In part one of this series on closing/selling a club, I discussed the pros and cons, as well as the benefits and pitfalls associated with either permanently closing a club or selling it to a new ownership group. In doing so, I shared the story of two club closings, one a well-handled club closing, and the other, a poorly handled closing.

In the second part, I am sharing tips on how to prepare for the possible sale or closing of a club, so that the involved stakeholders walk away with a sense of closure and a belief that the business considered their needs and interests.

It all begins with creating a plan and working your plan. Nearly every club operator has an emergency plan in place to deal with in-club emergencies, such as member and employee injuries, fires and natural disasters. Furthermore, good operators make it a habit to rehearse their emergency response plan so that when the real deal occurs, they can execute on autopilot.

Unfortunately, most club owners do not do the same for their business, often because they do not envision their business facing a life-threatening emergency. As we all know, businesses regularly fail, and when they do, having a well-prepared response plan can lessen the negative consequences and potentially insure that the ownership group can continue to do business another day. Likewise, when selling a business, you need to have a plan in place so that the transition process that occurs takes into consideration the club’s members and employees, as well as the ownership group’s potential interest in opening another business in the future. Although a business emergency plan that addresses the closure or sale process cannot be physically rehearsed, it can be reviewed regularly by ownership, which in the future will go a long way toward protecting the interests of all the parties involved.

Here is what goes into a plan for club closure or ownership change:

1. Create a strategy to assist employees with the transition. When a club closes its doors or when new ownership takes over, employees typically experience the greatest anxiety. For employees, the prospect of losing their job or, in the best case, having to deal with a new employer who may not provide the same quality workplace environment, often leads to behaviors that have dire consequences for the business. As a result, every operator needs to have a strategy in their plan that addresses:

• Payment of unused and accrued personal and vacation time. At all of my former companies, we had policies to address this and made sure to adhere to them, even if it cost us money.
• Assistance to employees in finding a new job or transitioning to a new owner. If you are closing the club, then you should have a plan in place to assist employees in finding new work in the industry or in the marketplace. At one club closing, we actually offered a job fair for our employees. In every case, you should provide the proper references for employees so it makes it easier for them to find work.
• If the club has been sold, then the seller should arrange for existing employees to keep their jobs for a transitional period until the new owner has an opportunity to evaluate the performance of the employees. A typical transitional period may be 90 days.

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