Female emPOWERED: Winning in Business & Life

Episode 350: The Legal Mistakes That Could Cost Your Studio Everything (And How to Avoid Them) with Danielle Stead Blanton

• Christa Gurka

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 52:58

Running a Pilates studio, cash-based physical therapy practice, or boutique fitness business involves more than delivering incredible client results—you also need to protect the business you've worked so hard to build.

In this episode of the Female emPOWERed Podcast, Christa Gurka sits down with attorney Danielle Stead Blanton, founder of DSB Legal, to discuss the biggest legal mistakes boutique fitness and wellness business owners make—and how to avoid them before they become expensive problems.

From 1099 vs. W-2 employee classification and protecting your intellectual property to trademarks, contracts, leases, and preparing your business for an eventual sale, this conversation is packed with practical legal advice every studio owner should hear.

In This Episode You'll Learn:

  •  Why employee misclassification can put your business at serious financial risk 
  •  The difference between 1099 contractors and W-2 employees 
  •  How legal mistakes can impact the future sale of your business 
  •  When (and why) you should trademark your business name 
  •  Common legal myths boutique fitness owners believe 
  •  Why contracts, leases, and operating agreements matter more than you think 
  •  How to protect your studio's brand, systems, and intellectual property 
  •  The importance of building a legally sound business from the beginning 

About Danielle Stead Blanton

Danielle Stead Blanton is the founder of DSB Legal, where she and her female-led team serve as fractional general counsel for female-founded businesses in the health, wellness, and technology industries. She is also a former multi-location fitness studio owner, real estate investor, former Nike-sponsored athlete, and business advisor helping entrepreneurs scale and prepare for successful exits.

Connect with Danielle

🌐 Website: https://daniellesteadblanton.com
📸 Instagram: https://www.instagram.com/danielle.stead

Resources & Links

🌐 Learn more about Fit Biz Accelerator: https://christagurka.com/accelerator

📸 Follow Christa on Instagram: https://www.instagram.com/christagurka

🎙️ Subscribe to the Female emPOWERed Podcast for weekly business strategies designed specifically for Pilates studios, physical therapy clinics, yoga studios, and boutique fitness business owners.

Christa Gurka | Fit Biz Strategies

Hey there, everyone. Welcome back to another episode of the Female Empowered podcast. I'm your host, Christa Gurka, and we have a great guest episode today. I love my guest episodes. I love having people on, especially when they're other powerful women that just, are gonna be able to give it to you straight today. It's gonna be a great, great episode. So we have Danielle Stead Blanton here, and if you saw some of my Instagram posts recently, I had her come in and talk as the monthly expert to our... my Fit Biz Accelerator group. she is the founder of DSB Legal, where she and her female-led team serve as fractional general counsel to female-founded businesses, I love this, at the intersection of tech and health and wellness. She co-owns a real estate investment business and emerging investment fund focusing on angel investing and advising early-stage business to prime for scale and exit. She's a former Nike-sponsored athlete, big law dropout, exited multi-location fitness studio owner, and toddler boy mom. The best thing in your entire bio. she came to talk to my team, my... not my team, my, the other business owners, all about kinda legal in this industry, health and wellness, how to protect your business, how to protect your employees, and I just love how you really articulate and relay information, which is really just, shoot from the hip, which is kinda how I am as well. why beat around the bush? why not just give it to people straight, whether they like the information or not? And so thank you so much for taking the time to come on the podcast. I just think this is gonna be super, super valuable for all my listeners.

Danielle Stead Blanton

Thank you for having me. What a fun introduction.

Christa Gurka | Fit Biz Strategies

It's...

Danielle Stead Blanton

best part of my day already

Christa Gurka | Fit Biz Strategies

I hope so. I hope so. Like I said, I hope this is literally the hardest thing you have to do all day, 'cause it'll be super, super easy, which means the rest of your day will be good. so why don't you give a little bit of background. Obviously, you went to law school and passed the bar, and worked for big law at one point. So did you know that you always wanted to be an attorney? Like, how did that actually transpire?

Danielle Stead Blanton

I love whenever we talk about, Danielle's a lawyer, and people are always like, "Are you a real lawyer?" And I'm like, "Who are the fake lawyers

Christa Gurka | Fit Biz Strategies

I

Danielle Stead Blanton

there?"

Christa Gurka | Fit Biz Strategies

know. Where are the fake... I know, but I just play one on TV, right?

Danielle Stead Blanton

I play one on TV, on the internet. No, you know what's funny, Christa, is I actually always wanted to go into PR. I wanted to go into PR and marketing. I actually got a job right out of college working for Hearst Publication. I worked for Harper's Bazaar in 2008. You can all do the math. And that was also, for those who were around, the great 2008 recession. The magazine industry crumbled before my eyes, and I was left without a career path. And my parents for l- who are achievers in every sense of the word, were like, should just really go to law school." 'Cause, I don't have the stomach to be doctors like they are. They were like, "You can be a doctor, a lawyer, an accountant, a consultant," right? those are your four choices when you're, like, an immigrant child. And so I decided to go to law school because Elle Woods could do it. It didn't seem that hard. It was the hardest, most awful thing I ever did. I recommend it to no one, zero stars. And, you're still in this achiever mindset. I was a collegiate athlete. you just, you do the things you're supposed to do, right? I think a lot of women, women business owners, very much resonate with that, where you just, you're on this path because you don't know what other path to be on because they... This is what you're told being good is or being successful is. And I almost failed out of law school. I always like to tell people that because I think it's important to know that, I'm a very flawed person. We all are. We all, screw up on our path. And then I magically got a job in big law, which is also zero stars. Don't recommend. It's as bad as everyone says it is on TV. It's soul-sucking. It's crushing. If it's for you and you're listening to this, I'm very sorry if I'm yucking on your yum. And know what? I was 30 years old by that and then I was just like, "This cannot be how I spend the next 50 years of my life," too short. So

Christa Gurka | Fit Biz Strategies

Life is way too short for that. And I do like how you said, I always love listening to people's origin story. I really do, 'cause I think some people just think that, you pop out of the box this way, and you're like, God, no, there's, such a windy road, but it's also sometimes very organic, right? I say that I'm an accidental entrepreneur. I also am from an immigrant family. my mom never went to... 'Cause my mom, we're on the other side. my mom never went to college. So just going to college for me was, like, achieving in my family. And so I never had entrepreneurship modeled for me. I fell into it because I was like, oh, there's... And I opened my business in 2008, so that was fun.

