Should You Open a Second Martial Arts School? The Truth About Going Multi-Location

I had a conversation recently with Scott Sullivan — he and his wife Brandi run Bam Bam Martial Arts in Houston, one of the finest schools I know — and he asked me a question I’ve fielded a hundred times in forty years: “Master Oliver, should I open a second location?” He’d heard things over the years, formed some opinions, changed some of them, and wanted the real lowdown on operating multi-school before he made a move.

So let me give you the same candid answer I gave Scott — names, numbers, and all — because almost everything the average owner believes about opening a second martial arts school is wrong, and getting it wrong can cost you your lifestyle, your profit, and your sanity.

Two Is the Worst Number You Can Have

This sounds backwards, so sit with it for a second: it is easier to run five schools than three, and easier to run three than two. Two is the hardest, most miserable number of locations you can own. Why?

Because the moment you go past one location, you have to build “corporate” capability — management talent, training systems, marketing coordination, accounting — and most of that overhead is fixed regardless of whether you have two locations or nine. With two, you’re carrying that cost with almost nothing to spread it across. With five, the same overhead gets divided five ways. The trap with two is mental: you stop thinking like a multi-school operator and start thinking “I have my main school… and a branch.” That single shift in mindset is where most second locations go to die.

The #1 Mistake: Opening “a Second School” Instead of Becoming a Multi-School Operator

Here’s the most common failure I’ve watched play out, over and over, for decades. An owner opens a second location, never really gets it off the ground, and then it just… sits there. Forty students, going nowhere, quietly draining the lifeblood out of the profitable original location. And they won’t pull the plug — because of the lease, because of the people they’ve hired, or because of plain ego. I’ve seen excellent owners I genuinely respect get stuck in exactly this spot.

The root cause is almost always the same: they didn’t grow it fast out of the gate. A slow start is a death sentence for a second location.

Here’s how I did it, and what I’d do again. I opened each new location with the team that was going to run it — fully trained before the doors opened — and I went in myself as the marketing lead, the program director, the salesperson. Never as the head instructor. I’d spin the school up hard and fast, and within about 90 days I’d hand it to the team and go open the next one. The one time I broke my own rule and parked myself on the floor as the head instructor, it bit me — because when the owner is teaching every class, people get annoyed the day you leave, even though leaving was always the plan. Go in as the engine of growth, not the face of the floor, and get out on schedule.

The Profit Myth That Sinks Owners

This is the big one. Almost everybody who goes multi believes the same fantasy: “My one location nets beautifully — so if I multiply it by five, I’ll be rich.” It almost never works that way.

Between corporate overhead and staffing, multiples have a nasty tendency to run around 10% to the bottom line. Get five locations to half a million gross each, netting maybe $50,000 apiece, and you’ve got roughly $250,000 total — about a quarter of what a single, fully maximized location can net — in exchange for five to nine times the headaches. Read that again before you sign a lease.

Now, per-location profit is a choice, and smart operators play different games. My friend Bill Clark was always happy to make about $2,500 per location — with enough locations, that adds up to real money, and it’s a perfectly valid model if you go in with your eyes open. Steve LaVallee and I once sat down and compared P&Ls; his revenue per location ran well above mine, yet once you tallied the overhead across the chain, that higher top line didn’t translate into a higher net — the margin got squeezed. Other very successful operators, like Dave Kovar, deliberately run high-volume, high-overhead organizations at thin net margins because they’re building something bigger than a paycheck. None of those owners is wrong. But you’d better know which game you’re playing before you start, because they pay out very differently. This is the same hard-nosed math behind building a million-dollar martial arts school.

The 80/20 Rule Never Takes a Day Off

Suppose you do everything right — you train every team perfectly, you manage the numbers like a hawk, you feed them every bit of marketing you can. You will still get the 80/20 rule. Out of five locations, two will be kicking it and the other three will land somewhere between mediocre and poor. And it won’t always be the same two.

Staff oscillate. You’ll have managers who have a fantastic quarter, then coast for three months until you light a fire under them, then have another great quarter. Owners do the exact same thing — engaged, then disengaged, then engaged again. With a single school and healthy cash flow, you can absorb that rhythm. With a chain, you’ve got five, six, seven different places where things can go sideways at once — and without a strong general manager keeping an eye on the ball every single day, you end up managing anarchy in a hurry.

