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Old 12-22-2008, 06:50 PM   #1
Amy Crawford
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Contracts v. prepaying

I'm very seriously toying with the idea of doing contracts for the new year. I know there are pros and cons, but I think that's the way for me to go.

My problem is with the payment. Those of you who use contracts - do you require prepayment for X amount of time? Or are you set up to accept credit cards/EFT? In my mind, one of the benefits of having contracts is that you're not chasing money (reminding clients to pay) anymore. Is that a false perception? How do I deal with this?

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Old 12-22-2008, 07:12 PM   #2
Steven Bowser
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Re: Contracts v. prepaying

I am going thru the same thing. I am going to listen in on this post. I been chasing every month and losing some here and there due to lack of commitment.
Been pushing new clients into 3 month packages and giving them a discount.
May even do a buy 6 month get 2 month free new year promo.
I am so close to a bigger box but afraid to make a commitment.
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Old 12-22-2008, 07:17 PM   #3
Jesse Kodadek
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Re: Contracts v. prepaying

If I had to do a contract at my affiliate - I'd quit.

Just to throw some fuel on the fire...but as a self-employed 20 something guy, there is just no way I am signing up for any more things I can't walk away from. A mortgage and a car payment are plenty.

Now, discounts for multiple months are a different story. Nothing wrong with that.
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Old 12-22-2008, 07:31 PM   #4
Steve Rakow
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Re: Contracts v. prepaying

Don't waste anymore time. Switch to contracts as soon as you can. Your business will take off. Why chase money every month? Why have clients that aren't committed to training as much as you're committed to training them? If you don't do to contracts, perhaps it's you that's afraid of commitment!

We only lost one client and it really wasn't a loss. We've grown, and continue to do so, since we switched from that monthly, money-chasing bs to contracts. You look more professional, you can focus on training your clients, and you can even out your cash flow. There's never a buying decision for the client at the end of each month. We've had people sign up for 8, 12, 18, and 24 months. Our shortest package is 3 months, and that only allows you to train 1x per week. If you want to train more, you have to commit to training more times per week. It's a beutiful thing.

For any affiliate out there that's on the fence about this, get to the Affiliate Business Seminar that Andy Petranek and John Burch run. Whether it's the 2-day seminar, or the 5-day, it's money well spent! My wife, Kelley, and I run our affiliate together and she attended the 5-day seminar back in March. She came back a changed businessperson. I was skeptical of the whole contracts thing and thought we'd lose people. I'm so glad I was wrong about that.

Also, get a training/gym software package that will track the money, scheduling, and clients. We use Mindbody. Our back-office is still Quickbooks Pro, but now all of our clients and their info is in Mindbody and we just use QB for tracking income and expenses. Works very well!
Steve Rakow
CrossFit Ocean City Maryland
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Old 12-22-2008, 07:37 PM   #5
John D. Burch
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Re: Contracts v. prepaying

Amy -- One ( and I stress ONE as in there are many pieces to this working right) of the things that has allowed CF Los Angeles to grow 300% (gross and members) in 24 months... and other affiliates who we've taught to double their respective businesses as well.

Steven -- IMHO you're nowhere near opening a second location unless you have NO ROOM FOR ANYONE and cannot add time on your schedule for more classes... Is that the case currently?
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Old 12-22-2008, 08:01 PM   #6
Randy Tarasevich
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Re: Contracts v. prepaying

You can set them up on a monthly reoccuring billing system through EFT. It doesn't require them to sign a contract and you don't have to chase money. They can cancel at anytime.

I see both sides to the contract debate. My business will probably never realize it's full potential financially (at least according to the "experts") without going to contracts, and I'm not ruling them out 100%. That may not be the case though and I want to give it a go without them and see where it takes me. CFHQ did very well without contracts. I realize my place isn't CFHQ, but I think it was a core piece of the CF philosophy. It is huge advantage for me when I'm positioning my business in the minds of my consumers. That's pretty anti-globo right?
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Old 12-22-2008, 09:26 PM   #7
Brian Wilson
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Re: Contracts v. prepaying

I totally see John and Steve's point, but right now we're not doing it. We've been open 4 months and have 120 members on a "cancel whenever you want" plan.

We're the new kid on the block here in the DC area, so we set ourselves up with lower prices and no contracts. Our retention is still very high (above 85% out of our Foundations curriculum), and while we have lost a few folks, it was mainly due to travel, jobs, etc.

A lot of people in our area have gym memberships at around $50/mo., so since we charge $150/mo., it's a big psychological jump for them to get started. Adding a contract for any length of time would certainly increase that.

