What do I need to know about a gym’s reliance on personal trainers who rent space?

Ask for every rental or contractor agreement. Look at the term, the rent, notice required, insurance and what the gym provides. Some are informal and month-to-month, which gives you less certainty than a signed agreement. Ask whether the trainers are properly set up as independent operators, and ask your lawyer to review that question.

Next, work out what trainers bring. Rent is one thing, but their clients also use the gym, buy memberships or add to its atmosphere. Ask which trainers have the largest following and whether their clients are members of the gym or only pay the trainer. If trainers leave, the gym might lose both the rent and the traffic.

Talk to the trainers, with permission. Ask why they work here, what they pay and what would make them leave. Ask whether rent has been adjusted or waived for any of them, since favourable arrangements may not carry on. Compare the rent income with the financial statements and the lease, since your accountant can show you which parts depend on these arrangements and which would continue. Ask also whether any trainer’s space is shared, since overlapping use can cause friction under new management. Ask each trainer the same questions, so you can compare their answers fairly.

Key takeaways

• Collect and read every trainer agreement.
• Separate rent income from the traffic trainers bring.
• Ask why trainers stay and what could change.