The Legacy Martial Arts Business Podcast

Sam (00:00.886)
Hello everyone and welcome to the Legacy Martial Arts Business Podcast. Today we have a really amazing and exciting guest practicing attorney for over a decade, Matthew Becker. He is also the owner and founder of Jim Lawyers. And in his time in litigation as an attorney, he also owned a gym of his own. But now he consults gym owners on how to...

Matthew E Becker (00:08.95)
Thanks for watching!

Matthew E Becker (00:28.431)
Thank you.

Sam (00:28.618)
stay safe and make sure all of their business practices are keeping not just their members safe, but themselves too. So I'll let Matthew take it away.

Matthew E Becker (00:39.196)
Wonderful. Well, hey guys, I would say good morning, but I guess it's not morning for you guys, it's good afternoon. So it's only morning for me. So how have you guys been doing? It's been a while since we chatted one on one like this. How's business? How's Canada? You've got your summit coming up in July. How's that going?

Sam (00:46.462)
Yes. That's right.

Sam (00:54.028)
Yeah.

Sam (01:01.162)
It's going great. We're really excited. It's going to be bigger than ever this year. So more news to come on that for all of our viewers and audience out there. It'll be big. Everyone's invited, not just our clients. And Matthew was kind enough to speak at our, at our summit last year, which was amazing. So just another reason we're excited to have him talk with us on our podcast today. But we've been good, busy as ever. I see you have been too.

Matthew E Becker (01:27.846)
Yeah, yeah, yeah. So we're a little bit over two and a half years, I think, in and out with Jim Lawyers and consulting. And yeah, it's just, it's blowing up. You know, there's all kinds of Jim owners getting in all kinds of different issues. So yeah, so basically what we do is provide that legal consulting. And you know, I just try to be clear on that. There's a difference between consulting and representation. So representation is the attorney that you call when you get sued.

Sam (01:52.174)
Mm.

Matthew E Becker (01:55.51)
who is going to show up at court and who is going to negotiate with the other side, we'll do some negotiation, not a whole lot. You know, that's your attorney representative. We try to prevent gym owners from having to get an attorney representative by doing legal consulting. So, we provide a lot of education. We provide a lot of consulting with, you know, I talked with a gym owner yesterday who wants to like buy three different.

Orange Theory franchises and how the heck do we do that? And then we do a lot of contract drafting. So everything from all the way from creating a legal entity to selling your gym on the back end and every piece of legal paperwork that needs to be done in between.

Sam (02:44.638)
Wow, that's really interesting. So my first question, this I think might segue into some of the other questions we have, is I know your gym was in functional fitness and when you started gym lawyers, you were mostly consulting for the functional fitness industry. It's a tongue twister. So I'm just wondering. I don't know if I have to edit that, but I'm just wondering because you.

Matthew E Becker (02:51.158)
Mm-hmm.

Matthew E Becker (03:03.439)
Yeah, oh Freudian slip there

Sam (03:11.606)
Transitioned a bit into the martial arts space now. So are you seeing some of this, are they the same types of problems that you're seeing in martial arts as you were seeing with functional fitness gym owners? Probably far worse. I would say far worse. I would say, I would say.

Matthew E Becker (03:26.838)
Sure. You said it, Nick, not me. No, it's all good. So, from a general standpoint, you know, we cover, like you said, functional fitness gyms, crossfit gyms, personal training studios, gymnastics, cheerleading dance, mixed martial arts, pickleball, parkour, you know, from a general standpoint.

Sam (03:34.839)
I'm sorry.

Matthew E Becker (03:55.73)
we all have the same basic business needs. And so, there's an easy crossover when somebody calls up and says, hey, I've got a gym, and I go, great, what's your corporate entity? That's gonna be a universal question regardless of what kind of gym owner's reaching out to me.

From there, when we start to put together some of, let's say, like a membership agreement or a liability waiver, there's going to be nuances in each individual industry that we really need to be paying attention to. So I'll commonly use the example of the waiver. The first section of the waiver should be your acknowledgment of danger. And this is where somebody comes in and they read your waiver.

And it basically says, you can get hurt if you partake in this activity. And then we have to get as specific as possible with how you can get hurt. You guys will recall the webinar I did not quite a year ago, I think it was like six, eight months ago, where we talked about that really horrible case here in California. And there was a big question in that case of did the participant, did the individual who ended up getting injured.

Sam (05:05.505)
Yeah.

Matthew E Becker (05:13.106)
adequately acknowledge that they could be rolled over and break their neck through the waiver. And so, you know, we, as our job, is to make sure that each industry now has waivers that are specific to the injuries that come up in that industry. So, mixed martial arts is a different danger than cheerleading, which is a different danger than parkour, which is a different danger than functional fitness.

