California Fitness was a brand well known around Hong Kong in China, as well as in Singapore. It was the second largest gym franchise for the latter, with Wong Lun as director. In Hong Kong, its notoriety is due to its 12 outlets across the city and a total count of 100,000 members. While its fees were not exactly low, the news of its demise came as a shock. Soon after the 12 Hong Kong branches were closed, the ones in Singapore followed.
Closing down all outlets
California Fitness did not decide to shut down only some of its gym clubs in Hong Kong. It went out of business entirely. Although it appeared as if it made enough of a profit, but something did not go right and forced the brand to disappear. The problem was not an obvious one considering that most of its members were loyal ones and were constantly renewing their memberships and never had major complaints.
What went wrong?
In the eyes of its loyal members and regular gym goers, California Fitness was good value for money. It was so for a good reason: the gym offered them plenty of facilities. It actually felt like a select club, to which one could come daily. More and more courses were included and people could even opt for purchasing vitamin supplements straight from the gym. The brand tailored different packages to suit different types of members. However, most people stuck with the basics and were not lured in to buy the extras.
The company was thus paying to provide more, but the crowd had no interest in the offer. This is where the profit went down. Soon enough, the income was too low to even pay the rent for each of the functioning outlets. Month by month, the cash flow stayed at very low levels.
The court’s official papers reveal important numbers. Until 2016, the company had lost consecutively HK$43 and HK$34 million. From January to May 2016 it lost HK$14 million. The current cash available is estimated at HK$16 million. Still, these amounts don’t sound such big as we count the value of sold memberships. Gym goers paid in advance up to 1 billion. It is hard to understand how things turned so badly, considering that the gym was making such a profit.
The closing decision
The closing of California Fitness was with immediate effect. The announcement was made on July 20 right after midnight, one day after the High Court’s decision. It was an abrupt change that took all gym members by surprise. The brand was owned and operated by JV Fitness, which did not possess enough resources to keep it operational. In the press release, it was mentioned that further options could be explored in order to push the business back and make it a functional again; however, the decision was compulsory – that of ceasing all activity right away.
A change of ownership
Many have considered that it was the change of ownership in 2012 that affected the business. California Fitness was previously owned by 24 Hour Fitness, which is a reputable brand known worldwide, able to keep countless gym centers operational. The brand was sold again in 2015 and all these moves appear to have destabilized it. Debts piled up and rumors say that the seller never mentioned the existing financial difficulties.
The cash flow at California Fitness, although pretty impressive on its own, would have never managed to cover both the expenses and the debt. With all Singapore branches closed, the gym franchise remains shut down “until further notice”.
If you are affected, here’s what you can do:
1. Cancel your California Fitness monthly instalment – Contact your bank immediately be it via credit card or GIRO.
2. Contact a lawyer and relevant authorities – Consumers Association of Singapore (CASE) hotline number is 61000315.
3. Sign the online petition on change.org for California Fitness to refund its victims – The link is here.
4. Join my gym – You still need to workout right.
Try out Anytime Fitness gym at Kallang Wave Mall for a free trial. No obligation and no hard selling. Call (+65)88097170. Do mention “Bodybuilding Singapore” as referral to extend your trial date.
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