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157. Buying / Selling a CrossFit Affiliate

157. Buying / Selling a CrossFit Affiliate

Ackerman and Fern get one question coming up regularly: Should I buy an Affiliate? They discuss the crucial factors on how to value an affiliate allowing for an accurate value of the business. Also, how to go about actually doing it, who needs to be involved and how to move the business forward. Ackerman and Fern have been through this process multiple time and use their experience to help you decide if this is the right choice. 

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Time Stamps:

(6:32) Contract in place
(8:25) Are you buying yourself a job? 
(9:48) The Hard stuff 
(12:41) Are they paying their staff?

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Buying : Selling a CrossFit Affiliate.mp4 transcript powered by Sonix—the best audio to text transcription service

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Fern:
Question?

Ackerman:
Oh, yeah. hit me.

Fern:
Would you purchase a gym? An existing Gym.

Ackerman:
Crossfit?

Fern:
Yes. That's a weird question because it's a Crossfit, podcast. But although Hamri or yes I a Crossfit the gym,.

Ackerman:
Then you never know.I mean, there are different types of gyms out there. I don't think we live in a bubble. Would I purchase a Crossfit, gym? Short answer is yes, but it would be followed with the caveat of it would have to be the right price.

Fern:
Ok, so that's one factor.

Ackerman:
Well, I mean, assuming the other factors are, hey, it's where I want to live, it's, you know, driving distance. I like it, et cetera. Assuming all those are check, check, check. You have probably the box I go to our coach at. Yeah. Now. Yeah.

Fern:
Zoom all the geographic thing. Yeah. Right. Like it's close enough like all that stuff. But I'm just talking about. Because the reason I've had about five people reach out this week with questions about buying a gym.

Ackerman:
Well as you know and I'm sure we'll get to this. I've sold a few gyms and I get probably five questions a week for the last five years about it. Ever since I've gone on a handful of podcasts, it's definitely a topic we need to discuss, which we're doing. And it's also it's it's a growing phenomenon in the Crossfit, world.

Fern:
Now, full disclosure, I purchased one in two thousand years. Two thousand and eighteen, and we end up having to shut it down because of something the landlord did. The landlord in suing me. And then we went to trial and we actually won. But so I've been through that process and then had to shut it down it and want to. But so, yeah, I'm always curious because I don't think. And I think we did our due diligence.

But there are some things that I think you don't know and that you don't know that may fall outside more in the abstract. Right. There's way too many people, in my experience, that are just not doing their due diligence on the numbers. And I and my argument is this is basically fact. People are passionate about Crossfit,, so they become illogical about business. When it when Crossfit, is involved, they will do things that in any other world, if you were still you like, this is the investment, you would look at me like I had three heads and you would say, that's the dumbest thing ever.

Ackerman:
I don't know that that's unique to Crossfit, so much as it's it's very common in small business ownership. When someone owns a small business, they are very taken very personally. It's their baby.I mean, having been involved in gym sales, but other small business sells as well. People often. Value their business at an extreme price.

Fern:
And then whoever is purchasing it does not do. Doesn't. Doesn't put the business through the wringer. From an evaluation standpoint, understanding like what are the actual numbers, what is this actually worth, all of that stuff? Because, yeah, there is a heap there's a massive disconnect because where I think it's worth this much and this is what it is and we don't have to because I think everybody understands that. It's just because you have this because you purchased all this equipment doesn't mean that's what it's worth.

Ackerman:
At all of that. And we'll definitely dive into that. And then like you've said, the purchaser is often someone minivan buying Crossfit, gym. But then the implication is, I'm excited. You know, I'm probably like newer into Crossfit,, really excited. Delane, the gym really excited to have my first business. So you get this price even though it's. Not real, meaning it's it's inflated. Like Furness saying, if you don't do your due diligence, you often get.

Ackerman:
You know, suckered into paying that price just because you're so excited, not realizing a business isn't worth this and B, something. Hopefully we dive into as you can just open your own.

Fern:
And typically the price wouldn't be that different.

Ackerman:
Yeah, I mean, I'll tell a quick story and I don't want to get too detailed into it because people that listen may know some of these people. But you know what? I relocated to Florida, one of the local boxes. Asked me to meet with them and I had been around to a few boxes and one of them sat me down, they took me out to lunch. They were these two very. They were very wealthy, smart people that somehow got involved in owning a gym. And they said, hey, we would love for you to own part of this gym. And I don't remember the exact numbers, but it was like two fifty. Two hundred fifty thousand for a third. Something along those lines. And I was like, damn, talking to really smart people and most likely thinking they're much smarter than me because when you're a fitness coach, hey, you're a dumb fitness coach. That's what the world thinks.

