Rick Mayo - No Pressure, Just Strategy: Why Alloy Took a PE Partner After 30 Years

Hey friends, welcome to the Future of Fitness, a top-rated fitness and wellness industry podcast for over five years and running. I'm your host, Eric Malzone, and I have the honor of talking to entrepreneurs, innovators, and cutting-edge technology experts within the extremely fast-paced industries of fitness, wellness, and health sciences. If you like the show, we'd love it if you took three minutes of your day to leave us a nice supporter review wherever you consume your podcast. If you're interested in staying up to date with the future of fitness, go to futurofitness.co to subscribe and get weekly summaries dropped into your inbox. Now onto the show. One theme keeps coming up: the right technology can make or break your business. That's why I'm thrilled to introduce our new presenting sponsor, Perfect Gym. Perfect Gym isn't just another gym management system. They are part of the Sport Alliance Group, Europe's leading fitness software company that has officially entered the US market. Now, I've seen this movie before, but here's the difference. They've opened up a U.S. headquarters in Boston because they understand that the American market deserves dedicated, localized support. After digging into the platform, one benefit especially stood out. They are simplifying the nightmare that keeps business owners up at night migrations. These guys were able to migrate one mega client with more than 250 locations in six different countries in just 20 days between two payment runs. No disrupting operations, no member loss, one seamless operation that simply works. Now, if you have ever switched platforms, you know how terrifying that process can be and how truly impressive that feed is. At a high level, here's their secret sauce. They give the power back to the operator. Instead of forcing you into their closed ecosystem, their Perfect Gym Marketplace connects with over 120 integration partners. So want to use your own app, your preferred payment processor, ClassPass for booking? No problem. Whether you're running a single studio or managing a multi-location enterprise, Perfect Gym was built from the ground up for multi-club operations. They've invested a ton into this platform, and now they're bringing that European engineering excellence to America. The migration experts have arrived. Check out perfectgym.com where enterprise level sophistication meets operator freedom.

All right, here we go. Rick Mayo, welcome back. How are we doing? Well, I'm back. I could not wait to come back. This is my third, I think. I'm so honored. Might be more, but I think three.

Yeah, at least three. Um, you know, I've been doing this a little while. I feel like there's uh pandemic and pre-pandemic recordings, which are like I've kind of blacked out. And then there's like everything since then, and I think it's at least two or three times we're having you on. And um, you know, for good reason, Rick. And I'm not just blowing smoke up your skirt here, but I admire the way you operate. Um, you know, you've been in this industry a long time. Um, you know, one thing I was just ranting about with somebody who I will remain nameless about how many people are coming into this industry seemingly lately and claiming to be experts on things, but they've never operated, they've never been a trainer, they've never done like, and they're just claiming expertise in an area, and it's really irritating. And you're not, you've just been kind of not quietly. I mean, you you'll make a wave every once in a while, but you you've been, for the most part, heads down building what alloy is for many years. You've been in this industry for 30 decades. So anyway, that's a long way of saying I think your opinion matters and what you're doing.

Well, I appreciate that. I don't know if that's true, but I think if you just stick around long enough, you'll make enough mistakes and if you're able to fix the problems and keep going, you might know a thing or two. I don't know. I don't know. There's a lot smarter people out there, but I tell you, like I'm at least dumb enough to just keep sticking around and figuring it out. So yeah.

Well, I've always got the adage is like I I I know enough to know I don't know shit, right? And percent.

And the more I learn, the less I know that I know. So I'm not sure how that works, but uh yeah, that's exactly how it works. Yeah. Peter principle, right? People that know the least think they know the most, and the people that know the most don't feel like they know anything.

Yeah, bingo. Bingo.

That's it.

That's it. That's it. So let's kick off with a big question. So you had a very big announcement, right? Now you found an alloy in was it 92 year in college still? Is it?

92.

Yeah. Yes. Okay. So it's it's been a minute. Um, so uh, you know, there was a transaction with Capital Spring. I'll let you describe what that is acquisition, partnership, investment. Um 135 locations, 38 states. You've you've seen a lot of growth. So 61 locations in 2025, 46 in 2024. Talk about your audacious goal of 800, right? Um, what that means exactly. But the big thing is, you know, I I want to get you on um as soon as I could after the announcement way is like you've been doing this for 30 years. You seem to be on a great growth plan. I'm sure you're highly profitable at this point. I know the model really well. People can go back and listen to our other interviews about you talk about the model and the form, even from a training, like what the formula is. It's a simplified formula. The unit economics of your franchises work really well. Smart people like Mark Fisher are investing in, you know, industry insiders are investing in this model because it's scalable and it's good. It's solid, it's not a fashion. Anyway, you decide to go with Capital Spring. And I want to know, after all this time, what made you do something like that and where where you see the opportunity is so maybe let's start there, walk us through it.

