Lesson 23: Legal Responsibilities and Business Strategies Flashcards
What structures do for-profit businesses typically operate under?
- sole proprietorship
- partnership
- corporation
What is a sole proprietorship?
It is a business owned and operated by one person.
How does a sole proprietorship exsist?
As long as the owner operates the business and profits from the business belong to the owner.
In a sole proprietorship, there is no ________ ____ that shields the actions of the business from the personal responsibility of the owner.
corporate veil
When an owner of a sole proprietorship conducts business under a different company name, does the personal responsilibty of them (being the owner) still reside on them?
Yes
What are the cons of a sole proprietorship PT business?
- no corporate veil to protect you from personal responsibility/fees
- incoming revenue can be decreased if you take time off
- if any lawsuit should occur, the financial loss is far greater and can cause you to sell assets
What is the definition of a partnership business?
When two or more people agree to operate a business, share profits/losses.
Partnerships can be created without filing paperwork, why should you file these documents though?
Any partnership should have legal documents to establish the rules of operation that outlines the structure of authority, partners’ rights, expected performance/contributions from each party, buy-out clauses, income distribution and responsibility for debts.
It basically protects each partner’s finances and job.
What should be included in a partnership rules of operation legal document?
It should outline and clearly define:
- structure for authority
- partners’ rights
- buy-out clauses
- income distribution
- expected performance and contributions from each partner
- responsibility for debts
In extreme cases, the lack of a partnership agreement can result in what?
The courts requiring the business to be dissolved to settle financial disputes
Partnership paperwork should be designed to address any eventuality, what is an example of one?
Potential death or incapacity of one of the partners.
What is a general partnership?
The joining or 2 or more individuals to own and operate a business.
Why will most attorneys advise against a 50-50 partnership split?
Because this can result in a stalemate because neither partner can institute policy without the other’s permission as business decisions must be approved by a majority of 50.1%.
Why can a disproportionate ownership in a partnership cause issues?
Because the minority partner ultimately cannot make decisions without permission from the other and may not want to invest as much as they get less profit/income.
What is the difference between an express partnership and an implied partnership?
An express partnership is created and recognized by a contract whereas an implied partnership is created and recognized by the judicial system without a contract necessarily.
What is an implied partnership?
One that is created and recognized through the judicial system as the individuals act as partners but don’t necessarily have a binding contract.
Such as opening a business bank account together or co-signing a loan.
What is an express partnership?
One that is created and recognized by the parties signing a contract.
In some cases, minority partners may be personally liable for a greater share of the companies’ liabilities than their % of ownership - why?
If their partner files for bankruptcy, the minority partner may be required to cover the financial obligation of the insolvent general partner even if they own 45%.
Why do some partnerships involve limited patners?
Limited partners are only liable for their direct financial contribution so this protects the partner from covering financial obligations should their partner pull out.
What do limited partners not gain in a partnership?
Any formal managerial input regarding the operations of the business.
Why has it proven to have issues in a partnership where one partner is the ‘hands on’ person and the other is the ‘office/admin’ person?
Because it creates problems where one partner maybe doesn’t fully value/appreciate the other partner’s input/work.
When/why does a partnership end?
When a partner dies, becomes bankrupt, the other partner engages in any illegal activity or if the court rules a partner as being medically incapacitated. It can also occur when the company is not making money and all parties wish to dissolve the partnership.
If a business is not making any money, what could happen for the partnership?
The partnership is dissolved unless one or more partners have different opinions on the financial future of the company.
A resolution must be met between all parties - these may include court intervention to determine dissolving of the partnership or compensation for one’s exit.
What is flow-through taxation?
When financial profits and losses flow from the business directly to the investors. The business does not pay any taxes, rather, the profits are taxed on the investors’ individual tax return and losses can be used by investors to offset other personal income.
Why is flow-through taxation good for sole proprietorships/partnerships?
Because it means that you pay lower tax and can offset your tax with another personal income to avoid business loss.
What are corporations designed to do?
Create a ‘separate’ entity from the investors and operators of a business.
How does the corporate veil work between investors/operators in a corporation?
In a corporation, investors own shares and must not act as owners therefore lowering their personal liability.
Operators of the business and investors must share separate existences in the company.
What is an example of an investor in a corporation piercing the corporate veil?
By mixing their personal checking account with that of the corporation, this can be seen by court as acting as the corporation and increases their personal liability potentials for any corporate debt/judgements.
How is forming and maintaining a corporation more burdensome than a sole proprietorship or partnership?
Because corporations are formed and registered in the office of the secretary of state as opposed to just an agreement between the partners.
What secretary of state must a corporation register in?
The one in which they operate.
If however, they operate in many states, they must determine the best state for short and long-term operation.
What must be done to register a corporation in a state?
- must select a name that is not previously registered in the desired state
- appropriate notice of incorporation forms must be completed
- fees paid
- registered agent must be present
Who is a registered agent?
The contact person in the event that a lawsuit is filed against the corporation.
Once the incorporation is complete, what is the corporation recognised as?
a distinct legal entity
What happens once the corporation is recognised as a distinct legal entity?
The shareholders will elect a board of directors who will hire the executive management team. If there are few shareholders, the investors may fill the corporate positions.
What annual paperwork must be filed once a company is established?
Operational paperwork, tax returns that are appropriate to the local, state and federal governments.
What are the main corporate structures?
- subchapter S-corporation
- limited liability companies
- limited liability partnerships
- C-corporations
What is the main financial advantage of subchapter S-corporations?
Profits flow through the business to the shareholders and are taxed as ordinary income.
Which of the corporate structures are most typically used by PT businesses that do not operate as a sole proprietorship or partnership?
Subchapter S-Corporations
What are 2 pros to Subchapter S-Corporations?
