Non Compete, Liability Forms, and Trademarks
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In fact, welcome to Trulyfit, the online fitness marketplace connecting pros and clients through unique fitness business software.
Meet Cory Sterling: Fitness Business Lawyer
Steve Washuta: Interestingly, what should you actually be concerned with when looking at a non-compete clause? Should every health and fitness business work with a lawyer proactively? That includes a single-person operation and a massive studio alike. What’s the difference between copyright and trademark? And are you setting yourself up for a huge financial disaster if you don’t secure one? We discuss all this and more in this episode. Welcome to the Trulyfit podcast, where we interview experts in fitness and health to expand our wisdom. I’m your host, Steve Washuta, co-founder of Trulyfit and author of Fitness Business 101. On today’s episode I have on Cory Sterling, a lawyer who works specifically with health and fitness businesses. His company is Conscious Counsel, which you can find at consciouscounsel.ca. I’ll provide the links in the podcast description.
Notably, cory covers everything from liability forms to what you should think about when selling your fitness business. It was a great conversation, so here’s Cory. Cory, thank you so much for joining the Trulyfit podcast. I wanted to give my listeners some background on who you are. I also wanted to explain what you do day to day in fitness and health law.
Cory Sterling: As it turns out, steve, thank you so much for having me. The name of the podcast is inspiring, because I try to be truly fit myself. On a day-to-day basis, I’m a lawyer for fitness and health professionals. That includes gym owners, personal trainers, health coaches, and anyone who works in health and wellness. I advise them legally, help them draft agreements, and make sure they’re protected. And if a problem comes up, I’m there to help resolve it.
Why Cory Sterling Focuses on Fitness and Health Law
Steve Washuta: To that point, what got you into that niche specifically? Is it because you’re a fitness buff, because you saw a hole in the market, or a combination of both?
Cory Sterling: Overall, i got started at a big law firm, and honestly, I loved my job. Though the first client I ever had was a tobacco company. I had a background in sports, working for the Oakland Raiders and NFL Media Services for a couple of years. I just love sports, it’s who I am. At the same time, I was working at that big firm helping defend tobacco companies. I was also a personal trainer, a group fitness and cycling instructor, and I was becoming a yoga teacher. I realized there was such a gap in the industry. So many new professionals were starting businesses, and none of them knew anything about the law. I thought, I’m super motivated to work with these people. I feel like I’m part of the community myself, and there’s a real need for it. My approach is relatable.
For context, i understand what they’re going through, I understand the legal issues, and I feel well equipped to advise them. Even from the moment you and I got to know each other, I’ve felt a connection. Everyone I’ve worked with in health and fitness feels the same way. We’re all part of a bigger community.
Why Every Fitness Business Should Work With a Lawyer Proactively
Steve Washuta: So those are some of the reasons. Why do you think every business should reach out to a lawyer proactively instead of reactively? That goes for a single-person LLC and a bigger operation alike, once there’s already a problem.
Cory Sterling: That said, one of my mentors in law taught me an adage I’ve always shared with clients. He worked with small business owners. He told me to look at the law as a “pay me now or pay me later” proposition. If you run a business involving physical activity, or health and lifestyle advice, a legal issue will come up eventually. That’s just the lifecycle of the business. If you invest upfront and you’re proactive about protective documents, that’s the “pay me now.” You accept it’s a cost of doing business to be legally protected and in the right place. The “pay me later” approach is borrowing your cousin’s documents, or downloading a template, and coasting for a while. But if something happens and you need those documents, you end up paying three to ten times the original investment.
Steve Washuta: Yeah, I might even add, it’s probably “pay me less now or pay me more later.” Whatever problems you’re dealing with will cost more down the road if you don’t get ahead of them.
The Real Cost of Skipping Legal Protection
Cory Sterling: Meanwhile, always. And what breaks my heart is how easily avoidable so many of the issues I resolve for clients are. It’s not rocket science, it’s law. Gym owner, personal trainer, health coach, it doesn’t matter. There’s a handful of legal boxes you need to check. Get those in place. And if a problem does come up, hand it to your lawyer instead of trying to cut corners. In the long run, cutting corners becomes very expensive. It can even threaten the continuance of the business.
Steve Washuta: In particular, without naming names, can you walk us through any legal nightmares you’ve had to deal with? Whether it involved a person or a business entity?
Cory Sterling: Ultimately, definitely. Clients getting injured, equipment breaking, people suffering significant damages, sometimes more than six figures. A lot of employee and contractor issues too. That includes misclassifying the people who work for you, or audits by the IRS as a result of that misclassification. There are also nightmares involving members of a studio who harass or create problems for other members. That’s especially true when you don’t have legal agreements outlining what behavior is and isn’t acceptable. The golden rule is you want to be in control of your relationships as a health and wellness professional. That’s what I do. I empower my clients to be in control of their relationships. That means protecting their assets, communicating expectations with their team, and properly classifying their workers. You just want to be in control. That’s the name of the game.
