If there’s one topic that quietly creates massive risk — and massive opportunity — inside independent gyms, boutique studios, and training facilities, it’s this:
Who actually works for you… and under what structure?
I can’t tell you how many gyms I’ve walked into where the owner says, “Oh, they’re all just contractors,” but when you dig deeper… they’re being treated like employees.
Or the opposite — talented trainers paying rent but being micromanaged like staff.
Or employees expected to behave like entrepreneurs without the support or structure.
Let me be blunt:
Misclassification is one of the biggest hidden liabilities in the fitness industry.
But when structured correctly, each model can be incredibly powerful.
Let’s break this down in a practical, real-world way — including things I see every week inside gyms across the country.
Why This Matters More Than Most Owners Realize
This isn’t just semantics or paperwork.
This impacts:
Legal exposure
Payroll taxes
Workers comp
Culture
Retention
Revenue predictability
Operational control
Scalability
I’ve seen gyms get hit with audits, back taxes, and penalties simply because they didn’t understand the difference.
And I’ve seen others unlock huge growth by choosing the right structure intentionally.
Model #1: Employees — Control, Culture, and Consistency
Employees work for you. You control:
Schedule
Pricing
How services are delivered
Dress code
Training methods
Sales process
Hours worked
You pay wages or salary and handle payroll taxes.
Where Employees Shine
- Strong culture
- Consistent member experience
- Easier brand alignment
- Predictable operations
- Easier to train and manage
- Better for scaling a unified brand
My Real-World Comment
- I often see gyms wanting employee-level control with contractor-level costs — and that’s where problems start.
If you’re telling someone when to show up, how to train, what to charge, and how to sell…
They’re likely an employee.
Model #2: Independent Contractors — Autonomy with Flexibility
Contractors operate their own business inside your facility.
They typically:
Set their own schedule
Control pricing
Bring their own clients
Choose how they train
Carry their own insurance
Can work elsewhere
You pay them via 1099 (in the U.S.).
Where Contractors Shine
- Lower payroll burden
- Entrepreneurial energy
- Less management overhead
- Flexibility
- Great for specialized services
My Real-World Comment
- One of the biggest mistakes I see is gyms calling trainers contractors but requiring them to attend staff meetings, use club pricing, and follow strict schedules.
That’s a red flag.
If you control the work… they’re not truly independent.
Model #3: Rent-Paying Trainers — The Landlord Model
What Defines Rent-Paying Professionals
They pay you fixed rent or percentage rent for space usage.
They are fully independent business owners.
You are essentially the landlord.
They:
Set pricing
Bring clients
Handle payments
Market themselves
Control their business
Where This Model Shines
- Predictable revenue
- Low management
- Minimal liability
- Scalable
- Attracts experienced trainers
- High margin
My Real-World Comment
- I’ve seen gyms generate significant additional revenue simply by creating clear rules and a professional rent structure.
But…
- Problems arise when owners start telling rent-paying trainers how to run their business.
You can enforce facility rules — not business control.
The Biggest Mistakes I See Inside Gyms
Let’s get real for a minute.
Here’s what I commonly observe:
- “Everyone is a contractor” because the owner doesn’t want payroll taxes
- No written agreements
- No insurance requirements
- Employees expected to find their own clients
- Renters treated like staff
- Contractors with employee schedules
- No operational clarity
- Blended compensation models that make no sense
- Culture confusion
- Trainers unsure of expectations
- Owners afraid to set boundaries
- Revenue leakage
- Lack of legal guidance
How to Decide Which Model Is Right for Your Gym
Ask yourself:
Do you want control and brand consistency?
- Employees
Do you want flexibility and entrepreneurial trainers?
- Contractors
Do you want predictable revenue with low management?
- Rent model
Do you want hybrid?
- Many gyms successfully combine models — but it must be structured intentionally.
The Hybrid Approach (What Many Successful Gyms Do)
A common high-performing structure:
Core staff = Employees
Specialists = Contractors
Experienced trainers = Rent model
This creates stability AND opportunity.
Culture Impact — Something Owners Often Overlook
Structure shapes behavior.
Employees build culture.
Contractors build energy.
Renters build ecosystem.
When aligned properly, your gym becomes a professional hub instead of a chaotic mix of expectations.
Warning Signs You May Have a Problem
- Trainers confused about status
- Inconsistent pay structure
- You’re controlling contractors
- You’re frustrated with renters
- High turnover
- Legal concerns keeping you up at night
- No written agreements
- You avoid talking to your accountant about it
My Advice After Decades in the Industry
Be intentional.
Don’t default to a model just because “that’s what other gyms do.”
Design your structure around:
Your leadership style
Your growth goals
Your risk tolerance
Your culture vision
Your financial model
Final Thought: Clarity Creates Freedom
The gyms that thrive long term are not the ones guessing.
They are the ones with:
- Clear agreements
- Clear expectations
- Clear structure
- Clear boundaries
When everyone understands their role, compensation, and opportunity…
You remove friction and unlock growth.
If You’re Unsure Where You Stand…
It may be time to step back and evaluate your structure before growth magnifies the problem.
Because fixing classification issues after you scale…
Is far harder than getting it right now.
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Meet Jim Thomas
Jim Thomas is the Founder and President of Fitness Management USA, Inc., a premier management consulting, turnaround, financing, and brokerage firm specializing in the leisure services industry. With over 25 years of hands-on experience owning, operating, and managing fitness facilities of all sizes, Jim is an outsourced CEO, turnaround expert, and author who delivers actionable strategies that drive results. Whether it’s improving gym sales, fostering teamwork, or refining marketing approaches, Jim has the expertise to help your business thrive. Learn more by visiting his website or YouTube channel