So our job is to come through each one of these industries and figure out like What are the big dangers? What are the most common injuries and making sure that we're then providing Legal consulting and legal paperwork and everything else that's very specific to that industry

Sam (05:59.586)
So just like let's touch on that situation because I feel like it's- It shook everybody. I feel like it shook everybody and I feel like the people watching the podcast, they connect so much better to the information with like a real life story they know of that they've heard about. And I know, you know, we're super grateful for you to looking into it and doing that webinar.

Matthew E Becker (06:08.079)
Mm-hmm.

Sam (06:27.778)
for us, you know, breaking that down. Like, did that school have themselves covered, you know, through the waiver, like in your opinion? Were they covered? Did they have themselves covered? Like, from your research, like into that case, like were they prepared for something to happen like that? I don't think anybody is ever, because like I have never seen an injury of that magnitude until that situation.

Matthew E Becker (06:51.807)
We do.

Sam (06:57.95)
Um, but like, what was your take on what happened there from your professional perspective?

Matthew E Becker (07:05.818)
Yeah, and I wish I had reviewed my notes on that case specifically prior to hopping on here, because I remember there was a lot of nitty gritties in the webinar. We talked about sort of the layered system here of like they had their corporate entities set up properly. They had the waiver. That was fantastic. They had like their DBA filed properly and all these things that came into step. So that even though it was like forty six million dollar.

I think it was a judgment. I think it ultimately went through. I don't think it settled and there was now this 46 million dollar judgment out there that Jim was still able to continue to operate. And I remember there was a very big question within the case about the acknowledgement of danger portion of the waiver. And the plaintiffs were really hammering it saying, there's no way that this, and Nick correct me if I'm wrong on the facts, but I believe it was like

The guy who came in was like a white belt and they put him rolling with like a black belt. And the problem was the guy rolling, black belt, executed a movement that some opinion was too difficult or too advanced and that the white belt didn't understand this and that's ended up, he ended up in a bad position. That's how he got hurt. And the plaintiffs were arguing, nowhere in your waiver did this guy acknowledge that.

he could be paired with a black belt and rolled over and break his neck. And so, no, we don't have to go through our waiver and be like, you might get paired with a black belt, try to cover every situation like that. That's a lot on the gym to do that. And that's a lot what you guys do in consulting with the gym owners on that stuff. But we can make it very clear in the waiver that you're gonna get punched, you're gonna get hit, you're gonna get scraped.

Sam (08:45.759)
Yeah.

Matthew E Becker (08:58.09)
You know, you're gonna get rolled upon, bodies are gonna hit each other, bodies are gonna roll on each other, and there is a potential that you could break your neck, and we'll spell that out very specifically in the waiver.

Sam (09:07.566)
Yeah. So in the United States, is there like, because like in Canada, I believe there is a lot, you know, that if you're negligent, like, it doesn't matter what you signed, like, if the business is negligent, like, it doesn't matter what you signed. So like in the United States, like, is there anything like that? So like, yeah, you have the waiver, they sign their indemnification, they sign their acknowledgement of risk, you know, waiving, you know, the ability to sue all agents of

Matthew E Becker (09:20.438)
Uh huh.

Sam (09:37.346)
you know, the facility of something were to happen. However, is there a rule in the United States like regarding negligence? And to be clear, like, I think a lot of people have their own opinion on what happened in this situation. I'm not giving mine regarding it for many reasons, okay? The internet trolls are vicious out here. So, you know, like, is there something like that in the United States about negligence?

Matthew E Becker (09:38.09)
Mm-hmm.

Matthew E Becker (09:53.686)
Sure.

Matthew E Becker (09:58.647)
hahahaha

Sam (10:06.35)
this would be a good time to go over Groves' first ordinary negligence.

Matthew E Becker (10:07.369)
Yeah.

Matthew E Becker (10:11.07)
Man, you guys just wanna like, we'll flip the script here. It just ratted off like every important section of a waiver and then Sam pops in with gross and ordinary negligence. I'll pretend like you guys have been reading my material. The bottom line is yes. There's different kinds of negligence.

Sam (10:15.038)
Hahaha!

Sam (10:19.886)
Bye!

Sam (10:28.875)
Yeah, maybe her.

Sam (10:34.295)
Take a compliment.

