INDUSTRY VIEWS
LEISURE DB
FOCUS ON WHAT YOU CAN CONTROL A VIEW FROM @THEWELLBEINGLAWYER
The boutique fitness sector has seen much volatility of late, the pandemic abruptly halting the boom and the cost-of-living crisis extending uncertainty. While fitness moves out of discretionary spend to become a non-negotiable – cemented by the concept of community that is so strong in boutiques – challenges remain in the shape of hybrid working patterns and many consumers’ desire for multi-faceted training. As such, we’ve seen pre-pack deals, acquisitions from liquidators, mass consolidation and a distinct lack of available funding, resulting in a continued sense of unease within the boutique industry. While it might not be the best time to fundraise in the fitness world, companies shouldn’t wait until things improve to get investment-ready. Getting the basics right from a legal perspective will put you ahead of the pack and leave a great first impression on any potential investor. The first easy win is to ensure you have a clear and up-to-date cap table (including class and number of shares and percentage holdings), details of any options granted and any loan notes in existence. Consider, too, using a brand management solution to protect your most valuable asset: your brand. Pinsent Masons’ Alteria product gives you control over the management of your intellectual property, such as your registered trademarks, and allows you to forecast renewal costs. There’s also optionality to monitor potential online infringements and comments about your company, leadership team and employees on social media. A review of existing employment and contractor agreements is advised to ensure any IP created during the course of engagement is owned by the employer. Consider scope and duration of any restrictive covenants to ensure they are enforceable. Coaches and instructors – particularly those with large followings on socials – can become pivotal, and so a balance must be struck between protecting the business if the individual leaves and unfairly restricting their ability to earn a living. Boutiques should recognise the unmistakable shift we’ve seen from investors being attracted to revenue-driven businesses to a desire for, at the least, breakeven businesses. Profit-making outfits are now considered to be gold dust. To differentiate themselves, boutiques should consider new ways of engaging with and retaining consumers. That might include an uptick in merchandise creation, blurring the lines between service provider and retailer while increasing sales and allowing customers to wear their loyalty on their sleeve for an even deeper connection. Investors will also be looking for boutiques to expand their offerings to better address holistic wellness, widening the ecosystem to capture more elements of consumers’ lives – think social and co-working spaces and events – while maintaining the delivery of measurable and inclusive training. The important takeaway: there is money out there and it needs to be deployed. The task now is to get ready to seize the opportunity when it comes.
There is money out there and it needs to be deployed. Get ready to seize
the opportunity when it comes.
SAMANTHA TRELEAVEN Associate, Pinsent Masons LLP
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LONDON BOUTIQUE STUDIO REPORT 2023
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