Buying a gym or fitness studio in Florida

Gyms and fitness studios sell access and coaching: full gyms with equipment and classes, boutique studios (yoga, cycling, pilates, boxing, strength), personal training studios, martial arts schools, and climbing or specialty gyms. Most of the money comes from monthly memberships paid automatically. Studios may also sell class packs, and training studios sell sessions in packages. Personal training, retail, drinks, childcare and events bring in more.

What matters most is how many members join and how long they stay. A gym with lots of sign-ups and quick cancellations has to run hard just to stand still, while a studio whose members stay for years can grow on referrals alone. In some parts of Florida, seasonal residents can swell winter attendance and leave a summer dip behind. The main costs are rent (often the largest), coaches and front desk staff, equipment, utilities and marketing. The team is usually a manager, part-time instructors or trainers (employees or contractors), front desk staff, and an owner who often teaches.

• Steady membership with few monthly cancellations and a long average stay.
• A community: members who come often, refer friends and know the coaches by name. Members who rarely show up are the first to cancel.
• Instructors and trainers loyal to the studio, not just to their own clients.
• Prices that have held up without constant discounting, or January promotions that bring members who leave by spring.
• A class schedule that fills at several times of day, not just two peak hours.
• A lease with years left, at a rent the membership comfortably covers.
• Equipment in good condition, with no big replacement due.
• A manager who runs sales, scheduling and staff without the owner.
• Billing and membership software with clean, exportable data.

Florida doesn't license gyms or trainers as a trade, but its health studio law (sections 501.012 to 501.019) covers most gyms and studios that sell memberships or packages. Each location must register every year with the Florida Department of Agriculture and Consumer Services (FDACS), and local governments won't issue a business tax receipt without it.

Unless an exemption applies, each location also needs a $25,000 bond, letter of credit or secured guaranty. Two kinds of studio are exempt: those that collect monthly and charge fees of no more than 10 percent of the contract price, and those with the same owner for five years and a clean record. A change of ownership, including a stock sale that changes control, starts that five-year count over.

Contracts must give members three business days to cancel and let them cancel on death or disability, or if the studio closes or moves more than five driving miles without a nearby substitute. They can't run longer than 36 months at first or be sold as lifetime memberships. Ask FDACS what to file at closing.

Pools and food service need their own permits.

• Membership data from the billing system: active members, joins and cancellations by month for two years, and the average stay.
• Revenue by type: memberships, packs, personal training, retail.
• Prepaid memberships and packages: service you'll owe after closing for money the seller collected.
• FDACS registration, bond or exemption (a change of owner ends the five-year exemption), and consumer complaints.
• Trainers and instructors: employees or contractors, any agreements not to solicit members, and who the clients really belong to.
• The lease: its term, landlord consent to a sale, and any exclusive-use clause that bars a competing tenant.
• Equipment list, age, and whether it's owned or leased.
• Payment processor agreements and chargeback history (disputed card charges).
• Attendance data, if the check-in system records it. Members who stop coming are about to cancel.

• How many active members do you have, and how many cancel each month?
• How long do members usually stay?
• Who sells memberships and handles cancellations?
• Which coaches have the biggest followings, and how long have they been with you?
• Is the studio registered with FDACS, and are you bonded or exempt?
• How much have members paid ahead for months or sessions they haven't used yet?
• What's left on the lease, and what would the landlord need to approve a sale?