Working as a Fitness Professional (FP) can be a rewarding career in helping others achieve their health and fitness goals, but the responsibilities also carry a number of substantial and potential legal and business risks, so it is always a good idea to check that you, and your business, are as well protected as you can be.
Am I at Risk as a Sole Trader?
It is not uncommon for FPs to operate their business as a sole trader as this structure has a number of advantages, being relatively cheap to establish, offering autonomy in decision making and it is easy to administer which makes it an attractive option for FPs.
However, a sole trader business structure also carries with it the obligation of unlimited personal liability and it also lacks of some of the benefits of other corporate structures in circumstances where your business or sources of income grow.
Corporate or company structures can otherwise provide an opportunity to limit some legal liabilities and by not having the benefit of limited liability a sole trader is personally responsible, without a limit, for the debts of the business and any claims made against the business. This means that all of your personal assets, including any assets jointly-owned with another person, such as a house, may be at risk should a claim be made against you.
Lawsuits and Personal Liability Exposure (Sole Trader)
Unfortunately, there is a range of business and legal risks which FPs must navigate.
In one example which occurred in 2017, a personal trainer, and the franchise gym where he worked, made news headlines when the gym was sued for $200,000 by a client who had to spend a week in hospital after being injured during his first training session, despite complaining about feeling unwell during his PT session.
To make matters worse, the gym claimed that the uninsured personal trainer was not its employee, and therefore the trainer could be personally liable for any damage.
This example and other similar cases, illustrate how important it is to take precautions to protect yourself, and to be proactive about it, as good intentions will not be enough.
You can take some Simple steps to help lower your risk
- Prevention: Assess and be aware of the legal risks, know your legal responsibilities, and the legal standard to which you are required to perform including professional standards and guidelines. Overall, know your client and manage the legal risk having regard to the client profile.
- Use a simple written contract containing terms and conditions which clearly describe your services, responsibilities and the limits. Do not rely on unstructured or verbal assurances to determine your obligations.
- Ensure that all agreements or arrangements you have with others (partners, employees and contractors, franchisees) are properly documented; and before signing anything, make sure that written documents accurately represent any verbal agreement reached.
- Keep accurate records of all correspondence, documentation and agreements.
- Be vigilant with your clients on an ongoing basis – keep monitoring and ensure you stay informed.
- Be adequately covered for your business and personal risk by taking out the appropriate insurances, such as professional indemnity and public liability insurance.
- When in doubt, seek legal assistance and advice. Just like people seek your help with their health and fitness needs and goals, referring to skilled professionals is always advised.
Fitness industry professionals have a duty of care to their clients and must follow professional standards and guidelines. Meridian Lawyers can help you to manage the risks, understand the regulations that may apply to your fitness business and when considering your business structure and contracts underpinning the operation of your business.
Meridian Lawyers’ corporate and commercial legal team has dedicated involvement and experience in the health and fitness industry and regularly advises gym businesses and fitness professionals on, a range of matters such as:
- professional negligence and public liability claims
- complaints and demands for compensation
- business restructures and advice on business and asset protection
- regulatory issues relevant to fitness professionals and businesses
- franchise and employment agreements and other contractual matters
Should you require advice about the many ways to better protect your business, including drafting agreements or restructuring, please contact our Corporate Advisory and Commercial Principal Michael Bracken or Special Counsel Georgina Odell.
This article, written by Michael Bracken (Principal) and Greg Bawden (Solicitor), was published in Commercial insights – November 2017 and was published in What’s New in Fitness – Summer 2017 on pp 16-17 and on the What’s New in Fitness website.