Danielle Stead Blanton

Ooh

Christa Gurka | Fit Biz Strategies

but I was... I said, I tell people this, I was like, "I'm t- I was too young and broke to really understand what was going on," and when people kept asking me, "W- why?" or, "How are you doing?" I thought they were asking me sincerely because I had two small kids at home and I had, just started a business. I had no idea that there was, like, this huge financial crisis that was happening around me, 'cause people were just being like, "Are you okay?" "What's gonna happen?" I was like,

Danielle Stead Blanton

I'm not."

Christa Gurka | Fit Biz Strategies

"I, I, yeah, things are cool." But so what was the turn or, the precipice for you that you were like, "I need out," and the whatever pivot ended you where you are today?

Danielle Stead Blanton

Oh my gosh, it's so funny. You talk about this pivot and One of the reason I work with female founders is I am, and I, and this is like part of my villain origin story. I'm Asian woman, and I worked in M&A, which in big law means you are one of, one of none. that didn't exist. And so I a male-dominated team. I was the only woman, I was the only person of color, and I just saw truly what the old boys' club looked like. And I, when I tell you stories of what that was like, like I had a partner who... And by partner who I re- reported to, not romantically, who had such rage issues, he threw a chair through a conference room window one day. just threw a chair. And we were all just expected to sit there. is not normal, and and then everyone looks at you 'cause you're the woman, and they're like, "Are you gonna clean that up?" And you're just like, "Are you freaking kidding me?" and so it was always just so clear that I was never going to be... I'm a little mouthy. I have a little attitude about me. I'm never gonna be this like, "Yes, sir. Thank you for this opportunity to clean up the glass wall that you broke because you can't control your emotions." And that was really this huge turning point for me. on top of I had severe anxiety. I was, I m- I was a physical manifestation of unwell. I had acne. I had gained weight. And this lovely man, who I'm now married to for 10 years, a few weeks ago was like, "I love you. I wanna spend my life with you. This is not your best self. This is not what your whole life is going to be. Let's figure this out for you." And so we structured an exit plan for me out of this path, and I took a lot of time to figure out what I wanted to do and who I wanted to be, and luckily we were in both the financial and life position to do that together at that point, which I recognize is a huge privilege. And I spent a lot of time at the gym. That's what one does when they're unemployed here in Los Angeles. I belong to Equinox. They are a fitness club people might have heard of. And Equinox was like, "You're here all day. You're taking classes. You're hanging out. You have a cool vibe. Do you wanna teach here?" And they actually brought me into their instructor training program and taught me how to be an instructor. And at first I was like, not a fitness person. I'm an attorney." that

Christa Gurka | Fit Biz Strategies

Yeah. Yeah

Danielle Stead Blanton

as an achiever. And again, I think a lot of women who left corporate are always holding onto, that corporate title. They're always like, I have a lot of clients who are like, "I was a COO of a trust fund," or, "I was a CIO this," and I was like, "Great. You're now a Pilates studio owner. accept your new, who, this awesome new version of yourself," and I really struggled with that identity shift. Except it then became this thing that knew how to start, like actually run businesses, 'cause I was a corporate person. So I would go audition. I remember, I can tell you all these studios in Los Angeles I would go audition for, and I'd be like, "If you hire me, I will fix your contracts. If you hire me, I'll review your lease for free." I was so desperate to, belong again, and the only way I knew how to belong was through my brain. And so I was, like, bartering, my legal services if you would just let me audition even, which is hysterical when you think about- that now,

Christa Gurka | Fit Biz Strategies

I wish you would've been in Miami. I would've been like, "Yes, check. Yes, come right now. Do whatever you want. I don't care. You can redo my contracts. You can get li- yes."

Danielle Stead Blanton

Christa, you know what it was like in, let's call it 2016, '17. Nobody even cared about contracts, and nobody cared about leases. Nobody was thinking about how to classify their team members. It was just, put as many people in the studio as possible and just survive because nobody was really running fitness businesses like businesses. They were running them like hobbies that just made them money at that point.

Christa Gurka | Fit Biz Strategies

The glory days

Danielle Stead Blanton

those were, like, the crazy days, and then all of a sudden this huge transition happened. You lived through it, when, PE came in, and PE bought SoulCycle, and PE started buying up Orangetheories and CrossFits, and suddenly everyone was, like, wanting to run a business as a business. it just happened that I was in Los Angeles, the fitness capital, during this time, and somebody told somebody who's somebody and was like, "You can review a contract for me." And I was like, "Yes, I can." And then I did a contract, and then I got put in touch with a group of people who were opening a studio that I invested into, and then something else. And it was very organic, where you're you're in the right place at the right time, but also every moment of your life prepared you to be the right person to be in that right place,

