What should a personal trainer or fitness studio owner check before signing a gym lease?

Nikolina Milošević
25 minutes ago
5 min read

Before signing a gym or fitness studio lease, personal trainers and studio owners should check whether the lease is a retail lease, whether the permitted use covers all of their intended activities, whether their trading hours are allowed, what their obligations are for fit out and equipment, and what happens at the end of the lease. Fitness premises have specific requirements that a generic commercial lease rarely addresses properly, and the cost of getting this wrong can be the end of the business.

Opening a studio in Perth or anywhere else in Australia is a significant commitment. The lease is the document that governs everything about the premises, and most fitness business owners sign it without understanding how many of its clauses will shape the next three to five years of their business.

Is it a retail lease?

In most Australian states, fitness studios and gyms open to the public fall within the definition of a retail lease under the relevant retail tenancies legislation. In Western Australia, the Commercial Tenancy (Retail Shops) Agreements Act 1985 applies to premises used for specified retail businesses, and this commonly includes fitness premises.

The classification matters because retail leases come with significant legal protections for tenants. These include restrictions on ratchet clauses in rent reviews, protections against certain outgoings being passed on to tenants, and access to a state tribunal for dispute resolution. This also includes mandatory disclosure statements before signing, which can have significant consequences. Click here to read more.

If your lease is a retail lease, you are entitled to these protections whether the landlord mentions them or not. If your lease is a commercial lease, you are not. Knowing which one applies changes the negotiation entirely.

If you are not sure whether your fitness lease is a retail or commercial lease, book a call with us to review it:

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Does the permitted use cover everything you do?

The permitted use clause in a lease defines what you are legally allowed to do on the premises. For fitness businesses, this is often drafted too narrowly, and it is one of the most common problems we see.

A permitted use clause that simply says "gym" or "fitness studio" may not cover group classes, one on one personal training, Pilates, yoga, boxing, nutrition consultations, physiotherapy, or small retail sales of supplements and apparel. If your business involves any of these activities and the permitted use does not expressly cover them, you could be in breach from day one.

The permitted use also affects your ability to evolve the business over time. If you start with personal training and later want to add group classes, or vice versa, you need the permitted use to be broad enough to allow that without requiring landlord consent.

Push for a permitted use that covers all of your current and foreseeable activities. Not just what you do today, but what you might do in two or three years.

Are your trading hours allowed?

Fitness businesses often operate outside normal business hours. Early morning sessions, evening classes, and weekend programs are central to most fitness business models. If your lease restricts trading hours or access to the building, your business model may not be viable.

Check the lease for trading hours clauses and building access provisions. Some commercial buildings only allow access between 7am and 7pm on weekdays. Others restrict weekend access entirely. If your lease does not expressly allow the hours you need to operate, you need to negotiate this before signing.

This is particularly important for 24 hour access gyms, which cannot function in any building that restricts after hours access.

Fit out, equipment, and landlord works

Fitness premises usually require significant fit out, including equipment, flooring, mirrors, sound systems, air conditioning upgrades, and sometimes additional bathrooms or changing rooms. The cost can run into six figures.

Before signing, confirm in writing who is responsible for the fit out and any landlord works, what fit out you are permitted to install, whether the landlord is contributing to the cost, what happens to the fit out and equipment at the end of the lease, and whether your equipment and fixtures can be removed on exit.

This is directly tied to the make good clause. Many fitness business owners spend significant money fitting out a studio, only to discover at the end of the lease that they are required to remove everything and restore the premises to base building condition at their own cost. The make good clause needs to be negotiated before signing, not after.

Before you commit to a fit out, get your lease reviewed. Book a Strategy & Advice Consult.

Noise, use of common areas, and neighbouring tenants

Fitness businesses generate noise. Music, voices, weights hitting the floor, treadmills, high intensity classes. If your lease is in a building with other tenants, noise is a predictable source of complaints and disputes.

Check the lease for noise restrictions, quiet enjoyment provisions, and any limitations on the activities you can carry out. Consider whether your premises are acoustically separated from neighbouring tenants, and whether any soundproofing is required under the lease.

Also check whether there are existing exclusivity clauses or use restrictions affecting other tenants in the building. If a neighbouring tenant has an exclusive use right for "fitness services," you may not be able to operate the business you planned.

Signage and marketing rights

Signage matters for fitness businesses, particularly ground level studios that rely on walk in traffic and local visibility. Your signage rights should be documented in the lease, including what signs you can install, where they can be placed, and whether you need landlord or council approval.

Check whether your signage rights allow for window decals, external signs, and any branding on common areas or shared facilities. Assumptions here frequently go wrong.

Personal guarantee

Most fitness studio leases include a personal guarantee from the director of the tenant company. This means your personal assets are on the line if the business cannot pay rent. Fitness businesses are often sensitive to economic downturns, and many did not survive the pandemic years.

Before signing, negotiate the scope and duration of the personal guarantee. Cap it to a fixed number of months of rent. Limit it to specific default events. Ask for a release on assignment of the lease. The personal guarantee is one of the most important clauses in the lease, and it is only negotiable before you sign.

What you can negotiate before signing

Fitness studio tenants should push for a broad permitted use covering all current and foreseeable activities, unrestricted trading hours and building access, a reasonable make good clause limited to fair wear and tear, a fit out contribution or rent free period to offset start up costs, a capped and time limited personal guarantee, clear signage rights, and an option to renew to protect against relocation risk after investing in fit out.

Landlords expect negotiation on these points, particularly from tenants with a detailed and specific business plan. What you do not negotiate before signing becomes a permanent feature of your lease.

The bottom line

A fitness studio lease is not a standard commercial lease. The permitted use, trading hours, noise considerations, fit out requirements, and make good obligations all need specific attention. Landlords do not draft these provisions with fitness businesses in mind, and generic commercial lease wording rarely works for a fitness business.

If you are opening a studio, a gym, or any fitness business in leased premises, the lease is the most important document in the deal. Get it reviewed before you sign, so the terms support your business instead of undermining it.

Get your gym lease reviewed before you sign

If you are opening a fitness studio or gym and have a lease in front of you, book a call with us to review: