Auckland gym court case has global implications for franchising

The dispute between Auckland fitness franchise Club Physical and former franchisee Jolt Fitness has "global implications" for the franchising industry according to Franchise Association of New Zealand (FANZ) Executive Director Graham Billings

Jolt Fitness cancelled their Club Physical franchises at three Auckland gyms, in the suburbs of Three Kings, Botany and Westgate at the beginning of February, rebranding them under the Jolt Fitness banner.

An injunction to stop Jolt Fitness from trading was brought before the New Zealand High Court on Tuesday.

In Court, Club Physical owner Paul Richards alleged that the actions of Jolt Fitness owner Stuart Holder were a breach of franchise agreements that had "years to run on them" and that the cancellation was without notice.

Speaking to Australasian Leisure Management about the implications of Jolt Fitness' cancellation of their franchise agreement, FANZ's Graham Billings stated that it was his hope that courts would "uphold the principle of franchising contacts as a legal document and that people shouldn't break them."

Billings referred to past cases where courts in New Zealand had upheld franchise agreements.

Adding that "the fundamental principle of franchising is a good and valid franchise agreement that can stand up in Court", Billings believes that the case has global implications.

In New Zealand, where franchises employ over 100,000 people and are worth $21 billion to the economy, Billings suggested that the implications of this case are "serious."

While Jolt Fitness' Holder listed a number of grievances surrounding the franchisor-franchisee relationship in court, Australasian Leisure Management understands that Jolt Fitness did not make use of any type of mediation to resolve these issues with Club Physical.

A decision on the matter is expected from Justice Helen Winkelmann as of next week.

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