Yeah, I think um to your point, you know, you have to be somewhat profitable to earn the right, if you will, to transact. I mean, at the end of the day, no matter how you slice it, most of the time it's gonna end up as a multiple of your profits or EBITDA. You know, sure there's some blue sky thinking, and you know, we've seen certainly in franchising that can happen where people will sell a bunch and maybe they don't have a lot open and there's some projections, but it's based on something. You know, it's got to be some operational model out there that this thing can be built off of. And so to your point, you know, if you are in a position to be able to bring on an equity partner, you are doing pretty well. So then that you ask the million dollar question, then why do it? I think for us, you know, we're uh we're a bit of a unicorn, and this is something that I'm normally, you know, uh I don't um don't do a lot of self-praise or you know, patting myself on the back because it's uh it's unnerving, you know, in some ways, and the goalpost is always moving, so it's like, what are we doing, right? Like there's always somebody doing something greater and you know, not uh bigger things to achieve. But when you look at getting to 100 open and you know, and then getting to royalties sufficient, which just means the royalties from the franchise are covering all of your expenses, it's a nice point of stability. To be able to get there without any um early funding from an outside source, you know, like a VC fund, or maybe you exited another company and you rolled it into this company, something along those lines, which is what you typically hear. It's we're a bit of a unicorn. And so I'm proud to have reached a milestone where we could do something, right, without any kind of pressure. There's no VC behind us or friends and family weirdness we had to unfurl with a punch of people pushing us, being like, okay, it's been five years, your royalty is sufficient, let's do this, right? There was no pressure other than strategic decision on our part, right? And so we looked at things and thought, well, as you know, timing is everything in business, and we are we have a bit of a tiger by the tail. You know, if if things land perfectly with permitting this year, we could open 90 locations, so along with sales on the front end of that. So that is a lot of activity, and it's one thing to sell them, but getting them open is a whole different ballgame, right? And so that's a lot of activity. And so what what we were staring down the barrel of is a lot of scale, both team, technology, and a lot of just unknowns. I mean, as good as we are at doing the thing in market, when you're in a franchise system, you're really in two dual businesses. You're in the franchise business, which has its own rules, and then you're in the business of what the franchise does in market, right? And those can be similar, but they can also be really different. And so for us to understand what things are going to look like with 200, 300, 400, 500 open, to your point, 800 awarded is probably 500-ish open for us. What are we going to need? And I would rather know ahead of time than to fix things as we go, you know, which is really the only way to do it is to figure it out. And so we thought the timing was right with what our where our growth trajectory was, and we just really wanted resources and knowledge. And so we started the process back in April of 245. And, you know, it takes a minute, right? So you vet a bunch of different groups, they get an IOI out, you accept it, then they have a timeline for an LOI, and you start filtering it down to just the groups that you feel like you can work best with. And I think that's really important. And when you're in a position, Eric, to not have to do it, there's no pressure from any outside entities. You can really be selective about the who, right? And so you had mentioned the group we partner with, Capital Spring. They're voted year over year most founder-friendly franchise. And what they specialize in is buying into founder-led companies and just coming alongside them and giving them bandwidth resources, knowledge, and helping them scale at a decent pace, which we're kind of doing anyway. And so we chose them deliberately based on who they were. And, you know, they're not disruptive, they're not a gunslinging company that's, you know, taking wild, you know, pot shots here and there, hoping something lands. They are slow and steady. And I think when you look at most of the best PE groups, the main thing they do is really mitigate risk. They're not really gunslingers. I mean, they're happy to do to get a five multiple on their investment, slow and steady, than to, you know, sure, they would love a 20, but you know, those are probably rare, and it's better that you get a consistent five than a 20 every now and then, but you know, mostly it just uh turns into a dumpster fire. So I was proud of the company that we chose and you know went through the process. We didn't wrap it up till almost the end of the year. That's how long these things take. Um but yeah, I mean, I know I'm probably answering a bunch of questions all in one long answer, but I think for us, the timing was right, and we did it because we of the activity, the growth of the business, and to get some resources, both financial knowledge, bandwidth, whatever those things are, you know, for this next phase of growth, because it's a bit of an unknown for us, and I felt like we were reaching one of those inflection points where something had to give, and and it was a good time for us to do it.

Yeah. I mean, it's a great answer, and your answer actually just sparks more questions for me. But um great. What's uh well, why why 800? Why is that number important for you? Like uh and I I I I look at this lens uh through the lens of like personal development. As I as I personally turn the half century mark soon, uh I I find myself like, well, why do I want, you know, for me, why do I want a million dollar business? Like, what what is that number even important to me, right? Like, what does this mean if I get there? Like I've seen at this age, I've seen multiple people get to where they want to be, and then they're like, shit, well now, like that wasn't as great as I thought, you know? So I'm just curious, when you look at 800, is there a significance to that number, or is that something you kind of set in a boardroom, you're like, hey, we're going here and then we'll see what happens once we get there. Like, what does that number mean to you personally?

Yeah, I mean, nothing really. I mean, I would love to say, like, you know, that's how much I squat on a regular basis. So I just thought 800 was a nice round number. It's like, I do that for sets of 10, so why not just pick 800, right? Um, yeah, not true, by the way. That being said, it was really just based on a what we thought was a reasonable growth trajectory. Like, how quickly can we grow with integrity? And what that means is can we get them open? Can we get them to revenue? You know, again, it's not just the sale, it's the getting them open and getting and helping them, coaching them, supporting them. So at the time that we set that goal, you know, we run a system called EOS, which I know you're familiar with, but it allows us to set goals from, you know, again, weekly, monthly, daily, almost, you know, all the way through to 10 years out. And we looked at 800 as awarding about 100 a year as a as a goal pace, which is a pretty brisk pace, you know, because you start selling out major territories, it's a little bit more difficult to s to find those hundred. But our runway is probably 1,500, maybe up to 2,000. I mean, just depending on you know where we end up. So there's a bunch of runway left. And so to get to 800, it's not at capacity by any means. It's just on pace with awarding about 100 a year from when we set that goal. And we're on pace to do that. And then behind that, opening about 60 a year. Again, this year, bit of a wild card. We could actually open more if permitting breaks loose in some of these tougher states that we're in. But um, right now we're on pace to hit that 800 if we could just continue to award about 100 a year. And that 800, by the way, is not open. It would be 800 awarded, which means probably about 500 open.

