop our 2022 FTD, which is March, April. What I will say is those numbers have increased significantly from what we did in 2021. So if you want to get an insight into our four-wall economics, you know, you can find, if you're savvy and creative, you can find our 2022 FDD and see what those numbers are in, you know, their 30, 40% growth. You know, our our our numbers are just, you know, we're we're very pleased with our numbers. I'll just say that. And that's why, you know, I go back to the comment earlier is I just think we're warming up. The consumer is really just becoming aware of these incredible healing modalities and the benefits they have on their mental health and their physical health. And they are more willing than ever right now to spend their discretionary dollars on them. And to some extent, I don't think they're discretionary. I think they're a must-have, and that's what they feel, and that's why they're spending the way they're spending. Um, so if you want to, you know, uh I I'm being a little cagey, but you can get to our numbers by you know looking at our our FDD, which will be republished, you know, late winter, early spring of this year, and get the updated numbers. But you know, like I said, growth over last year was up maybe 35, 40 percent.

Oh, that's great. Yeah, nice work. Um, and it's no, you know, I have no problem giving our listeners a little bit of homework, you know, to go out there and work for it, right? Um yeah, but tell me if I'm a if I'm a potential franchisee, I'm I'm looking at this, like what are some of the the big things I need to know as far as like what's an ideal market for one of these franchises? What kind of footprint, what kind of capital outlay am I expecting, um, you know, time to ROI, all those major points that people are looking at?

Yeah. Well, you know, great question. Big picture is we've studied a lot of FDDs um, you know, inside our specific space, outside of our specific space. You know, the way franchising works is the franchise or gets 7% of top line revenue, which is great for the franchise or but if you're not a you know a strong EBITA four-wall producing business, it's not so great for the franchisee. You know, our business, the way it's set up is to have a tremendous AUV or annual, you know, annual revenue, um, which is good for us. But we also, the way we've designed the business to be kind of a labor-light model and we don't have any practitioner cost associated with revenue is the EBITA margins that our business throws off are incredible, kind of second to none. So both, it's a win-win relationship between the franchise or and the franchisee. Whereas, you know, I've seen, you know, and not to, I'm not gonna call any brands, but you know, whether you're a massage brand or a hair care brand or a nail brand, and these all exist, or a lash brand, and you're doing that level of revenue, you have to pay the practitioner, you know, um, labor costs to render that service. So your gross margins are in the 40s or 50s versus ours, which are in the high 90s, because we don't have any practitioner costs. Um, and that's certainly one of our value propositions to our candidates who are coming through our sales system. Kind of other metrics, you know, studio size is 2,600 to 3,000 square feet, demographics. You know, we like to see 150,000 people in a in a territory, you know, 20,000 people making more than 100K a year. Um those are some of the general metrics for for you know the real estate and the demographics um that we're seeking. Yeah, excellent, excellent information.

So um when I ask this, it's always in you know the spirit of collaboration. But when you look at the point you're at right now, and uh, like you say earlier, this is late January 2023. Uh what what do you need right now? Like what are some of the most important things uh to your business at this critical time?

For us, because we've got a proven model, we have a we have a brand in Southern California that punches way beyond its weight. Like we only have three studios right now. And the amount of emails and calls we get, and I was just on the phone with someone from New York yesterday who, again, is that corporate executive, early 40s, kind of you know, check in the box and turn made a ton of money with their existing business, but just not passionate about what they're doing. And all their friends in LA are talking about pause to them. And he got to me because he's heard about it so many times over the last you know few months about the services, the brand. Um, and so you know, our branding is really just extends way beyond our four walls. Um to and to support that, really the answer your question directly is at this point, we've got the brand, we've got the model, it's all about team. It's all about, you know, as Jim Collins said, you know, the right people on the bus at the right time. So that is our intent focus right now. Um we had an amazing woman join us um summer of last year with eight years of operational experience at OTF Canada. Um, we just hired someone with six years of direct franchise marketing formally with Expo. Um and so our focus now, and we have a very detailed spreadsheet for hires over the next 24, 36 months down to the date they're gonna join us, is executing on that hiring plan and making sure we're building out a world-class team with deep franchise experience to support the launch, the pre-sales, and the ongoing operations of our franchise units that are gonna start opening up in Q1 of 2024. You know, my partner and I, Jeff Ono, who was at SportsCub LA for 15 years running their marketing, we both come from the corporate side of the business. We have zero franchising experience, although we've gotten a PhD in it over the last 18 months, um, is knowing what we know and knowing what we don't know, and making sure we surround our people with knowledge and credibility with what we don't know and what we're lacking. Rapidly learning, and that's how to manage, run, and operate a franchise business. So that that is really our greatest initiative right now, will be over the next two to three years.

