Opening a Second Gym Location: What Going From 3 to 8 Taught Me

Do not open a second gym location until someone other than you can run a location without you. That is the one lesson I took from my years as COO of Fitness Town, which grew from three locations to eight while I was there, and it is the lesson we learned the hard way.

Key takeaways

Key takeaways

1. Grow a leader first. Do not open a second location until someone can run one without you.
2. Fitness Town grew from three to eight locations on four levers: written playbooks, managers developed from within, site selection and a sales engine.
3. The hardest lesson was that growth outran the managers. Research on the "Penrose effect" links firm growth rates to the capacity of experienced managers.
4. Watch payroll as a percentage of revenue every week, and track owner hours as a readiness signal.
5. Score yourself on the eight-line readiness scorecard before you sign a lease.
6. Protect your own hours. If you are already at 60 a week, a second site has nowhere to come from.

The growth came from four levers: written systems, managers we developed ourselves, site selection and a sales engine. The part that hurt was that some locations opened before their leaders were ready. Most weeks during those years I worked 60 to 70 hours. Below is what worked, what I would change, and the checklist I would use before signing a second lease.

What does it take to grow from one gym to several?

Most small businesses never get to the question. Canada's Key Small Business Statistics 2024, from Innovation, Science and Economic Development Canada, tracked small employer businesses (1 to 99 employees) across the 2001 to 2021 cohorts. About two-thirds (67.4%) were still operating after five years. Fewer than half (47.5%) made it to ten. Services businesses, which is where gyms sit, survived slightly less often than goods producers at every mark.

So the first location surviving is already an achievement. Adding a second one changes the job. You stop being the person who runs a gym and become the person who builds the people who run gyms.

Economists have a name for the limit you hit. Edith Penrose argued in 1959 that the rate a firm can grow is capped by the time and capacity of the experienced managers it already has. Later studies have tested the idea:

• Hutzschenreuter and Horstkotte (European Management Journal, 2013) studied 5,848 expansion steps by 91 German firms from 1985 to 2007. They found that the senior management capacity a firm had limited how quickly it could set up new units, and that the top team's shared experience lifted later growth.
• Tan and Mahoney (Managerial and Decision Economics, 2005) found that Japanese firms entering US industries that grew fast in one period tended to grow more slowly in the next, with the effect strongest where know-how was tacit and hard to write down.

These are associations in large firms, not gyms, so treat them as a pattern rather than proof. But a coached gym runs on exactly the tacit, hard-to-write-down kind of know-how those studies describe. That is why the managers matter more than the building.

How Fitness Town grew from three locations to eight

Systems and playbooks

The first lever was writing things down. Fitness Town had playbooks for opening and closing standards, the sales process, hiring and onboarding staff, and weekly financial reporting, including payroll as a percentage of revenue. Leadership watched that payroll number every week.

A playbook is what lets a new location run the same way on a Tuesday night when nobody from head office is in the building. If your standards live in your head, they cannot travel to a second site.

Developing managers from within

The second lever was people. We promoted from within, ran formal manager training, held weekly one-on-ones, and gave each manager a scorecard they owned. Owning the scorecard is the important part. A manager who reports numbers somebody else chose is a supervisor. A manager who owns the numbers runs the location.

Site selection

The third lever was choosing where to open. If I were choosing a second site for an independent gym today, I would check how far the new site is from the first (close enough that members and coaches can float between them, far enough not to cannibalise), what the lease costs as a share of the revenue a realistic membership could produce, and whether the neighbourhood has the kind of people already paying for your first location.

A sales engine

The fourth lever was a sales engine that could fill a new location rather than waiting for word of mouth. For a small gym I would want a written sales process, a lead source that does not depend on the owner's personal network, and a conversion rate you already know from the first site before you count on it at the second.

The hardest lesson: growth outran the managers

Our growth outran our managers. Locations opened before their leaders were ready.