Liability Waivers: The Bare Minimum Legal Protection
Steve Washuta: In fact, what’s the bare minimum someone should do? Say they’ve just started their business, and plan to reach out to you in six months or a year. Once they have more capital. As a personal trainer or yoga instructor, what’s the bare minimum? Like having a client sign a form so they’re not liable for injuries.
Cory Sterling: If there’s only one document you’re taking, it’s the waiver of liability. It has to be specific to what you do, how you do it, and where. It also needs to name your equipment. Fitness and wellness professionals need to understand that at law there’s something called a “duty of care.” If I’m facilitating services or activities for you, I have a responsibility to keep you from suffering damages. If you do suffer damages, I’m going to be responsible, because I’m the one facilitating those activities. A waiver of liability negates that responsibility. It spells out exactly what we do and how, whether that’s online, pre-recorded, or in person. The equipment involved and what can go wrong are named too. It lists the injuries you could suffer. And it states you agree to participate voluntarily, that you won’t hold me responsible, and that you’ve gotten medical clearance.
Once you sign and agree to that, we can start working together.
Non-Compete Clauses for Personal Trainers, Explained
Steve Washuta: Interestingly, let’s talk about non-compete clauses. From my perspective helping personal trainers grow their businesses, the issues I see aren’t usually between trainers and clients. They’re between trainers and the big-box gyms they work for, over their contracts. My wife dealt with this herself. How much do non-compete clauses actually stand up? How can a personal trainer get out of one? What’s the real strength behind them?
Cory Sterling: Notably, the first part of the answer is that it’s jurisdiction-based. Whether a non-compete applies depends on the state, or venue, where the agreement was drafted. As a general rule, if you’re an independent contractor, it’s very unlikely a non-compete will apply. If you’re an employee, there’s a higher chance, though some states have outright eliminated non-competes altogether. The way you always want to look at a non-compete is through a lens of reasonableness. How restrictive are the activities it covers? What geography is it trying to restrict, and for how long? How specific is the activity it’s trying to restrict? Nine times out of ten, a client pays me to review a non-compete from a gym or studio. I find the provision doesn’t apply. That’s obviously subject to the specifics of what’s drafted.
Real-World Example: When a Non-Compete Doesn’t Hold Up
Steve Washuta: As it turns out, that’s interesting. I always figured you can’t really be competition if you’re doing something different. Say I work at a yoga studio and sign a non-compete. I also do private personal training elsewhere, or in my own house. Those are two different services. If the yoga studio doesn’t offer personal training, would I be able to circumvent that non-compete?
Cory Sterling: To that point, it’s not even about circumventing it. Like I mentioned, one of the key variables is how restrictive the provision is. Say a studio has me sign a non-compete saying I can’t teach yoga anywhere else. That’s unreasonable. Yoga teaching is my profession, and they can’t restrict me from doing anything else. Even a provision restricting just the teaching of yoga would be difficult for a studio to enforce. A non-compete restricts someone’s ability to earn a living in their own profession. It depends on how narrowly the provision is drafted, plus other variables. How much were you working there, and how much were you earning?
Cory Sterling: For example, I had a client, a personal trainer in Washington State, earning around $45,000 a year. They wanted to leave their club job and start their own business. Their employment agreement had a non-compete provision. But Washington State law says, don’t quote me on the exact figure, below roughly $105,000 a non-compete just can’t apply. So there are a lot of variables based on jurisdiction. But here’s an example. Say I’m a yoga teacher earning $25 an hour for four hours a week. If they try to tell me I can’t teach yoga privately to my clients, that would be hard to enforce.
Non-Solicitation vs. Non-Compete Agreements
Steve Washuta: Overall, what about taking clients away? Is that considered part of a non-compete, or is that a totally different legal term? If I tried to, for lack of a better term, steal a client from a facility?
Cory Sterling: For context, the term for that is “non-solicitation.” As long as you’re working for a particular company or studio, you’re generally not allowed to actively solicit their clients. Legally there’s language about soliciting “actively or inactively.” I’m not sure how one inactively solicits, but I won’t get too deep into the legalese. Basically, what you’re not allowed to do is use your platform in that context to promote your own services. You can’t say, “I do private spinning classes at my home studio, here’s my number,” and collect contacts from clients. What’s really changed the industry is social media, especially since COVID. Every personal trainer has essentially become their own gym. You follow your favorite instructor on Instagram and can message them directly.