I'm not opposed to switching to contracts in the future, but we're doing ok right now. I tell people when they show up for their first class "You pay me for results, stop getting them, and you can walk away". It's a nice counter-offer to the globo-gym, as many of them try to get out of their contracts there when they start training with us and can't.
Coach/Co-owner, Potomac CrossFit Arlington VA
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Old 12-23-2008, 01:32 PM   #8
Tobias W. Neal
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Re: Contracts v. prepaying

I am going to be straight with everyone. When I started in this business a little over a year ago I had no idea as far as business goes what I was doing.

I spent some money and attended a business seminar. There was a good amount of information that was presented and in the right hands I am sure the information could lead to success. In my eyes though the system I was shown was not for me. It didn't resonate with me or the way I wanted to run things.

Two weeks ago life seemed pretty bleak, I was a face in a sea of faces in a town that has the largest per capita of clubs in the United States. My money was gone, I had made some mistakes along the way and my box was 3 weeks from closing. Out of money, I was losing my box, and everyone told me that I was dumb to start this in a recession. I love to train and folks would tell you that I am a good coach and love doing what I am doing but I needed to realize that this is a business.

This is what I do ball to bones, no second job, and a family to support. Then something IMO God led me to send out an email to two people. One I will not mention and the other was Andy at Petranek. I explained my plight and Andy got back to me and told me to come to the cert. Mind you I took this out of what little personal money I had left and made the trip.

I almost want to keep his system a secret because it makes us so different than anyone now in the city. How he runs things is different and it fit with me on a deep level.

I brought it back to my small box and my 6 loyal members and told them that we were going to contracts and EFT. Not one of them went against it. In fact most said they were glad so that didn't have to think about the payment. Since I have been back we have found a new better home for a place to train. We even got free radio commericals over the holiday season. We have raised our prices but also raised the value of what we do here. I will be the first tell you that if you are not willing to really hustle and truly want to put in the extra work for your clients the system won't work. We have been getting everything up to speed with the new system and had our first Intro under the new system.

We didn't want to go to hardcore yet because of our move. But 1 intro scheduled, one new member gained and she wanted to sign for 2 years. We actually talked her out of it until she gets a taste of the program.

For me the trip put to LA and the 2 days spent was worth so much both personally and professionally.

Sorry, I digress...Contracts are a good thing. I need to preface the statement by saying that it also needs to be presented in the correct way. I was worried that it would keep the coaches from working so hard knowing that they have someone but in the end it freed them up to be better coaches. Honestly, all the steps in the system are designed in a way to push people away. I could not wrap my head around this until I realized that the screens in the end put the very dedicated people in your gym and keep those that are not really serious out.

This keeps the coach from wasting time and lets them focus on folks that really want to be there. Also, it brings accountability back to the individual which in a society is in the habit of blaming everyone else for their issues.

Sorry for the long post but I got swept up. If anyone has any questions please don't hesitate to ask.

Have a great day.

Tobias Neal
"Doing the impossible"- CrossFit LA
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Old 12-23-2008, 08:45 PM   #9
Ryan Hoegner
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Re: Contracts v. prepaying


That's a great story! Keep your head up and doing what you do.

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Old 12-23-2008, 09:21 PM   #10
Matt Fullerton
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Re: Contracts v. prepaying

Originally Posted by Randy Tarasevich View Post
You can set them up on a monthly reoccuring billing system through EFT. It doesn't require them to sign a contract and you don't have to chase money. They can cancel at anytime.
I'm helping Kevin setup the EFT system for CrossFit HEL. From my research, every EFT system needs some kind of "contract" between the consumer and the business in order to operate legally.

From Wikipedia...
"Written authorization [for an EFT charge] constitutes a signed form giving consent on the amount, date, or even frequency of the transaction."

Check out the Wikipedia article here, it lays out most of the important terms.

As far your contract terms are concerned, consider what your overall goal is for your members. Golds Gym knew that on average their new members would come in for the first 3 weeks, then never come back. The EFT system keeps billing them until the contract duration runs out, and it costs at least $175 to cancel your contract early. Their goal is to keep draining checking accounts, not get them in shape.

Our motivations should be the other way around, and you can structure your billing/contract system to support that.

Kevin is making it clear that if a member just doesn't show up for a month or more, he's freezing their membership. Our members have to prove themselves to into the gym AND to keep their membership.

Freeze or cancel at any time for no fee. If they don't want to train with us anymore, we're not going to keep draining their checking account! There are plenty of other athletes standing on the porch.

Hope this helps!
Matt Fullerton is not WFS, but both of his websites are. |
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