Fern:
Correct.

Ackerman:
So not taking into account, I've sold three gyms at this point. I've done some things and I go.

Fern:
This is like impression is that this is worth three quarters of a million dollars,.

Ackerman:
Which something like that. And I want to say they might have even said twenty five percent is somewhere between 750 million. And I go, listen, guys. I will open up next to you for sixty thousand dollars and steal all of your members because I'm so much better than you. And that was the end of that conversation. Never heard that.

Fern:
And my question is always, where did that number come from?

Ackerman:
Yeah, I mean, they just had a crazy number. And they the thing is, people don't understand the Crossfit, world. It's like I literally could have opened up next to them. And granted, they were in a nice location and, you know, so would have probably been very expensive rent for me. There may have been a non-compete in this location. It wasn't like I was actually going to do it. And I was still interested in becoming a part owner at the time. But it was like your point was your number is ridiculous and you don't understand this. This Mitch Gym space that I really understand.

Fern:
I've heard similar stories. Which is ridiculous numbers when it's worth three. If you haven't a gross 300 K ever worth 300 K and.

Ackerman:
You know.So let's talk about some of those things, you know, when people put out these prices. One of the first questions a CPA is going to ask you is, are they on long term memberships?

Fern:
Are contracts in place?

Ackerman:
Right. Our contracts in place. And if they're not, they're going to cool. All of these members can leave tomorrow.

Fern:
Yes.So at that point, there's is there's like two different discussions that happen. So if there is no contracts in place. Really, if you're the purchaser, the only thing that you're really negotiating is purchase of assets.

Ackerman:
Yeah. Which is equipment, which is a depreciating value and most likely for buying a gym. The equipment's been around for, you know, three to ten years. It's worth.

Fern:
On the high end, 50 percent of water was purchased for.

Ackerman:
That's the that's, like you said, on the high end. Most likely mean. And that's something an accountant should be able to show you. Hey, you bought the equipment on this date. We've depreciated. I don't know. You know, different things depreciate at different rates. But, you know, this is what it's currently worth. That's and ultimately, when I sold my second box to my partner, that's what was in the agreement. This business is going to be worth whatever the assets are worth at the time of sale.

Fern:
Because nothing else is guaranteed, like the members can walk away. So you're purchasing you're purchasing two things that center on purchasing assets and then I'm purchasing liability really? Because I'm purchasing rent. Right. That's in there, so I have a built in expenses already. And either you're not going to have expenses if you start your own business, but it's in there. Right. So it's OK. So I'm purchasing that. And then the second thing is. OK. Do they have. Are there contracts in place? And then the second question is probably Likly Is the business profitable? That's the first. That's the second question. Are there contracts? Is the business profitable? And you can probably swap those, too. Like, is it profitable? Are their contracts in place?

Ackerman:
And we're gonna direct a lot of people to this episode in the future. So one thing I want to say, if you're listening at this point is if you're buying a gym. Are you just trying to buy yourself? Are you just trying to buy yourself a job,.

Fern:
A really low paid job? And a lot of scenarios like,.

Ackerman:
Yeah, low pay, high stress, a lot of hours. Like there are other ways to make money than buying yourself a job. Now, if you're buying a gym because you want to be a business owner, potentially grow it in and do these other things. Great. But if you're buying a small Crossfit, box and you're one of two coaches there, you're buying yourself a job.

Fern:
And this is an entirely separate question. So we there's there's some additional questions you have to ask, which is probably a whole nother episode if this is if you're purchasing a second gym.

Ackerman:
In addition to the one you currently own,.

Fern:
Correct, right, that's a whole different topic and there's a whole other set of filters, questions that have to be asked and ET center. So let's just stick with. I just. My my owner approached me as an athlete about purchasing the gym.

Ackerman:
Right. Or it could even be. Or you found one. I mean there's there's websites and social media things where, you know, you can find a gym in Seattle. So yeah, the point is it's your first thoughts. You don't own a box firmly.

Fern:
Yeah. What's that? What's what are some of the.

Fern:
Let's go with the hard stuff first, like what are some of the things that you want to know about the gym if you're going to purchase it? What are the if I'm like, hey, I want you to buy this shit? What are you gonna ask me for?

Ackerman:
I think I think the two biggest numbers, I would maybe three even. And then in fairness, I get this question all the time. How do I value the gym? And by the way, there is a difference between evaluation and evaluation. Not entirely sure the difference, but typically it's valuation is when you're trying to put a number on something and that's usually what people are asking. Correct. And they're, you know, sort of a few things. First of all, the one thing I always, always say is something is worth what someone is willing to pay for it.

