Good afternoon, everybody. Welcome to a special edition of the Spin. Some news just came out from CrossFit to the affiliates. Have you guys gotten the e-mail yet? We have I just. Skimmed through it very quickly. Yeah. So that for those who may not know, CrossFit sent out an e-mail to the affiliates and let me let me read a little bit of it here for you guys. But thank you for being part of
the affiliate community. Affiliates are and always will be the lifeblood of CrossFit and we have immense gratitude for your continued support. We previously shared our goal of growing to 30 million members by 20-30. To do that, we need to innovate and reinvest in the business to ensure we're attracting more people to CrossFit, driving a greater number of leads into your gyms, and protecting and preserving the brand in multiple ways.
Despite inflation in higher costs, which have risen by an average of 74%, CrossFit has not raised prices for 11 years. In order to sustain a healthy business and invest in resources to achieve our goals, we need to increase our affiliation fee. So before I get into it, if you guys aren't aware, we have CrossFit Bolts owners Matt Mccraney and Rebecca Fusilier and we have Jamie Free who is a co-owner of CrossFit Trivium here in Nashville. Initial reaction.
I guess first, have you guys, do you guys have any insider rumors going around about possibly a affiliate fee going being increased? Start with you, Matt. No, other than kind of I got word. I think I first saw it from Seth from Jump Ship when he posted the thing about the the survey they said that that he received and I dug back to my e-mail, kind of looked through that and kind of went through it too, just to see what it was about.
And that was the first thing where I saw that there was some idea or thought behind this. Yeah, Jamie, what about you? I actually, I hadn't, I hadn't heard from about it at all. So you know, the fact that it comes out in an e-mail and not some sort of like town hall that they put together to actually address some of this, that's it's a little frustrating.
Yeah. And Jamie you said you would you're you're obviously driving, so you haven't been able to read it. Another aspect of this is in addition to that piece, as gym owners renew their their affiliation fee in 2024, two things happen. You get a A1 time $500 credit to apply to AL1 or L2 for you or somebody in your gym and all existing and new CrossFit affiliate owners have 12 months following their renewal to get sort of get their L2 certification.
So I guess I'll start with with Matt and and Rebecca does does the 4500, you know the increase from 3000 to $4500, is that concerning to you? How do you feel just, yeah, gut reaction about the increase. Yeah, we're actually go that we'll actually go from 2000 to 4500 older affiliate. So yeah, that's a, it's a significant increase, right. It's more than 74% the number that they quoted of inflation.
So it's significant for us in some ways and just that you know it's $2500 and you know there's a lot of things in here like they mentioned cap and I know a lot of people like cap and it's a great resource for some, but it's not something we really use And we kind of that's something that sets us apart as our programming and kind of doing things uniquely and taking into account like cool things we have in our area or equipment that we have that makes us maybe not follow that exactly.
And so there's like there's portions of offered with that and is it something that we find valuable and that's the that's the real question is obviously love CrossFit been doing it a long time we're about to be thirteen years and so you know always want to fly that banner but also we're we're we want to be seeing the value and what what we're getting from it as well. So I don't know, do you have any I I kind of, I don't dislike the level two thing.
Like I do feel like if you're engaged in coaching and now I understand there's different roles that people have as far as being business owner and coach and all that stuff. But I don't like if you're about CrossFit. I don't have an issue with that being a requirement for an owner. So what about you, Jamie? Yeah, I mean I don't I I I agree I I don't have any issue with the L2 being a requirement. I believe both me and my my co-owner are both L2's anyway, so it doesn't really affect us.
We're a long, long standing affiliate as well so. But we were. We're a little bit younger than you guys. So we paid 3000 and now so bumping it up 1500, The first thought in my head is like anytime we raise rates, how are we providing value, you know, and same thing with the cap, we don't, we don't use that. It's it's not something that we have a relationship with. We do have a relationship with our programmer and that's who we
use. So, and I think this is this business is all about relationships. So, and I don't believe that CrossFit has actually spent any time trying to build relationships. They just make these changes and then it's like, all right, should we still be an affiliate? You know, where is the, is there a draw there? Because they're not helping us with SEO, they're not helping us with any of that. There, it's that's all on us. Yeah. When, when did you guys affiliate?
