Alison McElroy, general counsel of Snap Fitness, Inc. ()
Snap Fitness Inc.’s legal department is small in headcount, but the two-attorney department handled an impressive array of deals during the past year.
The Chanhassen, Minn.-based franchiser of 24-hour, affordable gyms has grown to more than 2,000 locations around the globe during the past decade and expanded into additional wellness-related businesses through a series of acquisitions. Inc. magazine recognized Snap Fitness last year as one of the fastest-growing private companies in the United States.
“The company grew incredibly quickly,” said general counsel Alison McElroy, who founded its legal department nearly five years ago after handling international franchise matters for Snap Fitness as an associate at Faegre Baker Daniels.
Last year marked the largest transaction so far for the company. In December, it closed on a private-equity deal with New York-based TZP Group, which invested more than $200 million in the gym. TZP bought out minority investor Summit Partners L.P.
The deal, McElroy said, will fuel the company’s quest for expansion. “A lot of our growth is funded through the cash we already have, and having TZP enter as a partner will help us accelerate that and continue the growth with our new brands and with Snap Fitness,” she said.
That growth includes a slew of recent acquisitions. In addition to expanding its core gym business, Snap Fitness in 2012 acquired Kosama Holdings LLC, a chain of boot-camp style workout studios now located in 10 states. Snap Fitness followed up in early 2013 by purchasing kickboxing gym 9Round for an undisclosed amount. In December, it acquired Minneapolis-based personal training chain Steele Fitness Inc.
All that adds up to a lot of due diligence and related deal work for Snap Fitness’ legal department. “Anything that comes along, we do,” McElroy said. “We do as much in-house as possible, since we know the business best.”
Her department handles franchise and corporate matters plus local health club licensing and litigation, she said. Work that goes to outside counsel is more “specialized” and includes intellectual property, real estate and some litigation. “We use local counsel for international matters, of course,” she said.
McElroy was deeply involved in the company’s acquisition of Steele Fitness, according to founder Steele Smiley. “What impressed me about [the Snap fitness legal department] is that they had a really good business context for the transaction and the points we were discussing,” he said. “They were really coming from a business standpoint and not just a legal one.”
In some ways, being such a small department has proved a blessing, McElroy said, because it makes communication much easier and allows everyone to stay on the same page. Moreover, she said, it’s fun to have a hand in nearly all of the company’s various legal needs.
“We’re pretty efficient,” she said. “We get a lot done and we work pretty hard. We certainly have no trouble staying busy.”
Name of company: Snap Fitness Inc.
Headquarters: Chanhassen, Minn.
No. of lawyers in Twin Cities area: 2
No. of U.S. lawyers outside Twin Cities: 0
No. of lawyers outside U.S.: 0
General counsel: Alison McElroy
KEYS TO SUCCESS
Eat lunch in the company lunchroom. Be accessible. At Snap Fitness, we focus on being proactive and accessible and cultivating relationships with the internal clients and the business team.
Focus on solutions. We work with our business to be as entrepreneurial as the business itself, and we focus on finding practical business solutions.
Have fun doing what you’re doing. We’re lucky that we work in the health and fitness industry, and we can get excited about what we’re selling and the difference we make in people’s lives.
— Alison McElroy