How You Pay Your Managers Changes Everything

If you do go multi, the single biggest lever you control is your compensation structure. Here are the four broad models, roughly worst to best for motivation:

• Salary or hourly plus a year-end bonus. The easiest to set up and the weakest by far — nobody runs through a wall on a fixed wage.
• A full-blown franchise. I’ve been there. It’s a works project for lawyers and accountants, and you still get the 80/20 — only now with even less day-to-day control, because the operator feels like they own the place and does as they please.
• A percentage of top-line revenue paid to the key person running the location. This was my model for years. It aligns them directly with growth, and a hungry, entrepreneurial operator can do very well.
• A minority-partner or “proprietor” stake. Think of the “proprietor” sign over the door at an Outback Steakhouse — not an independent franchisee, but someone with a real percentage stake in the cash flow of their location. Danny Shulman ran a version of this. When you get a genuinely motivated operator, it’s powerful.

One cautionary tale worth remembering: Bill Clark once handed branch managers something like 30% of gross. The managers at the strong schools ended up paid so richly that there was nothing left over to prop up the weak schools — a comp plan too generous for the winners and too thin to carry the losers. My advice to Scott was simple: don’t put your key person on salary or hourly, don’t bother with the full franchise, and choose one of the two middle models — then have your own attorney and accountant paper it properly.

What About Bringing Your Kids Into the Business?

A lot of owners dream of handing locations to their children. It can work beautifully — but go in knowing it’s double-edged. Kids tend to perceive your systems as “Dad’s systems,” and many will instinctively rebel to prove they can stand on their own. More often than not, the ones who could run the business drift toward the athletic, tournament side instead, looking at themselves in the mirror rather than at the P&L. I’ve watched this dynamic play out fifteen or twenty times. The cases that work best are usually the reverse — a business-minded kid quietly fixing the operation underneath their dad. Just plan for the wrinkle.

The Real Reasons to Go Multi Are Intangible

Here’s the truth almost nobody admits out loud: the best reasons to build a multi-school organization usually aren’t financial at all.

When I was running five and six locations doing five to six million gross, the magic was never the money — it was the critical mass. Intramural tournaments of 700 to 1,000 people. Black belt extravaganzas that sold out the Paramount Theater — 2,200 seats. Producing 100 to 150 black belts a year. A national and even international presence. I couldn’t walk through town without being recognized, either from television or because they were one of my students. When you have enough locations, you become the big kahuna — you can command citywide publicity a single school could never touch.

That’s really the Jhoon Rhee lesson, too. My teacher built one of the most famous martial arts brands in America on exactly this kind of presence — constant television, the Washington Post, friendships with celebrities and politicians. (I told that whole story in the lineage of Stephen Oliver and Jeff Smith.) But there’s a strategic fork in the road every empire-builder should understand. You can build an organization around your own persona, or you can build one that elevates the people underneath you. Grandmaster Jhoon Rhee built largely around Jhoon Rhee — and it made him a legend. Grandmaster H.U. Lee built the ATA the other way, deliberately making it about the instructors he was developing, and it scaled into one of the largest martial arts organizations in the world. Neither path is “wrong.” But know which one you’re building, because it determines how big the thing can get — and whether it can ever run without you in the room.

Build the School Around You — Not a Fantasy of “a Real Business”

The most valuable question isn’t “how many locations should I have?” It’s “what actually gets me out of bed in the morning?” Build the business around that — not around some fictionalized vision of what a business is supposed to look like.

Keith Hafner ran a single school doing about $120,000 a month at roughly a 60% net, and he built the entire operation around the life he wanted — a fixed daily rhythm he loved, doing every enrollment and renewal himself. He wouldn’t trade it for a chain if you paid him. Me? I’ll be honest with you: I’m terrific at running a school for 90 days, maybe six months — and then I get restless, because I’m simply not wired to turn the same crank over and over. So I built around openings, systems, and marketing rather than daily operations. Elon Musk built the most valuable companies on earth essentially because he wants to go to Mars — the rockets aren’t the point, the compelling vision is. Figure out your vision first. Then build the business to serve it, instead of contorting your life to serve the business.