Got it. Got it. When you look at I'm just gonna get give it a name, wellness technologies, healing technologies, uh, modalities, things like that. Um, outside of what you're currently offering, is there anything that you're keeping an eye on, something that's really interesting to you? Um Yeah, I'm I'm always curious what what you're looking at going forward.

Yeah, we've you know, we've been at this for six years now and tinkered with a lot of things and brought in modalities that we've you know offered to our members, member members on a trial basis, um, and then ultimately not you know decided not to include them in in the curated list of modalities that we have. That's not to say that we won't and can't add additional modalities in the future. I think the the medical aspect of the business, there's room for expansion there. So we just started with IVs and intramuscular, you know, vitamin IVs and intramuscular injections. We're launching more advanced um technology uh next month in our studio in Brent with peptides. Um there's amazing research about the benefits of peptides. I just started taking them myself through a nasal application. I think I'm already seeing the results. Um, so we can definitely add a lot more in the medical piece because we already have the medical side of the business figured out. We have nurses um, you know, in our studios every day already doing these um services, you know, these these health optimization services. So there's ways to you know fold in more of those technologies. Um, in terms of more hardware, you know, there's other modalities out there that are on the short list, but we haven't you know pulled the trigger on them. We are experimenting with a an existing modality, but kind of in a different format for um our fifth studio. I can't really I'm not gonna talk about it right now, but if you have me back next year, I'll I'll be able to tell you about it. But it's it's it's kind of bringing people together in a more community-centered uh-centric way within one of the modalities, and I'll leave it at that, and most people will probably be able to figure it out. Um we have a cool name for it as well. Um and so yeah, we're always looking, and I get the benefit of being kind of the you know, uh, the chief guinea pig officer of trying these things out. I'm the guy doing peptides now, and I was the guy jumping in the coal plunge, you know, four years ago and deciding to bring it in. And like I said, I'm passionate about it, I love it, and and you know, um if it works for me, it should work for you know our members and our community at large.

Well, yeah. Well, if you need anyone else to uh test stuff out on, just let me know, John. I have a long history of throwing myself down the stairs for a great purpose. Uh and uh always happy to. Um well, John, I want to be respectful of your time. This is this has been really uh intriguing and informative uh conversation. You know, if if is there any place in particular you want people to go online or to to get in touch with you? Where would you like them to go?

You could definitely learn more about our business uh at pawsstudio.com. If you're interested in in researching and getting educated on the franchise component, there's a tab there you can click on, fill out some information. You'll be contacted by you know someone at Repum to have an intro call if you want to learn more about that. Um you know, my email is john at pawsstudio.com. I'm not one of these you know CEOs who sits behind an iron curtain, doesn't want to talk to people. I love talking to the you know, the 25-year-old, you know, just out of college, who you know is intrigued by our brand and maybe wants to come work with us, you know, up to the you know PE guys who are starting to come our way to learn more about our business and our growth strategy, and you know, potent talking about a potential partnership, whether it's this year or three years from now. So, you know, welcome one, welcome all in terms of trying to communicate with me, and I'm happy to chat with anyone.

Right on. I appreciate that. John, thank you so much for spending some time with me. Congratulations on all the success uh so far. And I will absolutely take you up on that. I would love to have you back on in a year and see where this thing's at because I have a feeling it's gonna be uh another very exciting conversation. So really appreciate it, ladies and gentlemen. John Klein. Thank you, Eric.

And I just to say thank you so much for the exposure and the time, and I really enjoyed chatting with you today. Oh, 100% my pleasure.

Hey, wait, don't leave yet. This is your host, Eric Malzone, and I hope you enjoyed this episode of Future of Minute. If you did, I'm gonna ask you to do three simple things. It takes under five minutes and it goes such a long way. We really appreciate it. Number one, please subscribe to our show wherever you listen to it, iTunes, Spotify, Castbox, whatever it may be. Number two, please leave us a favorable review. Number three, share. Put it on social media, talk about it to your friends, send it in a text message, whatever it may be. Please share this episode because we put a lot of work into it. We want to make sure that as many people are getting value out of it as possible. Lastly, if you'd like to learn more, get in touch with me, simply go to the futureoffitness.co. You can subscribe to our newsletter there, or you can simply get in touch with me as I love to hear from our listeners. So thank you so much. This is Eric Malzone, and this is the future of fitness. Have a great day.