Christa Gurka | Fit Biz Strategies

You have to be ready is what I believe. Do you know what I'm saying? And so you, yes, w- some people say it's luck. I also believe we're in the right place at the right time for a right, the right reason, but we also have to be ready for that opportunity, and you were ready for that opportunity. if you think you're... We're both athletes, if you think of the higher you get in sports, sometimes it's, the less you play. think about guys that just try to get drafted who have been the best at their thing forever and ever and then don't get drafted. It's the first time probably in their life they ever heard no, so as you go further along in sports, you might be at the end of the bench, and you have to be ready for when your coach turns around or yells your name, you have to be, like, ready to go. Tom Brady and, Drew Bledsoe. he was ready when he got hurt, and, he became the best quarterback in the NFL. So yes, I agree that it is sometimes it's the right connection, it's be- that's why it's never always about the immediate sale. It's who did you meet and impress and have a conversation with that maybe even six months down the road is gonna mention your name in a room again? But you, Danielle, also had to be ready for that opportunity, and you had to bet on yourself. And so that, I think, is important for women especially to know. our names get called l- less than men, although I feel very fortunate that somebody posted some, I don't know if you saw this on Instagram the other day, that somebody posted, I'm not gonna mention her name, 'cause I actually know her and I respect her a lot, but she posted some of the women's groups are mean girl groups, and I was like, I just wanna say I've been super, super fortunate. I can totally see how that happens, but I've been so fortunate that the w- gr- rooms that I have been in have been nothing but kind to me, and it's not the level of our business, it wasn't the level of our exit. Everyone was there to help each other, and I just felt so grateful for that opportunity and to meet people like you. Felicia was one of the ones that was in the room with me, and I can see... It makes me sad when women are like, "I was in this room and it was mean girls." It just makes me sad, and the Pilates industry unfortunately is filled with them. it's sad.

Danielle Stead Blanton

to, to your point about that, and again, this is our experience. I like to preface to people, 'cause some people, I'll say that and they're just like, "I have no idea what you're talking about." I think that's fabulous. Is that already harder for us. We already get... Women get 2% of venture capital. Women of color get half of that. It's already harder for us. Why are we making it harder on ourselves? Like, why are we working against our own best interests? that's what I always find to be so funny. And so, people talk about, for example, for me, they're like, who's your competition? Who are other women doing this?" And I was like, "I don't look at other women as my

Christa Gurka | Fit Biz Strategies

I don't care

Danielle Stead Blanton

I look at other men who don't even have to try a third as hard as I have to be taken half as seriously. that's my competition." Those other women that are doing it, like I will drag you up with me. But I just... I think, that's something that I see a lot in this industry that does make me really sad. And I think that's also something that we are huge on vibes at our firm. And like really, like we don't foster that. I don't mean just in our firm. we don't foster it with our clients. if you come to us and you're like, "I know so-and-so's doing this and I wanna do it better than them or take them down," I'm just like, "Great. Here's five other people who might entertain your bad attitude." But like we don't believe in that here,

Christa Gurka | Fit Biz Strategies

Yeah. Yeah. it does sad. And, honestly, it's a lot in the Pilates industry, which is really We have one member in our group who actually said that she went to, she's an owner of a Pilates studio, she went to another Pilates studio to take class, and they told her she couldn't come

Danielle Stead Blanton

That's pretty common

Christa Gurka | Fit Biz Strategies

I know, but it's First of all, I was like, it's illegal to tell you can't come because you're, like, banned 'cause you own a studio, number one. Number two, who cares? I just feel, and I've said this a lot, I have a lot of soapboxes, but if you spent a quarter of the time worried about, your own business and experience and took all of that energy that you were saying, "So and so you can't come to the studio 'cause you're another owner," and focused on the right stuff, your business would be leaps and bounds ahead of where it is. You're using that energy to focus on the wrong shit, and it's just stupid. More- there are 350 million Americans alone, just in the United States. There is enough business for everyone to go around, especially in the Pilates world, even though now there are more and more bigger studios, but still, there's plenty of business out there. There is no need, none, to backstab, to cheat, to downgrade other people's, bus- there's just no, there's no n- now I'm not saying you have to open your books and, IP and trade secrets, whatever. but you also don't have to push people out. I love when other studios come to my studio, like other studio owners. We had two studio owners from Miami in my mentorship group, and I was like, "This is fine. We're all good. there's plenty of business for us to go around." That's just my feeling, and it's one of the reasons I wanted I like bringing women like you on, 'cause I think you value that as well. I guess we could talk about this for an hour, but let's talk actually about the law. let's just lean right into 1099s and W-2s, because my post that I shared of, our conversation last week w- I got a lot of... I actually got... I wanna a- answer, ask you some questions, 'cause I got a bunch of questions from people and I just stopped responding. 'Cause I was like, listen, if you wanna fight for your reasons not to believe in this, I'm, I don't care. go do you. But this is, I'm not, it's not false information that we're putting out. let's talk about 1099s versus W-2s. when I opened my studio in 2008, everyone in fitness was a 1099. it just was how it was. Everyone in fitness was a 1099. But, and I even think in California you might have been able to be a 1099, but I'm not gonna go down on that. I'm not 100% sure. But there are different states h- are more lax than others, but can you just give, like- The legal de- well, there, so there's a legal classification and then there's, the IRS classification, but relatively they're both saying what in terms of who qualifies as a 1099 versus a W-2?

Danielle Stead Blanton

Yeah. The most simple way to look at this are three words: the means, the manner, and the method of which someone is working and your control over their means, their manner, their method. So break it down. If you are a business owner and you are controlling, dictating, strongly suggesting how someone is working, meaning they're showing up at a certain time, they're teaching a sequence, they're using your equipment, manner in which they're doing it, are they using your vocabulary that you train them in? Again, are you, th- are you doing a proprietary flow, like you always start with core, and then you go to the left leg, And then, are you telling them to clock in at a certain time? Are you telling them that they show up every Tuesday at 10:00 AM? Do they have a consistent schedule? Did they set their own rates, or did you tell them how much they're gonna get paid for it? If you are doing any of those things, by law, black and white, that person should be employee. Now, anyone who's ever worked with me has heard me say this before, they're gonna roll their eyes, is I always say, the b- the law is black and white. We get to choose where in this gray area we live, right? My job is to keep you as above board in your gray area, but my job is also to tell you what the black and white is, and you get to take on that risk, and I wanna make that very clear. We... I like to, to make this analogy of speeding. we all can relate to this, right? The speed limit says 35. In California, it's 65 on a freeway. Black and white, 65. How many of us actually only go 65 on a freeway? Not I. I know that for certain. I- I'm somewhere in the 75 range, like I'll wholly own that. that is the gray area I'm choosing to live in. And so it's funny because I actually haven't read any of these comments, but when people want to start in this dialogue, I'm not gonna engage with you your desire to go 65. I'm gonna tell you that the speed sign posted on the freeway says 65. all I'm gonna say, and I think, that's where we're getting really tripped up. And also, you're not a bad person for going 75. I