Fern:
Correct.

Ackerman:
Which could be over or under what it's worth. Right. Now, what I would want to know is, hey, what's the gross profit of the gym over the last probably two or three years? What was the net profit and what did the owner pay themselves? Those are probably the three biggest things, because if you know that you know a lot.

Ackerman:
Like, for example, I didn't necessarily pay myself a lot when I own my gyms, but a lot of my life expenses were covered because, you know, you own a gym, you own a small business, you can have some write offs, you know, from things like gas mileage, you know, 50 percent of what you eat out, all of those if you're out with your members, your coaches, etc.. So oftentimes the net or the. Owners numbers could be off and the gross and then the net and then their pay kind of tells the full story, yeah.

Fern:
So there's really some things have to dig into and you can get a lot of this from you should get multiple years of tax returns. You should get if you can. Comparative balance sheets and Parnell's from the previous at least two years, so you can look at them and then look at what those. Because depending on how the owner pays themselves, their W2 could say 12 grand. What they take home, significantly more than that. If if they're depending on how they structure the business and how it's all lined up.

Ackerman:
So, yeah, and some people you know, it's funny. I'm sure you for this people, their small business. It's a write up by a write off. And I'm like, that's not Reems. Yeah, I figured that. And so some people I've seen people trying to sell their gym and it looks like they don't make anything because they've ran off everything like a television I have in my car and my dog food. All right. Like I get you bring your dog to the gym every day, but their food is not a right off.

Fern:
Yeah. And so you have to. You have to flush out some of those things. The other thing that I would put in there and this actually has to go with the post that we had the other day is do they pay they staff?

Ackerman:
Right.

Fern:
Like what is payroll? Because if there is no payroll involved and they're showing a profit, that profit is not accurate. Right. Meaning if everybody's working for free and that's not how you implant innocent, how you intend to run the business, there's going to be a significant. Disconnect there between what the panel looks like the day you take it over vs.. If I had everybody working on a barter system, you know, you could be in the red immediately if that was the case.

Ackerman:
Yeah. You know, or you know. And then let's flip it. Let's let's look at some things that could be potentially beneficial. Well, this guy's giving out 20 free memberships to random people or everyone's at a discount. And you got to come in and, you know, we can all ultimately do another show on. You bought the gym. Now what? Right. Don't charge all these people. All of a sudden the full rate and lose them all. But those are important things to see is their opportunity to bring home a bigger net. But also, like ferne just said, if you want to run this a little more polished and a little more professionally, is it gonna cost you more? Because now all of a sudden you're gonna pay $15 a class. Or is the owner paying all these coaches and this is gonna be your full time gig and you're gonna take over some of those and save. So all sorts of options we have.

Fern:
The other thing I looked at is monthly revenue and then rub revenue streams like how much revenue comes in from different things. The.And then the other one is make sure that make sure it all matches, because what you really need to marry up is the actual bank statements with whatever software they're using, because that could not. They could. They could show a report from Wodfiy that shows this number, because I've seen I've seen scenarios that, you know, whatever system they use is not accurate. It shows this much money coming every month. But you look at the bank statements and that's not accurate at all. It's not even close. Or it says, I have this many members, at which point we could do some quick math, try to figure out roughly what the gross revenue is. And then I look at the gross revenue and it's half of that. So immediately alarms are going off in my head that you like, virtually nothing you're gonna give me. From this point is accurate from a number standpoint because you think you have one hundred and seventy eight members with the gross revenue of eight thousand dollars a month.

Yeah. And that's just where it comes down to. You know. Because, again, I get that we both get the question a lot. I don't want to buy the shit. What's it worth? It's like get to get these tax forms, which basically have all the things I mentioned that has the gross, that's the net. And it should have, you know what the owner got paid and find yourself a good CPA. If you don't have one, I've got one. Email me. I'm happy to refer you to attempt at least three. CPA is in my life currently and I'm happy they're afraid of one of three and they've all got a lot of experience here. Or just reach out to John Briggs at Insight talks because he owns a gym. So, yeah. Or just plain as fun. The reason I like my guys because he's been through this couple of times. But yeah, so has John bred so it doesn't matter.

Nice guy will actually get ahead of me and have the accountant look at that stuff. But then you need to do your due diligence by looking into the actual gym metrics to see what is the what is a what is the good, clear, accurate picture of what is the gym health like? Do they actually have that many members? What's the check in rate like? How many people are delinquent? How many people are on contracts or not on contracts? Who has discounts and who doesn't have discounts? You. There needs to be like if you're gonna do this right. You're basically asking the other person to take their pants off. I need you to take your pants off and show me everything. Otherwise, this is not going to work.