- shareholders are shielded from personal liability by the corporate veil
- S-corps can own subsidiaries that operate independently which shields them from liability
What are 3 cons to Subchapter S-Corporations?
- must be based in the US
- can only have a total of 100 investors that must be from the US
- can only issue one form of stock so every share must have the same voting rights/dividend allotments
What is the definition of an Subchapter S-Corporation?
A type of corporation that meets specific Internal Revenue Code requirements. The requirements give a corporation with 100 shareholders or less the benefit of incorporation while being taxed as a partnership.
What is the difference between LLC/LLP and S-corps?
An S-Corp requires extensive paperwork whereas LLCs and LLPs can be established by filing simple paperwork in the state where the LLC/LLP will initially operate.
There are also no national standards regarding the operation of LLCs or LLPs.
Why is it likely that LLC/Ps will become the preferred operating structure for PTs?
Because they combine the limited liability and flow-through taxation of the S-Corp but with easier creation and operation requirements.
What is the difference between a C-Corp and S-Corp in tax payments?
A C-corp is taxed as a company first and then any profits remaining may be provided to shareholders whereas in an S-corp, the profits flow through the business to the shareholders before being taxed as ordinary income.
What are C-corps thought to provide double taxation?
Because the company is taxed first, then the shareholders are paid the remaining profits before they are taxed individually on their dividends. Therefore, they essentially pay double tax.
What is the difference between a C-corp and an S-corp in terms of shareholders?
Unlike an S-Corp, C-Corps have no limits on the number of potential shareholders, can also issue different classifications of stock and stock can be sold to foreign nationals/institutional investors.
Why do profitable companies operated as partnerships, LLCs or S-Corps elect to change their classification to a C-Corp?
Because ‘going public’ can enable the owner/s to generate a large amount of money.
What is a possible negative to already established companies changing their classification to a C-Corp?
It can allow investors to take a significant stake in the operation of the company and can often lead to prominent founders of the company being ‘forced out.’
This happens when one person/group owns 50.1% of the stock and therefore has the majority of power to set policies.
Why when a company goes public does no one owner retain more than 50.1% of the stock?
Because that one owner would therefore hold the majority of the business which means they can make executive decisions and policies.
What can a consultation with an attorney who specializes in business operations assist with?
Reducing potential liability and mitigating potential tax payments.
What are advantages and disadvantages of a sole proprietorship?
Pros -
easily created/managed and flow through taxation
Cons -
personal liability and raising capital
What are advantages and disadvantages of a partnership?
Pros -
easily created and flow through taxation
Cons -
potential management disputes and personal liability (except limited partners)
What are advantages and disadvantages of an S-Corp?
Pros -
flow through taxations and limited liability
Cons -
limited number of potential investors and costs of formation/operation
What are advantages and disadvantages of an LLC/LLP?
Pros -
flow through taxations and limited liability
Cons -
undefined operating standards in states
What are advantages and disadvantages of C-Corps?
Pros -
limited liability and unlimited number of investors
Cons -
cost of formation/operation and double taxation
What does LLC and LLP stand for?
Limited Liability Companies and Limited Liability Partnerships
What is a Franchise Operation Business Model?
A franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business’s (franchisor) proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business’s name.
What is the franchising model based on?
The principle that local business owners will have greater success connecting their facilities to the local communities and more commitment to making them successful if they have an ownership stake in the business.
What can a franchisee purchase?
A specific location or the rights to open a number of locations for a specific market.
Owning and operating a franchise provides some of the advantages of both an?
independent operation and a multiple-facility operation
What is the individual franchisee upfront cost that most franchise operations will change?
up to £25,000 plus annual fees of a % of revenue earned from the business
What costs are involved in owning a franchise?
- cost of purchasing operational and retail products through franchisor’s business structure
- annual feels of a % of revenue earned from the business
What are 5 advantages to owning and operating a franchise?
- obtaining the rights to a recognized brand name that will assist the PT in creating a strong presence in a specific market
- access to business/operating systems created by the franchiser (e.g equipment layouts, discounts on equipment purchases, marketing info)
- access to national advertising programs and the ability to share costs associated with marketing/brand identity with other franchise owners
- ability to control the business as long as the requirements of the parent franchise company are met
- franchisers that will provide training/advice on all aspects of marketing/operating the business as it is in their best interest for all individuals to be successful
What are the disadvantages of owning/operating a franchise?
- upfront costs and ongoing costs to maintain the association with the parent brand
- annual costs of maintaining the franchise (such as necessary purchases through the franchise system)
- association with a particular brand which could drawback if other franchisees perform badly or unethically
- following the franchise’s operating model which could limit the franchisee’s ability to adapt to changing market forces
What is the difference between an employee and independent contractor?
Employees regularly work for their employer whilst independent contractors are typically hired on a short-term basis to perform a specific task or series of tasks.
Once the specific task is complete, ICs are paid and no longer needed.
What are employers responsible for in terms of their employee?
- training and supervising them
- maintaining records regarding their work
- withholding and matching the employees Federal Insurance Contributions Act taxes for Social Security and Medicare
What does an employer usually cover for their employee?
Unemployment coverage, workers’ compensation coverage and medical benefits.
What work details typically differentiate an independent contractor from an employee?
If schedules are created that require specific materials to be utilized and an overseeing of procedures then it will typically be seen as an employee.
What payment details typically differentiate an independent contractor from an employee?
Regularly scheduled payments typically indicate employment whilst payment by the ‘job’ indicates independent contractors.
What training/retraining details typically differentiate an independent contractor from an employee?
An IC will require no training or additional training from the hiring agency.
What equipment details typically differentiate an independent contractor from an employee?
ICs will typically provide their own equipment.
How does a person’s ‘number of clients’ typically differentiate an independent contractor from an employee?
Employees typically work for one employer whereas an IC will have multiple clients.
How does someones nature of work typically differentiate an independent contractor from an employee?