Christa Gurka | Fit Biz Strategies

Right

Danielle Stead Blanton

you for going 75. I'm just saying that if there's a police officer there that has nothing else to do, we are all in the wrong. And to then liken it to studio owners, if there is an IRS audit, if there is a workers' comp audit, if there is a state department of labor audit, it is black and white. And I think, that's where people are just getting really upset is that I'm not telling you're wrong or you're a bad person or anything. I'm just telling you that you're not falling in within the legal boundaries of where you could get yourself into hot water. That's it.

Christa Gurka | Fit Biz Strategies

exactly. And I think the, some of the bigger one, 'cause some people the argument is, "No, I- they can, they just have a class, it's 10 o'clock, they don't clock in or anything out." But I, one of the things that I think is really clear, do you set the rates? Do you take the payments?

Danielle Stead Blanton

Yep

Christa Gurka | Fit Biz Strategies

So they don't negotiate the rate with their person. They, you take, you set the p- rate, you set the rate of what you pay them, and you take the payment, et cetera, right? that's like a big thing where people are like... I'm like, "No, but you set the rates." So let's now talk about, by the way, the fourth thing that could happen besides the a- audits, somebody on their team at some point could say, "I want to have an audit to sue them for misclassification," for whatever reason. And by the way, you could think this, you could think, "That would never happen to me. I would never have those people on my team." sometimes it's the people that you would least expect, people that you've had at your home for dinner, people that you've shared celebrations with could make this happen. And so now let's talk about what the repercussions are. so somebody, so what does that mean? They're not going to jail, but what does that mean for their, the future of their business?

Danielle Stead Blanton

Great question. Can I take one step back? 'Cause I didn't say

Christa Gurka | Fit Biz Strategies

Of course,

Danielle Stead Blanton

the most important thing. So you mentioned there's two ways to look at who's an independent contractor. There's the IRS definition, and then there's the labor definitions. The number one thing that we didn't talk about is the way we look at someone who is... should be an employee versus a contractor is, are they doing work that is the nature

Christa Gurka | Fit Biz Strategies

Of the business, right

Danielle Stead Blanton

And for example, the nature of the work of my business is a law firm. If I have someone that's working for me as a lawyer, they need to be an employee. My social media person is not an employee. My social or podcast editor is not an employee,

Christa Gurka | Fit Biz Strategies

Bookkeeper

Danielle Stead Blanton

bookkeeper

Christa Gurka | Fit Biz Strategies

employee

Danielle Stead Blanton

an employee. your l- lawyer is not an employee. But the people who are doing the work that is the nature of your business, if you are a Pilates studio, your Pilates instructors are doing the nature of your business, that's an employee, and that's the number one test that the labor organizations are looking at. And so I think that's something where, again, people are like, I let them choose the rate for their private," or, "I let them pick their class schedule." It still doesn't matter if they don't pass that basic service test. Okay. Anyways, okay, that's that.

Christa Gurka | Fit Biz Strategies

You're, absolutely right. That's, that is another very clear point. Yeah

Danielle Stead Blanton

So to, to your point though, I think listen, as somebody who is absolutely terrified of getting in trouble a- all the time, that's me,

Christa Gurka | Fit Biz Strategies

profile work

Danielle Stead Blanton

are always are like, "What's the worst thing that can happen?" And so what's the worst thing that can happen is, Christa just said, you have an employ- you have a team member who honestly is just either, wronged or just that person, and they can report you and report, you for misclassification. You get audited. you get audited, the lightest thing you're gonna get is a slap on the wrist. But you're still gonna spend a crap load of time preparing your books. Audits look back to at least three years, so you're gonna have to do three years of payroll, three years of operations, three years of contracts, three years of every person that's ever worked for you, in addition to pulling time sheets for three years worth of people. And I know some of you are like, "Oh, it's all in the system." Great. I don't know about you, I don't have time to wash my hair on a weekly basis. I don't have time to do this, right? that's number one. Number two is there are statutory fines. So misclassification includes a statutory time fine per person. Every state has a different fine. It can be anywhere from 5,000 to $10,000 per person who you've misclassified, as just the slap on your wrist that gets paid to the government agency. So that really sucks. And then now what happens is if you've misclassified somebody, you actually are gonna owe back taxes and back wages and maybe even back benefits for those people. So the fact that we all don't wanna pay payroll taxes, now you're going to have to take your entire team's worth of payroll taxes back three years and pay all of that. You're gonna have to pay back whatever other taxes you owe, pay back that times three years. You're gonna have that 5 to $10,000 per person due immediately. And a lot of these things are Nobody has a slush fund that can really take that into account. you're not gonna get your business shut down. You're not going to get thrown to, to, sent to jail. You're gonna get a huge, massive financial penalty that will crush,

Christa Gurka | Fit Biz Strategies

And that's usually what closes businesses. It's not that they tell you have to shut down, and they're not taking you away in handcuffs. However, if you have to pay, if you get all of those fines, and you're right, businesses don't have... Unless you're like these conglomerates who don't break the law that way, for the most part, you're not gonna be able to afford it, right? that's what closes your business down. It's not that it's so illegal that they come and, put chains on your door. It's just that you just can't afford it. you have to shut down. so let's now talk about, let's just take it now one step further, okay? Let's take it that a business owner wants to eventually sell their business. So mo- well, maybe you could correct me. you could give me your own opinion, but most sales the buyer oftentimes needs financing, okay? There's not as many... It's like buying a house, right? There's maybe a few people that can put a cash offer, but the majority of people buying house need financing from the bank. When the bank evaluates your business to decide if they're gonna give a loan to these people, they can see that this is a liability on the books, and it will be very hard for the bank to say, "We're gonna loan you this money," because they have this huge liability on the books. W- would you say that is accurate or not so accurate?

