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Running a CrossFit Facility Tips and guidance on how to open and operate a CrossFit gym.

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Old 04-05-2014, 08:50 AM   #11
Ezra Green
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Re: Sold small gym

thanks for sharing.
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Old 04-05-2014, 09:32 AM   #12
Steve Loeding
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Re: Sold small gym

That's exactly the same size / members as my gym Top Gun CrossFit in Mpls. People don't realize the cost of running a business - I bring in $6K / month but don't see any of it - rent, bills, coaches, equipment, etc. I have a full time job so for now not making $ not a huge deal. It's good to see what a gym of my size is worth. Thanks for sharing !!! And waiting to hear your next steps in the CF world and looking forward to more posts on the CF discussion boards.
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Old 04-05-2014, 09:35 AM   #13
Steve Loeding
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Re: Sold small gym

Hey Dave = thanks for the great Blog - I read it often
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Old 04-08-2014, 11:56 AM   #14
Keith Martin
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Re: Sold small gym

Been following your posts on and off for some time. Sorry to see you had to sell but good luck on future opportunities.
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Old 04-08-2014, 01:33 PM   #15
Douglas Menikheim
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Re: Sold small gym

Brendan, quick question. You say you used an escrow agent so everything would be done right? Im curious what you mean by that and what the escrow was for? Was the entire purchase price put in escrow?

I am a corporate attorney and handle a lot of M&A for clients, particularly for small businesses. In my experience if this was a signing and delayed closing (such as in an instance where the purchaser needed to go out and get certain consents or licenses - say their affiliation) then maybe a downpayment would be put into escrow pending the closing. Post-closing escrows would be a different story. Obviously it doesn't matter much because you got your money, but I was just curious.
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Old 04-09-2014, 08:20 AM   #16
Brendan McNamar
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Re: Sold small gym

I required an escrow agent so we could officially document the transaction with a 3rd party.

The sales contract required 10% earnest money that was nonrefundable so long as I met my side of the contract.

Once the earnest money was with the escrow company we started to work our way through the list in the sales contract. Because the buyers wanted to do the asset sale there were parts of the deal out of my control. For example they had to negotiate a new lease with the landlord and get my lease cancelled. I said it was fine to do it this way but if they couldn't get the lease worked out I was keeping the earnest money for my time, effort and disruption to the business. Without earnest money the buyers can walk with no consequences if they get cold feet. I didn't do any serious transfer work until the earnest money was on deposit then I hit high gear.

The escrow company not only guarantees payment but they document that all the conditions of the sales contract have been met by both buyer and seller.

It was important to me that I had proof that:
1) I was no longer the owner
2) I had correctly fulfilled my obligations to transfer everything.

They escrow company also handled the transfer of the trademarked name.

They did a UCC search to insure that there were no outstanding debts on the gym or equipment.

I believe the coaches who bought my gym will do well. On the off chance something goes wrong I don't want anyone to be able to come back to me saying I didn't fulfill my side of the deal.

My experience in business is when something does go wrong most people start looking for someone besides themselves to blame.

I have full documentation signed by the buyers that I met all the conditions of the sale.
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Old 04-10-2014, 09:42 AM   #17
Douglas Menikheim
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Re: Sold small gym

Thanks for the explanation Brendan. Did you have any legal representation? I only ask because it sounds like everything the escrow company did is something that your attorney would handle. It sounds like this was handled almost like a real estate sale. In the deals I do unless there are very large escrowed amounts to be held pre-closing and/or post-closing either buyer or seller's counsel will act as escrow agent.

Any reason they didn't just take an assignment of your current lease and you could have required a release from the landlord with respect to the lease and any personal guarantees that you may have made?

Also did you obtain any indemnification obligations from the for post-closing liability?
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Old 04-11-2014, 08:40 AM   #18
Brendan McNamar
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Re: Sold small gym

First I want to make it clear in the end this was a good sale. The new owners are happy operating the gym and we had no issues. From what I am seeing on my Facebook feed the members are happy with the new owners. I believe part of the reason for this is we were careful and went through this process to make sure we covered everything.

This all comes under the "Good fences make good neighbors." idea.

No legal representation. Choose to do it myself through the escrow company. Not enough money involved to justify the expense and my back ground is business so I felt very comfortable through the process.

Used the escrow agent so it was all documented through an independent third party.

In many ways it was like a real estate deal. Once it was finished and I fulfilled my obligations to transfer everything I was free and clear. This was one of my requirements.

The gym has a great landlord. He decided it was best to just sign a new lease. I know they signed for 3 years which is longer then the options my lease was currently operating under. I had 5 more years in options at 2-1-1-1.

I didn't get specific indemnification but I feel comfortable I have clear documentation of the hand over if it ever landed in court. I'm also still covered by the RRG during the transition period and they have to defend any claims.

Remember I only had 1 buyer so my goal was to close the deal without giving my gym away. I did what ever it took to make the buyers comfortable. You can have the best contract and process in the world that is legally perfect but if it kills the deal then it fails.

I got enough for my gym, I'm happily living on the other side of town, my girl friend, at 41 years old, got a tentative offer from Chandler PD and is off to academy. She will be perusing her life long dream of working in law enforcement (after being a single mom for the last 23 years). I will have enough time to run the house and support her while she works hard to keep up with people almost 1/2 her age. I couldn't do this if I still had the gym.

In the end life is good and that is what is really important.

Off to work with my Olympic lifting coach. I have vowed to full extend my hips before I die at least once! If I can figure this out I'll be pretty good for my age and weight.
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Old 04-11-2014, 08:55 AM   #19
Douglas Menikheim
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Re: Sold small gym

Glad to hear it all worked out Brendan and it sounds like you were good and comfortable with the buyers and deal that was worked out.

I was curious only because I have only dealt with one "gym" acquisition so far and that was a small globo type gym. I am always interested to hear about how others are doing doing their deals. My goal is to attract more business in my area from affiliate owners, so it pays for me to know what issues they are dealing with.
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Old 04-14-2014, 10:04 AM   #20
Chris Sinagoga
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Re: Sold small gym

Cool story Brendan. Hope to keep seeing you on these boards!
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