NEW YORK (WCBS 880) – The franchisee owner of children’s gyms in Brooklyn, who is also a real estate attorney, is choosing to pay his employees over his rent.
“I can’t pay both my employees and my rent at the same time,” said James Wacht who owns two locations of the global franchise My Gym Children’s Fitness Center in Park Slope and Cobble Hill. “My decision was to pay my employees and not pay my rent.”
This was a difficult decision for Wacht, who runs the activity spaces for infants to 10 year old kids with his son Evan, while also serving as president of Lee & Associates NYC, thus being on both sides of the tenant-landlord predicament during the COVID-19 pandemic.
He hired highly skilled trainers over a two year period and concluded it would be more effective and smarter to retain his employees and hope for leniency from his two landlords during a global crisis.
“Given what’s happened in retail the last two years, the likelihood that landlords will be able to replace a retail tenant quickly at the same rent they’re currently getting, is really unlikely, so I think landlords are going to be really hard-pressed to work something out with their tenants, Wacht said, adding, “Some of them are just not going to be able to survive.”
He highlighted restaurants and other small businesses with low margins that may not be able to bounce back from a months-long closure, even with government relief programs, as it will take capital to jump-start business operations.
He told WCBS 880 he applied for the Payment Protection Payment (PPP) Loan and the New York City small businesses loan for both gyms and a few of his other businesses. The PPP loan is forgivable if a company maintains its workforce. It can be partially used for rent payments. If accepted through his Small Business Administration-approved bank, he would be able to pay part of his monthly payment.
“What I’m hoping to be able to do with my landlords is make a deal with them saying, ‘Listen, my business got hurt, what I’m willing to do is: I will pay you some of the rent, but I want some rent forgiveness for the period of time that I couldn’t operate,’” Wacht said.
He is developing online classes for children as non-essential businesses remain shuttered through at least April 29 and he has been upfront with his landlords that he and his son are working on new revenue streams to stay afloat.
“I look at this as sort of a collaboration between me and my landlord. It isn’t me against them,” Wacht said, adding his mantra through this challenge is, “How do we solve a problem together?”