If the work provided is integral to the core function of the business then they are deemed an employee. In addition, if the work is typically performed by ICs then the courts will utilize that in their determination.
How does ‘intention of the parties’ typically differentiate an independent contractor from an employee?
The intent of the parties is a factor in defining an IC and employee.
If the intent is to work scheduled hours, they are more likely deemed an employee.
What are 8 areas that courts will look at when investigating a potential status dispute?
- work details
- payment
- length of relationship
- training/retraining
- equipment
- number of clients
- nature of work
- intention of parties
How does someones ‘length of relationship’ typically differentiate an independent contractor from an employee?
ICs are typically hired for short amounts of time opposed to employees.
A PT that is an independent contractor that works in a fitness center should be able to?
- choose when/where to work
- charge variable fees for different situations
- begin working without extensive guidance
- maintain autonomy in training decision
Why can it often be better to be a PT at a gym?
Because you are gaining more security being an employee of a fitness facility as opposed to an IC with more personal/financial risk.
What elements are necessary to creating a binding contract?
- an offer and acceptance with a mutual agreement of terms
- consideration (an exchange of valuable items i.e money for service)
- legality (acceptance under the law)
- ability of the parties to enter into a contract with respect to legal age and mental capacity
Why is an oral contract deemed dangerous?
Because oral contract disputes may require legal intervention in which case the conflicting stories may be settled in a courtroom without sufficient evidence to support the trainer’s account of what transpired.
Some trainers use scheduling as a form of contract, why should a written contract be established instead?
To account for rescheduling, bounced checks, agreements to follow instructions and adhere to proper techniques, confidentiality, termination of agreement.
What will be signed as a component of the initial contract?
A waiver
When should a PT insist upon a written contract not only with clients but fitness centers, vendors and other entities in which they work?
Every time they conduct new business/services.
When does the statute of frauds require there be a written contract for the agreement to be valid?
In any case where the agreement involves real estate, goods or services worth $500 + or requires 1+ years to complete.
When will the courts not intervene in a potential oral contract dispute?
When the contract violates the statute of frauds as it will invalidate the agreement.
What is the difference between an act of omission and an act of commission?
An act of omission would be a PT failing to act such as not spotting their client whereas an act of commission would be acting inappropriately such as failing to suitably make a program for someone with back injuries.
To substantiate a charge of negligence in court, what 4 elements must the plaintiff establish?
- the defendant had a duty to protect the plaintiff from injury
- the defendant failed to uphold the standard of care necessary to perform that duty
- damage or injury to the plaintiff occured
- the damage or injury was caused by the defendants breach of duty
What is proximate causation?
In law, a proximate cause is an event sufficiently related to an injury that the courts deem the event to be the cause of that injury.
What does vicarious liability/respondeat superior refer to?
This is a concept that states employers are responsible for the employment actions of their employees.
Aka if their employee acts negligently then the employer and employee are liable for court cases.
What is an exculpatory clause used for?
a contract provision that relieves one party of liability if damages are caused during the execution of the contract.
e.g signing a waiver before boxing that says you will not sue should you break your nose during
Why should a PT utilize their own waiver in addition to the one signed at a fitness facility before working with a client?
Because the original waiver may not extend to the PT if they do not immediately work at the centre and the client may try to sue. It is extra protection.
What must a client understand before signing a waiver?
The nature of the activities and potential risks of injuries they may sustain during.
What is classified as gross negligence?
An action that demonstrates recklessness or a willful disregard for the safety of others, this occurs when someone deliberately acts in a manner that extends beyond the scope of employment or fails to meet the accepted standard of care.
If a PT removed a safety screw from a bench, what is this classified as and would the waiver protect them from legal inference?
This is an example of gross negligence because it deliberately places danger upon their client. The waiver would not protect them.
The use of proper waivers protects the PT from lawsuits that arise from what type of injuries?
Ones that are typically sustained during exercise (e.g sprained ankle) as well as injuries due to mistakes the trainer makes during training.
What is classified as contributory negligence?
When the plaintiff in a lawsuit is deemed to have played a role in the injury and is prevented from receiving any remuneration (money).
If a client fails to tell you that the sole of their shoe is broken and slips during a session, what type of negligence is this?
contributory negligence
What is comparative negligence?
When several parties are involved so the damage is split between who is at fault.
If a client fails to tell you that the sole of their shoe is broken and slips during a squat you were not properly spotting - what might the court deem this? What would the result of this be?
They would deem it as comparative negligence and may give 40% blame to the client and 60% to you - meaning you would pay 60% of the damage costs.
What 3 forms should be filled out before a PT begins the first exercise session with a new client?
- agreement to participate
- informed consent
- waivers
What is an agreement to participate form designed to do?
Protect the PT from a client claiming to be unaware of the potential risks of physical activity.
What type of form is more typical for class settings as opposed to 1-1?
agreement to participate
What should an agreement to participate form outline?
- potential risks to be encountered
- nature of activity
- expected behaviour of participant (as they may need to follow instructions)
Why do some attorneys suggest you do not train anyone until they have been verified by a basic health examination?
Because whilst PTs know how to start safely and slowly, they cannot evaluate a client’s overall health in the way a doctor can.
Why is it useful to know if a client has health insurance?
To know that they’re covered but also so that you can provide this info if anything should happen.
What is an informed consent form?
A form that shows the client’s acknowledgment that they have been specifically informed about the risks associated with the engaged activity.
What are 5 headings that could be used in an informed consent form?
- purpose and explanation of test
- risks
- benefits to be expected and alternatives available to the exercise testing procedure
- confidentiality and use of information
- inquiries and freedom of consent
What is a inherent risk?
A risk that can occur through normal participation in the stated activity and can only be avoided by declining to participate.
What 2 forms would protect a PT from any injuries due to inherent risks?
an agreement to participate and informed consent as these both show the potential risks/injuries of the activity that may happen even if proper technique is fulfilled.
