What Gym Owners Get Wrong About The Legal Side Of Their Business

What's up, Gym World?

Mateo sat down with Matt Becker at the Two-Brain Business Summit in Rosemont, Illinois. Matt is the founder of Gym Lawyers, a national law firm focused exclusively on the fitness industry. He's also a former owner of a CrossFit affiliate for 11 years.

Most gym owners don't think about the legal side of their business until something goes wrong, and Matt's whole practice is built around fixing that.

Here's the summary 👇

How Gym Lawyers came to be

Matt spent years running his CrossFit affiliate while also practicing law. He knew what compliance looked like from both sides of the desk, as an operator and as an attorney.

The idea to turn that into a business came from Chris Cooper, who called Matt one day and made a simple pitch: there's nobody in the US combining gym ownership experience with real legal expertise, so go do that.

The practice eventually settled into two main areas: compliance and transactions, the legal infrastructure that keeps a gym protected day to day, and the buy/sell work that comes when ownership changes hands.

The compliance stuff most gym owners are missing

When a new gym owner comes to Matt, there's a checklist of things that need to be in order. Most gyms have some of it, but not all of it.

The basics:

• A properly structured LLC or corporation

• A liability waiver that's valid in your specific state

• A membership agreement that complies with your state's consumer protection laws

• A staff agreement that correctly classifies coaches as employees or independent contractors

• A lease, reviewed and negotiated, with protections for the tenant

Lease agreements alone run 35 to 105 pages, and most gym owners sign them without understanding what they've agreed to, including personal guarantees that put their own assets on the line.

Why compliance directly affects what your gym is worth

Your legal infrastructure has a real impact on whether you can sell your gym, and for how much.

If a buyer comes in and finds that your membership agreements aren't state-law compliant, they can challenge whether those members are real contractual assets at all. If your liability waiver is weak or outdated, it immediately lowers its perceived value, and if your financials aren't clean, the deal stalls.

Matt put it plainly: you can tell a buyer you have 300 members, but if none of them signed a compliance agreement, you don't really have 300 members in any meaningful legal sense.

How gym valuations actually work

Gym Lawyers also provides market-value opinions, not certified appraisals, but a formal process built on the same methodology. It gives sellers a realistic picture of what the market should bear before they begin conversations with buyers.

Two common valuation methods:

• Seller's Discretionary Earnings (SDE) multiple: typically 1.5x to 2.5x in this industry

• EBITDA multiple:: usually 3x to 3.5x, sometimes 4x at the boutique fitness level

The practical value of getting this done early is knowing whether you're even ready to sell. If the valuation comes back at $150K and you were expecting $350K, that's information you need before you start the process, not during it.

What buyers should watch out for

The riskiest legal deals Matt sees are those in which the buyer already knows the seller, for instance, a coach buying from their owner or a longtime member. But because there's trust, the proper steps in the sale process get skipped.

That's where things go sideways.

A formal diligence process will find what a personal relationship won't: compliance issues, gaps, lease risks, member agreement problems, and undisclosed risks. By the time the issuer discovers those on their own, they've already handed over the money.

What's happening in the market right now

The boutique gym expansion that ran up through and after COVID is starting to shake out.

It’s created an opening for a different kind of buyer. Now, people are identifying underperforming gyms in specific markets, acquiring several of them at low prices, turning them around, and then selling the whole portfolio to a larger buyer. It's called a roll-up strategy, and Matt is seeing it pop up in different corners of the US right now.

TL;DR

Matt's practice covers the full lifecycle of gym ownership, from getting the legal foundation right at the start to knowing what your gym is worth and navigating a clean exit.

A few things worth taking away:

• Most gyms have compliance gaps they don't know about, including entity setup, waivers, membership agreements, and staff classification.

• Get a market value opinion before you start talking to buyers; know your number first.

• If you're buying, run a real diligence process even if you trust the seller.

The compliance work isn't just about avoiding lawsuits; it determines what your gym is worth and whether a buyer will actually want it.

That's worth thinking about well before you're ready to sell.

cheers,

j