Matthew E Becker (10:41.734)
So let's put this sort of in and Sam uses the buzzwords ordinary and gross negligence. And so when somebody walks into a mixed martial arts gym facility, dojo, and whatever you guys want to call it, it is an inherently dangerous environment. Okay. And you know, as a gym owner, you just have to accept that. Somebody walks into my CrossFit gym, it's now an inherently dangerous environment. There are just things going on that people can get hurt. Okay. So.

you cannot prevent all of it from happening. The definition of negligence is duty, breach, causation, and injury. There's a duty as the gym owner for you to protect everybody there. If somebody gets injured, there is a breach. Duty, breach, okay, somebody got injured. What was the cause of it? Something in your gym caused it. Somebody you're in charge of caused the injury. And so now we have the damage. Do you have to pay out? If I walk into your gym,

and we're doing some sort of striking. And so I've acknowledged that I can be hit because my waiver has a nice physical contact section in it and I end up getting punched in the nose and it breaks my nose. There was a duty there, there was a breach. There was a cause, somebody hit me. Do we have damages? Well, some would argue.

it's in the ordinary course of business of going into a gym that has striking that there's a chance you're gonna get popped in the nose. Okay? And so the defense attorney for the gym is gonna argue this is ordinary negligence, it's an ordinary course of this business, the gym is covered by the waiver and hopefully the gym owner is then sort of protected down the line. Okay? And I'm happy to go into those weeds, but ultimately that's what we're trying to do here is protect the gym owner.

In the alternative, if somebody walks into my gym, a CrossFit gym, and in the middle of doing muscle-ups, the person next to them turns and punches them in the nose and breaks their nose, well, I had a duty to protect them. There was a breach of that duty because their nose is now broken. We know what the cause was and is there damages? Well, I don't know.

Matthew E Becker (13:05.142)
That's not ordinary course of business at a CrossFit gym to worry about somebody's gonna punch you in the nose. And perhaps I knew that member who punched is a particularly violent outgoing member and when he can't hit a muscle up, he gets a little violent about it. And so I had an additional knowledge that I disregarded. I stuck the new member next to that guy, that guy punched him in the nose. The plaintiff's attorney is gonna argue that that's

gross negligence because I knew or should have known that there was a problem and I did nothing. I avoided everything. I took no action to prevent it even though there was a potential for that to happen. And I knew it. It was reckless. If it's ordinary negligence, the gym is hopefully covered. We can cover everything. If it's a gross negligence, it all goes out to the side. No waiver on the world is going to cover it.

against gross things.

Sam (14:08.162)
Okay, so here's another scenario. I know I'm like we went over a brief before, but I have these questions of these situations that every gym owner goes through and myself. And I feel like these are like the most important questions. Like I was going over this just, you know, this morning or yesterday. Okay, so martial arts schools,

Matthew E Becker (14:19.138)
That's fine. Let's free flow it.

Sam (14:37.126)
sometimes attract or all the time attract types, all types of different people. And, you know, say you have somebody that's come in there, you don't really know too much about them, but somebody in the community has spoken to you and said, you know, like, hey, this is my experience with this person, you know, at my school, um, you know, questionable behavior.

Matthew E Becker (14:43.606)
Mm-hmm.

Sam (15:07.282)
on their own, may be involved in something, okay, that is not proper, like something illegal. But like, again, you know, and again, school owners asking me this, I'm like, I go through this throughout the years, like what is, you know, like from a legal perspective, like what is the right answer? You know, because like, it's like you said, right?

you're like, hey, I got this crazy, you got this crazy guy in your gym and he goes and he punches the person beside you, which has happened in my gyms before, people getting in fights. And there has been red flags. There has been things that we have seen to get rid of these people. So in knowing this, like you're basically saying, like you as a gym owner, if there's somebody in your gym that has the,

Matthew E Becker (15:46.662)
Mm-hmm.

Sam (16:05.81)
or the

Sam (16:10.286)
I'm not sure the way to articulate that the possible potential to hurt others in some way. And you have seen red flags predicting that like the onus is on you to get rid of them because you're going to be responsible for their behavior inside of your school, whether, whether like you had anything to do with it or not. Is that correct? Like, am I on point here or am I like all over the place?

Matthew E Becker (16:33.054)
Yeah, no, you're on point. And from your business perspective, some listeners might sit here and think, oh, well, the less I know, the better. And that's not a good tactic to take when it comes to the law. In your instance, you said something about, I get a new gym member, and you call me as an old gym owner and it says, hey, watch this guy. There's a reason he's no longer a member of my gym. I am unfortunately now burdened with that knowledge.

and I have to act accordingly. But that knowledge is power because if I ignore that and that gym member goes and does something now, that's a surefire way to prove gross negligence is that I as the gym owner knew and I didn't do anything about it. Or I took active steps to not know, okay? That can all go into real problems down the road if this sort of thing gets challenged, if somebody ends up suing the gym.

