In a recent episode of  Nick Powills ’ “ Franchisor Hot Seat” podcast ,  Dennis Cieri , co-CEO and founder of  Fitness Factory Health Clubs , detailed the brand’s journey into franchising and its dedication to creating a scalable, franchisee-friendly model. With a background in real estate development and a history of building operationally sound businesses, Cieri emphasized the importance of site selection, lease negotiation and controlled growth to ensure long-term success for franchisees. Cieri shared his vision for Fitness Factory’s expansion within the densely populated New Jersey and New York markets, where the brand leverages its expertise in real estate and fitness operations to achieve sustainable growth. The franchise offers flexible entry points, allowing franchisees to join at various stages of development and tailor their involvement to fit their goals and risk tolerance. A transcript of Powill’s interview with Cieri has been provided below. It has been edited for brevity, clarity and style. Nick Powills: All right, Dennis, we start with you, then we'll get to the brand, but how did you accidentally fall into franchising? What's your franchise backstory? Dennis Cieri:  Pretty much exactly the way that you just described — it was accidentally. We were in the health club business with several corporate locations starting in 1998, growing organically. In 2017, we were eyeing a franchisor to purchase. The franchises were in great locations and would have fit perfectly into our fold, but we couldn’t come to terms on the purchase price and terms. We decided to step back and monitor the situation over the next few years. Coming out of COVID in April 2022, the timing was finally right. We had stayed in touch and maintained good relations, which allowed us to close on the purchase. Acquiring the franchisor gave us entry into the franchising world. We then converted the old franchisor’s brand names to the Fitness Factory. There are still a couple more locations that need to meet our criteria before transitioning, but we are now actively and diligently selling franchises. Powills: How many units do you guys have? Cieri:  We have eight right now with a couple in the hopper. We expect to be growing probably about five per year, I think is a strategic kind of like a controlled growth strategy, so to say. Powills: How does that hit your expectations when you got into this thing? Are you feeling like things have gone the way that you wanted? Have there been any speed bumps? Cieri:  No speed bumps — things are going the way that we wanted. We didn't say, “Oh, let's do this and we're going to open up 20 units a year” or something like that. We have private equity behind us where we're financed all internally and we grow as fast as the opportunities allow us to. So I don't want to grow because we need to grow or because we want to grow — I want to grow because there's a great opportunity for growth and we're going to take that opportunity. So if there are no opportunities, we probably won't grow. But if there are opportunities, we're going to take as many of them as we possibly can. And right now we are seeing those opportunities and we're taking them and trying to hold them for prospective franchisees. But to the extent that we don't have a franchisee because we're just too busy to find one, so to say, we'll do a corporate store as a placeholder. Powills: And then eventually flip it over to a franchisee or are you going to keep developing corporately? Cieri:  Yes, we would flip it over to a franchisee. Depending on when a franchisee wants to get involved, they could join early in the process. At that stage, we would collectively help them find locations, handle design, and oversee construction. Alternatively, they might join after we’ve already secured a lease in a great location with a smart, well-planned agreement. In that case, the design and build might already be underway or even completed. They could come in at that point, or after construction when the business is ready to open. If the club is already stable, they can take over at that time. Because we allow franchisees to join at any stage, we cater to a wide range of risk appetites. Some franchisees want to run a business but don’t want to handle tasks like finding a location, constructing a 20,000-square-foot health club, securing financing for $600,000 worth of gym equipment or completing leasehold improvements. For those individuals, we offer a product tailored to their needs, allowing them to join at the stage that works best for them. Powills: Let’s switch over to the brand, and there’s a reason I’m doing this so quickly — I’ll explain in a second. When I’m looking at a website, especially as a franchise buyer, I’m trying to identify the point of differentiation. Show me why I should buy into the business. Buried in your site is something I want to highlight: “Dennis, along with two colleagues, founded Heartland Restaurant Group and signed the largest franchise development agreement with Dunkin’ Brands in the history of the franchise.” When I think about the business side, the line I often use is, "You bet on the jockey, not the horse." If I bought your business today, I’d put that front and center. The reality is, you already have the franchisee mindset. You approached this with a scale mindset, recognizing supply and demand, and you figured out how to partner with others successfully. In my opinion, that’s why