Jazzercise, Inc.

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Jazzercise, Inc.

2460 Impala Drive
Carlsbad, California 92008
U.S.A.
Telephone: (760) 476-1750
Fax: (760) 602-7180
Web site: http://www.jazzercise.com

Private Company
Incorporated: 1979
Employees: 125
Sales: $17.9 million (2000)
NAIC: 71399 All Other Amusement and Recreation Industries

Jazzercise, Inc. is the world’s leading franchiser of dance and fitness classes. The company pioneered its own brand of dance-based exercise routines. These are taught by certified Jazzercise instructors across the United States and in Europe, Japan, and Latin America. The company has over 5,000 franchises, and an estimated 450,000 students worldwide. Franchisees pay a nominal start-up fee to the company, and then 20 percent of gross revenues monthly. Founder Judi Sheppard Missett choreographs new routines approximately every ten weeks. The company also produces videos, music recordings, and other educational materials, as well as a computer-based CyberStretch program that aims to prevent repetitive stress injuries among office workers. The company’s retail division sells exercise wear, accessories, and items bearing the Jazzercise logo. The division sells primarily through a mail-order catalog. Jazzercise also operates a video production division, JM DigitalWorks, which produces Jazzercise videos and also does videotape production, post-production, and duplicating work for hundreds of other clients.

A Hit with a Fun Dance Class

Jazzercise, Inc. was founded by Judi Sheppard Missett, a professional jazz dancer. Missett was born in Iowa in 1944. As a toddler, she was pigeon-toed, and had to wear leg braces. Her doctor recommended the little girl take dance classes as therapy, and she took her first class at the age of three. Apparently her talent was evident from the beginning. Her mother especially encouraged young Judi, though it was difficult to find qualified dance teachers in the small town of Red Oak where the family lived. So her mother recruited dance teachers to settle in towns within driving distance of Red Oak, promising the recruits a place to teach, students, and offering her own bookkeeping and costume-sewing services. By the time Missett was ten years old, she was teaching dance herself. After she graduated from high school, she moved to Chicago and enrolled in the theater and dance program at Northwestern University. She began focusing on jazz dance, studying with the choreographer Gus Giordano. She traveled widely with touring shows, and ultimately began teaching jazz dance classes for her mentor Giordano. In 1966 she married a television news reporter, Jack Missett, and had a daughter, Shanna, in 1968.

Missett’s professional career had taken her all over the world, and she continued to perform. But she also began to focus more on teaching. She was troubled, however, because so many of her students dropped out of her classes. These students were typically young mothers like herself, or married housewives. They wanted to take a class for the fun of it as well as to keep fit, but they did not have the ambition to become professional dancers. Their choices were either to take a high-powered class like Missett taught, or to take a calisthenics class. If the dance class was too demanding, they dropped out after a few weeks. Their other alternative, the calisthenics class, typically had only soft background music, and Missett imagined it was dreary. Around 1969, she began developing jazz-based exercise routines that she thought fit somewhere between the two extremes. Her classes were meant to be enjoyable, musical, and good exercise. She did not critique form, as in a professional dance class, and she used a room without mirrors, to reduce inhibitions.

In 1972, the Missetts moved near San Diego, California. It was primarily a career move for Jack Missett, who also had family in the area. But Judi Sheppard Missett thought southern California might prove an excellent place to develop her new dance classes. The area was far ahead of the rest of the country in worshiping health and fitness. Missett began looking for community centers and gymnasiums where she could teach her class, which she advertised as a new technique developed in faraway Chicago. She promoted herself and her classes, getting coverage in the local newspaper, and soon she had flocks of students. She stopped performing around this time, and devoted herself to teaching. In 1974, she began using the name Jazzercise for her program.

Jazzercise grew more and more popular. By 1977, Missett was teaching 20 classes a week, with a total of almost a thousand students. This was all she could handle, and she had to turn people away. Jazzercise had found a niche, but it was difficult for Missett to fill it singlehandedly. Missett was at first unwilling to let others teach her Jazzercise routines. But there seemed no other way to provide enough classes for the community. So she began by training five students who had been with Jazzercise since Missett’s arrival in California. These new teachers set up in rented spaces and began teaching Jazzercise classes. They were almost immediately successful, and Missett trained five more teachers over the course of the year. At this point, Jazzercise did not have a formal franchise arrangement. But the new instructors paid a start-up fee to Missett and then promised her 30 percent of their gross revenues. They got to use the Jazzercise name, and continued to train with Missett. By 1978, this arrangement included instructors outside the San Diego area. In 1979, Jazzercise formally incorporated. Missett also began using videotapes of her routines to teach certified instructors new material. This method allowed her to keep instructors up to date, even if they were teaching far from Jazzercise’s new corporate headquarters in Carlsbad, California. By the end of the year, Jazzercise had gone international, with instructors in Europe, Japan, and Brazil.