And so from a gym owner's perspective, the more you know about your members, the better off it is because then you can make educated decisions on behalf of your gym and your business that are gonna help you get move the business forward. And I'm a gym owner, I know that losing one member a month seems distinct far worse than the glory of gaining like five members in a month. You don't wanna have that conversation with a member of like.

sorry you can't be a member here at the gym. Okay, but if you're going to look at the long-term length and financial wellness of your gym, the cost-benefit analysis of getting rid of one member in order to help protect yourself against the risk of a lawsuit and the cost that's going to be associated with that, I can assure you the lifetime valuation of that member is not worth keeping them.

Sam (18:30.558)
You are so welcome.

Matthew E Becker (18:33.184)
It's part of being a business owner. You've got to make those hard decisions. I did it once in my gym. Again, it's CrossFit. We had an individual and he had some legal issues and I had to tell him to leave and it was not an easy thing to do. But as the gym owner, that's your responsibility.

Sam (18:52.496)
So how do you find out about those legal issues?

Matthew E Becker (18:53.906)
Um, yeah, I got a phone call from one of my members who pointed out. So, so, you know, this guy, he, he had some federal convictions for child, for possession of child pornography. And so he was on the Megan's list. And, you know, somebody, one of my members called and said, I don't remember exactly how it went, but it was basically like,

You put a video of this guy on your Facebook, and one of our members' friends saw the video on Facebook, and they recognized him as being somebody on Craig, or Megan's list from their neighborhood, and it was like a wildfire. By the end of the day, everybody in the gym knew that this guy was on the Megan's list, and he couldn't be around any kids. So, there was nothing, I mean, I didn't, I had no problems with the guy. I used to be a criminal defense attorney, so I'm like all about giving people like,

additional chances and I struggled pretty hard with having to terminate. But at the end of the day, I was a business owner and I had to do what was best for my business. And God forbid, I ignore it. And he ends up with a situation with a kid and it just wasn't worth it. It's not worth it.

Sam (20:12.246)
Yeah, 100%. Okay, so top three things every martial arts goal owner should do from a legal perspective. You're like, you know what? Here's the top three, guys. If you're not doing these, you're on business suicide, you need to have these top three things done for your martial arts goal.

Matthew E Becker (20:20.21)
Mmm.

Sam (20:41.783)
What would those be, man?

Matthew E Becker (20:45.158)
So first one is making sure that your corporate entity is set up properly. And I'll try not to use like big little jargon here, but every business should be owned by either down here in the States, mainly an LLC or a corporation. There are variations. Up there in Canada it's like all corporations, but down here it's an LLC or a corporation.

And that is known as the legal entity. And you can't just go on your state's websites down here or go to your province website up there and file the legal entity and walk away and be like, okay, I got my corporation, I'm done. I'm protected personally. My personal assets are protected against anything. There's a ton of formality that goes into it after that. And so that's one of the main conversations we have with

what we call an established gym owner, which is somebody who is in business, right? They're not calling to me, we'd be like, I want to start a gym. They're calling me and saying, I've had my gym for one, two, three years, what do I need to worry about? That's the first step. I'm going to audit that legal entity because if it's not set up properly, it doesn't matter about the other things I talk about. The gym owner is personally still exposed to any negativity that comes down the line through the law.

Okay. And again, like, I'm happy to go through the weeds on this stuff, but I'm just trying to keep it easily digestible because it can get very complicated very quickly. And every gym owner is gonna call me with a different legal entity and a different setup and a different problem and a different state that has different requirements. So the it depends answer will come out of me very quickly.

Sam (22:35.61)
Mm-hmm. That's fair. But the main point is that you need to make sure that your corporate entity is set up properly and appropriately for whatever jurisdiction you are in, if you're in province, estate, whatever.

Matthew E Becker (22:50.226)
Right, right, right. And I can tell you, nine times out of 10, if you didn't use an attorney to set it up, you're not set up properly.

Sam (22:51.998)
Do you?

Sam (22:58.014)
Yeah, that makes sense. So use an attorney to set up your proper corporate entity. Yep.

Matthew E Becker (23:06.886)
For anybody starting out. Yeah. Yeah, please don't use legal zoom. Don't use rocket lawyer they're gonna get you like a third of the way there and They're not gonna help you complete the rest of

Sam (23:19.95)
They're also not going to help defend you if stuff goes wrong. So, okay. So a good portion of our clients are in Canada and I, and I've been talking to people about this. They do sole proprietor. Do you know what that is or do they have anything like that in the States?

Matthew E Becker (23:23.066)
Oh no.

Matthew E Becker (23:37.53)
If we're talking the same terminology, then a sole proprietor is essentially you operating your business as yourself with no corporate entity whatsoever. Is that what you're talking about? Okay, yep, yep. That's a big no-no. So, let's kind of just...

Sam (23:46.832)
That's correct. Yeah. That's the words I'm thinking about. Huge.