You just know, no matter how friendly you are with this person, they're not going to tell you everything. They may not lie to you, but they're also not going to tell you everything. Yeah, because they want to. If they're trying to sell this gym, they want out. And there's not like this crazy market of people buying Crossfit, gyms.

The other question I ask you and this is where we kind of believe some of the hard metrics is why do they want to know?

Yeah, I mean, when I argue that's probably the question I get asked the most, why did you sell? And I think that's important. You know, sometimes people are burned out. And if they're burned out, you can probably come in. It's rare that if you're buying a Crossfit, gym, you're negotiating against other people. Right. It's Ali. This is like a one person deal because most of the time it's it's based on location. Like right now, I'm not going to buy a gym in Florida because I'm not going to move back to Florida. And I don't want to run a gym virtually. So, yeah. You need to be able to. Think about what what it's worth and then figure out why they're selling. And, you know, is it for. Is it because they have a better option? Sometimes they just need to move fast. Maybe their significant other got offered a really nice job elsewhere and they need to sell. I've seen that scenario where it's like they just want to get out of it.

So there's there's all sorts of I've seen other scenarios where people. These are gym owners who who got gyms all that later in life and they want to retire and move and they're there in that scenario where they basically look at it and they say, we built this thing, I can sell it, I can use the capital that I use that I that I sell this for and then move in and fast forward my retirement by five years, because now I can go buy that property over there and move it. But typically, I do. Typically, it's like people are burned out. Like they're just like, I don't want to do this anymore. I'm not making any money. Let me just get out while I can.

Yeah, and I'll tell the quick reason I sold my first box. You know, Albany Crossfit,, it was one of the first box sales really, you know, and I think there was this trend. This was like 2014. And, you know, there was a trend between then and now where it's really the early adopters to Crossfit, in the early box. Owners got a little burnt out. And also, I think the difference was when we started, it was like ass backwards for all of us were all trainers that are like now business owners. So when I opened my 3rd box, it was like, OK, this is all polished and professional where there's a lot of overcoming your mistakes early on. But, you know, I went in and I was renting and I asked the owner of the building, which was really a big global gem. Can I buy this building? I got sick of dealing with the his members. I was sick of dealing with the fact that I didn't control anything outside of the walls of my little space. And he was like, no. And it was probably way more than I can afford anyway. And he was like, but we'd be interested in buying yours. And that was it. You know, so it can be something as simple as that. Now, I was I was a little burned out at the time, but that wasn't really why I did it. So there's all sorts of reasons why, you know, people were mad. My members were mad at me. But they're not looking at it from the fact that, hey, this dude wants to buy me out. I'm not even guaranteed to sign another lease here. He doesn't have to renew my lease. And he's offered me a good amount of money that, like you said, you know, most of us in the fitness world don't have a 4 one K and don't have a retirement and a pension. So that was it. And I had to take advantage of it.

Yeah, it's timely. And if you can if you can take advantage of it and do that, that's great. But and you should the other from a purchaser standpoint, you have to look at that or a why like when am I going to recoup my investment? So if I'm going to put arbitrarily, let's just say fifty thousand for the purpose of a gym, how long is it going to take me to get my money back? Is it five years? Is it ten years if that business is in the red? We have to do some hard evaluation on what is it gonna take to get it in the black and then how much in the black? Like how long is it gonna take me to recoup? Fifty thousand dollars while paying myself like another journalist of another job. But if you're gonna if you're gonna try to turn a business around.

While having another job. That's tough.

It can be doing. And that's really where that, you know, most people when they think about buying a business, they use these multipliers and it's typically two to three times. You know, and that's kind of the first thing I typically say, hey, this is worth what someone's willing to pay. The second thing I'd typically say is it's probably somewhere around two to three times.

Somewhere around the net profit and the owner pays themselves and for exactly what friend said. Eventually, you need to pay yourself, so you're putting in 10 times what it's worth. It's going to take, you know, 10 years to get that back. But if you're paying two to three times now. OK. So you have to work a little bit to recoup. But then also you shouldn't be doing things that over that length of time brings up the value of the box.

Yeah, while simultaneously having more expenses. Right. So typically, unless you're paying it in cash, just straight cash, you're going to have to whatever their expenses. Are you gonna take a loan payment on top of that? So just throw that in there right off the gate. If they were not paying a ton of the coaches and you can't be there full time and now you have to pay, people now have additional payroll and a loan payment. And then what's the what's the delta between that and then being profitable so that I can, you know, cover expenses, not be financially stressed out about this and then and then do that. But what I would tell most people is you should be able to. This is me having missed a lot of things up is. There should be six months of expenses offered in.

