January 22, 2018
Shop Talk

Founder of Boost Fitness is creating a fitness empire

Mark Federico: President of New England for Fitness Holdings, LLC in Hudson

Former title: Founder, Boost Fitness

Employees: 200 (Boost Fitness); 800 (Fitness Holdings)

Age: 43

Residence: Marlborough

Birthplace: Westborough

Education: Bachelor's in business administration, University of Rhode Island

About 12 years ago, Mark Federico opened the first Anytime Fitness franchise in Marlborough before deciding to create his own independent business in Boost Fitness, growing to eight locations: Hudson, Worcester, Auburn, Oxford, Fitchburg, Franklin, Tewksbury and Westford. On Jan. 1, Boost was bought out by Crunch franchisee Fitness Holdings, and Federico is now working to help the company expand its reach.

Are you passionate about exercise?

No, not really.

One of the reasons we have been successful is we ran Boost as a business, rather than as a fitness enthusiast. Sometimes where we have had staff leave to open up their own fitness studios; they're passionate about it and run it like they want it to be as a fitness center; but running a business can be different. Like, if you love to drink, that doesn't mean you should open a bar.

Why did Fitness Holdings buy Boost?

Ultimately, Boost clubs are very profitable. When they were coming into Mass., they wanted that.

Our models are very similar. Our price points are very similar to their price points – we have memberships as low as $10 per month – so from a membership perspective, not a lot is going to change from that.

Finally, when they were coming into Mass, they really wanted a presence beyond their two locations in Roslindale and Medford, and Boost had really become one of the largest independent brands in Massachusetts. By taking over Boost, they added 40,000 members in Central Mass.

With 40,000 members paying $10 per month, your annual revenues must be more than $6 million.

We have different membership levels, so we probably average $18-$20 per membership, plus we have personal training revenue as well.

Are memberships the bulk of your revenue?

It is, but personal training is still significant. Fewer people get a personal trainer, but it is a much higher cost – right around $70 an hour.

Did Fitness Holdings buy you out, or did you get a stake in the company?

Both. I was bought out, and I reinvested it in the new company, so I have an ownership stake in Fitness Holdings.

Are you now in charge of all 10 Crunch Massachusetts locations?

Ultimately, I will be. Right now, my main task is converting the eight locations over. That will take some time.

We have some new clubs we are opening in Massachusetts, in Fall River, and we are looking at two more.

How many clubs do you want to have?

With this merger, Fitness Holdings now has 18 locations, but our goal is to grow to 54 locations in three to five years. It will be throughout the Northeast: Philadelphia, Connecticut, New Jersey, New York.

As larger franchises come into markets, it is much more difficult for smaller clubs to survive. A lot of our growth will come from the acquisition of independent businesses.

Is there a market for that many clubs?

With the market changing right now, we find health and wellness is important. Young people grew up exercising, so there is a market there.

What we are finding with retail space is big box stores are struggling, and we are able to find aggressive deals for new locations. It makes it very attractive to open clubs.

How does Crunch stand out in the crowd?

Planet Fitness is the top franchise in the United States right now with its low-cost, high-volume model. Crunch is probably No. 2 in that space; the difference is while it is still low cost, we offer a lot more. We offer classes, personal training, small group training.

We give more value for the dollar, to give people more resources for their health goals.

Does running a gym making it easier or harder to work out?

It is harder. Like a lot of contractors who work all day don't want to take care of things at the house, sometimes you are at the gym all day and just want to go home. I find that it is easier for me to work out at another facility, where I can just put the headphones on and not have to worry about a piece of equipment being broken or another issue.

This interview was conducted and edited for length and clarity by Brad Kane, WBJ editor.


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