There are always major lessons to be learned when finding gym space. Among the more important ones are, trust your gut and never rely on a verbal agreement, or “handshake deal.”
Hannah Gaines learned this the hard way last year when she opened her gym, CrossFit Culminate in Jacksonville, IL.
Jacksonville is a small town and as Gaines said, “Everyone knows everyone.” Which was exactly the case for the person she decided to rent the new gym space from. Gaines and her partner are police officers. The building owner is a firefighter and the three had been on emergency calls together.
Because of this, Gaines was convinced that a verbal agreement was all they needed. Throughout the discussions and planning, she figured there was “no need to be so formal” or get things in writing.
The Negotiation Phase of Finding Gym Space.
After finding the gym space that Gaines was happy with, the lease negotiations began. She communicated a list of building upgrades to the owner. These included fresh paint, updated flooring, a new bathroom build-out and the installation of a roll-up door.
“There were all these things that needed to be done,” she recalled. “And he said, ‘Okay, these things are my responsibility because it’s my building, and these are just things you want.’”
From there, both parties agreed on who was responsible for which improvements. Gaines then took out a $30,000 loan for her part of the list. That loan was then rolled into the lease, ultimately doubling her rent for the upcoming three years.
When moving day rolled around last February, the owner hadn’t lived up to his side of the agreement. In fact, the only upgrade he had completed was a coat of fresh paint.
“He didn’t have the building ready to be occupied,” Gaines said. “It had been used for storage and there was (still) water damage that had been there for a while. The floors were rotten, so if you dropped a barbell it would break through the rotten floor.”
In addition, when Gaines was originally finding gym space, she was promised 3,000 square feet. As it turned out, the space was only 2,500 square feet in size, with only 1,500 square feet being usable.
“But none of that was in writing,” Gaines said.
Nowhere to Go But Forward.
Determined to get her gym going to the best of her ability, Gaines had no choice but to pay out of pocket.
“We were scrambling to get everything done right before we had our gym grand opening,” she said. She then added that ultimately, they still moved in before everything was ready.
But that wasn’t the end of it.
To make matters worse, shortly after Gained made the improvements and moved in, the owner sold the building.
“Now it looked more attractive for him to sell because he had a high paying tenant in there,” she said. “But on the lease it just looks like we’re paying high rent because the loan isn’t in the lease.”
The Lesson for Gym Owners.
Gaines knows that her willingness to trust when finding gym space was a $30,000 mistake. As a result, she’s a year into a rough start to gym ownership.
“This has really limited our ability to grow,” she explained. “Things are pretty shaky right now. We hope that in the new year things kind of take off a bit more, but we’re not profiting much. We’re maybe five to ten members away from not even covering the overhead.”
When asked about the advice she’d give to other gym owners, Gaines cautioned not to take anyone’s word at face value, even if they’re a friend.
“Never trust anyone, and get everything in writing. Every single thing.” she said. “And hire a lawyer. Part of us knew to just spend the extra money to have someone look over the lease for us, but we were just so strapped for money. We were just trying to make it work. So we didn’t trust that instinct, and we decided it wasn’t worth it. We trusted him.”
Gaines went on to say, “If I could do it again, I would have allowed part of our budget to have an attorney look over our lease, just to cover our bases. Because in the long run, that would have been worth it.”
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The Right Steps to Finding Gym Space.
Gaines admitted that she jumped the gun a bit when finding gym space. She said it was partly because there just weren’t many available options that would be suitable for a CrossFit gym.
This is common for new gym owners. Oftentimes, it’s easy to rush into a lease because they’re eager to open their gym.
If Gaines could go back in time, she admits she would have done some more research. Then she would’ve waited it out for the perfect space. And needless to say, she would’ve gotten the agreement in writing.
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