Danielle Stead Blanton

Yeah, absolutely. So if you're going to buy or sell a business, we have a, sale readiness practice that we go through and we audit you through. And on the buyer side, if you're gonna buy a business and you're financing it, your bank is gonna put contingencies. They're gonna put requirements on it. It's very similar to if you've ever bought a house. They're like, "Hey, you gotta pay down that credit card," or, "Hey, you gotta take care of this or that," right? The bank is gonna require that all these people become employers... excuse me, employees, because the bank cannot afford for you to get audited and default. And so what's gonna happen is in your purchase documents, you're actually gonna have to put in limitations of liability and you're gonna have to put in in- what's called indemnities. And basically the seller, the person who misclassified the workers, is gonna have to be on the hook and responsible for any and all labor claims as of the date of close previous. Meaning if somebody comes back and is like, what do you mean I'm converting to an employee? I should've been an employee the whole time," and then wants to cause a stink about it, the new owners have no liability. They're off the hook. The old owners are assuming that liability. That's a huge thing to carry with you, as an owner, by the way. And what we usually do... And fun fact, we had three transactions last week in our firm. We bought, we sold, and we did an investment. we know a lot about putting these representations and liability guardrails into contracts. But you as the seller are thinking, "I'm getting this payout. I'm done.

Christa Gurka | Fit Biz Strategies

Yeah

Danielle Stead Blanton

gonna go retire." No, you are gonna have this looming thing for three to five years that you are on the hook for injuries, you are on the hook for employees, you are on the hook for everything. And unless you have a really good lawyer, your liability for that is gonna be very high. potentially very high. in our case, we try to cap it at a certain number so you're not paying out millions, but only, $100,000, whatever that number is. But also, here's the next step, is you're like, "I have insurance. Insurance is gonna take care of me." Insurance doesn't take care of you for being a dumbass. there's your soundbite. Please listen to that, because come to me all the time, and I'm gonna veer off track here, and they're gonna be like, I don't need a liability waiver, insu- I have insurance." Insurance isn't gonna cover what your liability waiver doesn't cover. Insurance isn't gonna cover you if you've misclassified employees and they told you that they should be employees. Insurance isn't gonna cover you if... So if you're a ding-dong and you are not making good business decisions, you can't just assume your insurance is gonna get you back. So now, you're now back to carrying this, stress for years just hoping that no one comes after you. that's a terrible retirement plan.

Christa Gurka | Fit Biz Strategies

Yeah. Plus buyers, for sure, I think a lot of sellers, like that negotiation, by the way, like the reps and warranties, like on my sale, took a very long time. And, but buyers also are not gonna want to buy into a business oftentimes that has 1099s, because they're like, there's no like buy-in from these people. Like, how did... they're gonna... W- what's to keep them from leaving?" So it's just something to consider, people. I want you to, I just want the owners... And by the way, this is something that I changed my mind on, the same way I have changed my mind on passing on credit card fees. But when I first started my business, I was like, "1099s. Everyone's a 1099." And I rode that wave until I literally almost got sued, and then s- had a really difficult slap in the face. And so yes, you consider, "Oh, it's so expensive, I have to pay all this stuff," but also there's a lot of positive to it. You can offer your people time off and sick time and health benefits if you can afford that. and you also get buy-in from your people. So the way that I tell business owners, I'm like, if you think about most business owners want just like total buy-in from their team, I want you to eat, sleep, and breathe Pilates in the Grove. you like do so much, so on one hand, they're like, "Just give", but on the other hand they're like, "And I don't wanna make you an employee. So I don't want you to ask for a vacation, but I don't wanna pay your taxes." So like you're sending out two different messages to the universe, right? And you can create brand loyalty, you can create standards, you can create a lot of things when you have W-2 employees. And that doesn't mean they have to be on a salary. They can be hourly employees, okay? They can be part-time. They can be two hours a week. They don't... I think some people think "Oh, now I have to offer them a full salary." No, they can be hour... Pilates in the Grove's instructors were hourly employees, and then they did get a rate for when they were not, direct client facing,

Danielle Stead Blanton

yeah

Christa Gurka | Fit Biz Strategies

and I had instructors that were making six figures, a year, and had health benefits and had paid time off and had continuing education stipend. And what you want as a business owner is you want people that wanna work. You want people that want this as a career. You want to attract those kind of people, and being a W-2 allows you to do that. So I hope business owners can see from like just the day to day all the way, extrapolate all the way out to like sale, this is the right move to make.

