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What Is An Ethical And Sustainable Gym?

An ethical gym is one where all parties win - the client, the coaches and the business owner.

A sustainable gym is one where everyone wins forever. 

We empower coaches to be professionals and teach business owners how to provide them with the chance to do so. 

We have owned an ethical and sustainable gym for the past 18 years. The foundations in which Madlab were built weren't discovered overnight - it took years of wins and losses, along with trial and error, to learn what works and why it works.  

There are no gurus here, just experienced gym owners who have taught hundreds of other gym owners how to play the long game.

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The History of Madlab

AN ETHICAL AND SUSTAINABLE GYM

Madlab School of Fitness—which was once the first CrossFit gym in Canada called CrossFit Vancouver—was founded by Craig Patterson, a former mechanical engineer who worked for two Fortune 100 companies as well as founding his own sustainability and green building design engineering firm before getting into the fitness industry in 2004.

Since then, Patterson and his Madlab team have been obsessed with figuring out best practices so that all parties—the clients, the coaches and the business owner—can be successful long-term. In other words, we have become obsessed with best practices to build an ethical and sustainable gym. 

Doing so has involved working with hundreds of small independent gym owners around the world since 2005 to ultimately come up with the nine laws for success—laws that, if followed, will lead to long-term success for all parties. 

Watch the video for a deeper dive into our background and our journey to get where Madlab School of Fitness is today: a gym in Vancouver that does 1,000,000 in gross revenue a year, with six full-time coaches, who earn an average of $79,000 a year, with an average client value of $276 a month and 80 percent-plus annual client retention. 

But this isn’t about us: It’s about you. So keep watching this video series that lays out exactly how you can do the same.

The Broken Model

AN ETHICAL AND SUSTAINABLE GYM

Before we get into the how, we need to address the current state of the industry, an industry that is largely broken.

Why is it broken?

Well, at most gyms both client retention and coach retention are dire (most coaches leave the industry after two years because they’re not able to make a decent wage, let alone a professional wage), and most small independent gyms aren’t able to make a profit.

Why? Well, if you’re in the franchise business, the business model is often set up for the short term—so that investors and marketing companies make money and get out.

The same can even be said of CrossFit. It was set up so that CrossFit HQ made money by selling two-day certifications and affiliation fees. Producing more coaches and more locations became the “pursuit of excellence.” Meanwhile, at the grassroots level, gym owners struggle to pay their bills, coaches can’t make a living and clients leave as fast as they come.

This is largely because most gyms have a client development process that is set up for short-term gain and not long-term sustainability.  Short-term thinking leads to client churn and a coach compensation model (paying coaches by the hour) that doesn’t let the coach earn enough money without burning out. So ultimately, coaches leave, clients leave and the business struggles to make a profit.  

Without consistent high converting, high paying, organic lead generation (referrals), and high retention of professional class coaches; eventually, business owners find themselves stuck playing a game that does not have a great ending. 

Prime Directive and Six KPIs

AN ETHICAL AND SUSTIANABLE GYM

When we first began searching for best practices, we realized we needed to come up with a Prime Directive—a purpose-statement or philosophy of sorts.

What is it we’re looking to do exactly?

Well, we are looking for clients to be successful, coaches to be successful and the business to be successful, so real simple our prime directive became: All business decisions must work for the client, the coach and the business.

The next question then became: How do we measure this success?

  • What do clients need? They want to get fit and stay fit.
  • What do coaches need? They need to have job satisfaction (and to avoid burnout) and they need to be able to earn a professional wage in order to stay in the industry long-term.
  • What does the business need? Money. Profit. It’s that simple.

In light of this, we came up with the six key performance indicators (KPIs).

1. Client retention 
2. Average client value

If clients are willing to pay a high price month after month, clearly, they value your service and are getting what they need and want.

3. Dollars per coach hour
4. Total coach pay

If the coach is earning enough money working a sustainable number of hours, chances are they’ll continue in the industry as a full-time career.

