Franchised gym chain F45 is in meltdown after slashing its projection of underlying earning from up to $US100 million to just $US25 million for the year ending December 31. Adam Gilchrist (not the cricketer), the company’s Australian founder, has resigned from the business and 110 company staff – nearly half of those employed – have lost their jobs.
The network, which has more than 1500 franchise centres around the world, listed on the Nasdaq in July last year. According to MarketWatch, the share price dropped more than 60 per cent to just USD$1.31 (AUD$1.87) last month after the company announced it had “slashed its expansion plans”, reportedly to prioritise profitability and cashflow generation in the tough global environment.
Rob Deutsch who resigned his post as F45’s chief executive in 2020, took to Instagram.
“Never in my wildest dreams could I have imagined this,” he posted. “When I exited, and sold out of F45, I left a healthy, phenomenal, beast of a business. All the way from the company culture to the heartbeat of the business. I genuinely hope all of the 110 laid-off staff find happiness and opportunities elsewhere. For those OGs, I want to personally thank you for your blood, sweat and tears. You are the reason F45 was special.”
Franchisees blindsided
Franchise owners heard the bad news through media reports well before mass emails told them their businesses wouldn’t be affected.
Luke Hogbin, who owns three F45 branches in Melbourne, told the Sydney Morning Herald and The Age newspapers that F45 were promising a “network-wide meeting” with franchise owners to “let us know their side of the story of what’s going on”. He added that F45 franchisor meetings are usually led by a panel of five to ten global team representatives and allow for questions at the end.
F45 Kingsgrove head trainer Brittany Reynolds said everything had seemed “normal and fine” and there had been “no indication” or hint of any woes unveiled in the trading update.
“It was a bit of a shock when the news came out,” she told the Herald and The Age. A franchise owner in Melbourne said the news of the turmoil came “after two years of being kicked in the nuts by COVID”.
