Arthur Murray Dance Studios is Still Growing After 114 Years

Tony Padulo, chief development officer at Arthur Murray Dance Studios, has been focused on franchise development for forty-five years. He started his professional journey in Montreal with Dunkin’ Donuts in 1981, ultimately spending 22 years with the company and rising to head of international development. Throughout his storied career, he’s also worked with BP Oil, putting together a revitalization program for their franchise system, as well as names like RE/MAX, BrightStar Care, and the Goddard School.

Prior to joining Arthur Murray, Tony served as CDO at School of Rock for eight years, where he took the business from about 160 units to about 425 units.

Franchise development history

When we heard that Arthur Murray was experiencing its most successful development period in its 114-year history, we had to sit down with Tony to understand what’s revitalized the system and how his team is working harder than ever to set franchisees up to thrive.

When I started back in ’81, we were in the relatively earlier days. The IFA had been founded. Bill Rosenberg was the founder of Dunkin’ Donuts and a co-founder of the IFA. The whole purpose of the IFA was to ensure that you were dealing with reputable franchisors. And we really have come a long way in that process, but it’s been a steady process.

I’ve seen franchising really as a way to minimize risk in businesses and reduce the damaging impacts of different issues, whether it’s COVID or the 2008 financial crisis. The idea is that the franchisor sets up a robust system with support behind the franchisee to reduce pressure.

For example, at School of Rock, within ten days of COVID, we had shifted our company from an in-person, in-house model to a distance learning system. We created Zoom calls, and we created remote training. That saved the industry. That saved all of our franchisees. We had no franchisees close during COVID.

Here at Arthur Murray, they experienced a similar situation where they converted very quickly. Those franchisees were able to stay open and protect their businesses because they had the support of a franchisor behind them.

So, for me, the strength of the systems we’ve built over the last forty-plus years is what’s really exciting.

Arthur murray growth

Arthur Murray is a hundred and fourteen years old. We’ve been in business since 1912, and we’ve been franchising since 1939. Currently, we have about three hundred and thirty studios in nineteen countries. But the interesting part is that historically, we would grow at a pace of about five to seven new studios a year. That’s steady growth, but nothing exciting. But what was interesting is that almost exclusively, all of our development was with existing franchisees or their instructors that they would bring up through the ranks. So, all of our growth was internal.

I came on board as part of the acquisition of Arthur Murray in December of ’24. The brand was purchased in a partnership between Gary Edwards, who was our CEO, and Clarion Partners out of New York. At that point, they were looking to transition the company from a single owner business to more of a corporate environment. So, the challenge or opportunity that was put to me was the need to bring in systems and support services that would enhance our value proposition to our franchisees and give them services that they’d never had before.

Interestingly, franchisees were very happy with what they had. They were very successful at different levels, of course. But they were used to being on their own, which you often see when you have a one-owner business.

One of my first activities was to create better service, better support. We did things like creating a partnership with real estate brokers and designing manuals that the franchisees never had. We also built a market planning software program that we can use to identify not only the characteristics of a really good market but where the best opportunities lie for us and our franchisees on the map.

At the same time, we looked at our growth strategy, and the intent there was to build a three-pronged approach to development. The first part of that plan was to continue growing with our franchisees, because obviously that’s the foundation, and to me, you can’t get any better validation than a franchise growing with their owner. Two, we looked to bring in new candidates as well because we needed to move away from this five to seven a year pace.

Yes, we wanted to grow responsibly and wisely, but at a faster pace. And third was to develop a conversion program targeting good independent dance studios that would be interested in converting to an Arthur Murray franchise.

So, in the first phase, what we did was we notified all of the franchisees of our strategy and intent, and we said, “We won’t launch this until January of ’26. So in the interim, if there are any franchisees that are interested in developing a unit, we will work with you first.” As a result of that, in December, we awarded thirty-two- franchise agreements, all with existing franchisees.

Through the end of June, of those thirty-two units twenty-six have already opened. And five more are in the phases of construction, and they’re targeted to open in July, August, and September. So by the end of September, thirty-one of the thirty-two franchises will have opened, which we’ve never seen that in our history. And the good news is I probably right now have another fifteen or so existing franchisees that will be signing franchise agreements between now and year-end.

Future growth plans

We haven’t signed our first outside or external franchise, but I’m building up a pipeline of candidates that we’re working with. We see both new candidates and conversions as a major part of the three-pronged approach moving forward.

There are, I think there are two parts to that answer. The first part is the standard answer that you would expect: We look for people that are financially qualified, who have the ability to do it, maybe because of their business background or their experience owning another franchise; or if they haven’t owned a franchise, they’ve managed teams, so they understand what it’s like to manage people, because that is really core. It’s about building your business and managing people and having that personality and charisma. So, that’s the standard answer.

But the other thing that I’ve noticed (and this, in my experience, not only applies to Arthur Murray, but it’s applied to School of Rock, at Dunkin’ Donuts, BP, and RE/MAX) is there are intangibles that really need to be there in order for the candidate to succeed. And I think there are three parts to that equation from my experience.

One is that the candidates we’re looking at have to have a passion for this business. They have to feel that this business is absolutely right for them. Whether or not they’ve looked at other opportunities, they have to feel that this is right. They need to feel like they’re a good fit for us, and we’re a good fit for them. That, to me, is critical, because if you don’t have that passion, you’ll never be a great franchisee.

Second is that they have to feel that, if they come in, they are going to be the best franchisee that we’ve ever had. With that attitude, you will be the best franchisee. What concerns me is if the candidate is continually focusing on “What does your average unit do? What does the average franchisee do?” To me, being average is below par. I’m not looking for average studios. I’m looking to open above-average studios, high performing ones. If I don’t see that passion it raises red flags for me.

And then the third quality may sound a little odd, but I tell every new candidate, “If you are going to sign up with Arthur Murray, you have to trust us enough that for the first two years, you’ll do everything we ask.” And that seems odd, but it really makes a lot of sense because where I’ve seen franchisees fail has been primarily in the first couple of years, either because they were undercapitalized, they’d underestimated the time to break even, or they believe their market is different or unique in ways that will require changing the model. That is a sure sign for disaster.

There’s a reason why franchises are successful. They have a proven track record. They have a way of being consistent in their output, and customers expect that. If you start changing the processes or the offerings within the business, to me it’s a sure sign for a disaster. That’s how I look at the process when I’m rating and analyzing potential franchisees. And at the same time, whatever I think, they have to feel the same way about us.

I think good support is having established processes in every aspect of the business, whether it’s on the marketing side, on the operations side, pre-opening support, or whatever.

For example, one of the things I observed when I came on board is we had no real development cycle. Franchisees would sign an agreement with or without a location, they’d work on developing, and we’d get ready for the grand opening. That’s fine, but we needed a more reliable, replicable playbook. So, I put together our New Studio Opening (NSO) department. It’s currently a small group with one manager, but they are coordinating with all our departments to finalize an onboarding checklist for our new franchisees.

That resource will provide operators with clarity and guidance at every step of the journey, from the day they sign the franchise agreement until their soft opening, through the grand opening, and into the first two years of operations. We’re trying to minimize the stress of opening by saying, “Look, don’t worry. This has happened before, and here’s when you do this thing.”

We’ve hired a new VP of operations, who comes from the franchisee community. She was a very successful franchisee over the course of her career, having opened and operated and sold over 30 units, so she knows the business from the inside out.

We brought in an outside IT group. They redesigned the websites. They put together a software package plus a CRM package. We’ve done the same thing in marketing. All of the departments are now working together as opposed to all being independent silos. We meet as an executive team every Monday morning to go through all of the issues for the week and where we need help from each other as well. So, there’s a lot of interaction, a lot of back and forth.

From a franchise development perspective, I’m really excited about the growth opportunities. In our first year of this leadership team being here, we went from 7 units a year to 35 units a year. Now, I don’t think 35 is the right number for next year. I think realistically the right number would be 15 to 20. But it’s going to grow from there, right?

As we bring in more conversions, as we bring in more new franchisees, I think we will get to that 35 to 40 a year over the next two to three years. What I’m seeing is a really strong growth opportunity on the domestic side. And I think we’re reminding people that we’ve been in business 114 years, which is important.