This article appeared in the July/August issue of Athletic Business. Athletic Business is a free magazine for professionals in the athletic, fitness and recreation industry. Click here to subscribe.
While I'd rather talk about best practices for growing your fitness business, I'm dedicating this column to the other end of the operations spectrum — what to do when it's time to close a club. We are currently faced with this situation.
Our second, smaller club is located in a strip mall that was recently sold. The new owner has plans to renovate the entire property and has requested that all of the current tenants vacate before the closing. We've had a great relationship with our landlord and, for various reasons, we decided to close the club.
How do you go about closing a club that has been serving the local community for almost 10 years? How do you tell your staff? How do you tell your members? There aren't any books I could consult on this one, so I just had to make things up as I went along — keeping one guiding principle in mind: Do the right thing. As you might guess, there are hundreds of details that have to be addressed, and the most difficult part is trying to decide what order to go in.
After I decided that we would be closing, the first call I placed was to our billing company, ABC Financial. I assumed, correctly, that since they have been in business a long time, they must have run into this situation before. This is where having a great relationship with your vendors can really be beneficial. Within 48 hours, I was on a conference call with our club rep and several additional executives from ABC. They could prorate everyone's dues to sync up with our proposed closing date. This was a huge relief, as it meant not having to do refunds for several hundred members. All memberships would then terminate on our closing date. Anyone who was due a refund for dues paid in advance or for unused personal training would simply have to call our main club and we would make arrangements for the refund.
As with everything in a local club, there were rumors of our closing. It seems that word had gotten out that the property was for sale and that there was a buyer. Our landlord had told me months before that the property was for sale (and had been for more than a year) and that the only offer he had was far too low. At that point, I told the staff, and any member who asked, that "No, we had no plans to close but, yes, the property had been on the market for awhile." I wanted to be open and honest. Until I heard from the landlord himself, I was not going to feed the rumor mill, nor was I going to speculate.
Once I knew for sure that we were going to close, I scheduled a staff meeting as quickly as I could. I wanted the staff to know before anyone else, and I wanted to make sure they had the facts, not the rumors. It was difficult, to say the least.
At first, it was quiet, as everyone just sat and absorbed the news, but soon there was shock, sadness, anger. Then, when I thought they were ready, I addressed the many questions I knew they would have. We would be closing in approximately 30 days. I would make it public, to our members, as of the next day. We would be reducing our hours and cutting back on the number of classes (we had to manage expenses carefully, as dues revenue along with day-to-day sales would, of course, diminish dramatically).
They were free to talk about it but were advised to please stick to the facts and refer any media requests only to me. Above all, I communicated the expectation that staff members continue to do their jobs to the best of their abilities right up to and including our last day. I told them the club will be clean, we will greet everyone with a smile, and we will do our best to help our members each day.
I wanted to make sure we respected the fact that this was going to be a shock to members and that our closing would leave them without a health club or studio of any kind in the area. After the staff meeting, I posted a personally signed letter on the club's door.
I thanked all of our members for choosing our club and for making us a part of their lives. We had made good friends and great memories, and we hoped that we had provided our members and the community with the help and support they needed. I also mentioned that we were going to adjust members' dues to reflect our closing date and that if they had paid ahead to contact me (I provided my email address and the phone number of the main club).
Lastly, I told them that I would like to invite them to join our other location to continue their workouts. I would honor their current membership price and they could join on a month-by-month basis to ensure they would be able to determine if the alternative to their usual location was going to work for them. We then emailed this letter to all members and posted it on our Facebook page.
The biggest thing to account for, of course, is the fitness equipment. I reached out to a few friends in the industry and came up with two respected equipment resellers. I had to provide them with a detailed list of the equipment (make, model, age, etc.) and any and all logistical details (when was the last day of operations and how much time would they have to remove the equipment).
Several members inquired about buying one or several pieces. While this would bring a higher price, it is an idea fraught with peril — most important, what to do with equipment that no one wants or that members didn't realize would be so expensive. (Shockingly, most people think a commercial treadmill costs about $800 — like at Dick's Sporting Goods.)
I also wanted to make sure I kept in close contact with our landlord throughout this process. He would surely want to keep the electricity on after we move out, as he would need lights and AC/heat.
As of this writing, the club closing is only five days away. I've been dealing with and "managing" this for several weeks, and it's not getting easier. I'm past the shock of it, and I have already done most of the legwork to ensure we will close the facility in an organized manner. But we are leaving a community we have served for many years.
Members have reached out to say how sad they are, to let me know how important the club was to them, to say that one or more members of the staff had a huge impact on their life. Worst of all, I'm putting people out of work. It's something that I take seriously as a business owner.
This experience confirmed what I had suspected, and what any dedicated fitness proprietor would suspect. Even if you do it the right way, closing a club is not an easy thing.
This article originally appeared in the July/August 2016 issue of Athletic Business with the title "Lessons from the unenviable process of closing a club"