Gotcha. And Cattle Springs, that's a it's a PE firm. Is that correct?

Yeah, so they're a private equity group. You know, I think that's important. There was some confusion even on our team, and maybe anybody listening that's ever considering doing this, you know. I probably did a poor job explaining to my team, not our leadership team, because they were they they were part of the process. So, you know, they were able to participate some in in this exit or sale. I say exit, there you go, freak everybody out. Um, selling a portion of the company. They were able to participate, as they should have they've been there since the beginning, and they're on the leadership team. But some of the other folks on our team were like, okay, so if they buy us, do they come in or do they have people that do what we do? And it's like, oh, you know, it made me think like, geez, I did a horrible job explaining this. That's not what this is at all. That would be an acquisition, say another company buys you, and they have whatever role that you're in, they have that role already. You become then redundant, and the fear would be that then you're laid off or let go because they don't need you anymore. Typically in private equity investments, that's not what they do. And not all of them are created equal. Like I said, ours is conservative, slow steady, which I like, which is sort of our philosophy always. But um, they typically are going to come in, invest some money, and they're gonna help you grow for a certain amount of time, and then they're going to want to get a return on their investment. I'd say average time is about five years. Again, not outlandish numbers, but great thing about franchising and why there's such a high multiple of profit or EBITDA is because it's very predictable. It's like if we can sell this and it takes this long to get open, it takes this long for a unit to get to revenue, and this is the average unit value, which simply means what does an alloy location make in a year because we're sharing in the revenue with a royalty, then it's very easy to predict, a ramp. And so, you know, again, mitigating risk is the number one job, I think, of these private equity firms. They like that model, right? And so, yes, it's private equity. They come alongside you, they invest in the company, they buy a portion of the shares of your company. It could be if you're a giant, maybe it's a minority deal. Most of these are majority deals, and then you can still decide who has control. And I mean, believe me, like I've learned a ton in the last year. There's a 400 million deal options and ways you can go with things. So it was a fun learning process. But that's typically how it works. They're going to come in, they're going to invest some money. Me as the founder, that means the best word I've had heard to describe it is you de-risk it to a certain degree. So you do pull some chips off the table. So that's always nice as well, because you pull some chips off, you put some money in your pocket, and now you've got this really strong partner that hopefully has a lot of experience in franchising, which Capital Spring does, and they're going to be able to help you in this next growth phase. So there's two big pluses. One is pull chips off the table. Next, you've got this great resource. And that's typically what private equity does. You just have to be selective with the group because if they're very hostile or they want to impose too much influence on the company where they don't have knowledge, that can be a bit precarious, you know, and that could put you in a tough spot. And that's when you hear the stories are like, geez, everything that private equity invests in turns to crap because they ruin the culture and they do this and that. Well, that is not true at all. And I had not really seen that, to be honest, with the people that had actually done it. It was like these rumors of these things that have happened. I never saw it that way. And it certainly wasn't that way with us at its early innings, of course, but so far, so good. And I think you're going to be asked some hard questions and held accountable at a different level, but there's nothing wrong with that, right? Those are the same questions I'd be asking myself about my same company. So yeah, it's as kind of business as usual, but you've got this big engine now, and you've got a little bit of money in your pocket, which is kind of nice when you're uh building a franchise. It takes a while to get from launch to that royalty sufficient, stable place and a lot of money and time and energy, and you really don't know if you're going to get there. A lot of franchises don't. But once you do, it's like, whoo, you can catch your breath. And then boy, you pull some chips off the table, you catch your breath even more, and you get this really smart partner that believes in your model, right? And I'll tell you this: if you get through successfully a process like this, there is no stone unturned. I mean, they probably have on their on the buy side maybe eight groups from forensic accounting to franchise law to regular law to consultants that are looking at your sales process, your marketing, I mean everything. And if you make it through and transact with a pretty sophisticated group, it's well something to be proud of. That means you you have a good business, it's solid, you don't have any bones in your closet, right? And you pulled it off. So I'm proud of that. And also, you know, just getting started, a lot of work left to do. But that's typically how PE works. A good one doesn't want to run your business. They're not buying a job, they're trusting you to continue to do what you've done, and they're going to come alongside you with both resources, whether that be capital and/or like, I mean, these guys have access to 300 vendors, right? And so there's all these little ways that they can help us to help our franchisees as well, which is really cool.

What other uh Capital Springs, what other areas of franchising have they seen, like what other industries or verticals have they seen success in?

Yeah, a lot. A lot of food and beverage for those guys. So they are the uh Fran, they own the franchise or uh Panero Bread. They uh is it uh golly, it's a coffee concept and they're gonna kill me. Better Buzz, I believe, out of San Diego. That's a big one. They're also on the franchisee side, which I really like. So they have a they have a company uh that owns 78, I believe, Crunch Fitness Locations. Okay. A guy that you may know, Kevin LaFerrier, who's been a friend of mine in the industry, good dude. He ran PTA Global and run some other enterprises. He runs that project for them. So the thing I like about that is they both understand the psychology of the franchise or and the franchisee, because they are a franchisee as well as being a franchisor. So they have a unique perspective. And when you're sitting down and having these board meetings, we've only had one, but it's like, hey, you know, as a franchisee, I would like this, right? But as a franchise or I need it to happen this way. And so that's a unique place to sit and a view on both sides of the business for them. I really like that.

