Make It

Kevin O'Leary Reacts to an Engaged Couple's Fight Over Spending $50,000 on a Boutique Fitness Studio: ‘You Are in Maximum Risk'

Gustavo Caballero | CNBC

Running a business with your significant other can be frustrating, especially when you have very different visions for its future.

That's the challenge in front of O'Shares ETFs chairman Kevin O'Leary on the newest episode of CNBC's new series "Money Court." In the episode, O'Leary sits down with an engaged couple to help chart the best path forward for their boutique fitness studio.

Michelle Berry and Jason Brown run Elite Fitness, a small gym in Minnetonka, Minn., where both serve as personal trainers. Brown wants to invest $50,000 in finding a new, larger space for their business while Berry wants to stay put and avoid taking on debt.

With their wedding date yet to be chosen, the couple wants to get their business dispute sorted out before they say "I do." And since they signed a contract agreeing to abide by O'Leary's recommendation, his decision will be binding.

The case

In a good month, Berry and Brown each bring in about $10,000 in revenue. They pay a total of $1,000 monthly for Elite Fitness' rent and utilities.

Currently, customers pay individually for each personal training session. Brown wants to expand from their 3,300 square-foot location to a larger space, so the gym can launch a more standard membership service. But Berry wants to stay small.

"It's too risky to expand right now with the current market for gyms," she says. "There's no reason to get a larger facility and take on additional expenses."

The couple still has $10,000 in debt from opening their current location five years ago, and Berry says she doesn't want to add any more debt to the pile. She also wants Brown to prioritize the wedding above the business.

"We have a wedding to plan," she says. "Acquiring all this debt and opening a new gym is going to push it off even further."

But Brown says the couple needs to act quickly because Elite Fitness is on a month-to-month lease, and the building they are in was recently acquired. He fears that if they don't move proactively, they may end up getting kicked out on short notice.

"If we're put in that position, we won't make it," he says.

The verdict

The moment he learns about the month-to-month lease, O'Leary's eyes widen. He criticizes Berry for dragging her feet on finding a new space when the possibility of being evicted from their current location is hanging over their heads.

"For someone who doesn't like risk, how can you be looking at your situation and not be concerned?" he says. "You are in maximum risk."

However, he's bemused by Brown's desire for a membership model, calling the current per-session model "immensely successful."

He orders the couple to immediately begin relocating their gym to a location no larger than 4,000 square feet. He also orders them to keep their non-membership business model.

"You can afford this," O'Leary tells the couple. "Your coverage ratio of your debt is spectacular. You've built it up over five years. I don't want to see it go away. And I want to see you get married."

Don't miss new CNBC series Money Court featuring Kevin O'Leary Wednesdays at 10P ET.

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