you don’t own your own business anymore. I’m betting on you because you know what you’re doing. You’ve been in this industry and clearly know how to construct a successful model. When I say that, how does it resonate with you? Cieri:  That’s interesting. I’ve always thought it was an asset to let people know I’ve been on the other side of the equation as a franchisee in a big way, but I never really considered putting it front and center. You’re not wrong, though. When I took that risk, we had to put down a significant amount of money — an ungodly amount — as a deposit for the 105-store development agreement we signed in Pittsburgh and the surrounding 16 counties. At the time, there were no Dunkin’ Donuts in Pittsburgh. People didn’t even know what Dunkin’ Donuts was there. We were building a brand from the ground up. We hit the ground running with one location, and it was tremendously successful. From there, it just snowballed. But we had to build everything — a team, a platform, growth strategies, real estate processes, training systems and more — all within Dunkin’s rules, procedures and playbook. It worked out extraordinarily well, but it took time. Nothing happened overnight. We started during the credit crisis, so you can imagine the challenges. It was like, "OK, any other meteors you want to throw at us?" Powills: I would replay what we just talked about. If I were redesigning your website, I’d have a picture of you standing in front of one of your Dunkin’ Donuts locations right at the top. The reason is simple — let’s establish credibility. What you just said is the story that sets you apart. We opened one location. We built the operations. We built the team. We made sure that unit was super successful. Then we moved on to the second. When I read about why you own Fitness Factory, the messaging could apply to almost any brand with a different logo. But your differentiation lies in your experience: you started during the credit crisis, knew what it was like to ride out turbulence and kept your eye on the prize. That’s why someone would want to buy into your business. The reality is my next question would be, “What’s the point of differentiation?” There’s a lot of competition in fitness. But your value isn’t just about competing on the consumer side; it’s about the franchise business — teaching people how to scale and build wealth. That’s a different type of customer. I’d scrap the stock image of two people at the top of your site. Instead, I’d put you in front of a Dunkin’ Donuts and highlight exactly what you just said in bullet points. That’s the blueprint for building a successful franchisee. Sounds like I’ve got to hire you for our growth model. So, what’s your point of differentiation? How have you found a way to stand out? Because when you went to Pittsburgh and there were no Dunkin’ Donuts, it was simple — you were the first. Cieri:  In Pittsburgh, there were coffee shops and donut shops. Starbucks was everywhere. So, what’s Dunkin’ Donuts, for instance? What’s the difference between their donut and your donut? Is it better? Worse? Coffee doesn’t really taste that much different — some people say yes, some people say just give me a cup of coffee and move on. Similarly, it’s not like our 45-pound plates are better than anyone else’s. But the way we do it sets us apart. First, we start with real estate. I’m a real estate developer and have done 34 Walgreens in northern and central New Jersey, along with strip shopping centers, Starbucks, Wawa gas and convenience stores, and more. I’ve been selecting and developing locations for 30 years. It’s all about location. We don’t want to be second fiddle in any market. We don’t want to be out-positioned. Then there’s the lease — you can have a great location, but if you’re overpaying for rent or have a poor lease agreement, you’ll have problems. Those are two main ingredients we put front and center. Next is operations. Since 1998, our operations have been extraordinarily successful. We believe we’ve developed a great recipe for success in the fitness industry, which is exploding. This industry isn’t growing at 5 percent per year — it’s seeing annual growth of 20 percent or more. Show me someone under 40, and I’ll show you someone who is 90 percent likely to make health and wellness a central part of their life. What’s more, they can’t imagine a future where health and wellness isn’t a priority. That’s very interesting and underscores the opportunity in this space. Powills: OK, so here’s what I’m going to do. I love these conversations because it’s like, Dennis, I see it so clearly. We get to what we offer, and you say, “What is franchising? What can you expect from the franchise?” It’s site selection, lease negotiation and an operational model perfected since 1998. Look at the category — it’s exploding with a 20 percent growth rate versus five. You start reconstructing this, taking the methodical approach and investing alongside corporately. I have no doubt you’re going to grow. But there’s such an incredible story here that’s so buried. Right now, you’re coming across as just another fitness brand in the way you’re presenting it. But it’s glorious. This is a mistake most franchises make. They don’t focus on real estate selection. When you nail real estate and lease negotiation, you can almost recover your royalty through the expertise that went into it. You could be shaving off 5-10%. When you buy into our franchise, we’ve