Yoga Journal Live: Keeping your studio in line with the law

SNEWS attended the Yoga Journal Live conference in Estes Park, Colo., Sept. 14-21, 2014, and throughout the next few weeks, we’ll bring you coverage from the event with news, education and trends from one of specialty retail’s fast-growing sectors.

Lawyer by day and yoga studio owner by night, Ron Weikers is a rare breed — but one with excellent advice about opening a small yoga business. Part of Yoga Journal Live’s daylong “Business of Yoga” workshop, his presentation, “Legal Issues Underlying Yoga Studio Creation and Management,” offered instruction on how to keep small yoga businesses on the up and up.

The essence of his advice: Hire an accountant; hire a lawyer; and be nice.

“In the yoga world there’s what’s legal and what you should do; what’s moral, ethical, and what’s bad karma. I think that’s true in any business,” he said. “You really should do what’s right, even if it’s expensive.”

Weikers’ seminar covered everything from forming a business entity to creating bulletproof contracts. Here are the highlights:

Accountants
A blossoming studio owner can pursue a handful of different business entity types, each with its pros and cons. Selecting the type that’s right for you can be difficult, and then figuring out the applicable tax forms is even more hairy — hence the need for an accountant.

Although S Corporations and Limited Liability Partnerships (LLPs) are possibilities, Weikers recommends a Limited Liability Corporation, or LLC, for its flexibility and personal asset protection. LLCs can be a single, sole proprietorship or owned by multiple members, called shareholders. The LLC can even own other LLCs, which comes in handy if you end up opening multiple studios. This system protects the mother company and Studio 1 if Studio 2 gets sued or goes bankrupt.

Decision-making in an LLC is laid out in the operating agreement. Therein, the weight of different opinions may be disproportionate. There are no annual meetings or annual reports.

But those are just the basics, Weikers warned. “Get an accountant.”

Lawyers
Legal experts are an invaluable tool for creating your own business, so though hiring one is an expensive endeavor, avoiding legal issues down the road is worth every penny of that initial investment. Choose a lawyer that specializes in small business law, Weikers recommends, ideally one with previous experience setting up a yoga studio.

One pro tip: Big law firms often have pro bono programs for companies serving the public good or benefiting the community somehow. You’ll have to sell the firm on the notion that your yoga business fits that mold, but getting free or discounted legal work is definitely worth the effort.

If that doesn’t work and going the word of mouth avenue reaches a dead end, try Lawyers.com, who even lawyers look to, Weikers said. And “if all else fails, use legalzoom.com. It’s good enough until you’re rich enough.”

Contracts
Although predetermined mandates may not seem to be in the feel-good spirit of yoga, Weikers emphasizes their importance.

One clause to consider in contract with an independent teacher (one that also teaches elsewhere) is if they should be allowed to teach at nearby competitors within a certain radius from your studio. The average student won’t travel more than eight minutes to get to your studio, so that can help calculate the exclusivity radius, whether it be in miles or city blocks.

If that seems overly harsh or unfair to the instructor, it shouldn’t, Weikers notes. Establish the contract and then make exceptions on a case-by-case basis.

“It’s not just to protect my investment, but to protect the jobs of the 18 other yoga teachers and the thousands of people who come to our yoga studio,” he said. “It’s good to have a contract because if there’s that one teacher that starts to do something funny and you decide that it’s time to sue, you have to show a judge that you’ve protected yourself consistently.”

It’s also wise to establish a contract between partners investing in the yoga business. Answer questions like how much money will each person invest? What will each person’s duties be? Anticipate anything that might reasonably arise and record the responses in the contract.

“If you don’t thoroughly define responsibilities, then resentment will build up,” Weikers said. “Make sure that in advance you [designate] all those responsibilities because then there’s no hard feelings.”

Release Forms
Disclosure and release forms with students should be kept forever, even though the statute of limitations for negligence varies from three to seven years, depending on the state. “One tenth of one percent of your students will get weird,” Weikers warns, so it’s always good to keep these waivers on hand.

Be “ultra careful” with prenatal students. He recommends having these participants sign in before every class. At the top of the sign-in sheet, print the waiver, so these women are signing “over and over again” that they’re aware of any risk they’re undertaking.

Leases
The average Core Power yoga studio costs between $400,000 and $700,000 as an initial investment, Weikers said. That’s because often floors need to be ripped out and replaced with hardwood, walls may need to be painted … the list goes on and on.

“Maybe the landlord will help chip in,” Weikers said; after all the improvements do increase the property value. If you’re doing all the fixes firsthand, ask for free or reduced rent. Reduce common area maintenance fees — percentages of things like property taxes, snow removal, roof repair, etc. that the landlord will ask you to pay — down as far as possible.

Ask for “exclusivity” in the lease, which prevents the landlord from housing other yoga, wellness or fitness studios within the same building.

Legal compliance
“Under contracts, everything is negotiable,” Weikers said. “Under legal compliance nothing is negotiable. It you don’t [comply ,] they’ll come after you.”

Weikers mentioned zoning issues, particularly making sure that the building you’re renting is zoned for your particular use, e.g. commercial vs. residential. Also keep an eye on any improvements the landlord makes, ensuring that they’re within zoning requirements. Signs too need to meet city ordinances, and depending on the area, may have to fit a certain motif.

Consumer protection falls under legal compliance as well. Tell students in advance about the refund and cancellation policies and don’t hide add-on costs. “Let people know in advance what is required of them. Deliver what you promise,” Weikers said. “Once you’ve entered into that [agreement], deliver it and then do random acts of kindness.”

— Courtney Holden

To boost your business acumen in person, check out the next Yoga Journal Live conference, which will feature a similar Business of Yoga daylong workshop.

>> Hollywood, Fla., Nov. 13-17, 2014

>> San Francisco, Calif., Jan. 15-19, 2015

SNEWS attended the Yoga Journal Live conference in Estes Park, Colo., Sept. 14-21, 2014, and throughout the next few weeks, we’ll bring you coverage from the event with news, education and trends from one of specialty retail’s fast-growing sectors.