How long should a PT retain the paperwork/forms on file with a new client?
Until the statute of limitations has elapsed although some say you should keep them forever to avoid any negative impact should any laws change.
What is the statute of limitations?
The time allotted to sue for damages.
What should an inspection of environment consider?
- different floor surfaces are designed for different activities
- is there sufficient free space available to protect the client from others and from hurting themselves on equipment?
- is the lighting functional and sufficient for chosen exercises?
- is the heating and air con functional?
- are there bathrooms/water stations near?
If you have inspected the training environment and found an area to be dangerous, notified the management and found they have done nothing about it. Why are you still partially liable for any injury sustained due to the danger of this area?
Because you still trained the client in the unsafe area despite having told management.
What are 2 examples that would cause a court to rule against you for a client sustaining an injury whilst training outdoors?
If the weather was predicted as dangerous or if they had never ran the trail before and you did not walk them through it.
An acceptable exercise routine in 24C / 75F may not be acceptable in ___ C/F or ___ C/F.
35 C / 95 F or 2 C / 35 F
Why should homemade equipment be avoided in a fitness facility?
Because designing and manufacturing equipment is not considered part of being a PT and it will not meet the standard of safety/design.
What should a PT do if they deem a piece of equipment as unsafe?
The PT should immediately remove the equipment from the training area or disable it from further use if it is not removable.
What would be a conservative legal stance of using client’s equipment?
Avoid using a client’s equipment.
What should you do if you notice a client’s own equipment is faulty/needs repair?
Inform the client that the equipment needs repair, suggest they call the company to replace any broken piece and conduct sessions without using this piece of equipment.
What non-exercise equipment should PT’s take note of before training a client?
Proper footwear and clothing is worn.
Failure to stop a client from exercising with improper shoes may be deemed as?
endorsment of a bad practice
What is the difference between general and specific supervision?
General supervision involves overseeing a group of people such as a class whereas specific supervision is overseeing a PT session.
How do you safely use specific supervision when working with 2 clients in a session?
Whilst providing specific supervision to one client such as spotting their squat, the other client should rest or perform an activity that requires only general supervision such as stretching/cardio.
In terms of giving instruction, when will a PT be deemed negligent?
If they fail to demonstrate a movement or give proper instructions regarding use of the equipment and the client is injured.
advocating dangerous or controversial exercises puts the trainer at risk for?
a successful lawsuit if a client is injured
What safety guidelines should a PT always adhere to in the conduct of their activities to avoid any legal action?
- ensure that all sessions are well-planned, appropriate and documented
- communicate and enforce all safety rules for equipment use
- ensure equipment meets/exceeds all industry standards
- inspect all equipment prior to use and document adherence to maintenance schedules
- never allow unsupervised activity during a PT session
- limit participation to those under contract (no friends/family can join without signing forms)
- clearly warn clients about specific risks of planned activities
- only select activities within defined scope of practice + appropriate expertise
- ensure all clients wear necessary protective equipment
- review emergency plan
- stay up to date with education/certifications
Why should a PT not use their client’s health history form to recommend treatment?
They could be accused of practicing medicine without a license.
When may trainers administer fitness assessments?
When the tests are recognized by a professional organization as appropriate for the intended use and are within the trainer’s scope of qualification/training.
When does giving advice/referring supplements/clothing etc to a client become a liability?
When you tell them to do something opposed to just offering personal opinion.
E.g telling a client that a certain food contains high amounts of vitamins/minerals versus telling them to eat more of the specific food
What are the most reputable insurance carriers?
One that have a national affiliation, are licensed, have strong financial backing, have a reinsurer and no bad claims against them by the Better Business Bureau.
What is a reinsurer?
corporate policy that ensures policy holder’s claims will b met even if the business collapses.
what type of insurance do PTs need to secure?
Professional liability insurance that is specifically designed to cover the health and fitness industry.
What should a PT’s insurance cover?
personal injuries that can occur as a result of a training session and injuries to clients including medical expenses and other compensation such as lost wages from not being able to work/loss of job.
How much coverage does ACE recommend you retain in insurance?
at least $1 million as medical expenses are very costly.
What is the difference in insurance policy’s for PTs in a gym facility vs home?
PTs that will use their own home or a client’s must ensure that their insurance includes a specific insurance rider that will cover those activities.
What is the difference in insurance policy’s for PTs that own their facility?
insurance should cover potential problems with the facility as well as instruction/supervision of the trainer.
What is an umbrella liability policy?
This type of policy adds coverage for all of the other insurances (e.g auto, home, professional liability)
Who should secure product liability insurance?
Trainers that sell products in case the product fails to perform properly - especially those that own and operate fitness centers.
Who should look to invest in keyman insurance?
PTs that form partnerships or corporations that may suffer significant financial loss should one important person die/become ill.
What is a keyman insurance policy designed to do?
compensate the business for the loss of a person who performs a unique and valuable function.
Why is it critical that independent contractors working for fitness facilities maintain adequate insurance coverage?
Because in the case of any legal action/lawsuit, the center’s legal representatives would likely try to separate the facility from the PT.
What is one important aspect of insurance?
To obligate the insurance carrier to pay in the event of a loss.
What is a key provision of an insurance policy?
That the company will pay even if the trainer fails to provide a service.
E.g if someone injures themselves and the trainer doesn’t provide first aid, insurance should still cover their protection.
When ‘failure to render’ or ‘omission’ is not specified, what does the insurance policy cover?
It covers the trainer only if the services provided were inadequate or improper.
What clause should a trainer look for in their policy?
One that states:
‘we will have the right and duty to defend any suit seeking damages under this policy even if the allegations are groundless, false or fraudulent and may make such investigation/settlement of any claim/suit deemed expedient.’