Where the Line Between Solicitation and Normal Marketing Falls
Cory Sterling: That said, say I’m teaching at a gym and post a video of myself doing bicep curls. Someone comments that they’d love to work with me. Me responding isn’t soliciting business from them. The classic non-solicitation example from law school is making a public announcement to everyone, like “come work with me personally.” Or going into the gym’s email system and messaging all the members directly about your own private classes. It’s a difficult question, because ultimately the client decides. Gyms don’t own their clients. But it’s a balance: your relationship with the gym or studio owner, what’s acceptable, and what you feel comfortable with.
Steve Washuta: Meanwhile, do you think a gym might come after somebody financially for that? Say I’m on my way out, and I go into the computer system and email 50 people. Would the gym come after me financially?
Cory Sterling: In particular, it depends on the mindset of the gym. But say you had an explicit non-solicitation agreement in your employment or contractor agreement. They’d have a strong case against you. That’s especially true if they could demonstrate they suffered damages and wanted to enforce their rights.
Patents, Copyright, and Trademark: What’s the Difference?
Steve Washuta: Ultimately, let’s talk about intellectual property. I’m pretty naive on this, so feel free to keep it high level before getting into specifics. What’s the difference between a patent, a copyright, and a trademark, and how do you differentiate them?
Cory Sterling: In fact, i don’t do any work with patents myself. But in fitness, patents are most relevant for creating a new tool or invention, a new design for something. I’ve never done patent work. The biggest issue I see health and wellness professionals dealing with is the difference between copyright and trademark. Copyright protects an artistic work, usually audio, video, or written words. Say I create a training manual or a training program. I’d register it with the U.S. Copyright Office and receive a certificate for it. If anyone copies it after that, it’s copyright infringement, and I have a copyright certification number to prove it.
How Trademark Registration Protects Your Brand
Cory Sterling: Interestingly, copyright relates specifically to artistic works: audio, video, and written words. Trademark, on the other hand, protects a word, a series of words, or a logo. That could be a trade name, a slogan, or a word associated with your goods and services. Registering a trademark gives you exclusive use of that word, phrase, or logo across the United States, or the world. With that exclusive use comes enforceable rights. If anyone else uses it, you can send a cease-and-desist letter, or launch a lawsuit if they don’t stop. Registering also prevents someone else from registering it out from under you, and then enforcing those rights against you.
The Bikram Yoga Case: A Copyright and Trademark Lesson
Steve Washuta: Notably, let’s go through a more tangible example, something like Bikram yoga. Are the movement patterns copyrighted, or is the name, or a combination of both?
Cory Sterling: As it turns out, there was a New York court case where Bikram tried to enforce copyright over his sequence of poses. He originally succeeded. But a yoga studio in New York appealed and challenged it. The courts found that the sequence had been in the public domain for long enough. Yoga’s been around for 2,000-plus years, after all, so he couldn’t claim exclusive use of it as an artistic work. That’s not really the norm for these kinds of legal issues. But it’s a landmark case on what’s public domain versus not, as it relates to a name like “Bikram yoga.” At law, you can’t trademark a common name outright. Remember, trademark gives you exclusive use. If the USPTO allowed a trademark for a common name, anyone else with it would be barred from using it. That’s prohibitive.
Trademark Priority and the Risk of a Cease-and-Desist Letter
Cory Sterling: To that point, from my experience with trademarks, the most challenging situations I’ve seen are successful businesses that never registered one. They’re building, growing, expanding to multiple locations. Then out of nowhere, they get a cease-and-desist letter from someone who registered the trademark first. Here’s how rights work for trade names, business names, slogans, or logos. As long as neither party has registered, whoever’s been using it longer has better priority. But the moment one party registers a trademark, they automatically move ahead, even of someone who’s been using it longer. The onus then falls on the unregistered party. They’d immediately have to file a trademark and challenge the registration, proving they’ve used it longer. That’s a costly, lengthy process.
Cory Sterling: Overall, i’ve had clients running seven-figure businesses who never registered a trademark. They meant to, but never did. I hear the same thing every time: they get a cease-and-desist, and sometimes it’s too late. The registration has already gone through. Another party has received a trademark certificate for that mark, and their legal position is zero. They have to rebrand everything.
Steve Washuta: Yeah, I can only imagine what that would entail. Are trademarks international, or are they just registered by country or state? How exactly does that work?
Are Trademarks International? The Madrid Protocol Explained
Cory Sterling: For context, there are treaties. I believe it’s called the Madrid Protocol of 1919, though don’t quote me on that. Basically, it works across the jurisdictions in that treaty, like the EU, Australia, Canada, and the United States. When you register in one jurisdiction, you get a grace period of around six months to register in the others. Say on January 1st I register with the USPTO. I’d have until July 1st to register in Canada and still keep that priority. Priority is all about the timing of filing. But say that time elapses and I never register in Canada. If someone else registers there on July 2nd, they’d have better priority than me. The trademark system is really all about the government rewarding proactivity, and that includes across international borders.
