Since Fitness First came to Australia, the IBO model has become a huge part of gyms all over the country, for the business owners it made sense, not having to worry as much about hiring, training & developing staff, super & tax with-holding, just charging a weekly rental fee on a 12month contract, it became easy money for the business with less head-aches for worrying about the #1 asset to the business, the people.
Now the rental model has taken some huge flak over the years and most especially since covid with some gym owners expecting full rent the moment gyms were open again and not giving any grace period.
There’s good and bad in every industry, and in terms of management, it’s the same for gyms. For the whole of my career as a PT bar the first 6 months, I paid rent to run my business out of the gym I was working at, every year there would be a slight increase in the weekly fee, and i’d also pay additional half rent per trainer I had working for me.
Up and coming personal trainers can’t fathom paying $220-$440 per week to rent space from a gym and run their business, but on the flip side, think they are getting ripped off if they are getting 20-30% of the client’s fee under an employee agreement.
Here are some home truth’s one must consider: Firstly, if you’re trying to do PT solely to make a quick buck, or on the side, if it’s not your real passion & purpose, you’re not going to reach the top of the industry.
Secondly, big box gyms have massive overheads, a break even of $20,000 to $100,000 a month is not uncommon when you consider commercial rent, wages, sales & marketing, work cover, utilities, franchise fee’s etc, therefor the rent charged is a justified fee for you to have free reign in their facility.
As an employee, 30% of a client’s fee is fair when you consider the training, development provided by the employer plus their spend on marketing & sales to get members in, let alone the overheads paid, the best serviced based industries work on the rule of thirds, (1/3 to wages, 1/3 to tax, 1/3 to profit) I have been a private PT studio owner for 7 years now, and I look back on my IBO days and consider what I paid in rent a very minor expense for the amount of members I had access to, the equipment, and exposure I had.
Lets dive in to the pro’s & con’s of being an IBO vs Employee. PRO’s: – You charge what you like – You have access to hundreds to thousands of members, and lets face it, gym’s don’t work, personal trainers do, the majority of gym members are simply spinning their wheels, the majority of the ones that actually make progress, all have a coach either in-person or online. – You have one fixed major expense (the pt rent) – You are exposed to so many members daily if you hold your presence right. -You can grow a highly profitable business with low fixed costs CON’S: -Fixed 12 month rental agreement in most cases. -If you have no business knowledge or sales skills, you will really struggle -Once your grace period is over, you’re on your own, it’s you that’s responsible for lead generation, sales, marketing and retention of your clients -If you don’t have a good foundational knowledge of program design and giving nutritional guidance, you will struggle to get results for your clients and struggle to keep them. -In most places, after your 3month induction, you have no real support. I wouldn’t be where I am today without this model being available to me, I bought a house at 25 and had multiple overseas holidays in my late 20’s, but that said, I have been business minded since I was 13 and was always destined to do well at business.. as a new pt you need to ask yourself, are you a leader?
Are you someone that thrives under pressure and wants all the responsibility of being an IBO?
Or are you a follower? Someone that has a great work ethic and attitude, that will put their heart and soul into their coaching job, but have no interest in the business / back end side of things?
This is where you decide if the Pro’s outway the Con’s of renting space in a big box gym and where earning a living following your passion lies.