And yet off are operating it.

I would tell you this is in addition to however you pay this out, but let's say you buy, let's say, their operating expenses of ten thousand a month. There should be 60 grand in the opportunity account prepared to cover that for six months moving forward because you don't know what's gonna happen. You could have a massive, you know.

You know, people could just leave because they're just like, well, why does it flood? Because it could have a flood. You a massive, massive, massive exodus of membership. And now you have to cover rent and all that because you accidentally have sex with one of your members. You know, something like that happens. Yeah, I don't know how you accidentally do that. So let me let me ask you this question for you. What would be some red flags? There will be some. I really want this. I want to make it happen, but I can't because of X. Just so I understand the question as a biker, as the bio red flags on my end are red flags on their end. Let's let's take it as a buyer perspective, because I think most people coming to us are coming to us from the perspective. And I want to buy a gym. You know, I do have people I know I'm sure you have as well that kind of reach out like I'm selling my gym. What should I do? And that's another that's tough to get touched on that really quick, because it's tough because you don't want to put it out there. You don't want to tell the world I'm selling my gym because all of a sudden your members freak out. So usually it's these quiet conversations amongst you and your coaches.

If you're the buyer, I think one of the big things is do I have the capital for this and then do I have the time? Because it's it's a significant investment of both.

Let's assume let's assume they're gonna do to me. Most people that are doing this are looking to either change careers or they're already in this. And they want to go from a head coach to full time on their.

Then I think you're probably in a better position than most. Most people that I talk to are neither, right. They're a member or a part time coach who's potentially looking at buying in. And then I wouldn't be onstad you buying in. That's all. Stop right there. Like either they're going to buy it. Or or you're not you're not going to purchase a percentage of the business because the only way you would do that is if that business is massively profitable, and then my question is why do they want you to buy it? If it's massively profitable, there's just so many things about that that don't make sense.

Yeah, I mean, I have heard stories of people doing in more cell. It's like they are burned out. It is profitable. They don't want to lose that profit. So they want to bring somebody on to keep it growing while they can take a step back in that scenario. I would encourage that owner to not do that. And this goes for anybody selling. I would say take a really deep step back, you know, kind of remove yourself from the scenario and say, this is something I thought about when I was selling is can I keep it? Hey, someone very well, you know, probably 60 to a hundred thousand a year to run this gym and then collect profits. Yes.

Right. Going back to what I said before, like it means it's massively profitable on that end where this person just still wants to get paid but doesn't want the day to day, the day to day grind of that, which is like fine is like pay somebody who wants to be a gym manager and pay them well in that way rather than you collecting whatever. One hundred and twenty grand, you collect 60 grand, but you collect 60 grand just to be the owner and the running.

The challenge with that and again, there was a lot more into it for me than that. But at the challenges, can you as the current owner, truthfully step away?

So that was so from the buyer's standpoint, if you were going to do a buy in, there needs to be a incremental buy out. So if you're going to buy into the business at twenty five percent, well, then again, because most businesses are not grossing enough to pay to people a full living wage. Most are some that are doing that. And these are one offs. They're they're rare at this point. They're getting to be more increasingly more gyms are doing better because of things like to rain and stuff like that.

But typically, us and us don't sell us short, but typically it's not there.

So if you're going to buy a percentage, then you should negotiate a full purchase of the business over a three to five years, which is like, hey, it's going to be 30 percent now and I'm going to tack on twenty five percent next year and then 15 percent and then 10 percent the following year. So. So you got to do an incremental buyout when you do that. So because otherwise you're you still have a boss. So you're the owner, but you're not the boss. Right. Which people don't think about.

So how much hand-rolled you have. And that's also something to consider. Most people when they're buying out, it's it's over time. And, you know, you're gonna get that money over time and typically with a personal guarantee. So all those things have to happen as well. You know, from once you get that far into it, you know, but currently just on red flags. Is there anything is there anything? I'm kind of think, you know, what would set me up? Things you have to consider is the lease.

Right. I won't pretend like water the liabilities involved. Like how? And then what is the lease look like year to year? Is it 3 percent increase, which is pretty standard? Is it is it is an option, too? Is it a five year option? Three year option? Is it often then you have to move out because now I have to incur a whole ton of costs to kick this thing up and move and put it somewhere.