National Prominence in the 1980s

After Jazzercise, Inc. incorporated in 1979, Missett began promoting the company’s fitness routines across the country. She performed on national television for the first time in 1980, where Missett’s svelte physique advertised the benefits of her program. Her television exposure led to the development of the Jazzercise apparel division. When Missett appeared on a broadcast of the Dinah Shore Show, she wore a leotard with the Jazzercise logo emblazoned on it. She wore this because she was afraid viewers would otherwise miss the connection between her and her company. But it spawned inquiries from Jazzercise students, who wanted to know where they could get Jazzercise gear. The company began to sell Jazzercise logo togs through a mail-order catalog.

By 1980, Missett had trained over 1,000 instructors. The franchises brought $1.9 million to Jazzercise, Inc. that year. The boom was just beginning. Missett broadened the company’s exposure by publishing a book in 1981 called Jazzercise: A Fun Way to Fitness.It was a bestseller, going into four reprints and selling close to 400,000 copies. Translated editions also appeared in France and the Netherlands. Missett also put out the first of the Jazzercise videos for public consumption. The next year, Jazzercise put out a record, which went gold, selling over 25,000 copies. The company followed the success of the “Jazzercise” album with “Jazzercise Looking Good!” later in 1982. In 1983, Jazzercise, Inc. formalized its franchise relationship with its certified instructors. The company broke with the norm in the franchise industry by charging a low start-up fee and a high royalty rate. Most franchises around the country went for upwards of $25,000, but a Jazzercise instructor could buy a Jazzercise franchise for only $500. The typical royalty rate for a franchise in the United States was from 3 to 10 percent, but Jazzercise instructors sent 30 percent of gross receipts back to Jazzercise, Inc. This cockeyed formula nevertheless worked well for both the company and the franchisees. Perhaps because the new instructors were able to make money quickly and did not have to worry about recouping a high start-up fee, Jazzercise retained a high percentage of its franchisees. A successful Jazzercise franchise could bring the owner $75,000 a year. This looked very good compared to other aerobics programs where instructors were paid an hourly wage. So despite the high royalty rate, Jazzercise instructors remained committed.

The company grew enormously in the early 1980s. By 1983, Jazzercise franchises had spread to all 50 states. The company put out a third album, and founder Missett gained more exposure by appearing frequently on the cable Disney Channel’s Epcot Magazine show. Jazzercise instructors performed in the opening ceremony for the 1984 Los Angeles Olympics, and Missett herself ran in the relay to bring the Olympic torch to the city. When the entertainment company MCA put out a Jazzercise workout video in 1984, it went gold, like the record in 1982, selling over 25,000 copies. Fitness had become something of a national craze. Aerobics classes of all kinds were popular, and actress Jane Fonda also had a huge following for her fitness videos. Gross receipts from franchises were $40 million in 1983, an astonishing rise from under $2 million at the start of the decade. But sales remained relatively flat for 1984 and 1985, held in check by competition from other exercise programs. Even so, the company was named one of the top fastest-growing franchises in the country in 1985.

With sales holding steady, Missett redoubled her efforts to promote Jazzercise. In addition to her frequent television appearances, she began writing a syndicated newspaper column on fitness, to get maximum media exposure. She also worked at a more grassroots level, making appearances, giving speeches, and distributing coupons for local Jazzercise classes. Jazzercise also advertised in innovative ways, promoting itself on packages of products deemed healthy. Jazzercise had space on the back of boxes of Nabisco Wheat Thins crackers, for example. Jazzercise entered a licensing agreement with an apparel manufacturer to produce a complete line of Jazzercise exercise clothes in 1987 which would be sold in retail stores. Previously, the company had sold its clothing only through its catalog. The Jazzercise clothes came with a certificate for two free Jazzercise classes.

Company Perspectives:

We develop and market fun and effective fitness programs and products that enhance the well-being of people of all ages.

