Swim Loops Pty Ltd, the entity in charge of embattled children’s franchise JUMP! Swim Schools has gone into voluntary administration.
After a horror 12 months that has seen the brand embroiled in a series of ongoing court proceedings and franchisee disputes, JUMP! Swim Schools management on Monday made the decision to restructure.
In a statement obtained by Inside Franchise Business, a JUMP! spokesperson revealed that the costly legal battles had finally taken their toll.
“As part of a longer-term strategy to restructure the group, management has today placed Swim Loops Pty Ltd into voluntary administration,” the spokesperson said.
“The company has been hamstrung with ongoing legacy issues with multiple leases on premises that were unable to gain approvals. This has resulted in an increase in costs and legal expenses that were simply no longer viable for the company.”
While the JUMP! Swim Schools voluntary administration is likely to buy some time for the group to get its affairs in order, the business’ future remains uncertain.
“The administration will allow us to negotiate with creditors to ensure we can refocus on our existing network of franchisees,” the spokesperson said.
“This administration will not impact the wider group of companies nor our trading franchises who are all independent owners. No swim schools will be closed as a result.”
Glenn O’Kearney of GT Advisory and Consulting has been appointed as administrator. The move comes after a wind up application was put forward by Western Australians Barry and Dorothy Ryle on April 30.
Since January, JUMP! has faced a barrage of media attention after franchisee Juliet Sharpe came forward with her story.
The disgruntled franchisee was not alone. Over the last six months, reports of mismanagement, underpayment of tradespeople and build delays have flooded in.
Most recently, Northern Beaches franchisee Shaun Trumbull took JUMP! to court, alleging the franchisor had engaged in misleading and deceptive behaviour.
Representations were made to him that his swim school would be operational within six to nine months, however two years on, ground remained unbroken.
Inside Franchise Business reported that despite his financial burden, Trumbull had been unsuccessful in recuperating his lost funds. At the time, the former franchisee asserted that while he had not been granted the win, he believed “time would vindicate”.
Today, that vindication was in part, granted.
“I think the existing network has been damaged by the conduct of JUMP! Depending on what happens with the administrators, it could be a good thing to see them resurrect some value in their business,” Trumbull told Inside Franchise Business.
JUMP! Swim Schools voluntary administration outcomes
Trumbull revealed that while the JUMP! Swim Schools voluntary administration decision came as no surprise to him, he believed the administration process might answer some burning questions.
“I think for a lot of families this will be shocking, certainly not for me, but I think what is most important is finding out what exactly happened. Where has the money gone?”
“JUMP! made me a settlement offer two weeks ago, right before my trial only to enter administration now. If you look at my case, had I accepted the offer, it would have negated Ian (Campbell, JUMP! managing director) and two others’ individual liability, and yet I’d still be in the same position I am in now.”
The JUMP! Swim Schools voluntary administration move does see some new concerns arise however, with Trumbull challenging the franchisor’s claims that no existing franchisees would be affected.
“For a lot of the existing network, in cases where the franchisee operates the lease, they will be fine. Where it becomes interesting is in situations where JUMP! is the lease holder,” he said.
“Those existing franchisees are going to have meet and negotiate directly with the landlord in order to continue trading.”
While Trumbull said he didn’t expect to receive any financial gain from the creditors meeting or the JUMP! Swim School voluntary administration decision, he remained hopeful new information would come to light.
“Clearly, you must have a very strong business model to sell 100 franchises, so to go into voluntary administration it spells one of two things; either poor management or a flawed system. It could very well be a combination of the two. Not until we really open this up, are we going to find out.”