That's the biggest one to me. I think people overlook. It's a cool you. You're buying this gym. It's in a great location with a there's two years remaining on the lease. Well, in two years, there's no guarantee that this owner is going to rent it to you again. I've seen places where, you know, the location wasn't great and all of a sudden that area developed. And now they wanted, you know, 10 times what they were asking in New York. Jim is really value them kind of where it sits, because if you move any distance, even a small distance, that can impact your membership tremendously.

The other thing to think about and I know this, unfortunately, too painfully, is if you are purchasing that, purchasing that business, you have to look at what that looks like with regard to assuming the lease. Or is it. Is it are you now a sub less or from the previous owner? Because that that's what created some issues for me. So we had. We basically had three P or two two entities on that lease, which is where the landlord did some shady stuff and then basically had myself and the previous owners wrapped in on that and ended up just suing me. We ended up winning, but it still created a lot of weird tension because what I should have pushed for is just, hey, take them off the lease and then. And most people don't know how to negotiate hard enough. So if I'd had I just said, listen, if you don't take them off the lease and just put me on them, this is this is a done deal and I'll just sign for an additional five years. And they just said, yes, they want a tenant. So it's just one of those things where, like, you get to put some hard barriers in place that you're not rapping in like more liability and more problems into this scenario because it's just going to end up being a headache. Right. So it just ended up causing a lot of tension between myself and who I bought it from because of things that we didn't know. It was just like, OK, I didn't know that. I didn't realize that was what was going on. Even though everything all although the line item for the contract read correctly, I still didn't understand it. Like, oh, if this goes south, like they're still on the hook as well. So.

Yeah, I think, you know, and that's all kind of comes back to one of our earlier statements, as do your due diligence. This is probably the biggest purchase you're going to make in your lives outside of the home front.

Yeah, that's probably a fair statement or a really ridiculously nice car, but most of most design is more expensive.

Yes. I mean, you need to just do that research. It's that you have to take your emotion out of it. And it's it's hard to do on both ends, because when I was selling that first gym, I used my baby even selling my second and third that I was kind of less attached to. It's like I think the biggest mistake the sellers make is just this astronomical value of the gym.

Yeah, it's not worth that much.

The other thing that because I consulted a lot of people before we purchased the other one and I still to this day, even though I'm going to lose my ass on it because of what the landlord did, I still don't consider that to be a bad decision because I think I think we did vet it appropriately. And there's just some things you just can't plan for. And that happened that I couldn't plan what I could have never known that was going to happen. But there's one thing that I was coming up a couple times from different people, and it was this abstract idea of like the culture has to be right. Like the culture it like it has to fit and it needs to be right and all that stuff. But. Nobody really had any advice for how do you evaluate that, because it's a very abstract thought.

So let's let's begin the, you know, wrap up, let's cool down this episode, if you will, and talk about that.

How do you value the culture of the box? So most people.

Have not spent enough time in the gym.

Physically in the space with the members in all of the classes to get an actual really clear picture of the culture. So what I would tell anybody is. You have to go to every single class on the schedule a minimum of two times prior to purchasing the business, so if they have seven to 10 classes, you need to be in 14 to 20 classes to see everything in there because there's some things you're just not going to pick up on. If you're not in every class, if they have dead time there in the day, you need to go there and just sit there and see what's going on.

Yeah, you basically have to get the drama of the gym, right? I mean, and really, if you're buying a gym, chances are. You probably don't want to just said or you just go to the 6 o'clock every night, you love it. You see what the community is like from 6:00 p.m. to 7:30 p.m., which is such a small snapshot of the day. And then you don't realize, hey, the morning class hates each other, the afternoon class. You know, bangs every every girl that he can get his hands. Yeah. You got a you've got to really check all that, Alan, because one drama at the gym can change everything. And you can and and you need to have like.

The good old eye and smell test on things like you need to if if if they're saying we have this many members, but then you go to classes and you've been to 14 attended classes, none of which had more than six people in it. That's where these numbers. Hey, where are they? That's a problem, which means the suit, the second anybody gets, you know, wind of there's ownership change, like there's probably a massive cancellations coming. And now you're in hot water because these are not contracts generally. So you think that is some of that is one thing that I couldn't wrap my brain around an input.

And one thing I would have added to the evaluation process that I went through, which is I would have spent significant amount of time in the facility and just seeing what are the things that I don't like, that I'm not going to be able to change because there are certain things you're just not going to be able to change. Like there's other stuff I can can move this over there. I can build this out. I can change up the coaching staff. But there's nuances in every business that you don't have control over. Like I can't control that while this thing might be. And we'll make something up. It might be in a retail parking or a retail shop or something of that nature. But you don't realize until I was going there two weeks that it's no left and no left out. So there's a lot of people that don't have access to it. We're depending on which direction you're coming from, that can be a significant issue or. It only has 10 parking spaces, and if you're planning to grow the gym now, there's a really big problem there because no, I can't and I'm running into parking issues with other tenants that don't even facilitate me having 20 people in a closet. It's not even it's not even possible.

Oh, that was a huge problem when my first came because it was part of a global gym. And, you know, Monday, especially at the at the gym, we're super busy and parking was a pain in the ass. Like those are little things everyone has to consider. And then as you're saying, that something that popped into my head as a purchaser really needs to evaluate their role as a member there, because you have to take your peers and let you know maybe your coach already. But even then, you know, the role of a coach is significantly different than the role of the owner. Like, they don't typically bitch to you about everything. So you have to see how integral you are as a member or coach at this facility because all of a sudden you're gonna be the big dog. And you know, again, if you only go to the 6 o'clock class that morning, people don't know you. Who the hell is this dude? That's changing class time since switching our programming from com train the best hour of their day programming courtesy of Jason Fernandez. So we have to really think about how you fit into this because all it takes is one or two people to be like, I don't like that dude. He took class on me once and he was a dick. You know, she whatever. And all of a sudden you get an exodus. Like you said, there's Crossfit, gyms everywhere. It doesn't take much for them to go next door.

And then probably the last thing I would I would tell somebody is people again, because we're passion. So there there's like this weird, double edged sword of being a Crossfit, are typically most of us are or are intimately involved or supernational because it's had some profound effect on our life, which in turn causes us to be morons when it comes to making decisions with regard to that thing. So think about all the number of people who are at a gym that they hate and and because they're like, well, this is where I started. Even though the deaths, trauma and the owners of Dick and all these things and there's a gym 400 meters away and I might just go try that gym like it doesn't matter. But they're just like, no, but this is where I started. I'm like, this is irrational. So people will do the same thing about purging is purchasing a gym because I'm guilty of this as anybody only looking at the upside. You're like, well, this could be great. I'm like, yeah, you could also fuckin blow up in your face. So I mean, like, look at the downside. Way harder and be like, can you Katie, you really stomach the downside. Like, could you could you would you be OK with that? If the answer is yes. Ask yourself again, sit on it for a month and then ask yourself again.

Yeah. And look, if you if you're really gung ho about buying this gym, listen to the episode. Everything we've said. And then just take that step back and think to yourself, could I just open my own? I think that's one of the biggest considerations you have to take. Can I just open my own? Start fresh. Lay out the gym how I want. Choose the colors I want. Choose the logo. I want the programming. I want all of that without the headache of. You're dealing with the changes that are gonna be associated with it. Chances are you can you know, here's a little bit of quick advice and it's certainly going to be a little more detail than this, but get yourself a 0 percent credit card, raising it as your present credit card for an 18 months, two years even potentially with twenty five thousand dollars on it. You know, pay for some stuff on there. Do your equipment through Roeg and get a lease. I think they lease it. Not necessarily, Lisa, but they do a loan to Roeg. She got a credit card, your loan through Roeg and you know, and then hopefully you have a little bit of money saved, but you can really get your gym going for probably 50 to 60 thousand. And most of that, you know, not immediately out of pocket.

Yeah, you just have to have a plan and sit down with somebody about how are we going to fill this thing up, because the good old days of if we build it, they will come are gone. That's that's a really awful, ridiculous plan. So don't do that. And there's and there's people that can help you with that kind of stuff. As far as like a launch and things like that. So. You know, I just like most people, are just irrational that I've talked to about it and they're just like, well, I just it's really good.

I love it. I'm like, you've only been to one class ever in three years. Like one time slot. Like, what is the rest of the gym like? What is it?

What are the guts of the of the business look like? Pop the hood on that thing. And really, really evaluate it because it might not be that great or it might be killer. You know, if the number is massive, that means the business can probably support paying. For the buy off itself, that's ideal, right, it's so profitable to the business, just pays for the buyout of the owner.

That's what you want. It mean and we can end this episode here. But, you know. I would. There are other things we haven't mentioned, like, hey, are you a good enough coach to even you know, if you're buying out the owner who's potentially a Level 3 or a Level 4 coach and you're new, all of a sudden the quality of the coaching may go down. I mean, so many things we need to consider. I hope I hope this was at least educational, because chances are if you're listening, you know, you love our podcast or we sent you here because you've e-mailed their text, editor called us. So hopefully we will answer your question. And if we haven't, of course, best hour of their day. G-mail, dot com. You can you can email us more questions. Or maybe if you want us to do a part to this episode, we can dive into some other nuances.