The company also changed its focus somewhat in the late 1980s. Missett realized that she had begun her career teaching mostly young married women who did not work outside the home. They were happy to take classes in a church basement or school gym. But by the late 1980s, the typical Jazzercise student was working outside the home, and did not mind spending money on pampering herself. The company built its first permanent gyms in the late 1980s, the upscale Fit Is It facilities. The modern buildings housed juice bars and clothing stores as well as attractive workout rooms. Missett also began offering more varied routines, to fit a variety of lifestyles. The Fast and Fit class offered more active aerobic exercise while the Lighter Side class was slower and easier. The company debuted Junior Jazzercise for kids, and Jazzergym for mothers and their small children, at the new Fit Is It centers. In 1988, the company reduced the royalty rate it charged franchisees to 20 percent. Despite the cutback, gross revenue inched up. The company had earned national name recognition, and had close to 4,000 franchises. Jazzercise classes were found in over 30 countries abroad. In 1989, Jazzercise became more widely available in Japan when that country’s largest operator of health clubs agreed to offer all its members Jazzercise classes. Moreover, even though the franchise business was not growing as quickly as it had early in the decade, Jazzercise now had a substantial revenue stream from its videotape and apparel sales. By 1989, one-third of the company’s sales came from tapes and clothing.

Still Fit in the 1990s

Judi Sheppard Missett continued her vigorous promotion of the company in the 1990s. She went to the Soviet Union in 1990 with other health and fitness experts as part of a People to People ambassador program, and in 1991 she helped present the Great American Workout at the White House. The company also launched a free fitness program for children called Kids Get Fit in 1991, which eventually reached more than a million children worldwide. The company entered a marketing arrangement with the athletic shoe company Nike, Inc. in 1992. In this cross-promotional effort, both Judi Sheppard Missett and her daughter Shanna gained the title Nike Fitness Athlete. The company also produced more videos in the 1990s. The year 1995 saw a series of videos including “Sports Stretch,” “Healthy Backs,” and “Body Power!” The company listed about 5,000 franchises by the mid-1990s. Sales were around $15 million.

Though Missett passed the age of 50, she showed no signs of slowing down. She continued to teach almost every day in California, and to choreograph new Jazzercise routines. In order to keep things fresh, she put out as many as 30 new routines every 10 or 11 weeks, and sent them via videotape to certified instructors worldwide. Missett’s daughter Shanna Missett Nelson also taught regularly, though she had become a Jazzercise corporate executive, in charge of Jazzercise’s international operations. The company kept up various promotional efforts tied to healthy products. It allied with General Mills in 1996, naming that company’s Total cereal as the Jazzercise official cereal, and giving away Jazzercise class coupons on the back of nine million Total boxes. The next year the company ran a similar promotion on boxes of Ore-Ida baked potatoes, and Jazzercise also promoted a new energy drink called Boost, made by Mead Johnson. The company allied with another athletic footwear manufacturer, Ryka, Inc., in 1997, and formed other publicity links the next year with Smuckers brand jam and cereal-maker Quaker Oats.

A new development in the late 1990s was the Jazzercise CyberStretch program. This was a computer program that appeared as a screen saver. CyberStretch gave step-by-step instructions for stretches and relaxation exercises, geared toward desk-bound office workers. Computer workers were subject to repetitive motion injuries such as carpal tunnel syndrome, and the program was designed to prevent or alleviate this kind of ailment. The insurance company Barney & Barney began offering Jazzercise’s CyberStretch program to client companies, hoping to reduce workman’s compensation claims for repetitive motion injuries. Jazzercise also marketed CyberStretch through an international network of insurance brokers.

Jazzercise celebrated its 30th anniversary in 1999. By 2000, sales were $17.9 million. About half of this came from franchise fees. Jazzercise franchises worldwide generated over $56 million. Jazzercise, Inc. brought in another third of its revenue from sales of apparel and other merchandise. Some 16 percent came from royalties and other miscellaneous sources, and the company’s video production arm, JM DigitalWorks, accounted for 6 percent of gross revenues. The company had changed its franchise arrangement only slightly. By 2001, the cost of the initial franchise fee had gone up to $650, and instructors still paid the company 20 percent of gross revenues monthly. Fitness was still popular, and Jazzercise was a formidable brand name, though the peak of the franchise expansion seemed past.