Mark your calendars for this date in history! The Federal Trade Commission (FTC) just announced a massive change that impacts every gym owner. They’ve implemented a rule that effectively bans non-compete agreements nationwide! Here’s looking at you California gym owners. It’s about time the rest of the US catches up, right?
What does this mean for you?
You’re no longer allowed to force your trainers, staff, or even fellow gym owners (if you co-own) to sign those restrictive contracts preventing them from working at competing gyms when they leave. This is true for everyone, from your most experienced trainers to your part-time front desk crew.
Here’s why this FTC decision is a huge deal:
- More Freedom for Your Team: Your employees will have the flexibility to explore new opportunities without being tied down by legal restrictions. This can improve morale, reduce turnover, and even help you attract top-tier talent.
- Focus on Building Loyalty: Instead of relying on non-competes, you’ll need to double down on creating a positive, supportive work environment and offering competitive compensation packages. These are the real factors that keep your team happy and loyal.
- Fairer for Everyone: Non-competes often limited an employee’s career growth and earning potential. This FTC ruling creates a fairer job market for everyone in the fitness industry.
- Partnerships: You and your business partner can no longer have a non compete in your partnership agreement. This encourages the free flow of business opportunities and forces partners to work hard to work out issues.
- Retroactive Application: Perhaps the biggest deal of them all is the retroactive application. That means all of your current non competes are rendered null and void, with very few exceptions.
Example: Sarah the Superstar Trainer
Let’s say Sarah, your best trainer, gets an incredible offer from a gym across town – better pay, more flexible hours, you name it. In the past, a non-compete agreement could have trapped her in your gym, even if it wasn’t the best fit for her career. Now, Sarah has the freedom to choose what’s best for her.
Example: Ben and Jake, the Gym Partners
Let’s say you started your gym with a partner, Ben. Years ago, you both signed an operating agreement with a strict non-compete clause. It stated that if either of you left the business, you couldn’t open another gym within a 50-mile radius for two years. Under the old rules, this was a common way to protect the partnership.
Now, thanks to the FTC ruling, that non-compete clause in your operating agreement is no longer enforceable. If Ben decides to pursue other opportunities, he’s free to open a competing gym down the street if he chooses.
Important Exception: Selling Your Gym
Here’s where it gets interesting for gym owners: The FTC ban has one major exception – selling your business. You can still include a non-compete agreement as part of the buy/sell agreement with the seller of the gym you are buying.
Why is this crucial? It protects the value of your new business! If you’re buying, you don’t want the seller to create immediate competition by opening up another gym right next door. That non-compete ensures a smooth transition and protects the investment the buyer is making.
Taking Action:
This is a big change, and it’s understandable to have questions. If you’re unsure how it affects your existing contracts, how to manage your team in this new environment, or need help navigating non-competes during a potential gym sale transaction, reach out to us! We can help with resources to ensure your gym not only navigates this change but thrives because of it.
Let’s make the fitness industry stronger together – a place where talent can flourish, and gyms compete based on the awesome experiences they offer their members.
