Opening a second gym location is a huge milestone—a sign that your business is thriving and ready to grow. But scaling up isn’t just about signing a new lease and setting up equipment. Expansion comes with legal, financial, and operational risks that, if not handled correctly, can threaten your entire business instead of helping it grow.
To protect your wealth and minimize liability, here’s everything you need to know before making the leap to gym location #2.
1. Is Your Gym Ready for Expansion?
Before you start scouting new locations, ask yourself these key questions:
- Is my current gym financially stable? – If your first location isn’t consistently profitable, a second location could drain your resources instead of multiplying your revenue.
- Do I have systems in place? – A second gym means twice the management, so SOPs (Standard Operating Procedures) for sales, staffing, and operations need to be rock solid.
- Do I have the time to manage both? – Running two locations is not the same as running one. You may need a strong leadership team in place before expanding.
- Will my second location compete with my first? – Market research is critical to ensure you’re not cannibalizing your own business.
Pro Tip: If your first gym still depends on you for daily operations, it might be too soon to expand. A second location requires delegation and a strong team to keep both locations running smoothly.
2. Choosing the Right Business Structure for Multi-Location Growth
Your business structure can make or break your financial security when expanding.
- Single LLC for Both Locations – One LLC owns both gyms, keeping things simple but increasing liability (a lawsuit at one gym could affect both).
- Separate LLCs for Each Location – Each gym is its own entity, keeping liabilities separate but requiring more admin work.
- Holding Company Model – A parent company (LLC or S-Corp) owns both gyms, providing asset protection while maintaining operational unity.
Pro Tip: The best setup depends on your long-term goals. A holding company model often works best for multiple locations or future franchising. Work with a business attorney to ensure you choose the right structure for growth.
3. Navigating Commercial Lease Agreements for Your Second Gym
Signing a lease for your second location? Don’t rush it.
Key Lease Terms to Negotiate:
- Personal Guarantees – Avoid personally guaranteeing the lease if possible, so your personal assets aren’t at risk.
- Exclusivity Clauses – Ensure your landlord won’t lease to a competitor in the same shopping center.
- Tenant Improvement Allowances – Negotiate upfront funds from your landlord to help cover buildout costs.
- Expansion Clauses – If growth continues, you’ll want the option to expand within the same property.
Pro Tip: Leasing mistakes can be expensive. Have an attorney review your lease to avoid being locked into a bad deal for 5-10 years.
4. Funding Your Second Location the Smart Way
Expanding requires capital, but how you finance it can determine whether your new gym boosts or drains your wealth.
Common Funding Options:
- Cash Reserves – If your first gym is highly profitable, you can self-fund expansion without debt.
- Small Business Loans (SBA 7a Loans) – Government-backed loans with favorable terms for gym owners.
- Investor Partnerships – Bring in business partners to help finance expansion, but ensure contracts clearly define ownership and decision-making.
- Revenue-Based Financing – Some lenders offer funding based on your gym’s revenue, rather than traditional bank loans.
Pro Tip: Before taking on debt or investors, make sure you understand the long-term financial impact. Expansion should strengthen your business, not overextend your finances.
5. Scaling Staff and Systems for Multi-Location Success
One of the biggest pitfalls of expansion is not having the right people in place.
Hiring & Structuring Your Team:
- Promote from Within – Consider elevating a trusted employee to manage the new location.
- Standardize Staff Contracts – Make sure employment agreements clearly define expectations, especially for multi-location roles.
- Clarify Non-Compete & Non-Solicitation Agreements – Protect your business by ensuring employees can’t take clients or start a competing gym.
Pro Tip: If your current gym runs on you, expansion could stretch you too thin. Build a management team before opening your second location.
6. Updating Your Legal & Financial Protections for Multi-Location Growth
Once you expand, your legal needs evolve.
Key Updates to Consider:
- Liability Waivers: Ensure each location has its own waiver tailored to services offered.
- Membership Agreements: Adjust contracts for multi-location access, pricing changes, and auto-renewal compliance.
- Insurance Coverage: Increase coverage for new employees, equipment, and property.
Pro Tip: Legal documents from your first gym may not apply to your second. Review and update all contracts before opening.
7. How to Protect Your Wealth While Expanding
Growth shouldn’t come at the cost of your personal wealth and financial security.
- Separate Personal & Business Assets – Keep personal wealth shielded from business risks.
- Use Holding Companies or Trusts – Structuring ownership strategically can limit liability and protect assets.
- Reinvest Smartly – Growth should increase profitability, not just add expenses.
Pro Tip: Work with an attorney and financial advisor to create a long-term wealth protection strategy as you expand.
Expansion Done Right = More Profit, Less Risk
Expanding your gym can be an incredible opportunity—but only if done strategically. From choosing the right business structure to negotiating your lease and securing funding, each decision impacts your financial future.
At Gym Lawyers PLLC, we specialize in helping gym owners expand the right way—protecting your wealth, reducing liability, and setting you up for long-term success.
Thinking about expanding? Let’s chat. Schedule a FREE consultation to plan your second location the smart way.
