The city where I live, Austin, TX right now is a highly competitive environment for fitness where a new gym or studio is showing up in every part of the city. Austin (and New York) are most likely a foreshadow of what is going to happen in most major cities in the next 3-5 years. There are currently studios/gyms threatening to sue instructors and gyms receiving letters from lawyers to prevent employees from working at their facility. I am interacting with both owners of gyms and their employees and this issue of “instructor vs owner has come up quite a bit recently.
I have the unique perspective of having been both a studio owner who has unfortunately had issues with instructors giving my entire list of customers to a competitor and am also an instructor who has been on the “other side” recruiting people to come take my classes (because we are on a mission to make everyone on the planet healthy and want everyone to attend our class, right?). I am not a lawyer, but I can provide my perspective as an entrepreneur, former studio owner, and an instructor. I truly believe there is a middle ground for both sides and the quicker the industry moves towards this middle ground the better. Below is my advice for both instructors/trainers AND for studio/gym owners:
- The cost of opening a studio and running it for 12 months is around 350k-500k, and for a larger gym 1-2+ million dollars. Included in this cost are thousands of dollars spent on marketing trying to obtain new customers. The owners of fitness businesses have put their personal assets on the line and if you are stealing their customers, they are going to be upset with you. It’s nothing personal, its business.
- Realize there are businesses suing each other and employees all the time over the issue of soliciting employees and customers; also realize there are laws protecting both sides in this issue. A customer list is considered a “trade secret” and you can be sued for damages for sharing it outright.
- If teaching/training is important to you, don’t sign an agreement that prevents you from working somewhere else for 12 months doing what you love if you leave unless you are 100% committed to that studio. Go work for a studio that does not require such a restrictive non-compete. Realize that not all non-competes are going to prevent you from working elsewhere. Additionally, the laws vary by state, but employers have the upper hand in most states.
- You are putting yourself at risk if you are working for two businesses that compete, especially if they are near each other. I know it is common to work at multiple facilities. A good rule is to keep them at least 10 miles apart and make sure you let the owners of both of those businesses know you are working for both of them. If they are not comfortable with this, move all your classes/training to a facility that is far enough away or consolidate your classes into one facility.
- If you met a customer at a gym/studio, you should not solicit that customer to go train or take a class somewhere else you are working. The litmus test is if a customer is asked if they trained with you or knew you before they took a class with you at a particular gym or studio, they would respond with “yes”. If a customer comes and finds you somewhere else you work, there is not much you can do about that, but make sure there are not emails, texts, social media posts, or phone calls to that customer.
- If you are inviting customers from one gym/studio to another, the owner most like is aware of it. I am interacting with owners all the time so you would be surprised. I was just speaking with one gym owner who has a record that one of his trainers printed off his entire member list 1 week before going to work for another gym 5 blocks away. When I was a studio owner, I had “other” customers telling me when instructors who worked for me were inviting them elsewhere. As a business owner, the last thing I wanted to do was to sit down with an instructor and have THAT discussion. It sucks, and I would rather do anything besides this. I had someone who was once a good friend who I hired in to help me at a studio I owned directly soliciting customers in addition to giving a competing studios owner her facebook login so they could access my customer list as she added every single person who attended her class as a “friend’. This discussion ended the friendship (probably not a bad thing as someone who steals from you is not a friend).
- If you are soliciting customers because you have another business where you make more money, realize you are opening yourself up to a lawsuit.
- If you are taking money from customers “on the side” while working at a gym or studio, that is considered “breach of fiduciary responsibility” or “breach of trust”. The media is filled with stories of politicians, executives, and employees being prosecuted for doing this. Just because they are not plastering spin instructors on the front page of CNN, does not make it okay to do this. It is wrong in any industry.
- If you are working at multiple studios/gyms, give equal time to each of them on social media; The owners of the gyms/studios see your posts and they DO get upset when they see you promoting the OTHER places you work and not their studio/gym. I work with gym/studio owners all day and have yet to see an owner that does not care about this. If you don’t care enough about a place where you work to promote your classes or services, then you may want to ask yourself why you are working there. Give equal airtime to everywhere you work. This is how you would want to be treated if you opened your own studio.
