Top of the Box: Building Businesses in the CrossFit World

David Sutor class
Crossfit Defined Co-owner David Sutor, far right, stretches with class before workout.

By: Jacob Rogers

When Neil Curran and Holly Cornille opened CrossFit Competitive Edge in Westtown on Jan. 6, 2014, they didn’t anticipate record breaking cold temperatures for that day.

No one showed up.

“It was insanely cold,” Curran said. “Holly and I basically sat in the space that we were in before this one and stared at each other for the entire day, going, ‘It’s gotta go up from here.’”

And up it went. The box, the term for a gym in CrossFit parlance, has almost doubled in size each year and now has roughly 150 members. But CrossFit CE is just one of over 10,000 affiliates worldwide and one of 30 in Chicago.

Founded by Greg Glassman in 2000, CrossFit took some time to catch on. According to LA Weekly, there were only 13 CrossFit affiliated gyms in 2005.

A lot has changed since then. The Reebok CrossFit Games are now shown on ESPN and Reebok has committed to increasing the prize purse by $200,000 each year until it reaches $3 million in 2020. In 2016, the winners received $275,000, compared to just $25,000 in 2010.

But David Sutor, co-owner of CrossFit Defined which has locations in Chicago’s Lincoln Square and Lakeview neighborhoods, said even more has changed at the local level.

Accompanying audio: In order to start Crossfit Defined, at 32-years-old, co-owner David Sutor moved back in with his parents.

“It’s incredible the amount of resources we have now,” he said. “From an education standpoint, business development, software, technology, payment processors, companies dedicated just towards the small, boutique facilities.”

Technically, the bar to opening a CrossFit box is still relatively low. All it takes is passing the CrossFit Level 1 exam and paying an affiliation fee. But settling for the minimum carries risks for owners. Justin Quandt, owner of The Foundry, a Chicago affiliate with locations in Printers Row and near Union Station, said this can lead to supply outpacing demand, resulting in a diluted product.

“I’m talking about how qualified is your team and your coaches,” he said. “So there are gyms that have nice facilities and things like that, but that’s different than [asking], ‘How good are the people that work there and how [well] is the business being operated?’”

But CrossFit is pushing continuing education. For instance, they offer a Certified CrossFit Trainer credential, which requires current CrossFit Level 1 and Level 2 certificates as well as 750 hours of coaching CrossFit.

Affiliate Guard, a company specializing in insuring CrossFit boxes and other small fitness facilities, is owned by Vaughn Vernon. He said a great example coaches becoming more educated is the significant decline in claims related to rhabdomyolysis, a condition in which muscle tissue breaks down rapidly and is typically associated with an athlete pushing too hard without proper hydration.

“I used to call it rhabdo season from late April to September,” he said, crediting the change to coaches being more educated and in turn educating their clients.

While rhabdomyolysis claims are down, affiliates face other liability challenges. Vernon couldn’t specify how many claims Affiliate Guard processed for its clients in 2016.

“That’s kind of like asking Chuck Norris how many push-ups he can do,” he said. “A lot.”

But the absence of waivers is still biggest problem Vernon sees.

“I can’t tell you how many times we’ve gotten sued and the affiliate owner can’t find their [expletive] waiver,” he said. “That is a big deal. That is our first line of defense.”

Waivers are one thing that separates the best-run boxes from the rest. Most affiliates digitize processes like waivers, payments and scheduling. Sutor said the lack of streamlined systems like automatic payment is one reason some CrossFit boxes go under, but the most common reason is owners undervaluing their time.

“When they should have been charging $175 [per month], they were dropping the value down to $120 or $100,” he said.

Sutor said offering too many discounts lowers the perceived value of the product. If a box is offering a Groupon, look elsewhere.

According to Zenplanner’s 2016 Affiliate Benchmark Report, affiliates that generate at least $7,000 per month in profit charge 30 percent more per month than struggling gyms. Leading boxes made $141 per member per month in revenue, while lagging gyms made only $73.

The report also showed leading CrossFit affiliates made $12,484, on average, in profit per month in 2016. Smaller facilities made $414 per month in profit, on average, although more than half have been open for two years or less.

Local CrossFit affiliates continue to build their brands, but their long-term viability comes down to ownership.

“It starts from the top down,” Curran said. “CrossFit owners need to take responsibility with who it is they’re hiring and also for their own continuing education and make sure that they really are honing their craft versus just being simple business owners and gym rats.”

Photo at top: CrossFit Defined co-owner David Sutor, far right, stretches with class before workout.