Yeah, right on. You know, I've heard for the most part, I feel like really successful PE stories are kind of quiet. Like they just go out, right? And they bring in successful, and then you know it's Panera Bread. And you're like, okay, well, no one no one looks no one looks at it back, oh, that's because of the private equity company that they partner with. But I do hear like the the it's like reverse survivor bias. It's like the ones that gone south horribly hear about often. And that's like the ones I've heard about, like two in the last year or so. I've talked to the the founders of a couple companies who really got they got pushed out. They just got they lost it. They lost control of everything and they didn't see it come in. And you know, there's so there's that exists too, but you know, I think in our industry as we mature, starting to see some really reputable PE companies come in, um, PE groups and coming in and really throwing some some gas on the fire here, which is which is really cool to see.

Yep. And again, you just have to be selective about your partner. I mean, I can't imagine being pushed out as a founder, and I don't know those situations, certainly. But look, it's human nature. You only read the bad reviews, you only listen to, you know, that you don't go tell somebody how amazing something was, you only talk about it if it was not a great experience, typically, or you'll talk about it five times more, whatever those metrics are. We all know that from owning businesses, right? So it's not that I think it happens more often than not that it you know it goes sideways. I just think people talk about it louder if it does, right? It's like to your point, slow and steady is not exciting. I mean, if we talk a couple years from now, I'm like, we're still on that pace, Eric, to 800, and it's been great. You're like, okay. You know, it's not much to talk, just just a day in the life of, same old stuff. You know, still growing, as you know. Okay, it's gonna grow and just kind of moving along, you know, and has your partners. They're fantastic. You know, it's like that is not a fun conversation. Um it's the right one, you know, hopefully, but it's not fun. But I would say, as a founder, like from where I sit, if I was to be pushed out, it would only be from lack of performance. And I'm not saying that's the case with yours because that's our group. But again, they don't want a job. And so So if we have goals and metrics, which we had anyway, right? We set our own budget that we follow with these guys, and I'm not performing. I mean, yeah, is there a is there a bigger downside for me? Yeah, I mean, I wouldn't fire myself before, but maybe I should if I can't meet my own metrics, right? Or figure it out. And so I would say if you're pushed out, maybe for me, if I was pushed out, I would think it would be my fault for not performing. It's like if I get pushed out for lack of performance, so be it, you know? And I am um I'm a big boy and I still own a huge chunk of the company. And if I felt like I ran out of talent or runway, I would happily hand the reins over to a different person to grow this business. Because first of all, I still own it. I want it to survive and I want it to grow, you know, I really do. I started the thing, and so I don't care if it my ego's not around I'm doing it, I just need it to be done. Right. And so I don't know, maybe that's a different point of view on it. But you know, I might be singing a different tune if I got fired. But like for now, that's the way I look at it. Again, two years from now, if I'm if I'm homeless and I'm living in your basement, Eric, then we'll be talking about it over coffee every morning. And you'll be able to do that.

We'll be talking it over over a couple turns on the ski resort, that's for sure. There you go. Better yet. Yeah, yeah, yeah. It wouldn't be that bad, really. It wouldn't be that bad. It really wouldn't. How does that I guess let's lean into that. Like, how does your day-to-day change now with Capital Spring and that kind of of the company as well? Like what yeah, what what are the things that were the biggest levers you're gonna pull here that you didn't have available before? Um the Future of Fitness Podcast is proudly brought to you by EGM. In an industry full of noise, with more features, more screens, more promises, eGym is focused on something far more meaningful progress that counts. EGM is a global fitness technology leader building the infrastructure behind real results. Their open ecosystem connects smart strength equipment, AI-powered software, and data-driven services to turn fitness into measurable, repeatable progress for members, trainers, operators, and communities. Now, what really excites me is how EGM brings its ecosystem together with Wellpast, their corporate wellness platform. By combining their strength equipment with AI-powered software and their corporate wellness platform Wellpast, they're leading the shift to proactive, preventative health. Isn't that what we all want? That's why we're here. The result: members feel more confident and motivated, trainers have better tools to support people, operators seek stronger retention and growth, and employers benefit from healthier, more engaged teams. This isn't innovation for show. It's progress you can see, measure, and repeat. To learn more, please visit eGim.com.

