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Old 10-29-2009, 03:57 PM   #251
John Devine
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Re: Huge Decline in Quality

Oliver, you really need to reread your post. It just doesn't make sense. First you say
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Originally Posted by Oliver Gould View Post
CFHQ has no responsibility for its affiliates. Once CFHQ receives payment for certification and affiliation, it has gotten what it needs from the arrangement. If an affiliate goes under, CFHQ loses nothing. If an affiliate struggles, there's no reflection in CFHQ's profits.
And then say
Quote:
Affiliates continue to support CFHQ by hosting its events and recruiting new members who pay for certifications.
So which is it? How is CFHQ not affected if an affiliate goes under if the affiliates support CFHQ? And by the way, the affiliates do not support CFHQ by hosting their events. It's the other way around. Yes the affiliates do support HQ by sending people to certs, some of whom will also open their own box and send their people to certs etc... It's called business growth.
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The whole arrangement is very similar to multi-level marketing (though there are some differences, most of them positive - with true MLM there's a high failure rate, whereas CF affiliates have a high success rate).
CF is NOTHING like MLM. MLM structures by definition are dependent upon multiple levels of ownership where you own a portion of those who are below you in the network. CF has one of the flattest, as in NOT multi-level, business models you can have.
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Affiliate owners finance the creation of their affiliates from the ground up - the entire investment is theirs, and so is the risk.
And so is the profit! Of course you would have to deduct the affiliation fee. Why don't you ask the hundreds of established affiliates or the hundreds of new affiliates or the hundreds in the affiliation process if they have any complaints about this arrangement.
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Old 10-29-2009, 04:17 PM   #252
John Devine
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Re: Huge Decline in Quality

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I agree. There are important differences. The fact that affiliates do not create new affiliates on their own is the most important. Affiliates are also self-sufficient - they don't rely on opening new branches to support their profits. In this sense, Crossfit is clearly not MLM in the traditional sense.

However, there are still some points of comparison, especially in terms of market saturation. The classic problem with business models assuming a near-infinite demand will enable exponential growth is that the demand inevitably runs out. There's never a problem until the point of over-saturation is reached. Once it is reached, there's a problem, even for generally self-sufficient affiliates - their client base can get diluted, so can the brand they promote.

The fact that Crossfit has become successful through exponential growth rings some warning bells. Without royalties, CFHQ needs to certify new trainers and sign new affiliates in order to grow and be profitable. In other words, CFHQ has a huge incentive to saturate the market with affiliates. This incentive exists whether demand supports growth or not. Over-saturation hurts affiliates, not HQ, at least in the short term. Whether there's an ethical problem with affiliates shouldering this risk is depends on your beliefs about the market.
Good grief Oliver! Yea, I guess the Glassman's clearly don't have a clue on how to manage and grow a business.

Can you get any more saturated than by giving away your fitness program for free? Including all the instructional videos on how to do the exercises?
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Old 10-29-2009, 04:19 PM   #253
Oliver Gould
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Re: Huge Decline in Quality

John, the first point in your post is correct - there is a contradiction there. What I meant was that CFHQ's profits are not affected by any individual affiliates success or failure, but it benefits from the existence of at least a few affiliates in different parts of the country.

Quote:
CF is NOTHING like MLM. MLM structures by definition are dependent upon multiple levels of ownership where you own a portion of those who are below you in the network. CF has one of the flattest, as in NOT multi-level, business models you can have.
I address this in the post immediate above yours (I guess it was written while you were writing). In short, I agree, but that's not what I'm referring to.

Edit: Also, we're posting at the same time, which means my responses have to keep pace with yours. I never said the Glassmans don't know how to run a business, they obviously do - they're in great shape and they will continue to be in great shape. I think your point about free information goes over my head. Free information in the clouds is great, but it doesn't compete directly with gyms on the ground. Crossfit affiliates make their money off of people who want to train and learn in a community setting - that's a different market from people who just want fitness info.

PS- I hope that the affiliate model works out. I know several affiliate owners and they're all awesome people. I'm concerned when I see an affiliate like Greyskull drop its affiliate because it wants to set itself apart from the Crossfit gyms in its area. The problem is clearly not quality coaching, so I worry that it represents a sign of market saturation.