It's been you're close to 10 years, right? So we were Brentwood Hills prior. So we had to, I think we're on like 10 or 12 years, but we had to re we changed the name. So we ended up having to pay a little bit more when we we did that. Got it. One of the things they do talk about is the ability to pay over 12 months rather than a one time sum. Is that something that you guys would find valuable or is that just doesn't really matter? I mean, I think it makes a difference.
Doesn't make. Yeah, it doesn't make a huge difference. Yeah, I mean I'm, I'm assuming it will for some like the the struggling affiliates that want to hold on to it. I'm assuming it will. But for us and I'm assuming you guys, well it's just all right, it's just deferring cost that we have to do anyway. Yeah. Yeah, the one of the things I did, I was able to speak with Dawn Fall last night before this
came out. He did mention that as of in 2022 they were actually crossword was actually break even financially and that was one of the reasons why they are looking to do this is to basically become financially more stable and you know make sure that they can actually be there to support the affiliates. Does that change your opinion of of this increase or you know or with that, with an increase, what do you need to see to to justify it on your end?
Go ahead, Matt. Well, I think, yeah, there's a couple of parts to that is just that I don't think that they're they're like like was mentioned earlier is like if we we want to feel like partners, right. And if they kind of went about some of this in a little bit different way as far as like getting gyms on board or having us feel like we're a part of the process, it would, it would make it a lot easier to kind of like
build that trust. So we kind of, oh, there may be some things coming in and I understand this business is hard like affiliates understand that like we live it every day like you have to make tough decisions. But just feeling like a partner would be helpful.
Like I mentioned that before when it came out like the game season and quarter finals changes and how that's going to affect affiliates is like if they came to US affiliates and said, hey, we need to increase revenue and this is how we're going to do it. And you might get a little bonus or get something for getting your people hyped and excited to do it instead of us finding out at the same time as everyone else. That would help build some
trust. And I would invest time in that to help the company if I felt that that was if I felt like I was a partner. And so I think there's just maybe some communication things that would definitely go a long way to help us feel comfortable, a little bit more comfortable versus getting a message from from Brian, which is awesome. Glad you you threw us on here like something's coming and we're like, oh, this is my livelihood. I guess we'll see what happens. Like that's got crazy.
Well, it's kind of goes back to like what's laughable about it is like your your first impression is literally like, OK, you owe us 225, $100 now and there was no reason, no explanation before that. And now it's just like it's going to take a lot of hard explaining and a lot of good, a lot of good explaining to kind of like get us to be like, OK, this sounds, this sounds something we're going to like something we're going to use. Not just like all these all
these. They're kind of I feel like they're trying to like make it look all sparkly and everything. Like we're going to give you these these things. But the the reality is it's like we had these things already at our hands for what we were paying for and then like we're not really using it a whole ton right now.
So it's like now you're going to have to like really like spruce something up for us and like and and I know like just us over here we're die hard cross fitters like we we've been through the ups and downs and never wanted to let go of it. But now it's just like you get an e-mail titled. You're. Being charged this much more, hand it over. So I don't. Know. Yeah. Seth Page and thanks for joining on A little late with that Hawaii time, but appreciate you jumping on.
So. Have you had a chance to check out the e-mail? My wife just texted me about it, and between her and I, we have basically 5 gyms that are going to be affected directly by this. So we are, you know we've we've actually talked about the possibility of this happening based on you know the previous post we'd made about the possible affiliation changes or you know whatever franchise and we talked about you know, how much it actually cost compared
to other expenses. And while this is definitely something that a lot of gyms that aren't doing well currently are not going to appreciate, and I don't think they're necessarily giving CrossFit themselves giving much value with what they're offering compared to what they give at the same time, You know, I think there's much bigger problems like people not being able to pay rent anymore and lease is
doubling and things like that. So this is just another one of those costs that are going to make. You have to be more professional or be less of a hobbyist as far as your gym goes. Definitely not something I want to just give extra money to. But yeah, I don't know what to think quite yet. Still trying to absorb it. Yeah, you were the one that kind of brought the survey out to the forefront, which then Hiller picked up and has been discussed
about in the community a lot. I did ask Don last night about that and his response was that they did use that survey as getting a gauge for what the affiliates wanted as in from terms of added value and I think to some degree what what price they could kind of go with and that people would be comfortable with. It's this has been in the works it sounds like for about six months or so, but they were able to pull the trigger after that survey came out.