I think for us, maybe the biggest gap was the only way I know how to describe it would be strategic finance. So examples would be just financing growth and understanding how to be ahead of it a little bit. And when you have these vast resources, you can be selective at how you deploy those. You're still very responsible. But to understand where the biggest levers are to pull is a bit hard if you haven't gone through it. You know, if I did this again in 10 years, yeah, totally different ballgame. You know, maybe I'm on the investor side at that point. So, but right now I'm not. And so I think for us, our biggest blind spot was like, well, you know, it sounds silly, but like, okay, is this the time that we hire a real CFO or do we just stay with a director of finance, right? And it's like they have answered those questions over a hundred times with other brands. Since they've been in business, they've invested in a hundred different brands. They've really never had a once go just completely sideways. They're normally, again, slow and steady. So they know, yeah, about right here, give you an example. We transact within a week, um, we we uh you know basically engage with a um accounting firm that's a consultant group. They're gonna send in a fractionalized CFO, tidy up our accounting processes, get them into a software that they can that we can put more mass on, if you will, or volume that they feel comfortable with that we wouldn't be able to foresee that having never done it, right? Yeah. And so one that's one resource. We so we get a CFO right out of the gate that's done it before and scaled businesses a million times over and is like, okay, so you're at this stage, here's what you need for the next stage, and then when we get to here, you're gonna need this. And it might just be software, it might be manpower, whatever those things are. And then on their team, they have a, you know, we are not at a stage yet to really need a CMO, right? That's a it's a bigger position. We'll get there. Got marketing people, but not necessarily a CMO. So you they have a CMO that works for their firm that you get fractionally based on the adjacent relationship. So it's like all of a sudden we have a fractionalized CMO. And of course, we're the new kid on the block as far as the brands they've invested in, so we're getting a lot of love. So, you know, I'm on the phone a couple days a week with their CMO, and you know, these are the marketing positions that we need. And here's probably the first, you know, as my lady says, you know, shoot the first alligator. Like, what's the most dangerous one close to the boat? Let's kill that one first, and can prioritize those things based on what they've seen about scale. In other words, if this isn't fixed, it's really there's no point in fixing this until we do this first, right? And it's things that I probably could have figured out, but you know, instead of trial and error, it's really nice to just have someone say, You're here, we've done this a hundred times, we're going here. And that's really for me the been the biggest upside. And as far as day in the life of change, it really hasn't changed at all. I would say that everyone on our team is working a little bit more because right now we're sort of integrating. You know, obviously, if you bring in someone new, you have to get them up to speed. You're interacting now with another group of people, so there's there's more meetings, at least currently. Those are taking longer because we're new, you know, with each other. But that will smooth out over time. And I was able to talk to some other people, Eric, that Capitol Springs has partnered with in the past, and they kind of gave me the lay of the land. It's like, okay, at first it's like a flurry, you feel like you have two jobs because you're kind of like you've got this new company you're integrating, and you have to communicate with them as well. But over time, those get shorter and shorter, and then you're all rolling in the same direction, and it gets much easier, which logically makes sense. So right now it's just a little bit more work because you have a third party to now communicate with and integrate, but with that comes a lot more resources and a lot of again, those things that I said, the reason why we did it, that's become evident like almost within a week of closing with these guys, we had immediate resources.

That's awesome. So that is awesome.

Yeah, man, it's been great. It makes you feel good and it makes me feel very optimistic for our future as a franchise because things change all the time and we never know what's going to happen ultimately. But boy, I feel really good about it with a group that's very methodical, very slow and steady. They ask all the right questions and just a good group of you know individuals on that side. So yeah, man, I feel really good about these guys.

Yeah. It's probably like if you always drove like a 1962 uh Bronco and it had, you know, a stick shift and a stereo cassette player, and that was kind of it, right? And then all of a sudden you get in a Tesla, like, whoa, I have all these tools that I can use now, all these buttons, all these things, and a screen, and like all this stuff, and you're like, well, you gotta learn how to drive a new vehicle.

I always laugh about that. I have a friend that um, he and I ride motorcycles together, and the technology is moving so fast in all motor vehicles of any kind, and certainly with motorcycles, right? You have like, I remember when ABS came out and it was like, I don't need that, you know, because you know, ABS is essentially just pulses at like an obscenely fast rate so that your tires don't lock up, right? Kind of important for a motorcycle. But like everyone, including me, was like, I don't need ABS, that's what my left hand is for because that's where the front brake is, right? But there's zero chance you can pulse as fast as a computer. And as it turns out, ABS is really safe and it's great. So I adopt that. Then it's like, I don't need this, and I don't need that, I don't need that. Now I just purchased a new, you know, I've got a couple different bikes, but the BMW is the one that I ride the most, the GS, which is kind of like our on-off-road thing. But it's got heated seats and like the suspension lowers itself when you stop. So you can this is ridiculous, you know? And none of it ever needed, but now I can't live without it. You know, same thing with your probably your heated seats and your heated steering wheel in a car, like you said. It's like the heated steering wheel.

Holy shit. I I thought that was the softest thing ever. And then I got one in my truck, and I was like, I get into my wife's car, and I'm like, oh my God, why is your steering wheel so cold? Like, how do you do this every day? Like, this is awful. Yeah.

I drive the most analog vehicle ever. When my dad passed about five years ago, I inherited his old FJ, and we had done a bunch of trips in it together out to Colorado off-roading and stuff. So I totally fixed it up and just turned it into my daily driver. So it is the most analog vehicle ever. I mean, you have to put the key in the thing and turn it, you know. And I I upgraded the stereo so I have Apple CarPlay and everything, but it has nothing heated or nothing. I mean, it'll be great. If the government ever starts just shutting down everyone's cars based on computers, I'll still be rolling because this thing is like I feel like I'm hand cranking it compared to current cars. But I was riding with my um with my lady, and I had my hands on the steering wheel. We were freezing, and she just reaches over and hits this button. I'm like, oh, that is so nice on my hands. I wished I hadn't known that this is possible.

Yeah, exactly. Exactly. Uh yeah. Well, um, you know, we we haven't talked about the model. I I just kind of assume that people know about it. Uh but maybe they don't. And I guess from when you look at the model, is it is it changing? I mean, for you know, if from what I remember, you know, 130 to 150 members is is the target, 91% retention rate, your average unit volume is around 387,000, right? So for I guess people listening to operators, and maybe you can also put it through the lens of the investors why they thought this was such a a green model to scale. But why does this work so well? Why is it so attractive and you know to franchises? And you know, what if if you had that is another question I want to ask, if you had franchised earlier with this, do you think you would have screwed this up? Good question.