Danielle Stead Blanton

You know what you also... You said two things I think are really important to hit on. One is you said some- you c- people can work for you for two hours a week. The biggest objection I always get from clients is they're like, I have all these employees that work two hours a week, so it's just, it's not worth it." And I'm like, "What's not worth it?" And they're like, it's not worth it for just two hours a week." And I was like, give me a number that it is worth then. Is it five hours? Is it 10 hours?" this, it is an absolute, farce to say "Oh, two hours does not make worth it them being an employee." Are they still getting an instructor manual? Are they still getting, this proprietary training? Do you still want them to teach this very certain thing? that's what I always go back to. And so it's just funny to me because at some point, some Facebook group told people, "Oh,

Christa Gurka | Fit Biz Strategies

I know

Danielle Stead Blanton

for less than two to five hours, it doesn't matter." And I'm just like, that's the d- if you wanna bring me an argument, make it make sense. give me a

Christa Gurka | Fit Biz Strategies

Make it make sense

Danielle Stead Blanton

that one's not a thoughtful one. And I think, that's something that, we just need to, scream from the mountaintops. that's not a real argument. Oh, two hours isn't worth it. It's not worth it? 'Cause by the way, that fine per person isn't the amount of hours they worked. It's per person. so that, $10,000 fine for your two hours is the same as your $10,000 for your full-time employee. let's just remind you of that bit. But, it's funny because you s- you said that, and I just thought about it. But, the other thing I think that is happening a lot right now is everyone, and this is not meant to, this is not targeted at any one person or studio. Everyone is creating their own, I'm doing quote unquote for the listeners, quote unquote, creating their own method on a mat in a heated room or not with a red light panel or not. And listen, if we can't poke fun of this industry, no one else can, right? But, everyone is coming to me and they're just like, "This is my new method. I made it. No one is doing this." And I was like, "Interesting. You invented fitness. Okay, cool."

Christa Gurka | Fit Biz Strategies

Great

Danielle Stead Blanton

And but, if this is the case, I am your biggest supporter But you also then are training your team on doing something very specific. that means, "Oh, we're doing movements like no one's ever done movements before." Girlfriend, you better patent that. You better trademark that. You better copy- you, you better protect it, is what I'm trying to say. And so how do you protect teaching an independent contractor something? You really

Christa Gurka | Fit Biz Strategies

can't

Danielle Stead Blanton

can't. right? you just, you can't. It's a lot harder. And so then you see all these copycat studios, and people are like, I invented the, that

Christa Gurka | Fit Biz Strategies

That breathing technique. Yeah

Danielle Stead Blanton

And you're just like, "Okay, how did you protect it?" And so if you have decided that you are creating something so new and innovative and so special, no one else has done it before, the number one way to protect yourself is to go to the source with your employees. Because in employees, we can call it a trade secret. We can call it proprietary business information. Employees are held to a different standard than contractors are, by law, for a reason, because we don't wanna hold contractors to these really strict trade secret informations and all of this stuff, because we want them to be free to go do whatever they want. So you don't get to have your cake and eat it too of "Oh, they're a contractor. Oh, but you can't go teach at another studio. You can't teach anyone what you learned here. You can't do..."

Christa Gurka | Fit Biz Strategies

No.

Danielle Stead Blanton

doesn't work

Christa Gurka | Fit Biz Strategies

I love how you make it make sense. It doesn't make sense. It doesn't make sense, But that actually is a really good segue, I think, to another question I get often, which is trademarking. So let's talk a little bit about trade- Let's just maybe, can you give a reason why someone would pursue trademarking? And what does trademark actually mean?

Danielle Stead Blanton

yeah, these are great questions. So there's three forms of intellectual property that you're gonna hear us talk about. You have copyright, trademark, and patent. For most of our purposes, patent doesn't apply. Patent's related to formulas, and unless you are, like, creating a protein powder, don't worry about patent. Copyright

Christa Gurka | Fit Biz Strategies

maybe designed a new piece of Pilates equipment that you could get patented. Yeah.

Danielle Stead Blanton

one of my dear friends. Yes,

Christa Gurka | Fit Biz Strategies

Yeah

Danielle Stead Blanton

So there we go. so copyright is gonna apply to what we call original works of authorship. You can, fun fact, copyright a training manual. We can talk about that. Trademark is going to be what you use to protect a name or a slogan or a logo so that nobody else can have it. Now, we talk about name and we talk about protecting the words itself. Now, trademarking is the actual legal act of owning words or names together that are wholly yours. And so when you think about the fact that you get to own part of the English language, wild to me. And people are trademarking these days like they're buying coffees. everyone wants to trademark everything. I wanna trademark, brown hair. I wanna trademark this podcast. is insane to me. And so one of the things is I think it is very important if you are creating a brand that you are trying to do it under the auspice of protecting yourself every step possible. That would include protecting your name. However, and again, this is said with so much love to our own industry, it's like you can pick on your own siblings, but nobody can mess with your siblings. The number of that go into trademarks, the number of times people use the word collective in trademarks, the number of times people use method, align, uplift, empower. I say this with all love because I have 17 clients who are gonna fall under this umbrella, but they are very common words is what I'm saying, my friends. And so when you're going to protect your brand, please be aware that if you pick very similar words, it's gonna be harder, or people are gonna have come before you, and they're gonna already own it. So one of the biggest things I really suggest for people is when you're thinking about trademarking is truly pick a unique name that is specific to just you. You're not just like Danielle's Fitness Club. That's actually not even trademarkable, Or, Los Angeles Pilates. Again, not trademarkable. And so I think a lot of people wanna pick names that they think is are super attractive to, the greater good or the common person, and in doing that, you're actually making your brand unprotectable

Christa Gurka | Fit Biz Strategies

yeah. Pilates in the Grove was actually not trademarkable because in the Grove is a location. Yeah.

Danielle Stead Blanton

So

Christa Gurka | Fit Biz Strategies

So

Danielle Stead Blanton

a fun tip for everyone, what Christa just said is, if you have a location in your name, so Los Angeles, At The Grove, et cetera, the location itself makes it almost untrademark-able unless you spend, five years trying to establish distinctiveness, which we can talk about separately. And then words like Pilates or sculpt or strength are also not, because they're so common. And what the US Trademark Office is saying is that these words are so common, we can't let you just

Christa Gurka | Fit Biz Strategies

Christa Gurka

Danielle Stead Blanton

the most common words in a very specific industry

Christa Gurka | Fit Biz Strategies

Yeah. there's also the very famous Pilates trademark lawsuit, which was, went on for many years, which is why people thought Pilates started in the 2000s, because for a period of time, people could not use the term Pilates 'cause it was under lawsuit. Anyways, you can s- Google it. It's a very interesting lawsuit. They lost anyways, which is why Pilates... But Pilates has been around for over a century. so let's take it now, I get that. So now, let's say somebody does trademark, okay? Let's say somebody does get their name trademarked, they've gone through the process. W- Now the next thing is you actually have to enforce the trademark. So what does enforcing the trademark look like to these two people?