Sam (23:54.986)
Hey, everybody watching the podcast. Okay. Hey, legacy clients who I've been bugging you for years to set up your corp. If you needed it straight call out public podcast, set up your corp. Get out of the school proprietor story. Carrying on with Matthew. Cause why is that bad? Why is that bad, Matt? Tell everybody why it was this bad.

Matthew E Becker (24:10.988)
I'm sorry.

Matthew E Becker (24:17.07)
Yeah. Yeah, yeah, yeah. Okay. You start a business, the whole purpose, I mean, sure we want to make people healthier and we want to get people to the next level and we have this profound purpose in starting a business, but then at the end of the day, we got to make money too. I'm not self whatever. So I have to make money from what I do and once I make that money, I want to protect that money.

If you are a plumber, or if you are a contractor, then yeah, okay fine. We can have the conversation about a sole proprietorship because there's not a lot of financial legal exposure there. If I come in and I improperly install somebody's toilet, it's going to cost me what to go back in and reinstall a toilet. It's not that big of a deal. When we're running a gym, we're talking $46 million judgments. We're talking...

$5,000 slips and falls off the back of a trampoline. Okay, we're talking a $50,000 broken arm. I can't afford that, okay. Sure I can make a claim over to my insurance about that, but my insurance is gonna take every avenue they can not to cover me, okay. So at the end of the day,

Sam (25:33.398)
100%. And even when they do, the least amount that they can give you. So, sorry, continuing, continuing.

Matthew E Becker (25:43.198)
Right, right, no, no. So, you know, at the end of the day, the whole purpose of, I guess you could say, like boiling it down, the whole purpose of me and Jim Lawyers is to look at Jim owners and say, Jim owner, you're trying to make a living. Let's protect that living, okay? And the law provides us ways to protect the living that you're making, the money you're making, all of your assets, your house, your car, okay?

And the way to do that is to form a corporate entity. And so if we don't form a corporate entity and we're just operating as a sole proprietorship, I'm just operating as Matt's sweatshop. And somebody comes into my gym and they get hurt and they sue Matt's sweatshop, I am 100% on the hook for anything my insurance either doesn't cover or rejects. It's coming at me.

And it may go to my bank account, it may get at my wife, if depending on the laws of the state, it might get at our house, it could take my cars, okay? All that stuff. So let's flip it over. And Nick's call out there now motivated somebody to go get a corporate entity. That's great. Because now, let's say I've got Matt's Gym LLC, or Matt's Gym.

incorporated, operating Matt's sweatshop. And somebody walks into the gym and they injure themselves and they sue Matt's sweatshop. Well that lawsuit is going to go back against my corporate entity. And if all of that is set up properly, the insurance comes through, they reject it or they cover everything they're supposed to cover and the judgment comes at me for more. Either...

that money now comes out of the business and I'm completely protected, okay, my assets, my home, my bank account, my car, that's the point, is it's protected. Or, you know, worst case scenario is, yeah, everything I worked so hard for, okay. And the worst case scenario is I bankrupt the business. Okay, and then we go through all the bankrupting proceedings and everything else, but again, all that hard work I've put into making, that's the new Jim Oter.

Sam (27:47.038)
Everything you've worked so hard for.

Matthew E Becker (28:05.402)
$4,000 a month, woo! You know, all the hard work you put in to get there, we're protecting it, okay? So no sole proprietorships, you are so exposed. At least get a corporate entity on top of that. It's not a big process, it's not a terribly expensive thing to do.

Sam (28:27.022)
Yeah. Okay. So that was that was number one. What's so number one corporate entity set up by a lawyer. What would you say is number two?

Matthew E Becker (28:30.75)
Yeah.

Matthew E Becker (28:37.03)
Number two, and this, you know, number two is really like, have somebody review all of your contracts, specifically your lease before you sign it. That's just like the biggest legal tip, but I'll kind of just, I'll adjust that because majority of the people who are listening are probably already established gym owners. So I'll kind of adjust number two simply to say, there are people out here, out there who,

Sam (28:37.662)
Number two, yeah, most of the time.

Matthew E Becker (29:05.502)
specialize in accounting, who specialize in tax, and you go to those people. There are people out there who specialize in business consulting, legacy, and you go to those people. There are people out there who specialize in boring legal shit, okay, for lack of better terms. Go to those people. Like, you know, it frustrates me personally, and you know, that's just my own demons, but it frustrates me personally when like,

A gym owner brings a contract to me and says, we need to do X, Y, Z. And I go, great, show me A, B, and C. And it's something that they just drafted themselves. And it's like, I can't do anything with this because here's the web that you just spun that made this so complicated now to unwind this thing. Because for some reason, you didn't feel like, even though you went to that accountant to pay your taxes,

you didn't feel like going to an attorney to draft a contract, or you didn't go to an attorney to review that contract before you signed it to look at the lease, to help you put information in there or clauses in there that will actually protect you, the gym owner. You didn't call an attorney before you signed the paperwork to buy into the LLC that now has $125,000 IRS debt on it. And so.