Probably. You know, I mean I learned a lot working alongside the folks, uh, Chuck and Dave at any time, really smart franchise ours, and you start to learn about the fr again, the franchise business is a different business. So while we were good at the thing, I think when you learn about franchising and franchise relationships and all the things that go into making a franchise system work, and those guys are at what 6,200 locations or something ridiculous now. Uh you know, I learned a lot there. So I don't think it could have gone any differently. Like had I franchised earlier, I might have had more early success because there was less noise, if you will, in the boutique space. But I don't know, man. I mean, you could say that we're still in a really interesting niche that no one is really, you know, nailing right now. So we're still in a bit of a you know, a bit of a unique category. I'm sure it's coming, and I'm sure there's some adjacent ones, but as far as like direct competitors, we don't have a ton right now. But the model is still the same. So you've got one coach in the facility in any given time training six people, and yes, 130 to 150 you know clients or members, they pay monthly for personal training, makes a really solid model for us. And I think when people hear that, the reason that like we have our differentiators, if you will. One of them is we've been in the business forever, so experience counts, right? We've been running this model forever and a day. Two, um, it's simple. And you know, it's our fifth core value. It's really hard to keep things simple. And there's so many quotes from Socrates or Steve Jobs or whoever, you know, about keeping things simple and how important that that is and how hard it is to do that. You know, I told a story recently, and I had forgotten about this. It was in an old presentation of Tim Cook at an Apple conference, and they had these round tops. I don't know, maybe sat like ten people. There was just a pile of Apple products in the middle of the table. And he's like, we say no to more amazing ideas than you can possibly imagine to make the products that are on your table world class. So, I mean, think about how many opportunities and how many directions they could go, and to say no is is really difficult to do so. And so I think to make something simple is is appealing, and then the consumer understands it when it's in market. But more importantly, maybe for franchise sales, the franchisees understand it. They like the idea of it. You know, we have a guy who um, you know, he he owned 30 jersey mics, and you can imagine like you're making sandwiches, you're all your employees are teenagers, they're all part-time. I mean, that doesn't sound easy, and I'm sure it's not. He's a very successful operator in that system. So he looks at Alloy and it's like you only have three, you know, maybe four employees at a location. And you only need 150 people? Like, this is great. Now, I would say that it's simple but not easy to make it work, right? Because you have to deliver a high level of service, but it is appealing. And and the last reason I think, Eric, is the person that is buying into Alloy as a franchisee, as an investment opportunity, is typically in the same age bracket as the end user. So if you think about who has money to invest, it's like guys that our age, right? You know, they've amassed enough wealth to be able to earn the right to invest in an opportunity. And so they look at it and say, man, this is cool. You know, yeah, I do have a bad knee. Like, I'm really fit. I like to ski, but like, man, I my knee hurts all the time. So I can't do these rock and roll boot camps. I don't want to crossfit or whatever the things are, right? And they're like, I would do this if it was in my market, and that just makes it easier for them to connect the dots. So I would say right now the big differentiators are that long-term experience, it's a simple model. It doesn't take a ton of complexity to get return. And the people that are buying it really understand it because they are the avatar as the end user.

You know, staying on that, Tim Cook, I recently read or listened to that same quote, that that scenario that happened. It's really impactful. And what are, you know, and there's a lot of things, there's a lot of this industry. I mean, you and I have talked about like the trends in this industry and the hype cycles are very, very real, almost comical if you actually look at it from a historical standpoint, right? But what are some of the things you said no to? I mean, there's there's probably you probably looked at recovery centers and like saunas and like all these things that would probably really um go along well with the formula that you guys have. So yeah, give us some example. What have been some strategic no's?

Yeah, I think um a lot of those things that you just mentioned. I'm not saying that we won't do it, but one that would be very um compelling would be like aligning ourselves and bringing into the business model some type of GLP one, you know, peptide treatment for for weight loss. Then we could, first of all, early on, I'm like, ugh, I'm not sure. Let's see how these this efficacy pans out from a health standpoint. Because how do you untether yourself once you like go to market as like, hey, we also do this, right? But now you see, Eric, and I'm sure you have, you see, Weight Watchers is now coming to our side of the fence. It's like, hey, we can help you lose a lot of weight. Here's a strength training program you can download on our app that will keep you from you know losing all your muscle mass and your bone you know density. So they're coming our way. So like logically, it's like, well, maybe we should go their way, right? But when you really look at it and the complexity that it presents and to really make it part of your business model, it's again, it just isn't in our core values to keeping it simple, right? That doesn't mean that we might align with a vendor. You know, we we have had some people there, you and I have talked about some opportunities in those areas, right? And I think those are things we're going to look at in the near future with you guys, right? And see if there's some things there for us where we can be adjacent to them. There is some financial upside, and there's certainly an upside for the end user because you're not getting away from it. It's not like people are not going to take GLP1s or peptides aren't still going to be a thing, or anti-aging is hot. I mean, we get it, right? We do. But I think there's something to be said for like, this is our core business. We can integrate these things. We have to be very deliberate about how we do it. Otherwise, we are just chasing every squirrel that runs through the room. I don't think that's the right strategy. I told you we had as a point of interest, we had our first board meeting last week with our private equity partners. And, you know, of course, the questions are like, how can we help franchisees make more money, which helps us make more money, like raise AUVs, if you will? And it's like, well, let's just let's just whiteboard this thing, you know, and that's just the way the meeting went. And it was all those things. It was like, well, we thought about saunas and red lights and you know, this and GLP1s, and I mean, there's just a million. And what about you know, meal delivery? I'm like, done it. What about supplements? Done it. I'm saying we've done it well, but done it, right? And so it was like, yes, yes, yes, yes, yes. So I was both encouraged to know that we hadn't missed all of these opportunities, but also like, okay, if we're going to do these things, we have to be very deliberate about how we do it. And we were able to explain like maybe why we didn't go full ham on some of these ideas, and they were like, oh yeah, that makes sense. So still working those things out, but to your point, I've said no to a lot of stuff because while it might have been a short-term increase in revenue, I don't know if it's the right play long-term for our brand. It's hard to say. It is, but that's a never-ending formula that we're always trying to solve. You as well in your business, right?

