Leases Expire, Leave Affiliates in Limbo

May 5, 2020 by
Photo: @redwolfcrossfit
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As the weeks roll by and building leases come up for renewal, some affiliate owners are choosing to enter a gray zone.

The gray zone: They’re keeping their CrossFit affiliation, but are in limbo as to whether or not they’ll ever re-open a brick and mortar facility.

  • Mary Retzlaff, the owner of CrossFit Murfreesboro in Murfreesboro, TN is one of them. Her gym has been around for 12 years, although Retzlaff has only owned it for the last two. Her gym’s lease was up on May 1, so she moved out of her building and isn’t sure what the future has in store for her gym.

So far, she has chosen to remain affiliated, and has slowly been moving her equipment into her home garage, creating an old-school garage box, for the time being, she explained. Once it’s all set up, Retzlaff intends to let a limited number of members join her and her husband at their garage for workouts.

Deciding not to sign a new lease: “During this time, with the gym being shut down, it gave us time to think about where we saw our gym in the next two years and really evaluate the business,” said Retzlaff, who is also a full-time nurse who works in an ICU.

She knew she didn’t want to stay in her former building, so she had the option of finding a new space, which would have caused her to accumulate debt in order to make improvements on the building, she explained. On top of this, her membership revenue is down $3,180 a month since she closed her doors. So, her best option for the moment was to remain undecided.

  • “I wouldn’t say this is calling it quits. We left it open with the chance to re-open once we can see what the economy and fitness industry is doing in the next coming months. But for now we need to take a step back and evaluate what we want in the future and how we want our life to look,” she said.

Retzlaff’s advice to other gym owners who might find themselves in a similar situation in the upcoming weeks: “Don’t go into debt to keep something going if the risks are outweighing the benefits. Work with a mentor and figure out what your next moves are. If your lease is done and you have doubts, it is OK to step back to re-evaluate,” she said.

CrossFit Murfreesboro isn’t alone: A Colorado affiliate owner, who wishes to remain unnamed because the announcement to members has not yet been made, is in a similar situation.

Their lease just expired, they’re choosing to keep their CrossFit affiliation, but they aren’t sure whether they’ll ever open their facility back up again.

  • “My affiliate fee and (CrossFit) Level 2 (coaching certificate) are up for renewal this summer. Not sure I’ll renew,” said the owner, adding that revenue is way down already.
  • “I’m weighing my options. I do have a realtor looking for deals, but in the meantime, I will put stuff in storage.”

In Huntington Beach, CA: Eight-year affiliate owner Matt Banwart is also dealing with lease uncertainty, which has left him in limbo.

Though his lease isn’t up until the end of the summer, the fall is unknown.

  • “We’re just kind of hanging out in a holding pattern, just waiting to see what’s going to happen, and it’s hard to make any rational business decisions. We have no idea the timeframe for re-opening and we’re not going to sign any new leases. A lot of things are up in the air,” said the owner of Red Wolf CrossFit.
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Like the other two gym owners, Banwart has held onto his affiliation, which he intends to do until he figures out his next move.

Reason to hope: “I have talked to my broker and he said there might be a lot of options (for facilities) available once this pandemic is all over,” he said.

  • “Before, the market here was really tight here and we were looking to expand, but now we might be looking to stay in a similar size space or even downsize, so there could be a lot of options for us,” Banwart added.

Still, the experience has been stressful.

  • “I go through waves where I’m super stressed and have days I just want to quit and close up shop and take all that stress off my plate. And I have days where I’m really positive and I know this is what I want to do still,” he said.
  • “I’m hoping to weather the storm. And I think anyone who can weather the storm — it doesn’t matter what industry you’re in — if you can find a way to adapt and make it through you’re going to be stronger. There will be a lot of businesses that don’t make it across the country, but I’m hoping we can adapt the right way and thrive after it’s all over.”

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