Danielle Stead Blanton

Yeah. gonna tell a story about this, and it's just, this is show biz. So enforcing the trademark, and I, I had to explain this to somebody recently where, I don't say things because I'm the villain. I don't say things because... I'm saying things 'cause this is just the law. And I chose a career where, this is my job. My job is to say the hard things, right? And so enforcing the trademark means if somebody is operating with your same name, you actually have to go out there and send them a very kind or a very strict cease and desist letter to stop using your name because they are violating and infringing upon your intellectual property. Their use of it literally violates your ownership of it. Think of it that way. And so what we do is we have definitely sent out our fair share of cease and desists. We've also had to defend our fair share of cease and desists because the fitness industry has so many common words and names and phrases. But this is actually a story, I'm gonna try really hard to d- to redact all confidential information, but this was, like, one of the worst, lowest moments of my career truly, is I have a client who has a very successful brand, multi-location, investors, et cetera, and we found out that there was a studio that was opening that was using basically her exact same name but spelling it slightly differently. Fun fact to all of our listeners, phonetic pronunciations matter. And so

Christa Gurka | Fit Biz Strategies

Yeah

Danielle Stead Blanton

that right now people are trying to get funky and fun with words and how we spell them. T- maybe spell stronger without any of your vowels and just do G-R for gr- like, is all the same. And so somebody opened a studio with the exact same name phonetic pronunciation as a client of ours, and they announced grand opening. a lot of my clients will put their brand names under a Google alert so if anything comes up, they get alerted of it. And my client sent this to me and was just like, "What do we do?" And I said, "You have to either decide if you're gonna let them coexist, which I don't suggest you do, or you're gonna have to shut them down, and that's my unpleasant task to do." And she's "We gotta do it." So I had to reach out to this person the week of Thanksgiving And tell her that her grand opening the following week, which also don't open a studio between Thanksgiving and Christmas, guys, but the following week could not open because she's violating trademark. And she said to me, "I've just invested tens of thousands of dollars in merchandise. I've invested this much money in signage. I have URLs." And I said, "I really appreciate all that you're doing into this. You are 1,000% violating our trademark." And she agreed, and she asked for us to... And I, you know how the story ends.

Christa Gurka | Fit Biz Strategies

Yep

Danielle Stead Blanton

and then basically she told me I was a horrible person and I can go somewhere because I ruined her holiday. And I said, I agree with you about that, and I'm very sorry that I had to be the messenger." The messenger, 'cause I didn't do anything wrong here.

Christa Gurka | Fit Biz Strategies

Right

Danielle Stead Blanton

one of the things that we really strongly recommend when people are coming to us because they have an idea to start a business, run

Christa Gurka | Fit Biz Strategies

it up

Danielle Stead Blanton

tr- you. But don't just... And here's the thing, Christa, don't just, Google it and decide no one has your name. Don't go into USPTO and do a quick search and tell me that you searched the database. I'm not trying to, generate bill- Everyone who works with us know, we are not trying to, charge you for work we're not doing. But, you searching USPTO is not a search, and I think that's, a huge fallacy that people have. And so people will be like, I already looked and nothing's there." And I was like, I have a whole team of people that are gonna tell you're completely wrong, but that's just our opinion." And hire us for a half hour. Go through your name with you. Take this. And then what you do is you file what's called an intent to use. It is when you literally hold a name. You have a legal hold on a name for you. You don't have to open your business yet, you don't have to use it yet, but nobody else can use it now because you've put dibs on it, for lack of better terms. But people are starting businesses being like, "I, I love this name. It's such a great name." And I'm like, "17,000 other people have this name, or have a similar one." And before you open an LLC, before you put a name on a lease, before you invest in branding, because people love spending tens of thousands of dollars on that and then none of it applies. And the other kind of thing that we see happening is logos, is, owners get all excited about a logo. They spend all this money on a logo with a designer. They file the logo with USPTO, and then they decide to rebrand. when you rebrand, the only thing you can keep is your name, so any element

Christa Gurka | Fit Biz Strategies

Yeah

Danielle Stead Blanton

that's changed is not protected anymore. And we've had clients that are, like, so bummed about the money really at the end of the day. it's a

Christa Gurka | Fit Biz Strategies

Yeah.

Danielle Stead Blanton

guys. I don't want you wasting that

Christa Gurka | Fit Biz Strategies

Yeah. No, I know. And, it's, it's why I like to put this information out there because it's not something everyone knows, and I just want, women that run these businesses and own these businesses to just have some better information for them, right? And have a resource where they can reach out to you and be like, "Hey, can I..." And again, there's nothing I hate more than in a Facebook group where someone's "Oh, so I'm gonna buy a business," or, "I'm starting a business, and what do you think about...?" And I'm like, "Please don't skimp on an attorney." I get it. Sometimes when I look at my attorney's fees or my accountant's fees, I'm like, are we on the clock or off the clock? 'Cause I'll ask about your kids later when we're, like, on personal time, but if we're on... But the, the, what's the word I'm trying to f- find out? the consequence of not using a professional is way greater, right? So does that make sense, what I'm trying to say? yes, attorneys are expensive, accountants are expensive, but so is not using them. And so are you gonna pay upfront to do it right and properly and have peace of mind, or are you gonna struggle five years down the road because someone is suing you for something, or you have to rebrand, or you, your contracts are not, you don't have the right employee handbook or the employee contracts and, So it's better just to, spend the money upfront with someone like Danielle, who really knows this industry and understands what it's also like to own a business and is a female and... So it's just, I hate that in the Facebook group. I'm like, please hi- don't take advice from the people in the Facebook group. please hire an attorney. Please.