Basically ensure the policy covers you at all costs.
Why are the best insurance policies ones that cover the cost of a legal defense and any claims awarded?
Because these will cover all of the trial fees as well as the awarded damages.
What liabilities are often excluded in a fitness professionals insurance policy?
- abuse
- molestation
- cancer (resulting from tanning)
- libel/slander
What should trainers inquire regarding bodily coverage in a policy?
If it covers mental stress as part of bodily coverage.
Why should trainers look to include prior-acts coverage?
In the case that a prior act/client tries to come forward against them, the policy will only cover them with this added coverage.
What issues are related to the claims-made basis of a policy?
Claims that occur before the policy and after the policy expires that therefore excludes coverage.
What does an extended reporting endorsement ensure?
That any claims made in the future for injuries during the policy period will be covered even if the policy is cancelled.
Why are marketing activities important to consider when joining fitness facilities?
Because even if you are the best PT, if the fitness facility has unethical behaviour online/offline, you can become associated with it and it can dampen your work and reputation.
What 3 groups in America license music for commercial use?
- American Society of Composers, Authors and Publishers
- Broadcast Music Inc
- Society of European Stage Authors and Composers
What 5 steps should be included in a risk management protocol?
- risk identification
- risk evaluation
- selection of an approach for managing each risk (avoidance, transfer, reduction, retention)
- implementation
- evaluation
What are the 4 approaches that a PT can decide between when managing a risk?
- Avoidance - removing possible danger/injury by eliminating activity
- Transfer - moving the risk to others via waiver, insurance policies
- Reduction - modifying risks by removing part of the activity
- Retention - retaining low impact risks and avoiding high impact ones as complete removal of exercise can halt the health benefits
PTs that provide training sessions to individuals and/or groups in clients homes or outdoor setting should check with their current insurance providers to see if they are covered for training in these settings or if they need to add a _________ _________ ______ policy to their current professional liability insurance.
specific insurance rider
A personal trainer needs to be able to match their desire for helping clients improve their lives through exercise with the ability to quickly establish ______ with them.
rapport
How is a trainer usually paid in the direct-employee model in a facility?
Usually paid one rate when working a scheduled shift on the fitness floor and a higher fee when working with a client as a PT.
The pay rate for delivering a PT session can range anywhere from ___ to ___% of what the client pays the club or training studio.
40 - 70%
What is the first consideration prior to committing to a fitness facility as a PT?
Establishing if their clientele is the same as your desired clientele and if their clients have disposable income for paying for trainer sessions.
What are some considerations before commiting to a fitness facility as a PT? (9)
- does their clientele match my desired clientele?
- is it conveniently located for me commuting?
- is it located in an area that gets steady traffic throughout the day?
- what are the busiest times during the day so I can work around them
- does the company have a good reputation and share my values?
- does the facility require specific education/standardized method or protocol for me to work there?
- are there any production expectations/sales quota?
- other revenue-making options such as class training?
- do they require I sell dietary supplements or nutritional products
Why is it important to consider whether a fitness facility requires you to sell nutritional/dietary/fitness products before joining as a PT?
As this can place you in legal jeopardy and violation of ACE Code of Ethics
What are the advantages of the direct-employee model? (10)
- employer pays cost of marketing to new members
- employer pays for equipment + expenses
- many employers provide benefits ie. healthcare, paid vacation, pension
- some provide education opportunities at no cost to you
- employer is required to submit all taxes on behalf of you which is beneficial for future car/home loans
- employes often check with all employees re fitness facility layout/business changes
- promotion opportunities
- clients travel to the facility
- extra income via group classes which can introduce new clients
- many facilities allow small group sessions which generate you more income in the same time frame
What are the disadvantages of the direct-employee model? (4)
- you have to conform to uniform and professional standards of the club
- the competitive per-session fees offered may still be lower than what you would offer independently
- likely required to meet min. number of hours worked each week
- potentially experience a high-pressure sales environment at the start of their PT job to meet employer sales goal
When working under the direct-employee model, should a PT still market their own business?
Yes because whilst they work for a facility, they are still their own business as they can take on different clients from others
What is the difference between a direct-employee model and an independent-contractor model?
A direct-employee model is when the PT works at the facility as both as a PT and employee that works scheduled shifts.
An independent contractor model is when a PT contracts their services (only as a PT) to a facility by either paying a monthly fee or per-client fee in return for using the facility.
What are the operational differences between a direct-employee model and independent-contractor model?
In a direct-employee model, you are not responsible for any equipment, marketing or rent fees and receive benefits such as healthcare, paid time off, pension scheme.
In an independent-contractor model you receive none of these benefits and are responsible for renting spaces, marketing to new clients and operational costs.
What considerations need to be made before deciding to be an independent contractor? (5)
- what facility will be used to train clients?
- if you are to work in client’s homes, what are the proximity of clients to each other? Is there enough market?
- what type of marketing expenses are required?
- what health-screening forms and liability waivers will be used to protect financial assets against litigation?
- what assistance is needed for an accountant/lawyer in setting up a business plan/financial/tax records?
What are the advantages of the independent-contractor model? (3)
- PT is able to establish fees for training services based on experience and what the market will pay
- opportunity to move around different facilities
- option to establish own financial goals
What are the disadvantages of the independent-contractor model?
- PT has to maintain business records and pay taxes accordingly
- responsible for all marketing costs
- no control over operation of facility you are renting
- travelling around which takes away from paid time and possibility of being late due to traffic
Why can beginning as a PT under the direct-employee model establish a good and rewarding foundation?
Because often employers will train the PT in marketing their services and constant training of skills which will set you up for success.
Some employers also offer community projects which can raise public awareness of the PT.
When first working with a client, a PT should?
Take the time to conduct an assessment to evaluate the client’s health risk factors and have them perform some standardized tests to determine their current level of fitness.