But yeah, if you have questions, just Demus with the questions, because this is a pretty in-depth topic, but the big contributors is pump the brakes. This should be something that's very, very well vetted. That's thought out because even if you're thinking it out, you can still make poor decisions. Like you can still convince yourself that the red flags are not red flags. And you need somebody who's going to say, that's stupid. Don't do that.

Speaking of that, do that. The better. Is our new shirt available?

Do you want it to be available, It's ready, but it's not out to the public. Why is it not out to the public? Was just trying to trying to trying to wait and just, you know, we're gonna launch it. All right. We'll get ready, guys.

We'll launch it. So when so when this when this goes up, we'll release the shirt.

Well, that's tomorrow.

So tomorrow or today, if you're listening to it today, let's say they were many weeks ago, you're finding this update. You have your finding. That's later on. It's a long time ago. And so here's what's gonna happen. So we're launching just a new shirt. And the first 50 are gonna be a giveaway. So. Really? Yeah. So 50 people are gonna get a free shirt. Which means they're going to last for. I was gonna make a joke about your sex life, but maybe you wouldn't be a joke. I'll hold off. You know, it's it's not funny. It's true. Those shirts will those shirts will be available for as long as Jay lost of. So not very long.

Point is, act fast. Somebody somebody good. We're at a Level 2 a couple weeks ago is working with Shari and Becky Harsh at Crossfit, Roots. And I taught the dad now day one workout, which is a heavy day, and then after after the class. Chari Hey, what are some things you like? You know, we kind of do this at every level. To what do you notice about Jay's coaching this and that? And one of the guys raises his hand and said something like. He was short and effective at that, like, you know, of course, everyone's laughing at the fact that he called me short. But then I followed that up with that's my sex life and the whole place erupted in laughter because I'm hysterical. But anyway, last night we launched this year and literally went in like a minute. I mean, I was dealing with all the DMZ. Can I get one? So like Fern said, friends had this, all of his very good friends with nanite foreverything.

You'll be able to purchase one, but the first fifty is a giveaway to get. And that's a shout out to like forever fierce. Yeah, forever fierce day. They're helping us out and they want to and they're good guys. So A, if you're an affiliate owner, talk to Matt and then Whiteboard Daily had a post about those guys as well because of some stuff from one of the clips from dropping in. So if you want to look at box t shirts or coaches gear, go ahead, Matt. But for every. We're going to give away 50 shirts best out of their day, do that bit better. And after that, you can purchase them.

So how do they get these shirts?

Through the Internet in a way that's very brodsky, clearly. Where do they go to get these shirts? Do we know yet there will be a link? Yeah, there will be a link somewhere. When Ferd says that using J. You'll put a link somewhere, so. Yeah.

Well how you'll do you'll fulfill your half of this partnership, which is to do something before 9:30 a.m. your time.

9:30. Yeah. First things I sleep in because he's 2 hours ahead now.

It hit record. This dude was just like, listen. I got up at 9:30. It was early part. At which point ever for a pathway productive human being. That's halfway through the day.

So if you know anything about Burning Man. Also, please tell us first considering going and I want to know more about it before I commit to go into Burning Man. I feel like he's trying to set up some sort of weird Minaj y thing with me and his wife just now. My wife's not in the short guys, short and effective. Anyway, single dad firm right now is killing it, by the way.

It's killing something. I have it. I mean, like, I don't know if I'm killing parenthood, but my kids are killing me.

If you don't regularly check out Fern's in Syria, you're missing out. And if you are thinking about having kids, it's great to show your significant other reasons not to have children. If you just look at Fern's Instagram, your kids. I don't know kids, your kids or your spin on what they're doing, that makes me laugh. But nevertheless, ness. Nevertheless, it makes me laugh.

We'll have to make. I have to make myself laugh. Otherwise, I feel like Logan can have a TV show. She's weird enough to find it amusing, but it's comical.

I think you and Logan and I'm sure just adds to the dynamic of humor because just as a very similar sense of humor as you but I think would be very funny to have you meet the Fern's.

It wouldn't be really that exciting, to be honest. Most people be like these are just some normal people.

All right. Speaking of normal people, let's let everybody go. They've got busy lives. Get your free t shirt. And if not, find it on the Internet and then hope this episode. I hope this episode helped.

Yeah. And if you have questions that you want us to cover in more depth. Just hit us up in the DMA or e-mail us about box ownership or buying a box.

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