optimized the P&L so well that you don’t even have to worry about royalty because we’ve found it in other areas. That’s huge. Cieri:  That’s right. We recently sold one of our corporate clubs to a franchisee. It was mature — not fully mature, but like a teenager. It was still growing and had some potential left. We sold it and helped them with the terms to ensure everything worked. Most importantly, when they looked at our numbers, they said, “OK, but now we have to pay a royalty.” We explained that we removed our corporate expenses attributed to each club — global expenses not at the club level but at the corporate level. You can imagine things like advertising, accountants, and some of my time and my partner’s time. It evened out. They were happy to see that the royalty actually worked better for them from day one, as it ended up being less than the management or global expenses we were attributing to the club. It was pretty interesting. Powills: There are so many philosophical things we could discuss, but one thing that drives me nuts is when Canada gets to the finish line and asks, “What about the royalty?” Go ahead — start your own business and tell me how you’re going to pay for the website, site selection, and branding. The royalty is actually the cheapest form of payment for everything you’re getting in return. Cieri:  Nick, I’ve been around a long time. My partner and I are in our 50s, and I’ve been very successful in many different businesses. The gyms fell into my lap in 1998, and I just ran with it. They kept growing, and the success kept growing. The last thing I want to do is charge someone a royalty they resent paying or feel doesn’t provide value. When I bought the franchisor — it was called Club Metro — in April 2022, I told the franchisees, “If we can’t show you value for the royalty you’re paying, and you don’t believe you’re saving or earning more than the royalty, then I don’t want it.” What am I here to do? Take someone’s royalty, say thank you, and not earn it? I don’t want to be in that business. I’ve got better things to do. I’d rather do nothing and watch with a clear conscience, knowing I didn’t take anybody’s money unfairly. I have a franchisee who came to me a year ago and said they wanted to open in a specific geographic location. I said, “Great, that works, because we want to expand in that area.” It was a natural extension of where we are today. We don’t want to grow a thousand miles away. We want organic, slow, controlled growth with great real estate. The franchisee asked, “What’s the next step? Do I give you a $50,000 check for the franchise fee?” I said, “No, I don’t want it.” They asked, “What do we do?” I replied, “Let’s find a piece of real estate. If we can’t find a great piece of real estate with a great lease, then I don’t want your $50,000. Save your money. I’m not interested in selling you a franchise and saying, ‘Good luck. Go find a spot and let me know when you have something. I’ll send the site selection committee to approve it.’” That’s not what I do. I’m not in the business of selling franchises to anyone with a heartbeat and $50,000 who claims to qualify. I want us to hit home runs. That’s why we’re growing at a controlled pace — three to five franchises a year. If we can grow faster while maintaining quality, that’s great, but this pace lets me manage it effectively. I want to ensure that if a franchisee doesn’t want the location, I’m willing to take it as a corporate store. That’s our threshold for saying yes to a franchisee. The question is, would we do that deal ourselves? If the answer is yes, then it’s yes for the franchisee. If the answer is no, we’re not interested in just taking their $50,000 or collecting royalties. No way. No thank you. Not in this lifetime, as long as we’re alive. Powills: Two things I want to say before we go into the investment. First, what a great core value or visionary statement to say, “We’re going to earn the royalty.” That’s such a powerful statement. Most franchisors sell the franchise without worrying about earning the royalty. It’s a great governor on the process. Second, in the scenario you’re describing, you qualified them as a person first. You said, “OK, you passed the beer test. I feel like you could be the right franchisee.” Then you moved on to finding the real estate and getting the lease done before they paid the check. That’s such a different mindset in franchising. The challenge comes down to awareness. There are people out there signing franchise agreements with brands today that don’t have the governor of, “We’re going to take care of you.” Those brands aren’t focused on ensuring the lifetime value of the relationship exceeds the initial payment. That’s the issue — finding the good ones among the bad. Let’s shift to the investment. How do you answer questions about potential earnings in Item 19? Cieri:  I don’t know. I’m so limited in how I can answer that question, you know? We’re doing really well. Franchisees are doing really well. What’s the investment? I don’t have enough brothers, sisters, or family members — I wish I had more — that I could just say, “Listen, please be a franchisee. Trust me when I tell you it’s worth it.” What’s the investment range? That’s another loaded question. What would be good enough for me? Would I go in and spend $2 million in leasehold improvements, another $700,000 in equipment, and open a gym for $2.7 million? No, I wouldn’t. That’s