5. EBITDA (earnings before interest, taxes, depreciation and amortization)
6. Asset Value (a turn-key business has the highest

If the business is making a profit (minimum 20 percent EBITDA) and can eventually function smoothly without the owner, the business will be sustainable.

Data-Driven Solutions

AN ETHICAL AND SUSTAINABLE GYM

To find our nine laws, we needed to test theories, to try different things via trial and error to discover what works best to maximize the six KPIs.

We used tried and true scientific method here, starting with conjecture, moving to a hypothesis, theory and eventually law (something that works every time). 

In practice, this meant working with hundreds of gyms from 2005 until present (it’s still an ongoing process as we’re always looking to improve) to discover best practices from everything from how to onboard new clients, to how to administer an introductory day, what type of fundamentals works best for the client, how to develop coaches, how to pay coaches etc. 

  • In 2012, we got serious and took on seven gyms and did a one-year alpha study.
  • In 2013, we took on 33 gyms for our beta study.
  • In 2015 we looked at 55 gyms in a gamma study. In each case, gyms that followed what has now become the nine laws increased their gross revenue, profit, coach pay, average client value and client retention. 
  • After that, we teamed up with a Ph.D. student at Harvard University, who looked at 1,600 gyms and found the same as we did in our alpha, beta and gamma studies.

Everything was measurable, repeatable and observable, but ultimately after a decade-plus, we came up with the nine laws—basically a business model that allows you to maximize the six KPIs and see all parties succeed.

The Nine Laws

AN ETHICAL AND SUSTIANABLE GYM

Watch the video for a deeper dive, but here’s a snapshot of the nine laws:

Law #1: The client’s intro day should be done in a one-on-one setting with one coach, and by appointment only

Law #2: Fundamentals should be administered as personal training (generally, 12-18 sessions depending on the client) 

Law #3: Each client needs a consistent coach for life in their corner, a coach who knows their strengths, weaknesses, goals, priorities etc.

Law #4: Hybrid memberships—aka a combination of group classes, personal training and in some cases individual design—is the most effective way to retain clients' long-term

Law #5: In order for coaches to become professional coaches, they should go through a formal, practical coach development process that includes a true mentorship process

Law #6: In order to earn a professional wage, coaches need to be compensated based on performance (meaning their ability to bring on and retain clients)

Law #7: A coach co-op (such as at a law or engineering firm) allows for coaches to work a sustainable number of on-floor hours, avoid burnout and be able to take paid vacation each year

Law #8: For long-term sustainability, the business needs to earn a minimum of 20 percent annual profit (EBITDA)

Law #9: (optional): If the above eight laws are followed, it’s possible to create a turnkey asset, where the business can run smoothly without the owner

If you’re feeling overwhelmed about the idea of overthrowing everything you’re doing right now and implementing the nine laws, take a deep breath. It doesn’t work like that. It’s not an overnight overhaul of your business and our mentors will hold your hand and take you through the process in a step-by-step manner—our three seal process—to put you on the long-term path to building an ethical and sustainable gym.

The Economics

AN ETHICAL AND SUSTAINABLE GYM

It’s time to talk about the math. 

What does the economics of the Madlab system look like in practice?

Watch the video for a full detailed breakdown of the economics, where we go through exactly how:

  • a coach can earn upwards of $100 an hour and earn $8,000 a month training 40 clients, and eventually upwards of $10,000 a month training 60 members (For most coaches, building a book of 40 clients will take three years, while 60 clients will take years four to five years),
  • a senior coach or gym owner can take home a professional wage ($100,000) year after year coaching 20 on-floor hours per week, a sustainable number of hours to avoid burnout long-term,
  • a coach can take four weeks of paid vacation each year thanks to the coach co-op system 
  • and the business owner can take home a professional wage while the business earns a minimum of 20 percent EBITDA year after year within five years through working with a Madlab mentor and eventually become a third seal gym (meaning a turn-key business, where the business can operate smoothly without the owner present).

Three Seal Implementation Process

AN ETHICAL AND SUSTIANABLE GYM

Feeling intimidated still and aren’t sure where to begin implementing our model?