Danielle Stead Blanton

one, nothing like literally lights a fire like the mention of Facebook groups, 'cause it's in every industry, right? And

Christa Gurka | Fit Biz Strategies

It's in every industry

Danielle Stead Blanton

insane. But one of the things I always remind people of is that, one, a legal is an investment. This is not $1,000 bottle of wine that you're gonna savor once and then, never remember again, right? think of it this way. Your lease, your lifetime value of your lease is a million dollars, depending on who you are, where you are. S- it's somewhere in the high 500,000s. Some of my leases are $10 million because they're longer, they're bigger properties, so there's that. There's your lease. You're gonna spend $100,000 on equipment most likely, right? You're going to spend... Some of my clients are spending a million dollars on a build-out.

Christa Gurka | Fit Biz Strategies

Yeah.

Danielle Stead Blanton

Think about how much money this

Christa Gurka | Fit Biz Strategies

Don't recommend, but anyways.

Danielle Stead Blanton

now, guys. y- we don't recommend that, but, that's okay. We don't judge. We don't judge, right? think about how much money you are investing. That's the word I

Christa Gurka | Fit Biz Strategies

I know

Danielle Stead Blanton

are investing into just getting into the space itself, right? It's also, one of the reasons I go really hard on, get a lawyer to read your lease. You're in it for 5 to 10 years. It's 500 to a million dollars of a lifetime value. Anyways, think about all these in areas you're investing in: the lease, the build-out, the equipment, the branding. We all love spending 10 grand on branding. I just love branding people, but, that's always one. The website is another 5 to 10. You have spent hundreds of thousands of dollars to open a brick-and-mortar studio. You don't wanna spend five on an attorney?

Christa Gurka | Fit Biz Strategies

I agree

Danielle Stead Blanton

I always just get s- And people are like, "Huh?" And I'm like, "Can you spend $5,000 on an attorney and, protect a lease, protect your clients, protect your employees, protect yourself?" what if that's all it cost, right? it's gonna be more or less here or there, depending on what we're adding in or what we're not doing, but, can you think about that bigger picture, that you have created this ecosystem? Now, what if we can literally put a shield around that ecosystem? It's a pretty small investment considering everything else you're paying for. And I think, that's where I just get very like this about is I'm just like, you're willing to spend so much money on everything else, guys. this

Christa Gurka | Fit Biz Strategies

I know

Danielle Stead Blanton

the last stop to be like, "Pass."

Christa Gurka | Fit Biz Strategies

Agreed. Agreed. And especially for those of you that have partners, get an operating agreement. You need a partnership agreement. friends now and it's lovely, but partnership dissolutions are like a divorce. It's really bad. I've been through one. It's not great. And, same in my lease, like I had an exclusivity clause in my lease that's almost similarly to what you had to do. I had a... They were starting a business upstairs from me, and I'm s- happen to see the owner in the garage one day, and I was like, "Oh my gosh, welcome to the building, we're so excited. What kind of business are you gonna have?" And she was like, "Oh, we're doing yoga and Pilates." And I was like, Really?" They had already started the build-out. They were probably 100 grand in. And I called my landlord, and I said, I have exclusivity." And they're like, you have Pilates exclusivity." I said, "Actually, I have fitness, physical therapy, yoga, any- I have all fitness." And he's "I don't believe that's true. I've been in the building for 10 years." So he looked and he ha- he's "Can I take you out to lunch?" I was like,

Danielle Stead Blanton

like,

Christa Gurka | Fit Biz Strategies

I did." I was like, "You can absolutely take me out to lunch." but the con- like I have... And he's "Here's what's gonna have to happen. I either have to go to them and tell them they have to be out

Danielle Stead Blanton

Yes

Christa Gurka | Fit Biz Strategies

because you're right, or what can we do?" And I was like, "Okay, here's what we can do. I want another 10 years on my lease at today's current market, and they can have ex- they we'll take the yoga exclusivity out, but everything else stays." And I was like, "That's what I'm happy with." And so again, but just being smart enough to know, understand your contracts, understand what's happening. Contracts are there for a reason. They're there to protect you, and it's a reason why I had a good person help me negotiate my lease in the first place. So where... Let's have, let's ha- tell everyone now where they can find you and your services, because if you... Actually, Danielle is listed on my website as a preferred vendor, so I know christagurka.com under recommended vendors, but give them your direct, like where should they find you if they want to reach out to you?

Danielle Stead Blanton

Yeah, absolutely. So I live on Instagram. I am an elder millennial. I'm not on the other app. @danielle.sted. I am always thrilled to connect, but the best way to get in touch is not via DMs. I find that DMs are a little difficult to do business in. I know that's not everyone's preference, but that's mine. So you can go to our website, Danielle Sted Blanton. It is linked online, and you can submit a contact form from there, and we will be in touch

Christa Gurka | Fit Biz Strategies

And we'll also link all of that information in the show notes. And also, if you decide, I... At the time of this recording, we are, we do still have a few spots left in the accelerator, but Danielle was one of the experts in the accelerator, and I would love to bring her back as a recurring guest expert to talk all things legal. So if you're interested in joining the accelerator, where you get to have sessions with Danielle and ask questions like that, you can check out my website as well. And so thank you, Danielle, so much for sharing your expertise. I hope people reach out to her. At the very least, go follow her on Instagram. just go follow her on Instagram. She drops a lot of really great knowledge. And listen, having a good attorney in your back pocket is never a bad idea. Always 10 out of 10 recommend.

Danielle Stead Blanton

Ah, bring it back. Bring it

Christa Gurka | Fit Biz Strategies

All right, thanks so much, Danielle. And ladies, until next time, bye for now.

Danielle Stead Blanton

Bye