One of the questions I have kind of go around the horn, start with you Jamie. Membership rates, you know, assuming you guys do stay on and do renew, I mean is, is that something you're going to have to pass on to to to your members? You know, I mean, so the inflation that we're already had to deal with, we already upped our memberships. So doing that again, I feel like that's a disservice to our members.
So I think we'll probably have to get creative and make up that money with, you know, different programs and things of that nature. But you know, passing it, passing this on to our members is going to be a difficult sell because there's no added value. Like if we're not getting anything extra, we're not able to give anything extra, then how are we going to justify that? Matt. Becca. Yeah, I mean obviously it's only been a only been a few minutes, but I mean is this something
that you may have to consider? Well, I think that raising our rates is something we've considered kind of leading up into the this new year already just because like it like mentioned before releases everything's gotten more expensive and we we have done some things to you know kind of how to put together a plan of like adding value to do that.
And so I wouldn't, I wouldn't say that that this would be something, this would be something that would maybe nudge us a little bit quicker to like enact those things or to make that change. But it wouldn't be solely based on this, but it would be kind of the, the continuing snowball of of making that decision or those expenses adding up or that we might make that. Decision. So, yeah, Seth, any any initial thoughts of that?
I mean, does it, does it matter between I think you're at well you're in Hawaii and at least in Arizona? Yep. Yeah, between a couple islands in Hawaii and Arizona. But no, I mean when you're looking at a business, it's the overall, you know the the overhead total, right. So this definitely adds to our overhead in in different ways in each businesses. Some will affect more than others.
If we make a membership rate increase, like it's not based on one thing changing like just, you know, a rent. Most people get rent increases every year, right? And they're not necessarily increasing their membership every year. You, you look at where this, you know, you find your tipping point in your business and then make a decision whether it makes more sense. And then one of the things we try to do knowing that there's always pushback and rent increases.
No one likes that whether it's your Netflix subscription or your gym membership. It's like we have to provide like 1 type of value add to like. So from one of our locations we added 24/7 open gym and then we didn't even increase the membership, we just made that an
add on for one of them. So that kind of those sort of tactics like offset and maybe brought in a little extra revenue, things like that instead of just doing like a flat increase which you know you probably do have to do every handful of years, but every gym will be treated different as all you guys gyms I'm sure are different with that too. Yeah. And you know what I was told was that the churn rate is basically at an all time low. It was around 12% in 2022, now it's about 6%.
Don does expect that to to increase most likely from gyms that are probably already struggling a bit. And the ones that do want to invest, you know he he, I think his hope is that it it does the cream rises to the top. You're going to have the best gyms out there. Jamie do you think I mean do you agree with that like if maybe if some gyms that are struggling that are kind of just hanging on that aren't putting enough effort and work in it.
If they, you know potentially could be hurting the brand if they drop off. And what's left are those that really support CrossFit the the methodology and are good stewards of the brand. Is is a good thing or is more gym, it's always better? I I think for me, I think that there's always been bad affiliates. So there's always been those people that don't do enough to coach better or to provide that value. But like, do I think it's better that they're not.
I mean, it's kind of contradictory if you think about it because they're trying to get more affiliates, but then this is going to shave off X amount of affiliates, X percent affiliates that just can't pay it. So it's like one of those things where it's like kind of a catch 22 for them, but you could have gyms similar to mine that you know start to purchase other gyms and I think there's opportunity there to to really. Grow your. Business in this, in this, in this increase.
Yeah, Matt, Rebecca, any thoughts on you know maybe some of the gyms that can't hang on they they close or DE affiliate? I feel. Brand in general. Yeah, I mean in our area I feel like that already happened quite a bit post COVID significantly. And I think it's kind of it could be a double edged sword. You know just because depending on you know is this something that's going to be an increase over time or as we add we get these add-ons.
