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Review: I am discussing my ideas about strip club design and management and designing a sample club as an illustration. The parameters are: 4000sf storefront with 10 ft ceilings, lap dances and VIP allowed but no alcohol. Club can run with as few as 3 non-dancers at slow times. The primary design goal is to maximize opportunities for interaction between dancers and customers and thus sell dances.

A great physical club will be terrible if not run well. And running a club well can be blocked by bad or inefficient design. One cannot be far separated from the other.

One of the first big questions is whether the dancers are employees or independent contractors. In some places like California the dancers must be employees by law. Otherwise clubs love to classify the dancers as independent contractors because it gets the club out of payroll taxes, many labor laws, and gives the implication that what the dancers are doing is their own actions over which the club is both ignorant and not responsible. Dancers also frequently prefer it because they can deduct expenses fully on a Schedule C whereas employees must itemize to be able to deduct work expenses and there is a minimum that is nondecuctible. On the downside to the dancers it also means that as independent contractors they need to pay twice the social security and medicare taxes (presuming that they are honest about what they are earning). The classification of dancers as independent contractors also is also a common cause for lawsuits from dancers and former dancers. Not to mention tax penalties for mis-categorizing workers.

Part of the problem is that there is no single test for being an independent contractor, but the big picture is that if you are going to call them independent contractors there must be significant areas over which the dancers really are independent. You can't call them independent contractors and then dictate what they must wear, what hours they must work, what they can and cannot say to the customers, what they can charge, what they can and cannot do with the customer, etc. None of those are automatic disqualifications, but you have to show others areas where they are genuinely independent.

So essentially you can't have both a very tight leash on quality control and independent contractor entertainers.

But if you go the employee route though you have to be sure to get the money to pay the wages and benefits from nonalcoholic drinks and entrance fees.

That leads to the revenue model. Since the door fee is not that big in this kind of club and the revenue from a juice-and-soda service not that high you need a means of getting some of all those singles and twenties being given to the dancers to fund the club's operation and, if the dancers are statutory employees, pay for wages and payroll taxes. And you have to do it in a manner that does not make the dancers feel like victims.

I have seen various combinations of four models:

1. The dancer pays a ‘stage fee' and then keeps all or most all of what they collect after that.

2. Dancers are expected to pay several ‘tip-out' fees at the end of their shift.

3. The club logs all the dances and charges the dancers a specific number of dollars per dance or minute.

4. The club collects all the payments for the dances and then the club pays the dancers on a draw against a percentage of revenue. Variations on this include paying the bartender/security before entering the dance, paying them on the way out, or various types of meters like the Deja-Vu timer poles.

I generally am negative on the first two options. Stage fees puts a lot of stress on the dancers and dancers who are worried about winding up the night in the red might do something against the overall best interests of the club. I also think that the tip-out system, particularly if the dancer is expected to make individual personal tip-outs to security, creates an environment ripe for intimidation and implied extortion. Security is the responsibility of the club, not a kind of protection racket.

When it comes to the overall ‘culture' of the club there are two possible vibes that can settle in:

1. Everybody has a real job in a real business with real customers.

2. This place is a racket where suckers are played on their emotions to trick them out of their money.

Why should the club care which attitude takes hold? Because if the second takes hold everybody will be looking for their angle on their racket and their own suckers. Dancers will be looking to trick other dancers. Security will be looking at how to squeeze money from the dancers, the bartender will be looking at how to skim some sales and worst of all everybody will be looking at how to cheat the club owner. And you do not want everybody looking at how to cheat the club owner because most of them will succeed.

Part of setting the ‘real job' vibe is having a set of ‘real job' benefits like access to group health plan rates (even if mostly paid by the employee) and 401k plans. These things make it easier for the dancer to feel that they are in control of their lives and thus less likely to be taken advantage of by others. In addition being a dancer has plenty of medical problems including injuries and exposure to a lot of people even for ordinary viruses much less STDs.

Also helping the ‘real job' vibe is management having some clear guiding principles. My list would start with the following:

1. You do not cheat the club. Not on big things and not on small things.

2. You do not cheat other dancers or disrespect their persons or possessions.

3. Do not get between a dancer and her trying to sell a customer on a dance.

4. You do not cheat the customers or disrespect their persons or possessions.

5. Do not overpromise. It is better to over-deliver than to under-deliver.

Outside the Club: I imagine that all club managers think performers that go OTC are stealing business from the club. And that feeling is no doubt justified. In addition dancers doing OTC likely are going to miss shifts as a result and make it harder to schedule the club. But how do you stop it in reality? What does our sample club do? If you can't beat them join them. So the club has an affiliate ‘modeling agency' that all OTC must be booked through. In some jurisdictions the license to operate the club prohibits offering escort services so the modeling agency may need to be an entirely separate entity next door. The justification isn't so much the money but the improved ability to schedule and making things safer both for the customer and dancer and promotes the ‘real job' vibe. OTC is risky, either that the dancer might do a rip-off or the guy might do something violent or dishonest. In addition when booking the OTC the right statements and disclaimers will be made to help protect the club from being charged with pimping. The agency will call the OTC ‘modeling', ‘party entertainment', ‘private function attendance', or such. The dancer sets the rate, the customer pays the modeling agency, and the agency then later gives the money to the dancer. The agency percentage on the OTC will be 10%. That seems small, but that puts it in the same league as other talent agencies and thus less likely to get unusual scrutiny. In addition since the agency fee is just 10 percent there is little incentive for the dancer to go behind their back.

I know that for some of you the ‘magic' of getting a girl to go OTC with you is the illusion that you ‘succeeded' in getting her to ‘go on a date'. But who are you really fooling. I realize that much of the ‘magic' of that illusion is lost if is really is just a matter of making an appointment with the booking agency. On the other hand it saves a lot of trouble and uncertainty and potential legal complications

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