more money than I’ve spent opening eight clubs combined, let alone one. If I can’t get the right deal with the landlord and the right amount of tenant improvement (T.I.) allowance, it’s not happening. There need to be guarantees, but we’re not afraid of reasonable guarantees because we have a great track record. If it’s not good enough for me to do myself, why would I ask someone else to do it? We’re fine signing reasonable agreements to get the landlord to invest in their own space. Why would I buy an air conditioner for the landlord? It’s their building. I’ll buy equipment, but I’ll do as little T.I. as possible. If I can’t get that, we move on. I have five letters of intent in my bag right now. I don’t need to work on a site where I’d have to make that kind of massive investment just to say hello. I also want free rent — there are ways we limit the amount of money necessary to open one of these large, 20,000-square-foot gyms to a fraction of what you typically see in Item 19. Powills: Now, let’s get to the vision. This is a larger statement — I know it’s a larger statement — but think about it. Take any of the brands that are exploding right now, like the power-washing, home-based “explosion” brands. If you were behind that, it would be a much stronger brand. You’ve gone from franchisee to accidental franchisor, to protecting the royalties, to ensuring the deals are right, to looking for home runs, to walking away from deals — whether with people or landlords. You’ve built such a beautiful business. So, what’s the vision now? What’s going to make you happy in the next few years? Cieri:  We’re planning to open three to five locations per year, both corporately and through franchising. We’ll also continue selling corporate locations as franchisees become more aware of us. We can only manage so much growth at the corporate level without expanding exponentially, so we want to focus more on franchising while maintaining a corporate presence. When someone buys a corporate location and becomes a franchisee, we’ll open another corporate location to keep the process moving. I’d say three to five new franchise locations per year and about three corporate openings annually is our goal. We’ll stay in the New Jersey, New York, tri-state area and possibly expand into Long Island, Connecticut, and the Philadelphia markets. There’s plenty of room to grow in the markets we’re already in — it’s the densest area in the country. We can double or triple our footprint without leaving the region. We don’t need to expand to places like Columbus, Ohio, or Pittsburgh. That’s not our focus. However, if the right deal comes along with a qualified operator who really knows what they’re doing, we’d consider other markets. For now, we’re staying focused on our core region. Powills: This is a simple question, but is it almost a blessing? You said, “I don’t have to be doing this.” When the pressure is off and you’re not obligated to do something, does that become a big blessing in what you’re accomplishing with this business? Cieri:  We’re in control of our own lives and what we’re doing. We hope a franchisee would experience that same sense of control, free from financial pressure to act or not act. The last thing we need is a financial partner breathing down our neck, telling us we didn’t open enough stores this year and that we need to step aside from managing the company. We get calls from private equity firms all the time. They want to write us a check for $10 million or however much. I told one of them, “Here’s an idea — write me a check and call me in five years. I’ll give you back triple the amount. Otherwise, leave me alone.” I’m not interested in their money because we don’t need it. Our clubs are doing great. We have excellent creditworthiness, a great signature and everything we need to meet our growth obligations and franchising requirements. If an opportunity arises, we’ll find the necessary funding to meet it on our own terms. Powills: I was looking forward to this conversation based on the nuggets I uncovered beforehand, but I’m even more excited now than I’ve been in a while. I appreciate it and thank you for sharing some of your story today. Cieri:  Looking at it the right way, I don’t want to sound arrogant or pompous, like, “Hey, we don’t need their money” or “I’m a big shot.” We’re learning every day and trying to get better every day. There’s not a day that goes by when we don’t say, “Hey, we could do that better.” Whether it’s screwing a piece into a leg press machine on the gym floor, finding a better way to manage or improving how we work with franchisees, we’re always looking for ways to improve. We don’t pretend to know everything — we just know we’re doing well. We have a strong recipe for growth and success within our clubs and marketplace. We’ve built a great name and a respected brand, and we believe it’s worth continuing to invest in that to grow and build further. Powills: Dennis, I'm looking forward to seeing where the story goes. I appreciate you sharing it with us.  Watch the full interview above or on  YouTube .  For more interviews with those influencing the franchise industry, check out these stories on 1851 Franchise: Tiam Behdarvandan’s Let’s Get Moving Offers a Franchise Opportunity Rooted in Growth and Support Lucas Kovalcik Shares How The Gravity Vault Is Making Climbing Gyms Accessible Across the U.S. Executive Q&A: Natalie Black, CEO of Comfort Keepers