What will a comprehensive business plan serve as when starting a business?
An operating guide for achieving specific objectives (i.e yearly income, number of clients)
What are the 6 components of a business plan?
- executive summary
- business description
- marketing plan
- operational plan
- risk analysis
- decision making criteria
What is an executive summary?
a brief outline of the business and an overview of how the business fills a need within the marketplace.
What does a well written executive summary include?
- business concept (service it provides, target market, competitive advantage)
- financial info (start up cost for 1st year, source of capital for initial expenses, return on investment)
- current business position (owners experience in the industry, specific legal structure of business)
- major achievements (awards, testimonials)
What should the business description component of a business plan include?
This should provide the details for the business as outlined in the executive summary but in further detail including the mission statement, business model, current status of the market, how the business fills a need within the mark and the management team.
What should be included when describing the business in a plan?
- identify the operating model and its difference/uniqueness when compared to other studios/businesses
- describe the fitness industry specific to the local market including present financial situation and future growth
- details on numbers and locations of competitors, how many employees the have and number of clients
- list management team, their knowledge/skills/experience
What is the purpose of the business description section in a business plan?
To provide information about the structure of the business, the market it will serve and the people that will run it.
Potential investors/lenders will want to see this information before deciding whether to provide capital.
What does the marketing plan section in a business plan specify?
How the business plans for prospective clients to become paying clients through marketing and campaigns.
What is marketing defined as?
The process of promoting a service by communicating the features, advantages and benefits to potential clients.
What will an effective marketing campaign communicate?
- how a specific product/service meets the needs of a potential client and enhance their life
- the benefits of working with an ACE certified PT
What will an effective marketing plan outline?
- list the details on the demographics for the area around the training business
- what the demand is for this service
- specific type/brand of training services that are offered in the business
- plan for communicating the benefits of personal training to potential clients
How does identifying a target audience help in building a full schedule?
Identifying a target audience that can benefit from your services helps to develop a plan to communicate with those specific audiences and what time of the day they are most available.
What does the operational plan of a business plan outline?
It describes how the business will operate including organizational charts that identify key decision makers and the employee responsibilities for executing those decisions.
What 4 risk categories are there in risk analysis for a business plan?
- barriers to entry (start up costs)
- financial (access to capital required to start/expand business)
- competitive (others in the market competing for the same customers)
- staffing (issues associated with managing employees, budgeting for consistent payroll)
A SWOT analysis is a simple tool for conducting a risk assessment, what does it stand for?
Strengths
Weaknesses
Opportunities
Threats
How do you perform a basic SWOT analysis?
Simply divide a piece of paper into 4 squares and label each strength, weakness, opportunities and threats. Under each heading, list all potential notes that fits in each category.
E.g strengths could be competitive advantages of the business such as location, brand name, education of the PT
What does the decision-making criteria of a business plan include?
a detailed cost-benefit analysis that demonstrates the financial benefits of operating the business outweigh the financial risks involved with establishing operations.
It should highlight the specifics about the business plan that prove it will be a successful business venture.
What will a well-written plan present by the end?
A weel-written plan will present all of the components of the business in a way that the final section is simply a conclusion summarizing how the business will be a profitable venture.
What does a brand represent?
what a service or product stands for and its value to potential customers/clients.
What should a trainer use the business planning process for?
To develop their brand identity for their service.
What is an important step in establishing an almost immediate emotional connection with a client?
Creating a brand to define the values and quality of the personal training service that a client can expect
What are the benefits of establishing/developing a distinct brand?
A brand establishes an instantly recognizable value for the product or service being sold. Developing a distinct brand establishes a unique identity that effectively communicates the benefits of working with an ACE PT.
Why is a strong brand identity important?
Because many people choose a specific brand because of a certain image the brand projects.
What becomes a target demographic/prospective customer base of the training business?
Once you establish the clients that will need your services and who would be most interested and able to afford the expenses of a PT - then you have your demographic.
Once deciding your business model (direct-employee/independent-contractor) you must identify some specific fitness goals that appeal to your prospective clients, what are some examples? (5)
- helping clients lose weight
- post-rehab strength training
- functional training to improve movement skills
- resistance training for muscular development
- sports conditioning for performance enhancement
What are some examples of types of clients who might be interested in working with a PT that a trainer can use to begin building a brand identity? (7)
- new health club members looking to learn the basics
- brides preparing for their wedding days
- 50+ adults looking to improve quality of life
- new mums wanting to lose pregnancy weight
- those preparing for an adventure vacation
- competitive amateur athletes such as runners, golders, cyclists
- high school athletes seeking performance enhancement
What can a trainer combine their strengths with to create a brand identity?
They can combine their strengths with research about the target demographic to create a vision statement for their service.
What is the trick to a vision statement/brand identity?
It should be simple and clearly communicate what the intended customer can expect to receive from the service.
There are a number of ways to market to prospective clients, what is an important thing to identify when deciding how to market?
Identifying the most cost-effective method that will have the greatest reach.
Why would offering a complimentary fitness assessment/training session prove to be a good marketing strategy?
Because it allows the potential client to experience the benefits of training services before making a commitment and investing in a package of sessions.
What should an initial (complimentary) training session accomplish with a client/prospective?
It should:
- collect info about them to screen for health risks and design an exercise program for both their needs and goals (i.e muscular imbalance and weight loss)
- give the prospect an opportunity to experience a specific brand of training so they can understand how working with a trainer will help them safely achieve their goals
Why should a trainer try to engage with as many club members on the floor as they can?
Because people will become more familiar with them which builds rapport based on trust and communication. All members should be seen as prospective clients too.
What should be on a business card?
- name
- title
- contact info (email/phone)
- website if application
- one line describing brand of training
What can be included in a testimonial book/page?
