Navigating the Franchise Journey: Insights from Neighborhood Barre Founder on Building a Resilient Business

Katy Richardson, the founder of Neighborhood Barre, always knew she wanted to grow her brand beyond a single-unit, but never thought it would happen so quickly.  

“I would say franchising found me a lot faster in my journey than I thought it would,” she told 1851 Franchise Founder and Publisher Nick Powills on his “Meet the Zor” podcast. 

Richardson’s franchising journey started when a visiting customer loved the workout so much she decided that she wanted to be the brand’s very first franchisee. However, it wasn’t that simple. Richardson faced challenges when starting off, like dealing with a non-compliant franchise disclosure document. But by seeking the right advice and learning from mistakes, she navigated these obstacles.

Instead of focusing on rapid expansion, Richardson chose to prioritize the stability and support of her franchisees. She wasn’t afraid to close underperforming locations to keep the brand strong. 

“Never think twice about closing an underperforming location, because an underperforming location is only going to drag down your entire brand,” she said. 

During the pandemic, Richardson revamped the franchisee onboarding process. She introduced micro-learnings, which helped new franchisees get up to speed more effectively. This change improved the training process and showed her commitment to adapting and improving.

“We found that we were producing much stronger franchisees from the start by doing that,” she said.

Richardson emphasizes the hard work needed for success and the importance of being transparent and realistic. Her story provides valuable lessons for anyone looking to succeed in the franchising industry.

A summarized transcript of Richardson’s interview with Powills has been included below. It has been edited for clarity, brevity and style.

Nick Powills: Katy, we’re starting with you, then we’ll talk about the brand. How did you accidentally fall into franchising? What’s your franchise story?

Katy Richardson: I mean, I feel like a lot of people who have more of a bootstrapped concept have the same story where it’s like franchising found me more than seeking it out from the start. Although I did approach Neighborhood Barre with the mindset of wanting to expand, not wanting to be a single-unit operator. Not that there’s anything wrong with that; it just wasn’t necessarily my vision for what I wanted to do long term. But I would say franchising found me a lot faster in my journey than I thought it would.

Powills: So you open up your unit, and you say franchising found you. Did someone reach out and say, “We want to help you franchise,” or did you start reaching out to consultants to help you get there?

Richardson: So a client actually reached out to me, and it wasn’t even a client of my studio. It was someone who was in my area visiting, who was a client of another brand and had been interested in franchising or purchasing a franchise of that concept but couldn’t because of territory restrictions. And once she found our brand, she loved the workout. She loved what we did in the studio, just our whole approach to Barre fitness. And she decided that she wanted to be our very first franchisee. So that’s kind of how it started.

Powills: Okay. So take me through the process of going from non-franchise to franchise. How was that, and how did it hit or miss your expectations?

Richardson: Okay. Loaded question. Let me walk it back. It is not easy to do when you don’t know anyone in the space to guide you on how to do it, so I tell everyone that the one thing I wish I would have done sooner in my whole business journey is put the pressure on myself to seek out the help that I needed instead of feeling like I needed to figure everything out for myself. Like I was capable of figuring it out, but I could have saved myself a lot of money and process. So it was a lot of — like I mentioned in the beginning — bootstrapping, figuring it out on my own, meeting with attorneys. And then I was approached by some franchise consultants, which I think is really common.

They informed me that I had a non-compliant franchise disclosure document, which I didn’t know because I trusted an attorney who claimed that he could write the document for me. Luckily, that was very short-lived, and we didn’t have any franchisees on that franchise disclosure document. But they kind of, out of the goodness of their heart, guided me toward some things that I needed to do. I have a great attorney now — one of the top franchising attorneys in the country — who has been able to guide me as well. But it is difficult to determine what your growth journey is going to be when you start franchising, especially when you go from having just two independent units to then beginning to franchise.

Franchise consultants will wave in front of your face that, you know, “Sign up with this firm, and we’ll sell 100 locations in the next four years,” and blah, blah, blah. That’s not super realistic, at least not in my experience, so you have to make the decision: Are you going to bootstrap your brand and grow it slowly and strategically —  which is what I decided to do — or are you going to really seek out a partner that can accelerate your growth from the jump, but that’s going to cost a lot of money and time? So it’s however you choose your growth path to be.

Powills: On the broker community or the FSO community that says, “We’ll add a thousand of these in five minutes,” the challenge is not whether they can sell franchises. Are they selling franchises with integrity, meaning are they actually bringing in candidates who are going to scale within the business? And are they giving you enough time and money resources, financial resources to build up a support mechanism around? 