Is that going to be like an add on to the things that they're promising something you pay more for and the really successful gems that can pay for this might not be really concerned or be looking into all those add-ons that they're that they might be
offering. So at some point too it's it's those the the more successful affiliates over time may feel a little bit like hey I'm paying this but I'm not really using any of it. My business is already set and running how I want and so I think it it's I can see both sides of it and kind of how they they go about communicating that and what those benefits or add add-ons are and how they how they play out and they could could go either way.
Yeah, I could definitely see, like, I mean, big believer in like quality, not quantity. And of course like we want like more great gyms out there and everything. But if there's had been too much in the past few years, there's been a lot of damage and not enough healing to like really be promoting like this increase in like we're just just talking to you guys. We're like we got two affiliates right here that for sure don't use like the cap programming and
like at all. Like, I mean, we'll let you glance at it every now and then and take some notes a little bit from it, but not like really implemented in the gym And then now like we're not like there's two successful gyms that are not using that. You can't just be promoting that and you're going to pay more for this even though you don't use it. So there's just there wasn't enough healing to really take the blow of the price increase like. Yeah, Seth is is less, more in
this case. Well, I just think that, you know, CrossFit as a company has let business owners develop their business for the last 20 years, right. They have not had a blueprint for a business. They've had a blueprint for how they think you should coach your classes, which I don't think even most people use that.
And so now there are probably a lot of third party companies within the CrossFit space that have better systems, think Crossfit's going to be able to offer you for whatever they want to charge for IT. So people probably aren't going to use them anyway. And on top of that, the more they start to try to integrate their systems into your business, the more you start to lead down to that franchise
direction, right? Because now they're controlling bits of your business a little different than you would have maybe done it. So I think anyone who's established at this point has survived all the things you guys have talked about. We're pretty confident in how we run our business businesses. Can we all be better? Yeah, for sure. Is CrossFit HQ, the new CrossFit HQ going to be the people that are going to lead my small
business that? You know, out of all the gyms I've had over 15 years in the next direction, no they're not. There's going to be other people with other experience in the CrossFit space specifically who'll provide more value, I think, than HQ. So we're just going to be paying essentially rate increase, at least from my perspective, for nothing gained. I'm still only paying because I feel allegiance to the CrossFit name, the methodology, what Greg built. That's why I'm still here.
I don't even really use the CrossFit name a lot in my gyms. It's always jump ship X, whatever it is. And that's how we brand it. Because if CrossFit ever goes really far down a road that I can't tolerate anymore, I can cut that name out and I still have my brand. So I think that's really important. You know, I'm with, I still want to be a part of CrossFit for as long as I can. But, you know, I'm just kind of, I don't know what else to say. It's like it's weird.
Yeah, the do you do you think maybe cap is beneficial for new affiliate owners, You guys have been doing it for so long that you know you have your systems in place, you know what works for you, Is that a good starting point maybe for some of these guys? I mean, I I don't. I I mean I'm I'm old school. I do it the way I do it. You know, I I program for our gym.
I've been doing it for forever. And I think that's one thing that I always thought was cool about CrossFit is that like I understand their business and they're trying to systemize things or bring up the quality. And you know there's there's been that that quality control discussion for a long time and so some people might find it helpful. I mean how they layout class plans and stuff definitely there's there's methods they use that you could find beneficial
in your affiliate. But you know I feel like as a someone who's engaged with our people every day and trying to have our own brand of what we do and and just really program to our clientele and program to what they like or or just our style. You know, and that we attract the people that come for our style is is something unique and definitely don't want to lose that. If there was a, if there was ever a push down that path of like all CrossFit doing the tap programming we'd be out in a
second. So I. Think it's like with regards to like newer, like newer affiliates. So I mean I I think it could put like some some really good training wheels on on some affiliates. But we're kind of in like this unique spot of like what we do and like the limitations that a lot of gyms do have. Like you started in like this teeny tiny space and everything and now eventually grew to this this big space. I think it's like it's it's difficult for like don't have a lot.