Last edited by Oliver Gould : 10-29-2009 at 04:32 PM.
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Old 10-29-2009, 04:50 PM   #254
Oliver Gould
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Re: Huge Decline in Quality

Also, on further reflection, there's a tempest in a tea pot quality to this whole debate. Things will fall where they may.
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Old 10-29-2009, 05:07 PM   #255
Katherine Derbyshire
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Re: Huge Decline in Quality

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The fact that Crossfit has become successful through exponential growth rings some warning bells.
No it doesn't. Essentially every innovative business on the planet has gone through an exponential growth phase. Intel did, Microsoft did, and before them AT&T and Ford did. (Gold's Gym probably did, though I don't know their history.) Exponential growth is easy when you're starting from zero. (2 affiliates this year, 4 next year, 8 the year after that... ZOWEE! Exponential growth!)

No, exponential growth can't go on forever, but that's also not news. Any executive worth his MBA knows that one of the key tests of management is how a business handles the flattening out of growth at the top of the exponential curve. It's not easy, but it's certainly doable, as numerous real-world examples show.

Katherine
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Old 10-29-2009, 06:14 PM   #256
Oliver Gould
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Re: Huge Decline in Quality

Katherine, I chose my wording carefully. I didn't write that Crossfit has achieved exponential growth, I specifically meant that CFHQ has become successful through exponential growth - i.e. it is only profitable because it is constantly creating new affiliates, certified trainers and certifications. When the top of the growth curve arrives, greater barriers to entry are in the affiliates' collective interest - but not in the interests of HQ. I'm curious how Crossfit will resolve this (as you said, it's a great test of management skill).
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Old 10-29-2009, 06:53 PM   #257
Katherine Derbyshire
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Re: Huge Decline in Quality

Quote:
Originally Posted by Oliver Gould View Post
Katherine, I chose my wording carefully. I didn't write that Crossfit has achieved exponential growth, I specifically meant that CFHQ has become successful through exponential growth - i.e. it is only profitable because it is constantly creating new affiliates, certified trainers and certifications. When the top of the growth curve arrives, greater barriers to entry are in the affiliates' collective interest - but not in the interests of HQ. I'm curious how Crossfit will resolve this (as you said, it's a great test of management skill).
I'm afraid you didn't choose your wording carefully enough. "Constantly creating new affiliates" does not mean "exponential growth." You can double the number of affiliates in a year, or you can add 5-10% more each year. There's a huge difference. A business model that is comfortable with 5-10% growth can go for a long long time before it hits saturation. After all, McDonald's is still opening new stores after nearly 70 years.

Katherine
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Old 10-29-2009, 07:42 PM   #258
Craig Massey
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Re: Huge Decline in Quality

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Also, on further reflection, there's a tempest in a tea pot quality to this whole debate. Things will fall where they may.
Ah, you noticed!

24029 members on the board, over 1000 affiliates; 256 posts in this topic at time of writing.
Even if no-one was posting twice and many are posting way more than that, it amounts to a few people out of a large population getting all bent out of shape over something that most people aren't worried about and which almost none of the participants have any control over.

It is good for a laugh though and I admit some people have made some extremely lucid statements of their eminently sensible position on the matter.

The best part was when the topic became "I'm a real CrossFitter and you're not" for a while. As most do.
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Old 10-29-2009, 11:01 PM   #259
Steven Low
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Re: Huge Decline in Quality

This is really the problem... potential serious injury conditions from potentially incompetent trainers.

wfs
http://www.board.crossfit.com/showthread.php?t=52507

For every 1 good trainer there's a lot of bad ones really... and that's something that plagues most professions not just CF.

I would honestly like to see better quality standards..
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Old 10-30-2009, 06:40 AM   #260
Sean Dunston
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Re: Huge Decline in Quality

Quote:
Originally Posted by Oliver Gould View Post
Katherine, I chose my wording carefully. I didn't write that Crossfit has achieved exponential growth, I specifically meant that CFHQ has become successful through exponential growth - i.e. it is only profitable because it is constantly creating new affiliates, certified trainers and certifications. When the top of the growth curve arrives, greater barriers to entry are in the affiliates' collective interest - but not in the interests of HQ. I'm curious how Crossfit will resolve this (as you said, it's a great test of management skill).
Correction --
CFHQ is not constantly creating new affiliates.
NEW PEOPLE keep petitioning HQ to allow them to open new affiliates.

Additionally, NEW PEOPLE (and some existing people) keep petitioning HQ to allow them to attend certs -- certs that sell out very quickly due to the high demand to attend said certs.

I would venture to guess -- though I have no facts to support it -- that fewer than 5% of people who attend a L1 cert actually open an affiliate. Most people are going there for the experience to work with great trainers and learn more about CF.
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Last edited by Sean Dunston : 10-30-2009 at 06:43 AM.
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