Richardson: I found out within my first couple of years of franchising that exactly what you said, you can get all of these promises of, “Oh, we can grow your brand, we can sell this many units, we can do this, we can do that.” But they never have a conversation about what you as the franchisor need to do on your side to support what you’re creating.

And to your point, it could have caused an absolute implosion of the brand had I not seen red flags and gotten an attorney involved or had tough conversations. So I think as a franchisor, when you’re looking to franchise your business, you have to also really advocate for yourself. And to your point, know what you’re getting into. 

Everything you said, I agree with 100%. I had no idea what I was getting into. I thought any person that wanted to buy a Neighborhood Barre was going to want it to be as successful as I wanted it to be. You find out that they don’t necessarily understand what goes into running a small business until somebody actually starts running their small business.

So learning how to guide people through the process of what it’s going to take to own your own business, even in just that vetting process of leads — going back to 2015-16, for me, I learned so much in those years about how to guide people through the process, how to vet leads, because it’s not just about numbers, it’s not about dots on the map — it’s about being able to support what you’re creating, and being able to build a strong system around you of people who can validate for new franchisees coming into the system. That’s the only way to get stronger.

So unless you, from the jump, get a great strategic partner that has really great resources and can accelerate your growth and provide that support that you need, it’s difficult to do it all on your own with just outsourcing to franchise development companies when you don’t know exactly what that means.

Powills: I would like to see more of your story when I land on your website, because I think that’s what I’m betting on. Everything you just said, if someone were to watch this, it’s going to resonate with them. Because even on the vetting of a franchisee, to say, “This is not easy. Yes, you will feel like a hero because you have a cool studio in your market. But then you got to go to work.”

Richardson: Totally. And, you know, unfortunately, there are some concepts out there in my industry in particular that are selling themselves as more of a set-it-and-forget-it absentee owner type of model. And that’s not really the reality in the fitness industry, at least the boutique fitness industry.

I’ve had conversations with franchisees of other brands that have said, “Yes, I purchased this concept. It was sold to me as an absentee owner, set-it-and-forget-it. I can get a development deal, pop these open, make money.” It’s a good thing. I like the industry that I chose to franchise, otherwise, I would have sold it; I would have flipped it. Because right now, at least in fitness — we were hit really hard during the pandemic and our whole industry is still trying to pull out of that.

It’s confusing because you still see a lot of new concepts popping up while older concepts are still in recovery. But it’s also a good thing because the industry is moving forward. But especially right now, it’s not a set-it-and-forget-it, so you do have to be careful about when you’re looking to be a franchisee, vetting the brand itself on how absentee it is. If you’re looking for absentee ownership, fitness might not be for you right now. Just understanding the concept that you’re purchasing.

Powills: Circling all the way back, I think some of your early decisions have — whether purposeful or not — lifted up a little bit more transparency that in the long term, I think it’s going to benefit you on your growth pattern. Where do you currently stand? How many units are open?

Richardson: We have 22 units open and a few in development right now. We took a small contraction last year, which was a strategic contraction. It really helped us. I went to a conference in New York a couple of years ago, and one of the speakers made a big point to say, “Never think twice about closing an underperforming location, because an underperforming location is only going to drag down your entire brand.” And I was like, finally, somebody gave me permission. 

So that’s another thing. You know in your gut all of these things you learn along the way, kind of circling back to those earlier days. It’s easier to connect the dots when you look back than when you look forward. But even just these little moments in time where you get this clarity, it’s like, “Okay, I feel like I have permission to do this.” It might be uncomfortable, it might be scary, but you take that next step and you see doors open. You see underperforming studios — getting those out, being able to put more of our time and resources into our franchisees, being able to lift them up, being able to lift the middle up towards the top, and then seeing the fruits of your labor instead of always being stuck on, “Why isn’t this one location doing better?”

There could be a myriad of reasons. The number one reason is the person driving the ship. But you can’t get stuck on what’s not going well. Sometimes you just have to cut those losses and focus on what is going well. And then everything else kind of aligns from there.

Powills: In hiring, we’re trained to hire slowly and fire fast. In franchising, it’s hiring fast and firing slowly. It’s almost like a backward thing. If I’m a buyer looking at a brand, I’m looking at you not being afraid to correct mistakes. And that’s a big thing. Because you can look at a billion awards and brands that say we’re going to have 7 billion locations next year. There’s very few that say, we’re taking an honest approach to growth and franchising, and look how it’s impacting our business.

Richardson: Right, I agree with that. And you also see brands that tout themselves on, “We’ve never closed a location.” Okay, well, maybe you should have. That doesn’t necessarily mean success. Never closing a location could mean that everybody behind the scenes is scrambling, saying, “Who can we transfer this location to? How can we get it to make money?" You have no idea what that really means.