When you start, you really don't have a lot. And I mean, I think you learn, you got like a group, like the the community is full of like all these these hustlers that really like when you love it and start like a gym like this, like you figure it out, right, Like by playing around and tinkering with with these little things. And I think if they do start with like something like cap, you'll move away from it really, really quick too. At least I I think you might
move away from it really quick. Yeah, I think this comment here from Matt, right, like they're talking about cutting the week in this and and but the question is some of the best coaches can be the worst business people and vice versa, right? Like it feels like to me, I'm not an affiliate owner but they focus everything on how to best program, right. Like here is how to here's cap programming, here's how to be the the you know the the programmer move well.
But the business side of thing is not always on the forefront. Is that been your experience, Seth start with you? Well, I I think, I mean that's definitely been the case and I think that's sort of how Greg intended it early on, You know, emphasis on methodology and health and things like that and really let the strongest business people and how they ran their community survive. But I'll just say one more thing about cap. The work out of the day the
other day was 5 by 5 push press. There's not that many coaches out there that can run a 5 by 5 push press class and make it worth any amount of money to anybody. I'm just saying that right now, it doesn't matter if you bet. I know L threes that can't run a 5 by 5 push press class. That's I don't care what class lesson you give, like you need to get people moving more than that.
So if that's still where their standard is on programming, that's not going to cut it. That's first and foremost in my strong opinion on that. As far as business owners go, I think that is one of the most beautiful things about being a CrossFit affiliate, at least in earlier years, is I you know, I opened my first one when I was 22. I'm approaching 38. I made so many business mistakes, I didn't even know how to start. I don't even know when LLC was when I wanted to open my first
gym. Like, I have no idea what I'm doing and I got an education on business by making mistakes, by growing, by, by listening to other people with experience like CrossFit, not HQ. But my experience of building a business in a brand while running the gym, you know, led me, shaped me to what I am today. I don't think a business in a box offering if that's kind of what HQ is going to start going towards, is going to Again, I'm not trusting them to know how to run an affiliate business wise.
I'm not trusting hedge funds to understand how to blossom a community and and stuff like that which is part of running your business. And so I don't know I I think I wish they'd double down on their media if they want to take more money from me like put it in the media and advertising and make CrossFit super sexy and get people in my door and let me run my business. Let me run my programming and like that's what I want from them. I don't need anything else. That's that's my opinion.
But again I have 15 years experience. If someone's brand new, I could see someone starting with cap for X amount of time, figuring out which coaches work, but immediately shifting away from that into something that provides, I think, more value. Yeah, that that leads me into a question. I'll comment here from Draw Your dagger. He's on year ten of his affiliate, not 100% of our plans, but I felt that way for a
few years now. I pretty much always talk myself into it each year because I will always use the methodology. I want to leave you with one last question. Start with Matt and Becca. If you were going to talk, you know, speak right to Don right now in the CrossFit HQ team.
With this increase, you know we talk about maybe not getting the value that you would hope like what what should CrossFit focus on with this additional revenue in the coming year to justify the affiliate fee and and and especially the increase? I would like to say something first, because in kind of regards to that question, 'cause you answered it earlier.
I was like over the last few years when we've been going through all of this, the mess of just trying to restructure everything as I was, like, if I had one question I could ask CrossFit HQ, like straight up to them. It's like, how much money do you actually have? And you said that they won't even last broke even in in 2022. So that like answered my question straight up, But then
it's like OK, broke even now. I mean something clearly isn't working and it just I feel like at this point they just like keep trying to like repeat like help like they're just saying like help the affiliates, help the affiliates, help the affiliates. Well you got, you got them right here. And the things that you're adding to create value like Seth said, like we got it, we got that part covered. Like, like, I would like to see. I mean, maybe I'm a little bit biased.