Yeah. Yeah, it's uh it's such an interesting time. I mean, we just seem to have this inevitable convergence of health and fitness, you know, the medical world coming into fitness, like finally, right? Exactly.

Like, hey, guess what? Breaking news, right? On Apple News, breaking news. Strength training is good for you for fat loss. I'm like, okay. You and I have known this for 30 years, it's like, okay, yeah, good to know, right? But I like I'm not complaining. I mean, better late than never. Yeah. And so I'm glad to hear it's really good for our brand right now. The popularity of GLP ones and good either med spa clinics or practitioners that are saying, hey, you really need to do some strength training on the back end of this. Like, I look at like Weight Watchers prescribing exercise and them getting press about that is a good thing for us because it doesn't mean that human beings have changed their behavior and they're going to open the Weight Watchers app and do a killer strength training workout with good form. You know, they're not. But they might say, Well, you know, I've lost 30 pounds. I'm I need to maintain some lean mass, and I don't want to lose all my bone density. Who's gonna help me, right? And and I think at this day and age, everyone knows what a trainer does. So the logical choice would be like, I'm gonna find a trainer. So it's been nothing but good for our business.

Well, it's it's become a classical um for leaders in the industry, especially in someone in a category like yours, where you're top of class in what you do, right? And it's specific. Like it's focused on strength training, specific age group, small group training, the formula, like you said, you've worked very hard to keep it simple. But it's like you have to pay attention to these things. And I think a lot of you know leaders in the industry are asking themselves, is this a build-by or partner scenario with these medical services, right? So it's like you can build it like my like lifetime, do their Miura program and you know, go bring, go grab a gym of all and and try to figure this whole thing out, right? You can buy, you can go acquire something that's adjacent and bring it in and you know, co-brand and do all those things, or you could partner with you know numerous places, maybe like a Corb Health or even a Weight Watchers or you know, one of these that uh you know offers very specific solutions to gyms, but it's it's an interesting thing. I don't know if there's a mad rush to do it, but it's definitely something you have to be thinking about and executing in you know the next few years because I mean every like headline, I don't know what the name of the new peptide is that came out recently, but like this is gonna be the first trillion dollar peptide. I've been hearing about it. It's like one where it basically mimics exercise, right? Like you can you can actually maintain muscle mass and lose weight at the same time.

Red a true tide is a good thing.

I think it starts with an yeah, it starts with an R. I don't know. Everyone fact check me on this.

It's some glycogon thing. And yeah, I hear you. And and yeah, I mean, I yeah, 100%. So to your point, those things aren't going anywhere. But I think what you said is really profound about how you either build it, you buy it, or you um partner with it, if you will, right? Um, I think is the key. And you know, if you'll let me pontificate for a second, which as you know, I love to do, but I think when you look at the way I look at our brand is a bicycle wheel. I always say this like we're the hub, right? And the hub is the center, and we're the trusted advisor in our clients' lives. And then the spokes in that wheel are, you know, supplementation, um, you know, again, hormone replacement therapy, concierge blood work, meal delivery, recovery, HRB. I mean, there's a million spokes in this bicycle wheel, right? And they're all important, but they're all sort of supporting this hub. And for us, it's like, okay, let's start with the building blocks. You got to do some strength training, you have to move more and get your heart rate up high every now and then, but don't kill yourself. You just don't have to do that anymore. And like, let's look at you know, these other things around us that we need to look into, and I think different people can benefit from those. So, how we integrate those is something that we are currently looking to solve. And there's a million ways we could do it. I think what we found early on, Eric, because it's a bit much to teach all of those things to franchisees, right? So they're, you know, a lot of our franchisees, they're they're early entrepreneurs, you know, they come out of corporate, they're you know they're figuring out how to make the sausage, so to speak. And then you're like, all right, and I want you to sell meal service because it's oh, it's easy. Well, it's easy to us, right? And you need supplements, easy, you know, this, this, this, and that. It just doesn't get traction. And they're just like putting their hands up, like, whoa, whoa, whoa. Like I'm just learning to like service people at a high level in our facility. So we have to figure out how to meaningfully um, you know. Again, put some scale on this. And it may be that we, as a brand, go direct to the consumers of our gyms and we run that play and then do a Rev share with franchisees. I mean, that might be the idea. It's like, hey, we partner with you guys, we've got concierge blood work, we've got hormone therapy, we've got peptides, all these things, great. We launch it to our, you know, now 15,000 clients or whatever that is, and that will only continue to grow. And I think it would be easier then for us to do it and to service it and to understand it than to rely on each individual location. And, you know, again, you think about bringing in like a concierge of blood work and peptides. Are you really going to try to edge every single personal trainer in every alloy who's 22 years old about what a 50-year-old lady needs for hormone replacement therapy? It's just not going to happen, no matter what you say. So you're best off just handling that centrally, I do believe. How we do that, I'm not sure, but uh that's that's at least what we're thinking now. And then we'll figure out a way to Rev share this with disease. And man, what a great resource. It'll be a great, it'll be great profiling for the brand overall. We'll pick those partners strategically, if that makes sense.