That's sort of like step number, or my advice number two, is like, I wake up in the morning to look at these things. Please give me an opportunity to look at these things. Don't just try to do it on your own, because I'm here to protect you as the gem owner. I'm here to protect you and all of the money that you're making. A lot of that goes into the legal paperwork that you're signing.

Sam (31:00.118)
Okay, so get your lawyer to review your paperwork. Have a lawyer. Yeah, have a lawyer. Get your corporate entities set up. What would be number three of your three most important things for martial arts school owner from a lawyer's perspective?

Matthew E Becker (31:17.162)
Mm-hmm. Yeah, start papering things inside of your gym. And for a gym owner, this is going to come in three primary forms. One is your liability waiver. And that's the one that probably just about anybody listening or anybody who calls you, that's usually pretty standard. They at least have something in writing that they call a liability waiver that they have members sign when they come in.

That's at least a good start. From there, ideally that person's gonna sign up for some sort of membership. And down here in the states, once they do that, that's gonna trigger a whole bunch of other potential legal stuff. But in the gym itself, we need that in writing. At its most basic form, you're taking $100, you're taking $150 off of a person every month on a recurring basis.

There are things we need to put in writing that technically give you authorization to do that, so we can better avoid problems down the road. We can avoid that member that says, I've been paying for six months and haven't been coming, so give me my money back. We can avoid the charge backs. We can avoid the cancellation notice issues, because we stuck it on writing and we set that expectation with the member from day one. And then, oops.

Sam (32:43.924)
Okay, so waiver membership agreement.

Matthew E Becker (32:45.054)
Hold on, I gotta, I gotta, can you guys hear me?

Sam (32:49.987)
Yeah, yeah.

Matthew E Becker (32:51.558)
Okay, I just got a notice that said waiting to trying to reconnect. So just want to make sure we're still good. Okay. And number three is staff agreements, which I know Nick, I think you had mentioned wanting to cover employment contracts. Get your staff, whether it's an independent contractor or an employee, and happy to talk about those distinctions from a legal perspective. But, you know,

regardless of the tax designation of the staff, get them on a proper staff agreement in writing.

Sam (33:26.894)
So because I have lots of negative experience on this, I'm just gonna share. Like I've had a situation where, because not having the proper contract in place and terminating an employee or wanting to terminate an employee in lieu of notice, that means like you just said you're fired.

and you didn't have the contract in place. Like I had to give double the required, you know, like severance for that person, you know, like I was on the hook because I didn't have them sign a proper contract. There were no write-ups for their election of duty. Yeah, and you know, Jim Bro.

Matthew E Becker (34:20.032)
Bye bye.

Sam (34:21.63)
Like, hey man, don't do that again. You know, like, hey, show up on time. Hey, answer the email. Hey, I'm warning you if you don't do your job, we're gonna have to sit down and have a conversation. You know, none of that matters because you need to give like an official write-up, you know, to demonstrate cause. And it was a very painful, it was a very many thousand dollars mistake learning.

learning opportunity. That's what I say to myself, make myself feel better about it. It was a $1000 learning opportunity and making sure that like, hey, everybody's gotta be on contracts now. So contractors need to be on contracts, employees need to be on contracts. And because it actually protects the employees as well, but also protects the business and it helps everybody be on the same page.

Matthew E Becker (35:13.876)
using it.

Sam (35:18.282)
Like gym owners gotta stop looking at this stuff that they don't understand because I used to be that way. Oh, I don't understand. So I feared what I didn't understand instead of taking the time to get educated and not paying the dummy tax. Like I had to pay the dummy tax in that situation. Say, hey, you're a dummy, so you gotta learn the hard way. And now it's like, all right, everybody's gotta be on contracts.

Matthew E Becker (35:36.469)
Pfft.

Sam (35:46.966)
That's my vent, that's my vent, got it out, got it out of my system. But guys, like Matt is saying here, and I am seconding what he is saying and telling you that it costs several thousands of dollars. And we will help you, all of us together, we'll help you guys get set up with all those things for your core, your business as well. I had some more questions as well.

Matthew E Becker (36:11.411)
Yeah.

Sam (36:16.294)
Um, so we covered like top three things. You were like, get, get set up with a corporate entity. Number two, always get your documents, uh, reviewed by a lawyer because that's their job. They're masters. They are the black belt paperwork. Okay. And number three is, uh, more paperwork. Like everything needs to be articulated.

Matthew E Becker (36:29.624)
Mhm.