Media media does a lot and you can do a lot of free media right now, a lot of free stuff and start hustling on that side. So pouring into that, like Crossfit's awesome. Like we're we're die hard. Like I said, we're die hards like show it off, like brag about it a little bit, put it in a good light. That's where I want to see it. Yeah. One one of the things that I've been saying, especially recently is nobody from the CrossFit side is from HQ is speaking to the methodology like Greg did,
right? There's nobody that's shouting from the rooftops of this is CrossFit. It's going to save your life, it's going to make you healthier, it's going to improve. You know, your family's live all, I mean all the different things that you, you know, you would talk about. And the only thing we're getting right now is Dave Castro's week in review, which half touches on the games and half touches on his keto and fasting and addressing some questions.
But there's nobody that's I guess on the forefront. I feel like that that, plus the media would definitely go a long way in driving what CrossFit is and getting that excitement back. Yeah, I'll add to that.
I kind of touched on it earlier but just that feeling of being truly partners like obviously there's a bunch of us we can't have they have to make decisions and but like I said getting us involved with when they make changes to the seasons that is going to like quarterfinals that's going to affect the affiliates. Getting us you know us finding out that beforehand and getting us on board and and and I know that's difficult because there's so many affiliates and and how
you do that. But I think it kind of we all can say like you like we were just mentioning with not having like that head of of leader of the group. We kind of feel like stepchildren a little bit you know like do they understand us, do we understand them And there's I think that's a big gap that could be bridged. It's just how this, how we communicate to each other. You know I know they they try to do more listening to affiliates are ways for us to reach out to affiliate reps and that's been
great in some ways. But when we get these new the news and stuff like that, it would be cool if if we had a little bit more direct communication to affiliates and and and. It it really feels like the same thing that we're we're battling and I know we have battled internally is what we talked about earlier is being the the CrossFit coaches and the passionate. I wanna help you live your best life and your healthiest life balance with the This is still a business that has to survive.
Like the only way the gym is gonna be here is if we make smart business decisions too. Is what we're seeing on the broader scale and right now it feels like the we're being led by non believers and one like like it just it feels a little bit of like bullying a. Little bit. Here's the here's the thing, if I decide to raise my rates at my gym, I'm not going to just send a blank e-mail out to the the
members, right? So they should treat us like we treat our members and then we push that downhill and so, or at least that's what I think. So there's a there's a communication thing that can be better there. Seth, I'll let you close it out. If you were talking to Don right now, what would you say and what would help add that bring bring value to what you're paying as an affiliate?
I I I think it's very similar to what Matt and Beckett just says just CrossFit is a is a lifestyle brand, right? It's not it's it's that's what it is. And people have to. People that get into CrossFit, get all the way into CrossFit. There isn't. There are very few casual Crossfitters, right. And so like how you perpetuate a brand like that is you continue to put it in everyone's face in this day and age, social media, YouTube with actual valuable content.
I mean, even things like you're putting out with us today, like we're talking from 15 years experience, Crossfit's putting out overproduced like workout demos and old reused like movement library stuff. Like I don't need that. And that's not also exciting for somebody who's perusing YouTube and finds that video. That's not getting them in my gym either. I want things sensationalized again like they were. I want the methodology
sensationalized. I want, I don't care if you put full seminars on YouTube, like get people into, get people online that are thinking about it into a gym. Your job is to take the leads and start delivering them to your affiliates, but you're not doing that at all.
So I don't mind the rate increase if they're going to step up other ways to build this lifestyle brand that is CrossFit and get people excited about it again, because I think right now people are more burned out on it than anything else. And if it gets stale, then every brand that feels like CrossFit is stale is going to move from CrossFit. And we're still going to do Functional Fitness and we're still going to use the methodology. We're not going to even say the word CrossFit.
And a lot of gyms will do well. A lot of the ones that already aren't doing well will probably be done. That's going to happen inevitably anyway. So pushing the lifestyle brand to him and telling him that, like, literally media is everything, and if they could blow that up, that would help us more than anything else. I couldn't stress that enough. Yeah, leave it with this Matt Reynolds. I used to watch and read CrossFit journal in between exercise science classes.
Make the journal great again. Yeah, Seth from Jump Ship Training and Matt and Rebecca from CrossFit Bolt. Thank you guys for jumping on short notice and kind of sharing your thoughts as affiliate owners and and on the recent news of affiliate fees being increased. So thank you guys and go to thebarbellspin.com for all of your fastest news. See you guys.