- personal biography about you as a trainer and person
- success stories from satisfied clients (with written permission)
- progress pics
- descriptions + pics of clients who the trainer has helped achieve goals
- pics of clients in wedding dresses/athletic uniform/tuxedos etc
When writing thank you notes to client, what guidelines should you follow?
- have an upbeat/positive tone
- mention client’s goals and explain the goals are the basis of the program
- stay professional and maintain the client-trainer relationship
Why is making brand t-shirts a good marketing idea?
Because you can reward clients with a free t-shirt, or people can purchase them and people will ask them about the trainer when wearing them.
What are good reasons that a PT should maintain an online presence?
- connect and engage with current and potential clients
- get discovered by others searching for your specific services
- create an active and persuasive community around the practice
- promote content such as webinars, health tips, articles
- generate leads for the practice
Why are fitness apps/sites useful for clients and trainers?
It allows information to easily transfer from the client to PT without necessarily being in the same room.
Info such as HR, activity, meal logs, body weight, BP, sleep habits.
It allows PTs to keep clients accountable between appointments and for real-time immediate feedback and encouragement for daily behaviours.
What are 5 reasons for using connected health tools (e.g apps) for delivering web-based health/wellness and fitness interventions?
- reduced delivery costs
- convenience to users
- timeliness
- reduction of stigma
- reduction of time-based isolation barriers
Why should trainers try to connect clients with friends, family/other clients to create an electronic bond?
Because this has shown to impact motivation and behavioural change.
What are 2 electronic tracking tools that empower users to collect and share exercise, nutrition and sleep data?
- body media
- fitbit
What are 2 in-depth nutrition apps that are modern, comprehensive diet services that help users track and monitor food intake while displaying a robust nutritional analysis based on personalized guidelines?
- my net diary
- foodzy
What is a sleep monitoring system users can track their personal health data with from their own home?
withings
What 2 health info portals allow for health data to be collected, monitored and shared not only with the client but other members of the client’s healthcare team?
- microsoft health vault
- run keeper
How does creating an adherence program help PTs market their services?
This system can be used whereby a client that doesn’t cancel any sessions during the training package/program becomes eligible for an additional session at no charge or receives a free item of the trainer’s brand.
What can an orientation program be used for?
The trainer can set specific times to use for new members to be provided with a brief overview on how the club works and how to use equipment.
Why would a trainer set up an education program?
This can be used to cover specific aspects of exercise programming and can allow the trainer to ‘touch’ more prospects.
Possible topics could be a 30 min education seminar on safe running or techniques for exercising whilst traveling.
What are 3 examples of complementary relationships/services a PT can offer related to health and wellness facilities?
- in a health club, they can run front desk or become group fitness instructor
- outside a club, they can work with other health and wellness service providers such as sport coaches, dietitians
- trainers can offer to run a conditioning program for local fundraising runs/walks
What are 3 social benefits to a small group/semi-private training session?
- dissociation: an exerciser’s attentional focus is diverted away from the unpleasant sensations by engaging with others
- enhance self-efficacy through receiving compliments and support from others with similar goals
- stimulus control through reminders from the group and trainer to attend the session
What are the 2 basic markets from which a trainer can attract small-group clients?
- current clients referral
- potential new clients
What is a good marketing strategy to gain referrals from existing clients?
offer a reward for successful referrals
What is a good marketing strategy for small group programs for new clients?
By making it a specific limited term program such as a “core performance blast” for 4-6 weeks or a “strength for seniors” for 4-6 weeks
What are some limitations involved in small group training sessions?
- clients who are dissimilar in their conditioning levels
- clients that require constant individual attention
- scheduling conflicts
What are the overall benefits to small group training?
- financial benefits as more money in the same amount of time
- social benefits which can push motivation/self-efficacy amongst clients
- client referrals for new prospects
How should a PT create a retention plan for keeping new clients?
Have them understand that progress takes time and create a long-term exercise program on the concept of periodization.
What should a periodized plan identify?
- the specific goals of the client
- the time of year they want to ‘peak’
- the phases the plan should be broken into as to vary intensity and so the client is progressing as each phases intensifies
A new client invests in 20 training sessions at the beginning of January committing to 2 sessions a week with the goal of losing weight and toning up. You discover they own a beach house and they want to look good in bikini season which begins Memorial Day Weekend. The client has previously tried and quit programs because it was too difficult to find the time, what will your plan look like?
The 20 sessions they have bought will last till the start of March, to start with, I could structure 8 weeks (16 workouts) to focus on posture and a base level of aerobic fitness. Start with a lower level of intensity in the stability and mobility phase (phase 1) to allow them to gradually adapt to the stress of exercise whilst improving tonic muscles responsible for posture and respiration.
This should help her avoid injuries and develop a positive relationship with exercise.
As they approach the 8 week/16th workout, I should move into the movement-training phase (phase 2) with more challenging cardiovascular exercise and changing exercise selection, intensity, reps, sets and intervals so they experience the difference from increased intensity.
The client will have moved into the action phase of the Transtheoretical model of Behavioural Change and will likely feel good results and want to continue for another 20 sessions (10 weeks) to get her to memorial day weekend.
What 7 factors do you need to consider before starting a personal-training business?
- the level of experience that the potential business owner has in the fitness industry
- the level of self-motivation
- the ability to create and execute a business plan
- the size of the proposed business
- the location of the proposed business
- the cost of running the proposed business
- the structure of the proposed business
What professional(s) services should are important parts of the process in starting a business?
- attorney
- accountant
- web developer/graphic design
- insurance broker
- real estate broker
- contractors
What can the right attorney help you with when starting a business?
Providing advice and guidance for structuring an effective business that adheres to all state and local regulations.
Why should you get an accountant when starting a business?
This can help structure cash-flow and financial management systems for the needs of a business.
Why is an accountant critical when working as a sole proprietor?
an accountant will help with learning what expenses and costs can be deducted as part of normal business operations.
