Tuesday, November 8, 2016

How To Sell A Boot Camp Business, PART II

This post is a continuation from a discussion I am having with a boot camp owner who is developing his exit strategy. You can read part one of How To Sell A Boot Camp Business here.


Hi Jesse,

Awesome answer!!! That is a perfect response and idea.

Here are my final clarifications on this and the main one I'd love your feedback on is question 5. Thank you:


1. I am putting the plans together to approach all 4 trainers this week. What happens if one or two of them say I'm not interested in buying it or running my own business? I am just wanting it how it is (which is get paid per session with no risk or responsibility other than show up and train the group)? I am really wanting all 4 to say yes of course, but I know there is definitely one of the 4 who is very risk averse.

2. Do I need to see a lawyer to get a contract or can I just draft a basic agreement myself outlining the need for them to do certain things and not quit/leave early, otherwise they get nothing?

3. How long do I consult them for and to what capacity each month? I obviously see the first few months as being more involved, with me explaining the 'business side' of things and coaching them on how to maintain their members, and to keep growing it. Would I be doing this ongoing until their payment is completed (i.e. 9 months or 12 months if I go that option?)

4. How would you create limits to this coaching/consulting? I want them to succeed, but not be calling on me for everything and draining my time each week.

5. With the current brand and bootcamps, would this simply mean that as of the end of this year that brand will no longer exist, and they will have to use their own brand and name to do so (e.g Mary's Fit Bootcamp and marysfitbootcamp.com) or should I separate their location page from my website with their branding and just put a location based url on it e.g. instead of actionfitnesscamp.com they would be sydneyactionfitness.com 

I know the daunting part for them will be that they will need to create their own website and have a brand that no one knows about.
I know that this otherwise will revert back to some sort of license style unless it is just a break off into their location, where they really just own their own business even though it has the existing name and branding on it.

Thank you Jesse.

Cheers,

R.


And Here Is My Response


Hey R.,

For question 1: Well, you have a few options as to how you handle "risk averse" trainers. One, you could put some effort into showing them how they don't really have any additional risk, since if the business didn't go well, you'd have to fire them. If it goes well, you make more money as the owner. If they owned it on the other hand, and it didn't go well, they would be out of work, and if it does well, then they make more money. So you see, if you frame it this way, you can help them understand that there is no downside, only an upside. If they can't see this after you really make the effort of showing them, then they are unfit to own a business and you should move on.

Moving on, incidentally, means you try to get one of the other owners to buy more than one location, which is your second option. If you have one that is really excited and perhaps a bit more ambitious, you might make a deal with them to buy two locations instead of just one. If I were them, I would do this deal, especially if the next location isn't too far away. They keep the trainer there and simply pay you the profit for awhile, just as we discussed earlier.

If nothing works, just sell the locations you can and hold the others until you either find a buyer or simply let them fade away and let them go. I really doubt it will come to that, however.

For question 2: I am not an attorney and don't give legal advice! With that being said, I can only comment that I have done both in my time. I have drafted my own documents after looking at generic templates on the Internet or using inexpensive contract creators online. I have also paid attorneys lots of money. I am not telling you what to do, but I didn't say you couldn't follow my example and do a little homework. You'd be surprised what you can do yourself with just a little effort. It also comes down to your comfort level with this. Seeing that you aren't selling million-dollar businesses, you just might want to save a little money and do it yourself.

For question 3: You almost answered your own question here. Yes, it should taper off over time. How much time is up to you. You just want them to leave with a good feeling and not feel as if you abandoned them, but you also don't want to be at their beckon call. I would think that ninety days is probably reasonable. You could also take it on a case-by-case basis and adjust for the different owners accordingly. Either way, you should definitely not be helping them for more than six months at the most.

For question 4: I would offer them unlimited access to you for two weeks while you are really pouring into them. After that, once a week is good unless there is some kind of emergency.

For question 5: I would do the latter of your options you listed. In essence, you are selling them your brand too, which is part of the value. In my mind, this is worth something and helps justify your price, since people have heard of them. If they have to change names and websites, you are giving them less of a reason to buy your business. You are then only selling the clients, which is not as attractive and they could always just steal the clients if they are unscrupulous. You want to reduce the chances of this, and selling the brand and the name and everything helps you with that process. I would give them a domain name with their location and then give them the rights to use the brand with the city. This is another thing you need to add to your agreement with them. They are licensing your name and brand and you could even continue charging them yearly or even monthly for the use of it alone. If you create a website for them, you could even continue charging for the website, or perhaps make it a part of the sale and then give it completely over to them free and clear. These are all things you need to carefully consider before you pull the trigger. Once you make a decision in this department, you can't undo it or complain to them down the road that you should have charged them more or retained some rights you think you should have in perpetuity. You also need it in your agreement that they only have the rights to the name that you give them, and have no rights to the other boot camp locations or the owners in any way so that there is no potential conflict among them.

I hope all that helps! Let me know what happens.


I am assuming this wraps up his questions about selling his boot camp business and I sincerely look forward to hearing back how it goes! I will, of course, keep you all abreast of anything interesting. Until next time... Please comment and ask your questions below.


Check out the continuation of this saga in part III of how to sell your boot camp business and create a personal training business exit strategy here.


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