When Should You Register a Trademark?
Steve Washuta: So from a recommendation standpoint, hypothetically, say I’m starting a studio called Yoga Flex. I have a particular look and brand, and I hire someone for advertising who builds me a colored panel. I file the LLC, and I have a website at yogaflex.com. Would I be missing out by not also trademarking that?
Cory Sterling: That said, you’d want to trademark it once you’re making investments like that. Once you know you’re building your business around this name, that’s the time. Just a technical note, since I’m a lawyer and a nerd about this: there are two types of applications. One is a “current use” filing, and one is an “intent to use” filing. If all you’ve done is build a website and haven’t started offering services yet, you’d file an intent-to-use application. That’s a longer, slightly more expensive process. What I’d recommend is registering the trademark the day you actually start using the mark.
Why You Need an Industry-Specific Fitness Lawyer
Steve Washuta: Meanwhile, we’ve sort of covered this already, but give me a quick elevator pitch. Say I’m a personal trainer with my own private gym, an LLC, insurance, and forms I already have clients sign. But I haven’t met a lawyer. Why should I meet with one?
Cory Sterling: In particular, your documents need to be specific to your business. Think of it like a seatbelt that’s not properly installed. That’s what using documents not drafted by an industry-specific lawyer is like. You might feel a false sense of comfort because it’s an agreement. The person who gave it to you was your coach, and they seemed professional. But in my experience, when an issue comes up, it always comes down to the specificity of the documents. Say you have a garage gym, and your waiver doesn’t mention the garage itself. Something happens with the garage door.
How Vague Waivers Fail in Court
Cory Sterling: Ultimately, a general waiver might cover the exercises you’re doing. But if it doesn’t list all your equipment, which is critical, there’s a gap. Say someone walks by, hits their head on it, and gets a concussion. Now they can’t work or look at screens. There’s nothing in your specific list of risks that covers it. So even if your document covered weight training generally, without that specific risk listed, it won’t hold up. This happens every single time. The opposing lawyer responds and says the waiver of liability didn’t mention that piece of equipment. How could their client have signed away their rights on something that was never even listed?
Cory Sterling: Then it becomes a game of legal position. What I want for all of my clients is a premium, ironclad legal position, unquestionable and unequivocal. If you come after us, we can counterclaim plus legal fees plus everything. Because the document is so solid, we can rely on it. That’s really how you make a lot of these problems go away.
Legal Considerations When Selling a Fitness Business
Steve Washuta: In fact, that’s great information. Can you speak to anything concerning the sale of a fitness business? Are there moves you should make early on, or near the end, to make sure everything’s tied up legally?
Cory Sterling: Interestingly, the biggest issue, and another reason to register a trademark, is goodwill. It’s an asset. I’ve seen deals where the sale price dropped by up to 30% because the business didn’t have a registered trademark. What people are usually buying, whether it’s a share sale or an asset sale, is the goodwill of the business. That’s the name, the logo, the reputation, and the client base. That’s the bread and butter of the sale, not the equipment. So looking at a trademark as an investment for the future means that when you sell, its value pays off.
Due Diligence Before You Buy a Fitness Business
Cory Sterling: Notably, other things to check if you’re buying: make sure you’re not inheriting debt, lawsuits, or tax filing issues. I’ve seen those come up on the seller’s side. If you’re a buyer, you want everything in order. That means employee agreements, independent contractor agreements, trademarks, and everything with the government and taxes paid. Some issues I’ve dealt with, acting for the seller or buyer, involve instructors with no employee agreement and no handbook. That raises a question. Are you buying a business with problems and backlash from the team waiting on the other side? And who do you have to keep, and for how long? It’s best practice, whether you’re running the business or preparing for a sale. Have a document that communicates expectations for all your relationships.
Steve Washuta: As it turns out, this has been fantastic information. Can you give my audience some insight into where they can find more about you, your company, and your services?
Connect With Cory Sterling of Conscious Counsel
Cory Sterling: To that point, yes, you can reach out to us. Our website is Conscious Counsel, so just search consciouscounsel.ca. Our social media handles are @consciouscounsel. I’ll make sure we send over links to our services so you can include them in the show notes. Thank you for the opportunity to share some of this information.
Steve Washuta: Overall, my guest today has been Cory Sterling of Conscious Counsel. Thank you for joining us.
Cory Sterling: For context, thanks, Steve.
Steve Washuta: That said, thanks for joining us on the Trulyfit podcast. Please subscribe, rate, and review on your listening platform. Feel free to email us, we’d love to hear from you.
Meanwhile, Social@Trulyfit.app
In particular, thanks again!
If you want to see more about the business side of fitness, check out: Fitness & Finance: Pat Darby.