Matthew E Becker (36:39.999)
Hehe hehehe

Sam (36:41.134)
the waiver, membership agreement, employment contracts, like those are the top three you gave us. And I know this question sounds the same, but I know it's not. What are the top three mistakes that you see, you know, and I'll open it up to gym owners too, like not just martial arts school owners, but gym owners in general. What are the top three mistakes that you see in the industry right now?

Matthew E Becker (37:10.482)
Yep, yep. So one, we'll just kind of sort of echo number two from the previous list which is really stay in your own lane and know that there are people out there who specialize in the law and drafting contracts and you know you need, if you're really going to protect your business, you need contracts, you need documents that are written specifically for your business. Boiler

membership agreements, trying to write your own operating agreements and things like that. That's one of the biggest mistakes that I see is a gym owner presents me with something that they may not even remember where they got it from. And they're relying on this to be protecting their business. And sadly, it's not. And they're all just sort of one ticking time bomb away from.

big problems are like you said, that dummy tax, it's gonna be far more expensive than it is to just have a professional do it right from the first time.

Sam (38:19.694)
Okay, so people basically like hack jobbing, whatever, you know, thinking that they're a lawyer or thinking this is like, this is again, a affliction with the martial arts industry that I like teaching my courses. It's like you're a martial arts instructor. You're not a doctor. You're not a psychiatrist. You are not a dietitian. Don't recommend people's, you know, nutritional wellness, you know, like stick.

Matthew E Becker (38:23.638)
Thanks for watching!

Matthew E Becker (38:34.142)
Mm-hmm.

Sam (38:49.15)
stay in your lane, like you said, you know, stick to the things that you know, which is martial arts. Let the experts like handle the rest of the stuff. What would you say is the number two, number two biggest mistake you see from gym owners?

Matthew E Becker (39:02.363)
Yeah, number is either the assumption that we've always done it this way, so why change now? Which sort of dovetails with we haven't had a problem yet, so why do we need to change?

Sam (39:18.414)
Very flawed logic.

Matthew E Becker (39:22.53)
Yeah, those are, you know, the people who come to us and ultimately get work done in our closing email, we tell them, you need to come back to us once a year to have anything and everything we've done for you, anything that has changed over the last year, you need to come back to us once a year so that we can look at things because, you know, the

Sam (39:33.934)
Bye.

Matthew E Becker (39:47.874)
and got a waiver from me last year or a membership agreement from me last year, I could tell you six months from now or six months later after I produced that for them, we probably provided some sort of an update. It's impossible for me to remember who has the update and who doesn't. That's why we say once a year, come back around and say, hey, here's my liability waiver. Here are the situations we talked about last year. Nothing's changed. I need to update my waiver. And sure.

There's probably a provision that we've added that's pretty standard across waivers. And we would just pump that out to them to add right into the waiver. But the law is fluid and it changes and it molds. And just because it wasn't applicable back then, like when everybody didn't have a phone in their pocket, doesn't mean we don't need to now add.

CCTV and personal surveillance and copyrights and all those other things to our waivers now because situations have changed.

Sam (40:52.245)
for sure. Okay. And number three, what do you think number three, number three biggest mistake, number three biggest mistake from Jim Moner.

Matthew E Becker (40:57.454)
Oh man, I had one and two, one and two really good, I felt like, number three.

Sam (41:06.938)
a suggestion that may partnership operators? I was gonna ask partnership questions after number three. That was next in line. But sure we can go with that.

Matthew E Becker (41:09.854)
Go for it. Oh, don't partnership.

Matthew E Becker (41:23.99)
Yeah, yeah, let's just blanket. Let's answer that with don't partnership. No. I guess number three, to be a little bit more serious about, oh, you guys froze. I'm gonna hold for a second. Okay. Number three would be,

Sam (41:29.522)
It's easy. Easy, sir.

Sam (41:37.934)
We're here.

Matthew E Becker (41:45.042)
Don't be shy of setting expectations with your members. And Nick, you kind of touched on this in the beginning or a couple of minutes ago when we were talking about employment agreements, you said, make sure everybody's on the same page. That's just another way that I say, set the expectations. And it's hard to do this as a gym owner because we like, it's hard for me to do this as a gym lawyer because we talk about this stuff on repetition every day, every day, every day. We tell...

We tell five people a day, we have a 30 day notice for cancellation or I'm gonna take your payment on the first of every month, we're gonna prorate your first payment to the first of the next month. That stuff just rolls off of our tongue. But we then have to be able to step back and look and say, okay, this person's being exposed, this gym member is now being exposed to all of this for the very first time. What expectations am I assuming are there that I can make with this gym?

member so that we can avoid problems more down the road. More expectations we set up now, the more problems we'll avoid down the road. And for those of you who are listening who are like, well, how do I know what assumptions I'm making? That's why Legacy is here. That's why Jim Lawyers is here. Because we all have so much experience in the industry that we can tell you these are the assumptions that you're making, and these are how we can change your standard operating procedures.

to set these expectations more with members. So we avoid those problems down the road.