Why is it recommended you work with a web developer/graphic designer when starting a business?
This will help establish a unique and appealing brand logo that will represent the business and become instantly identifiable to prospective clients.
It will also help set up the ability to collect PT fees via your website which is useful.
Why should you work with an insurance broker?
It’s important to have the right insurance coverage for any and all potential losses/damages before starting a business so working with an insurance broker will be the most effect way to develop and structure a portfolio with necessary levels of protection.
Why should you work with a real estate broker when setting up a business?
Because a commercial real estate specialist can help find the optimal location for a successful studio/center by determining the neighbourhoods with highest disposable income, parking space, showers etc.
They can also help negotiate lease terms including having the landlord properly prepare and build out the space for the potential business’ needs.
Why should you establish good relationships with different contractors when starting a business?
Because this means the facility will run smoother and repairs will take less time which can be a serious issue for members.
Having a network of the right professionals who can address any situation is critical for keeping a business open, operational and profitable.
Why is it important to establish budget and revenue goals for yourself?
Because once expenses are identified it allows you to determine your session/hourly rate as an independent trainer or the number of sessions you need as a direct-employee.
What is the first step to establishing a personal budget?
List all monthly expenses such as rent, transport, utilities and variables like food, entertainment and professional development
Once expenses are identified in a budget, what is the next step?
Determining the number of training sessions required to achieve revenue as a direct-employee or session/hour rate as an independent contractor.
A trainer’s monthly expenses are £2800 and they charge £25 per session. How many sessions must be conducted every month to hit this? How did you calculate?
112
- 2800 / 25 = 112 sessions every month
A trainer’s annual income goal is £50,000 which comes to £1000 per week with 2 weeks vacation. How many sessions must they do per week to make this when charging £40 per session?
25 per week
- 1000 / 40 = 25 p week
What does closing ratio refer to and how is calculated?
The success rate of a sals person in making a presentation to a prospective customer and actually having the customer make a purchase to complete the sale.
It is a measure of the number of sales made divided by the number of presentations given.
What is the primary goal of a business?
To generate cash flow and produce a profit.
What is the velvet rope principle?
Creating a sense that certain places or services are more scarce to make others perceive them as more attractive and valuable.
i.e setting strict time frames on PT work hours so clients adhere to them
A PTs schedule should allow time for what activities?
- working with clients
- client management such as paperwork, preparing/collecting invoices, developing programs, follow-up calls, scheduling
- prospecting new clients
- developing marketing/advertising materials
- personal exercise
- personal time/home life to allow balance
- other job duties such as travel, working a shift as a direct-employee, cleaning your own studio
What are generally the most popular times people train with PTs?
- 5AM to 9
- Noon to 2PM
- 4PM to 8PM
what is the difference between a salesperson and a sales professional?
A salesperson is someone that sees a customer as a dollar sign whereas a sales professional is someone than helps the consumer make an informed decision to meet their need/goal, educates them on their different options and how they would benefit from a service.
a leader can be defined as?
one who changes people’s attitudes and behaviours
What are 7 basic rules to selling?
- say it in terms of what the customer wants/needs/understands
- gather personal info and learn how to use it
- build friendships
- build a relationship ‘shield’ that no competitor can pierce
- establish common ground
- gain confidence
- have fun/be funny
true or false, prospective clients will think with logic but act on emotion?
true
What is empathy?
the ability to understand the thoughts and feelings of another person
What are 6 ways to earn someone’s immediate respect and trust?
- become genuinely interested in others
- smile
- remember their name
- be a good listener and encourage others to talk about themselves
- talk in terms of other people’s interests
- make the other person feel important and do it sinerely
a trainer needs to identify the _______ needs behind the decision of starting an exercise program.
emotional
After identifying your client’s emotional needs to starting an exercise program, what must you make sure future convos direct to?
future conversations should direct towards achieving the desired results and building a positive mindset towards exercise
A new client states they find it difficult to stay committed to an exercise program and it frustrates them, what would your response as a sales professional be?
I understand how difficult it has been to stay committed to an exercise program. You have expressed a feeling of frustration at not achieving your goals and I can relate. However, if we work together, I think you will find having someone encourage you and hold you accountable for your goals will help you adhere to your program.
What 4 basic questions move a prospective client to a paying client?
- did you enjoy the workout?
- would you like to continue to experience the benefits of working with a trainer?
- do you have the ability to invest in yourself by purchasing a package of training sessions?
- when would you like to schedule our next appointment?
What questions can you ask that focus on the client’s needs?
- you have told me your goals, how long have you had these goals?
- why is it so important you achieve these goals?
- what has kept you from achieving these goals?
- from what you have told me, I think I can help you work toward meeting these goals. Would you like that?
Why is it better to sell training programs as opposed to just sessions?
because a client knows the end goal of a training program and will adhere to it more whereas selling just sessions may not have a specific end goal
What are some training programs you could offer? (4)
- performance enhancement
- weight loss
- event prep such as vacation
- post-rehabilitation
True or false, a corporate veil shields the owner from losses in a sole proprietorship?
false
When working in a general partnership with a family member, should the business operate on a 50-50 partnership?
no as this can result in a stalemate because neither partner can make decisions without permission from the other
Which type of corporation is most typically used by PT businesses?
Subchapter S-Corps
True or false, an umbrella policy provides added coverage for all of the other insurance that a person has?
true
When training clients in their own, do you have to use recording produced specifically for fitness facilities?
No because when training clients in their home you can have the client provide music and therefore, they are using recordings for private, non-commercial enjoyment
When evaluating the risk of injury associated with a particular activity, a personal trainer finds that the frequency of occurrence is low or seldom, and the severity of injury is categorized as high or vital. What is the BEST course of action?
- reduce
- transfer
- avoid
transfer the risk which involves moving the risk to others through waivers/insurance policies
