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Crunch gyms open in two states; here's what to expect post-virus: Crunch Franchise CEO

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As the coronavirus continues to spread across the country, most states have closed all non-essential businesses. Crunch Franchise CEO Ben Midgley joins Yahoo Finance’s On The Move to address the company’s plan of reopening its gyms and concentration on keeping gyms sanitized.

Video Transcript

JULIE HYMAN: You're watching Yahoo Finance Live. I'm Julie Hyman. Let's talk about the fitness industry and the changes that they are making now that we are seeing some states reopen, including the likes of Georgia, where we already are seeing some gyms be allowed to reopen.

We're joined by Ben Midgley. He is Crunch Franchise CEO. Ben, it's good to see you again. So in what states are you seeing your franchisees reopen? And what are they having to do? Are they only allowing a certain number of members in, for example?

BEN MIDGLEY: Hi, Julie. Thank you for having me. It's nice to see you again as well. Currently, we just opened in Georgia and Oklahoma today, actually. We were allowed to open in Georgia about a week to 10 days ago. But we held off a little bit in order to make sure all the team members were ready to go and prepared to welcome, you know, the members in in a really safe and comfortable environment.

We haven't had any capacity restrictions set in those two states currently. We have been restricted from offering group fitness classes and things like Kids' Club because kids have no ideas really om social distancing. So we're going to hold off on that for a while.

But otherwise the things we've done is we've created about a 40 page readiness plan that we rolled out to the clubs. And those include things such as social distancing guidelines, directional and instructional signage in regard to social distancing and cleaning and the club, cleanliness. We've got enhanced cleaning guidelines for all the clubs that follow the CDC guidelines, personal protective equipment for all the team members, touchless check-in, asking all the clubs to do dry runs with their team members before they open, again, to make sure they're prepared for that.

And with our members, we're just asking them to be kind, considerate, and mindful of their actions and how they affect the health of other members.

ADAM SHAPIRO: Hey, it's Adam. I'm curious what you're going to expect, those of us who work out at gyms. For instance, it's just polite to clean the area. There are disinfectant wipes usually that you can use. But will there be people enforcing that. And I missed, will we have to wear masks, whether we're lifting or doing something aerobic while we're actually doing this?

BEN MIDGLEY: In terms of the cleaning, health clubs generally have a lot of sanitation stations around the clubs anyways because, you know, folks do sweat occasionally. So it's just common etiquette to make sure you clean that up. What we're doing to emphasize that is obviously having more cleaning stations around the club. You're going to see team members wandering around the clubs more frequently, reminding folks of that and a lot of signage to make sure it's really prominent and people-- people respect that.

We think all members are really going to be very respectful of that. They want to be considerate of others as they want others to be considerate of them.

DAN ROBERTS: Ben, Dan Roberts here. Thanks for joining us.


DAN ROBERTS: Former Crunch member years and years ago when I was living on the Upper West Side. I'm curious when you think about the future. So beyond right now, beyond stay at home and coronavirus, you know, there are a lot of people who think many industries will be changed forever or at least for a few years. I'm a little skeptical about that. But you know, one example is Disney Parks, people think that even once they're able to reopen, it'll be totally different, and a lot of families won't want to go.

Are you worried about that, thinking about that, how gyms might change? Especially with the rise of Peloton and classes at home, some people think that maybe when we emerge from this, a lot of people who used to be gym people won't want to go to a gym anymore.

BEN MIDGLEY: Sure, we've heard that question before and even before the crisis, you know, because a lot of folks are exercising at home right now. And Crunch ourselves, we actually offer something called Crunch Live in order for folks to take our classes and such while they're not at the gym or if they're on the move.

In terms of the industry changing, we don't really see that yet. It's a little too soon to think that that might happen. There's about 60 million members of health clubs across the country. So about 20% of the population, you know, take part in working out in clubs. I think what's important about that-- and your former guest from United Airlines actually mentioned that in terms of travel.

People really like the community effect. They like-- they like seeing people and exercising together. It's very energetic. It's very enriching, really. So we feel good that that's going to continue. We might see some trends in that direction. But you know, we're prepared for that. We have to modify the business in some respect.

But right now, we've seen a lot of enthusiasm from our millions-- from our members. We have about 1 and 1/2 million members. And they've been regularly asking when we're going to reopen. And again, we just want to do it in a safe and effective manner to make sure people get back in the club and feel comfortable doing so on a regular basis.

JULIE HYMAN: Hey, Ben, since you're head of the franchise business, I have to ask if any of your franchisees have asked you to defer fees, for example, for a month or two while they're closed or how the financial arrangements might be changing right now. And have you actually lost any franchisees who just have said, listen, I can't weather this?

BEN MIDGLEY: Yeah, we haven't lost any franchisees. And we actually, rather than waiting for anyone to ask us about that, Julie, we went ahead and deferred a lot of fees and waived many of them. I should say we actually waived fees. We have really deferred any. We just waived them, to be fair, in our relationship.

One thing that's important, as you know, in a franchise company is you're in it together, the franchiser and the franchisees are partners for quite a long time. And we've got a great culture in the network. So we felt it was the right thing to do to step up and do that for them.

In terms of them, you know, staying around, a lot of them obviously had to pull back in terms of how they kept their employees. They applied for the SBA loans. And they worked with the landlords. They worked with their leasing companies to try to defer or modify their expense plans there. And a lot of them have done that very effectively. So so far, so good. And we're planning on everybody reopening as soon as the states allow.

JULIE HYMAN: I also wanted to ask you about Gold's Gym, which has now filed for bankruptcy protection. They said they're still going to have gyms. And they hope to reemerge by August. But that leads me to ask, you know, if you are waiving a lot of fees, what does your cash position look like? And yes, we're seeing a lot of states reopen. But with a lot of significant metropolitan areas still closed, how long can you guys weather this kind of a situation?

BEN MIDGLEY: Sure, yeah. We're in a very good position. You know, we're a strong company. We've been in business for 30 years and have seen ups and downs in the industry. We also have a terrific sponsor at TPG growth. They're a fantastic company. They stand behind us. They're going to stand behind us into the future.

We're anticipating that we're going to have about 40 to 50 clubs open this month. And then ideally we'll get up to about 40% or 50% of capacity next month and hopefully 100% of the network by July. So as long as things stay on plan, we'll be fine. And most importantly for us is we want to get the franchisees back in business, get the members back in the clubs so we can get some semblance of normal and return to-- to a great time for people having fun in the clubs.

JULIE HYMAN: Ben, thanks for joining us. It's good to see you. And all the best to you guys over at Crunch Franchise. Ben Midgley-- Midgley is the Crunch Franchise CEO. Thank you.

BEN MIDGLEY: Thank you.