Matthew E Becker (43:31.774)
Yeah.

Matthew E Becker (43:45.023)
next.

Matthew E Becker (43:50.22)
Hehe hehehe

Matthew E Becker (44:27.829)
Mmm, yummy.

Matthew E Becker (44:38.258)
I might steal that.

Matthew E Becker (44:54.441)
Mm-hmm.

Matthew E Becker (45:00.883)
Hmm.

Matthew E Becker (46:04.506)
Mm-hmm. Yeah, that's a fantastic way of summarizing it. Think of your partnership as your marriage. And think of all of the things, all of the boxes you have to check off before you actually decide somebody is going to be your spouse. You should be considering an equally long checklist when you're considering somebody as a partner. And then,

Just as you may have a prenup agreement with your spouse, so that we know what happens when things go south, we need, call it whatever you want, partnership agreement, operating agreement, bylaws, all of these different corporate documents, which go all the way back around to the beginning of our conversation of the proper setting up of a corporate entity. We need to talk about, you're right Nick, who are we?

What are our roles and responsibilities and expectations and getting everybody on the same page from the beginning? And maybe we sit down every year and we adjust to that. And then ultimately, how do any of us leave this thing? And what does that look like? Because if we can answer all of those questions, especially when money's involved, if we can answer all those questions upfront, we can try to eliminate as many contingencies as possible.

When crap hits the fan and somebody wants out and they want a lot of money and we don't have guidance from that and a black and white piece of paper from the beginning, that's when we get real problems.

Matthew E Becker (47:44.366)
That's when you call your representing attorney, right? Instead of your consulting attorney.

Matthew E Becker (47:54.782)
Mm-hmm.

Matthew E Becker (47:58.988)
Yes.

Thanks for watching.

Matthew E Becker (48:11.519)
Mm-hmm.

Matthew E Becker (48:38.012)
Mm-hmm.

Matthew E Becker (48:55.806)
Yep, yep. Yeah, the other area we see this come up a lot is like two dudes get together and they just, they have this dream of opening up, let's say a mixed martial arts gym, and they save up all their money and they pull it all together. And they're like, yeah, man, we're gonna make millions of this, let's do it. And they go and they find a spot and they open up and they're starting to get members. And like one year in, they realize that like, they're barely paying it themselves.

and one partner's like, I gotta go get a real job, dude. I gotta get outta here and stops doing anything within the gym. The other guy's like, what the heck? I can't run all of this and then now, once we do become profitable, I'm supposed to pay you 50% because you're technically half owner, but you're now at whatever you're doing now, you've gone back to your corporate job or whatever. I get that call probably

on average once a week. And I go, great, let's see the operating agreement and they go, no, we don't have one. And I go, well, I mean, okay, it's gonna be really hard to get this guy now to kick off and get out of your LLC because you have no way of forcing him out. So yeah, it's...

And it is, and that's sort of like one of those, even if like you have a partnership, even if you're listening to this, you're like, man, I got a partnership right now and we don't have anything in paperwork, cool. Let's take care of it now. Like we still can. It's just while everybody's happy, let's get everybody to agree what happens when we're not happy, because that's the time to do it.

Matthew E Becker (51:05.034)
Yeah, yeah. Yeah, easiest way is just go to JimLawyers.com. That's G-Y- I don't hide. So there's calls to action all over the website. If you go to the contact page, you can get my cell phone. The goal

is, we sort of talked about a little bit earlier and I apologize, I think I dropped the S-bomb and now you're going to have to either bleep it or stick the explicit on here. That whole suggestion number two of Jim's, Jim owner's like, take this to a professional and if you don't want to take it to the stuffy attorney down the road, you're going

who walks in and out of his office with a suit on every day and has probably never thrown a punch, never rolled on a mat, never picked up a barbell. Like, I get it, all right? We are stuffy dudes, but at least reach out to me and say like, let's bull crap for a little bit about gym ownership and then ask me your legal question, let me see if you actually have an issue. It's a 45 minute consultations free. So.

I just, even if you're Canadian, you're like, well, this American dude can't help me. I can at least talk to you and tell you what the potential issues are that you then need to take to a Canadian attorney and ask him about. I'll give you the verbiage to take to that Canadian attorney and be like, where's my assumption of risk and my liability waiver? That's about the most I can do for Canadians, but I'll do that.

Matthew E Becker (53:04.65)
Yeah, anytime guys, thank you.