The legal foundations needed for starting a CrossFit Box are not significantly different from starting another kind of fitness business – however, there are some distinctive aspects that arise so read on for some things to think about as you establish the legal foundations for your CrossFit® gym.
- Choose an entity type
A CrossFit® Box can operate on the business model of the licensees’ choice, which means you need to explore what entity type will work best for you, and the business you are seeking to build. For assistance in that decision-making process, check out our DIY LLC course. Some of the options for setting up a CrossFit® Gym include: Sole Proprietorship, Partnership, Limited Liability Company (LLC), or Corporation. They each have their own set of positives and negatives to consider and it is essential that you not only make an informed decision about the business entity you choose to form, but that you understand why that option is the best entity choice for your business.
- Obtain EIN
An Employer Identification Number (EIN) is available from the IRS. This number will be required to open bank accounts and apply for registration with most States. Even if you are a single member LLC or Sole Proprietorship and can use a Social Security Number (SSN) to complete legal and financial actions on behalf of your business, you may want to consider obtaining an EIN to protect your personal information.
- Register with Secretary of State & for State Sales Tax
To form (or register) a business in your US state, you will need to file (or have an attorney file for you) with the Secretary of State or equivalent body who deals with the registration and formation of corporations. As part of this registration you will likely find the information you will later need for registration for state sales tax (if applicable) and any state-based licensing or permitting required in your state.
- Seek Insurance
While CrossFit® requires Affiliates to show proof of Insurance as part of their licensing application, you may need more insurance than they require, or a different type in addition depending on the risk profile of your business. You may also wish to explore professional liability insurance that will cover activities and instruction provided in your capacity as a fitness professional, and General Liability insurance that covers damage to the fabric of a building you lease.
- Take CrossFit Training
An essential step of opening a CrossFit Box is to undertake CrossFit® Training. You could have a business partner who is going to be focusing on training undertake the CrossFit® trainer certification, but you will need to make sure that your business has completed training that meets the CrossFit® Affiliate eligibility requirements. CrossFit® requires Affiliate applicants to hold at least Level 1 CrossFit® certificate before applying to be an affiliate.
- Apply to become a CrossFit Affiliate
To use the CrossFit® name as part of your business, and to be licensed as a CrossFit® affiliate you need to have undertaken their proprietary training and have entered into their affiliate agreement which explains the rights and responsibilities of licensees. You cannot use the name CrossFit® or use their logo as part of your business without obtaining the appropriate license – It could be very costly indeed if you infringement the intellectual property rights of CrossFit® as it is in their best interests to protect their mark from illegitimate use or use that would mean that it starts to become a generic term.
- Buy domain name
One of the ways CrossFit® HQ shares information about its Affiliates is through linking to their websites. So, as part of establishing your legal foundations, you are going to want to choose a domain name that is compliant with your licensing agreement. Along the same vein, as you think about what name to choose for your box you are going to want to consider names or taglines already in existence that are protected by a trademark. As you develop your website, you should consider some of the key disclaimers, waivers, and policies you need to include on your website to limit your risk of liability. For more information: we have written about the key steps to marketing your CrossFit® box legally.
- Protect Intellectual Property
In addition to using intellectual property assets owned by CrossFit® under the terms of your licensing agreement, you should also consider if your business (the CrossFit gym you are building) has intellectual property assets – this could include a logo, or a name – for which you could file a trademark. If you have questions about what aspects of your business might benefit from intellectual property protection, speak with an attorney who specializes in intellectual property in relation to the fitness industry.
- Local Business Licenses and Permits
The Requirements for local (city or county) business licenses and permits vary greatly. You will need to research (either online, in person, or at the local library or small business center) what is required for your specific circumstances. An attorney can also walk you through this process and get you squared away and operating legally!
- Contracts & Waivers
Contracts and waivers are often compiled in an adhoc manner, swiped from another business (this is usually copyright infringement!), or an afterthought. Don’t make the mistake of not being sure that you are protecting your business interests effectively. Which means, in the first instance it is advisable to make sure that you have an attorney review any contracts you enter (before you sign them). Secondly, members of your CrossFit box should sign a lawyer drafted injury and illness waiver before beginning to work out in your facility or with your trainers. You should even have “drop in” guests or “try-out session participants sign a lawyer drafted injury and illness waiver before working out!
It takes time to properly establish the legal foundations for a CrossFit® box. Rushing these steps can lead to more cost and greater risk further along your business journey. Consider prevention to be a key tool in your toolkit and money well spent to ensure that the legal foundations of your CrossFit® gym are secure and legal.