- If you sign a non-complete / non-solicitation agreement consider including a clause that excludes individuals (and their friends they invite) that you introduce to the studio/gym. As an instructor, you have a following and are helping the gym/studio where you work grow their business. You will want to able to bring those people with you if you go work somewhere else given you are the one who introduced them to the business in the first place. If you are bringing a large following with you, protect yourself and get this covered in writing.
For Studio / Gym Owners
- Make sure you include a non-solicitation clause in your employee agreement. Make it fair to ensure employees that invite their clients/customers to your studio/gym are going to be protected so they willing to bring these clients with them.
- Realize that many of these instructors have never owned a business and are not going to fully think through why inviting your customers elsewhere is wrong. I am around instructors all the time and I hear them inviting customers to other studios/gyms or promoting their side business. The industry needs to educate instructors/trainers. As a business owner, I would make this clear to an employee on their first day.
- Give employees the benefit of the doubt with a warning. Gauge how they handle the situation after you speak with them as to whether or not you should trust them with your customers going forward. I have had instructors I spoke with respond positively saying they will be more careful. I have had one who blew up on me, threatened to quit, and then continued to solicit customers after our initial discussion. Use how they respond as the deciding factor on how to deal with the situation.
- You will have people trying to use your facility as a trainer without paying a fee. Have a game plan on how to handle this. Their argument will be that they are bringing members to your facility and are member themselves. This is the equivalent of you and other members can come sleep in their apartment w/out paying rent. They obviously are not including the thousands of dollars in rent you are paying every month so they can operate their business which competes with your business.
- You will see laws in the near future covering social media protecting both employers and employees. They exist for email and telemarketing and will be extended to social media.
- Include a clause in your employee agreement that makes it a requirement of employment to provide equal air time for your business on social media. As an owner, you are going to be upset when you see weekly posts from an instructor promoting another gym/studio and zero posts for your business in months. If an employee is not committed, ask yourself why you are not spending time finding other employees who are.
- Preventing instructors/training from doing what they love is generally not a good idea. There is a middle ground in this issue so take it. Furthermore, when you pursue an employee legally, that employee will run around and tell everyone they know that you are threatening to sue them. This is not going to be good for your business so you have to think carefully before taking legal action. In general, it is not worth it, firing the employee and moving on is usually the best course of action. Letting them go work for a competitor may be the best thing you can do to compete.
- Beware of employees who are teaching one class at every studio in town. My experience is that the instructors who work at many different places don’t promote their classes or draw in new customers. Certainly it is okay to have employees who work at multiple gyms/studios but there is a balance that should be met on both sides. Minimally, you have to question the judgment of an instructor/trainer who spends half their time driving all over the city to teach one or two classes at five different gym/studios.
- Don’t know what an employment agreement is? Find a lawyer who is board-certified in employment law.
In the end, there is a middle ground for both employees and owners in the fitness industry. The reality is that less than 33% of the people in most cities are working out at a studio or gym. If we all worked on getting the other 67% of the people in every city in the country working out, we currently would not have enough studios or gyms to serve them all. Most of these gyms/studios are focused on figuring out how to get the 33% of people already working out at a competitor to become their customer when the real market is the 67% people not working out at all. So let’s work together as owners and instructors to “Inspire People to Fitness” and change lives.
About SWETI Services
The team at SWETI Services goal is to “Inspire People to Fitness” through creative marketing and consulting services to companies in the fitness industry. To learn more about SWETI Services go to www.swetiservices.com.
About The Author
The Author, Joe Berti, is the founder of SWETI Services is an entrepreneur in Austin who has the unique experience of having been an investor who launched a fitness studio, is currently the Founder/CEO of SWETI Services and is also a cycle instructor/running coach. For more information on the author visit http://www.linkedin.com/in/joeberti