That is the pattern the Penrose research describes. A new site does not just need a manager. It needs a manager who has already absorbed the standards, the sales process and the numbers, and that takes time no lease timeline cares about. When the person in charge is still learning, someone senior covers the difference, and that person is usually the owner.

The warning sign is easy to spot in hindsight: a site opening date set by the landlord or the build-out, not by the readiness of the person who will run it.

What I would do differently: protect my own hours

I would protect my own hours. As COO during the growth years I worked 60 to 70 hours most weeks. Long hours can feel like commitment from the inside. They are also a symptom: every hour an owner or executive spends covering a site is an hour that site's manager is not yet able to cover.

If I were doing it again, I would set a hard ceiling on my own week and treat any breach as a signal that a leader was not ready, rather than something to push through. I have written more on why the extra hours rarely produce what you hope in long working hours and productivity.

Should you open a second location? Grow a leader first

Here is the checklist I would work through before signing anything. The first item matters more than the rest combined.

1. You have a named person who can run a location without you, and they have done it. Test it: take two weeks away and check whether the numbers held.
2. Your playbooks exist in writing: opening and closing, sales, hiring and onboarding, and the weekly numbers report.
3. Your first location pays you. If you cannot say what you take home, read how much gym owners make in Canada first. A second location rarely fixes an owner pay problem at the first.
4. Your coach pay model is set up properly and can be repeated at a second site. See paying coaches in BC for the employment rules.
5. You know your lead-to-member conversion rate and where your leads come from.
6. You have cash to carry the new site through its slow months without starving the first.
7. Your own week has room in it. If you are already at 60 hours, a second site will not find hours you do not have.

Which weekly numbers should you watch?

Payroll as a percentage of revenue comes first. It is the number Fitness Town leadership watched every week, and it tells you fastest when a site is staffed for the business it hopes to have instead of the business it has. Set your ceiling from your own first location's history, then watch the new site against it.

For context on what good looks like, the Health & Fitness Association's 2025 benchmarking report drew on 175 companies running more than 17,000 facilities in 27 countries. Its public summary reports a median EBITDA margin of 23.6%, with two-thirds of clubs EBITDA-positive, and average member retention of 66.4%. The report also covers payroll as a share of revenue, but the summary does not publish that figure, so I will not guess it. These are mostly large operators, so use them as a ceiling to aim at, not a bar a small gym must clear.

Owner pay is the other reality check. Two-Brain Business data from about 7,000 gyms on Wodify and Kilo, reported in 2025, put above-average group-class owners at US$6,500 or more a month in owner benefit and below-average owners at US$2,799 or less.

Readiness scorecard: are you ready for a second gym?

Score yourself honestly on each line: 2 if you meet the "ready" description, 1 if you are close, 0 if you are in the "not yet" column.

A score of 14 to 16 says you are ready to look seriously. 9 to 13 means fix the gaps first. 8 or under means the second location would be built on the owner's hours, which is the trap I described above.

The first 90 days of a new site

If you do go ahead, this is how I would run the first three months.

Days 1 to 30: install the system

Run the playbooks exactly as written, even where they feel clumsy. The new manager holds a weekly one-on-one with you and owns their scorecard from week one. Collect the payroll-to-revenue number weekly, knowing it will look bad early.

Days 31 to 60: hand over decisions

Move day-to-day decisions to the site manager and stop answering questions they can answer. Review leads and conversion weekly. Any time you step in, write down why. That list becomes your training plan.

Days 61 to 90: test the leader

Take a week away from the new site. Compare the numbers before and after. Then decide whether the manager is ready, needs more training, or needs more support, before you even think about a third location.

When to bring in outside eyes

The hardest part of expansion is seeing your own business clearly while you are running it. If you want help reading your numbers, my gym numbers consulting page explains how I work, and hiring a fitness business consultant covers what to look for in anyone you hire.

If you are weighing a second location and want a second opinion on whether your numbers and your leaders are ready, book a free 20-minute gym numbers teardown and we will go through the scorecard together.