From Failing Club to 4,000+ Locations & $100m Exit | Peter Taunton - Snap Fitness Founder

Listen to the full conversation with Peter Taunton where we dive deep into how he bootstrapped Snap Fitness from $300k to a $100M valuation, opened 377 clubs in a single year, and why he turned down private equity for six years.

Watch the Episode | Listen to the Podcast

---

Peter Taunton built his third Snap Fitness in a town of 3,500 people.

His friends thought he'd lost his mind.

The conventional wisdom in fitness at the time was simple: You need population density. You need traffic. You need at least 50,000 people in the radius to make a gym work.

Peter put a 3,000 square foot gym in a strip mall next to a coffee shop in a town smaller than most college campuses.

And in 90 days, he sold enough memberships to cash flow the business for the entire year.

That's when he knew he had something that could scale.

The Three-Market Test

Here's what most entrepreneurs do wrong: They find something that works once and immediately try to scale it everywhere.

Peter did the opposite.

When he built that first Snap Fitness location, it crushed. Ninety days to full-year cash flow. He thought maybe it was a fluke. Or maybe it only worked in that specific market.

So he built a second one in a different type of market. Mid-size city. Different demographics. Different competitive landscape.

Same result. Ninety days to cash flow.

Most people would have started franchising right there. Two successful locations? That's enough validation, right?

Not for Peter.

He built that third location in the tiny town specifically to test the boundaries. He wanted to know: How small can I go and still make this work?

When that 3,500-person town produced the exact same unit economics, Peter finally allowed himself to believe it: "I have something here that's very scalable. It works in a small town, a mid-size market, and in an urban market."

That's when he started franchising.

The 90-Day Cash Flow Model

Most fitness businesses are what Peter calls "front-end capital loaded." You sign a lease. You fill it with equipment. You're pregnant with the deal whether you like it or not.

The traditional model meant you were burning cash for 12-18 months before you knew if the location would work.

Peter flipped this entirely.

His model was ruthlessly simple: If you can't sell enough memberships in 90 days to cover your operating expenses for 12 months, something's fundamentally broken.

Not "we'll get there eventually." Not "we just need more time to build awareness."

If the model works, you should be able to prove it in 90 days.

This did two things:

First, it validated the business model faster than any competitor. While other chains were waiting 18 months to know if a location was viable, Peter knew in 90 days.

Second, it made franchising dramatically less risky. He could tell franchisees with absolute confidence: "If you follow the system, here's exactly what happens in 90 days."

Why Validation Beats Vision

Everyone wants to believe their business idea will work everywhere. But Peter taught me something crucial:

You can't know if something is scalable until you've tested it in conditions that should break it.

That third location—the tiny town—was designed to fail by every industry standard. Too small. No density. Limited demographics.

When it succeeded anyway, Peter didn't just have a business. He had proof that his model transcended market conditions.

That proof is what allowed him to open 377 locations in a single year. Not 377 experiments. 377 carbon copies of a validated model.

"I documented everything," Peter told me. "Systems, processes, growth. Every part of it—franchise sales, real estate, training, buildout, delivery, installation, pre-marketing, pre-opening, ongoing support."

He wasn't winging it. He was replicating something he'd proven worked in the hardest conditions imaginable.

Your Three-Market Test

Here's the framework: Before you scale anything, validate it in three different conditions:

Test 1: The Best Case Scenario Build it where it should obviously work. Ideal demographics. Low competition. Perfect conditions.

If it doesn't work here, the model is broken.

Test 2: The Normal Market Build it in an average market with average conditions. Normal competition. Standard demographics.

If it only works in best-case scenarios, you don't have a scalable model. You have a niche play.

Test 3: The Stress Test Build it where it shouldn't work. Challenging demographics. Tough competition. Conditions that would make most people say "that's impossible."

If it works here, you know your model can survive anything.

Peter's stress test was that 3,500-person town. What's yours?

The Questions That Matter

Before you scale, answer these:

• Does your unit economics work in 90 days or do you need 18 months of "building momentum"?

• Have you tested your model in markets that are completely different from each other?

• Can you document every step of your process so precisely that someone else could replicate it?

• If you dropped your business in the worst possible market, would it survive?

If you can't answer yes to all four, you're not ready to scale. You're ready to hope.

Peter didn't hope. He validated. He stress-tested. He documented.

That's why he could go from three locations to 4,000+ locations across 25 countries.

The Confidence to Scale

What impressed me most wasn't the size of Peter's success. It was his discipline in earning the right to scale.

Three locations. That's all he built before franchising. But those three locations proved everything he needed to know.

He knew his unit economics. He knew his systems. He knew his model could survive anywhere.

Most entrepreneurs scale on hope. Peter scaled on proof.

The fascinating part? His "proof" only required three locations and less than two years. He didn't need 50 test markets. He just needed the right three test markets.

Find your three markets. Prove it works in conditions that should break it. Document everything obsessively.

Then—and only then—step on the gas.

Don't scale your vision. Scale your validation.

Leo

P.S. Peter told me something that stuck: "When I built that third club, I thought, there's no way this thing is ever going to succeed." That mindset—actively trying to find where your model breaks—is what separates entrepreneurs who scale successfully from those who scale into bankruptcy. If you're afraid to test your business in hard conditions, you don't believe in it as much as you think you do.