Powills: So if you go back to franchising, you go through the process of doing this and now you have north of 20 locations open. Is it where you expected it to be? Were there, like, a million consultants saying you’re going to have 100 units? Are you comfortable and excited? Are you stressed about where you’re at? Are you clamoring for that next deal? Where are you at mentally on this?

Richardson: That’s a really great question. I’ll walk it back a few years. Going into 2020 — I don’t want to make everything about the pandemic, but just to kind of put it in perspective — going into 2020, I was really frustrated that we didn’t have more locations than we had because I had been in the franchising game for almost five years. At that point, it felt like we should be further along. I was kind of hanging my personal success and worth on the number of locations versus really peeling back the onion and seeing what success actually means in franchising. And I say almost five years, people have been doing this for so much longer, but your perspective is your perspective at that time.

Once everyone was mandated to close, I was like, “Thank God we don’t have more than 16 locations.” I could see everything I had built, if it was not on a solid foundation, completely crumbling. I watched other brands in my industry, particularly in my niche, crumble because they were not built on a solid foundation. That put things in perspective for me, going back to all of the things we talked about. I made a conscious choice to pull back on franchise sales because I wanted to get everyone steady and stable. We made strategic decisions to not charge royalties for the months that people were shut down, even though we were also strategically preserving their revenue, but just keeping everyone as calm as possible so they could think clearly and get to the other side. We didn’t know when the other side was going to be. 

Then out of the sky, at the end of 2020, fell just an ideal franchisee, and she’s still one of our top producers. That tipped the domino. We sold 10 locations back-to-back after that. To your point, you have to support what you’re selling and opening. We did a little bit of “Let’s get these 10 open,” then pulled back and re-stabilized. We did that re-stabilization from about March of 2023 through about March of this year.

Powills: Super honest of you to say, “My measurement of my scorecard was how many units we sold,” but the reality is you can get to the same number in two different ways. You can go sell a whole bunch more franchises or you can find a way to help your franchisees make more money and build more customers. Let’s say a candidate has watched us up to this point. What else do you want them to know about the business before we sign off?

Richardson: I mean, the business in general — a lot of people think that they need to be an instructor in their own studio, which we don’t require. We do require all of our franchise owners to go through our instructor training so that they can be a resource to their team. People think if they’re getting into the fitness industry, they have to be the best on the mic for their own studio, and they absolutely do not. You just have to make strategic hires. One thing we also were able to do over the past few years, to go back to what you were saying about going deep versus going wide with the business, is really focus on individual unit sales and average unit volume and make that our key metric. We’ve done a lot of work around the P&Ls [profits and losses] for an average Neighborhood Barre location.

One thing that’s great about our concept is we’re big on not wanting to over-leverage our franchisees. Our concept can exist in tertiary markets, which is not common for boutique fitness. But the concept was started by me, who had no money and had to make it work on a budget. I don’t see any reason for us to stray from that just to charge franchisees more. We can exist in varying size markets, anywhere from a large market down to a tertiary market, which is pretty unique. Our onboarding process, like a lot of onboarding for new franchisees, requires you to travel to the headquarters and go through this week of training. During the pandemic, because we sold so many locations and everything was remote, we reworked our entire franchisee onboarding process to be a series of micro-learnings. We found that we were producing much stronger franchisees from the start by doing that. It allows us to do everything remotely and on a schedule where our new owners can retain that information. It makes it easier on everybody, on us and on a new owner, to onboard and become a studio owner with the way we’ve recently redone our onboarding.

Powills: Franchise sales is arguably easier than franchising a business. If you can get those two things to line up, it can be quite awesome. It seems like from the way you told your story, you’re doing a lot of the right things. I’m grateful that you shared some of your story with us today.

Richardson: Absolutely. I’m a pretty transparent person and I think that’s really important in business because, so often, people just want to talk about the highlights. In my personal journey, I told you one big lesson I had to learn was reaching out for help, hearing from other business owners. There were a lot of times where I didn’t want to hear from other business owners because I was afraid it would make me feel bad about the reality of what it takes to franchise a business or run a business. When I opened up and really started listening to other people’s stories — the ones that were transparent that had struggles — that’s what people relate to the most. I think my franchisees relate to that. They want to know that I’ve walked in their shoes, that I’ve experienced those hardships and got to the other side. Owning a business can feel very isolating at times, as weird as that is. If you are not that super entrepreneurial person, and you know that you are just hard-headed and can push through anything, a franchise is a great fit for you because you have other people that surround you that you can lean on, who have been through the tough times and the great times. You don’t feel so alone in your journey.

Watch the full episode above or on YouTube.