Yeah. Yeah, I think it's great. It's a great outlook. So a question I wrote down as you started talking in the beginning of this podcast is I I was curious through this 30 years of evolution of what you've done, do you look back and maybe even compare to your current position and be like, that was my favorite phase? Because I think a lot of people get through and they're like, you know, you look at like the first couple of years, we're like, I don't know if this thing's gonna freaking work. But then you kind of look back in a in a very like nostalgic way of like that was a really cool period of time, or you know, it was, oh, I remember when we hurt hit, you know, first 50 and you know, and we officially franchised, or like, yeah, is there any point in time when you're like, you know, that was that that's the point where I felt the most alive or just really remember favorably?

Yeah, I think probably two phases, and it really it's weird because they bookend my three decade plus career. So I really enjoyed just owning a business. I wouldn't even call myself an entrepreneur. You know, everybody opened them one location and you're working in there all day. I don't really think that's an entrepreneur, and I'm not throwing shade. There's probably some good things there. I was a business owner, right? I service to local community, and it was the easiest job Eric I've ever had. Like I never worked. I just walked in, I would train a few clients, I would slap backs and kiss babies, I would just cut up and crack jokes all day and go home. I didn't really work at all. What it didn't feel like it, right? I would have done that just for it's like hanging out in a weight room, you know? It was like so much fun. And I really miss putting my hands on the tangible thing that we do selfishly, because people pay you handsomely, you develop these great friendships and relationships, then they thank you as if you've done them a favor, and it's like, ah, it just doesn't get any better. So like I when I when I used to travel and talk a lot in front of trainers, they'd be like, I want to do what you're doing. Because I was traveling all over the world and you know, again, working with all these big brands. And I'm like, Do you really? Because like most of my days aren't spent anywhere near fitness at all. Like I missed those days doing what you do. I know it sounds silly, but like I really do. So I would say that was that was my phase. And then I really like entrepreneurship. You know, after you spend a bunch of time in business and you do scale something, you're like, well, this is really interesting. It's just a fun puzzle to solve at all times. And I used to uh help a friend of mine co-teach uh entrepreneurship class in a local college. I haven't in several years, but I really enjoyed that. So once we got into franchising and we started putting scale on it, I would say 23 was a fun year because we awarded almost 150 licenses that year, so it was moving quick. And I got to, I was thinking the whole time, I've got my two favorite things in the same vehicle. I've got entrepreneurship, which I'm passionate about, I love it, I talk about it all day, and fitness, which is a lifelong pursuit and changes lives. Now they're in the same vehicle. I got to see a big volume of people coming in and I could share what I had, which is 30 years of waking up and never feeling like I was going to work and putting my feet on the floor every day, hair on fire, fully excited to do what I do. And what a gift, right? Like in hindsight, what a great gift I've had. And so to be able to share that with other people. So I would say the thing itself was amazing, and I really liked it when I just had a gym because it wasn't even like a job. It was almost just a lazy, lazy thing to do, and it was so much fun. And now on the other end, it's like, okay, now I've got a tiger by the tail, but boy, it's really cool. And 23 was an amazing year of like realization that, like, holy crap, I'm teaching people both of my favorite things. So yeah, that that those are probably the two things that stood out the most. That's wonderful.

We'll leave it right there. But last question, as always, is uh in this new phase of growth that you have, very exciting time, like what do you need help with? If people are going to reach out, is there anything you're particularly interested in in hearing from them about?

Yeah, again, I mean, we talked about those spokes in the wheel. Um, you know, I've heard from like you, Eric, you're always a great resource for me. And I want to say publicly, if anybody else uh needs anything, you know, the Eric is a is an amazing source, he's a well-connected guy. He talks to a lot of smart people, not present company excluded, but he's a he's a great guy and he's very well connected and he thinks really well. And I don't know how else to say that, right? So folks like you and others, I'll be reaching out to regularly to solve these spokes, if you will. Best case scenarios, referrals, adjacent businesses. So yeah, if you've got something like that and you heard anything in my description of what we're looking for around that hub, those spokes in the wheel, if you will, reach out. I'd love to talk. We are in that process right now. And we're not we're getting our feet, our footing from this transaction, but in a few months, well, we're gonna be ready to roll. And so um, I'm actively looking.

Right on, right on. And uh if people want to reach out to your team, Rick, where where would you like them to go?

Yeah, you can go to alloyfranchise.com and just fill out a form. Um, you can find me anywhere on social media if you want to reach out that way, but probably through the website's the best way.

Right on. Well, Rick, uh congratulations on this next phase of growth. And uh, I feel like it's you know, we say that, but you've still got plenty of work to do.

So believe me, I know. Yeah, I know. But thank you first and foremost, and thanks for what you do in the industry. And I meant what I said about you being an amazing resource. That's not lost on me. And so every time you reach out, I always say yes because I'm super excited just to talk to you and you ask great questions, and you're very humble guy based on what you've accomplished as well. So thanks for all you do, Eric. Thanks for having me on again. And uh yeah, man, let's let's keep this thing rolling.

Yeah.

Turn in the big five-o. Let's see if we can do this for another 50 years.

Yeah, that's a plan. All right on. Ladies and gentlemen, Rick Mayo. Cheers.

Hey, wait, don't leave yet. This is your host, Eric Malzone, and I hope you enjoyed this episode of Future of Minnesota. 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 and 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 feature of fitness.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.