Take a deep breath. That’s what our Madlab mentors and our 3 Seal implementation process is for: A step-by-step system and mentor that holds your hand and makes the transition as un-intimidating and efficient as possible.

1st Seal: The first seal is all about changing your client development process and improving those first two KPIs. Essentially, this seal is all about Laws 1 to 4, and it takes about six to eight months to earn.

2nd Seal: Once you have your first seal in order, you move on to working on your second seal, which is all about coach development—aka improving KPIs 3 and 4. This seal is all about Laws 5-7, it takes about one to three years, and it hinges on your ability to have the right coaches in place.

3rd Seal: Once your clients and coaches are taken care of, and you earn your second seal, you’ll now easily be able to improve KPIs 5 and 6, which ensures you’re making a profit and working towards building a sellable asset. The third seal focuses on Laws 8 and 9 and takes as many as four years to achieve.

Check out the video for more details about the exact prerequisites required to earn each seal.

A HISTORY LIKE NO OTHER.

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Seven Years Of Trial And Error.

2004 - WE NEED A BETTER WAY.

Madlab School of Fitness made all the same mistakes most gym owners make early on.

We focused on getting people through the doors as fast as possible and thought that being the best gym in town just meant offering the most intense workouts. 

There were no metrics, and there was no data. We knew this needed to change. 

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Accredited Facility.

2011 - APPROVED LEARNING.

As we honed in our client development process and coach compensation system, gyms from all over the world began inquiring about how Madlab School of Fitness was producing the results it was. 

We wanted to share this information with as many people as possible.

This led to the creation of The Madlab Business Group and our accredited courses. 

 

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In Depth Harvard Study.

2015 - SCIENTIFIC RESEARCH.

After a one-year alpha study examining seven gyms, we followed that with a beta study of 33 gyms and a gamma study of 55 gyms.

These results were interesting enough for a Harvard MBA to conduct their own research and complete a six-month study examining metrics such as total revenue, profit and coach pay to name a few.

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1600 Gym Meta Study.

In 2015 Zen Planner commissioned an 18 month, 1600 gym meta-study. We compared average client value and retention rates among 1,600 CrossFit affiliate gyms, Madlab’s flagship gym and the 80 Madlab gyms in our network at that time.

We found that implementing Madlab's nine laws not only produces more profit but leads to a higher client value and the best retention rates on record. 

THE PILLARS OF MADLAB GROUPS APPROACH

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The Nine Laws.

SIMPLE YET EFFECTIVE.

Madlab's nine laws ensure that the business owner is successful in their endeavours, but they also provide coaches with an opportunity to have a lifelong career in the fitness industry.

The nine laws also ensure that the members in your gym are always on the winning side by providing them with the best coaching and training possible.

When push comes to shove, understanding and implementing Madlab's nine laws will take any fitness business to the next level.

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Our Flagship Facility.

How do we know the nine laws work?

How do we know that the six KPI's matter?

We have been using them and honing them for the past 17 years at our flagship gym, Madlab School of Fitness.

Having a facility that lives and breaths everything we preach is why and how we can give no-nonsense, real-life examples of how we can help you change your life and change your business.

We aren't gurus; we are gym owners just like you.

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Six KPI's.

THE NUMBERS RARELY LIE.

Madlab's six KPIs ensure that the nine laws are being utilized and producing results.

Tracking the data and knowing your numbers is critical when it comes to running a successful business. Understanding trends, setting goals and constantly reevaluating what is working and what is not is easier when concrete information is available.
 

OUR PEOPLE

Audrey

Audrey Patterson
"Squad"

Director - Implementation

Dai

Dai Manuel
Director - Marketing

Tom

Tom Sarosi
Director - Madlab School of Fitness

Derek

Derek Goff
Director - P.C.D.P

Dan

Dan McMeel

Implementaion Manager

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Kelly Hansen
"Dashie"

Education and
Administrative Assistant

Emily

Emily Beers
Content Creation

Patty

Craig Patterson
"Patty"

Founder and President

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1980 Clark Drive
Vancouver, BC Canada
V5N 0A9

info@madlabgroup.com