Your School Is Cash Flow, Not a Nest Egg

One more hard truth — one Nick Cokinos and I used to talk through years ago. Your school is probably not going to make you rich by selling it someday. What it does brilliantly is throw off cash flow. Your real job is to route that cash flow into assets that actually build wealth.

A martial arts school, much like a dental practice, is genuinely hard to sell: it’s personality-driven, and there are very few qualified buyers. Compare that to a financial advisor who builds a book of $150–200 million in assets under management — that’s a real, sellable asset. There are rare exceptions in our world — Barry Vanover sold Premier for a reported eight figures — but those are the exception, not the plan. So read Michael Gerber’s The E-Myth and Robert Kiyosaki’s Cashflow Quadrant, and treat your school as the engine that funds your wealth, not the nest egg itself.

So… Should You Open That Second School?

Here’s exactly what I told Scott, and I’ll tell you the same. If what you want is the fewest headaches, the best lifestyle, and the highest net profit, then don’t open a second location — maximize the one you have.

Scott runs a terrific school in about 2,400 square feet. Expand into 3,600 or 4,800 feet, attack the dropout rate, push toward 600 students, and a single location can do $2 million gross and $1.45 million net — with a fraction of the human problems, where you still personally know every student’s name. In most schools, you can add 50–60% to your net right where you are, with no new headaches at all.

Go multi-location for exactly one reason: because the scale, the presence, the events, and the impact genuinely light you up. If running a 1,000-person tournament and being the name everyone in your city knows is what gets you out of bed, then let’s go build fifty locations and I’ll show you every rope. Just don’t do it expecting fewer headaches — it multiplies them — and don’t do it expecting more money, because you can almost certainly out-earn it by maximizing what you already own.

Related Reading

• Multiple Schools, Licensing & Partnerships: The Legal Trap That Sinks Expansion
• The Renewal Blitz and the Leadership Tier: How to Double Your Gross in a Million-Dollar Martial Arts School
• The Owner Leverage System: Buy Back Your Time and Build a $1M School
• From Struggling to Million-Dollar Martial Arts School
• Case study: How the Sullivans built a $1.3M school from a $7.42 start

Frequently Asked Questions

Should I open a second martial arts school?

Only if the scale, presence, and impact of a larger organization genuinely excite you. If your goal is maximum profit and the best lifestyle, you’ll almost always do better by maximizing your existing location first — bigger space, lower dropout, more students — than by adding a second location.

Why is two the hardest number of locations to run?

Because most of the “corporate” overhead a multi-school operation requires — management, training, marketing coordination, accounting — is fixed the moment you pass one location. Two locations carry that cost with almost nothing to spread it over, which is why it’s genuinely easier to run five than three, and three than two.

How much profit does a second location really add?

Usually far less than owners expect. Between overhead and staffing, multiples often run around 10% to the bottom line, so a second location can add a lot of revenue and headaches while contributing modest net profit — frequently less than you’d gain by maximizing the school you already have.

How should I pay the manager of a second martial arts school?

Avoid pure salary or hourly for the key person running the location — it rarely produces strong performance. A percentage of top-line revenue, or a minority-ownership/“proprietor” stake in the location’s cash flow, tends to motivate best. Whatever you choose, have an attorney and accountant structure it properly.

The Bottom Line

Going multi-location can be a magnificent thing to build — but build it for the right reasons, with your eyes wide open to the math. Two is the hardest number, the profit rarely multiplies the way you imagine, the 80/20 rule never sleeps, and the genuine payoff is usually the presence and impact, not the bank account. Most of the time, the smartest, richest, least stressful move is to take the one school you have and make it extraordinary.

Want my complete student-acquisition system — on me? I’ll send you a FREE copy of my book, Six Simple Steps to Add 100 New Students to Your School — the exact playbook for maximizing a single location before you ever think about a second one. Claim your free copy now at FillYourSchool.com.

Stephen Oliver, MBA, is a 10th Degree Black Belt, founder of Mile High Karate, and the founder of Martial Arts Wealth Mastery. Known industry-wide as “The Millionaire Maker,” he trained at the Jhoon Rhee Institute and has built and coached more six- and seven-figure martial arts school owners — across single and multi-location organizations — than anyone in the industry. Read his full bio.