Fitness entrepreneur targets closing F45 gym sites

Media reports on the ongoing troubles of F45 Training and its franchisees have advised that around 150 of its gyms are in “distress”.

Into this market, fitness entrepreneur Serkan Honeine, founder of group training business C3 Training, is looking at the F45 sites with two of his chain’s seven Sydney locations being having formerly been part of the F45 network.

According to Honeine’s broker, there are currently 151 distressed F45 locations up for sale across the country with some F45 owners just looking to surrender their lease for no cost - almost 30% of F45’s Australian sites.

A News Ltd report has also advised of other F45 sites appearing to be “on the verge of collapse”.

Last month, several gyms in Queensland and far north NSW operated by a multi-site franchisee appointed Bill Karageozis and Nick Keramos of restructuring firm Mcleods Accounting.

Those businesses traded under the names F45 Training Mount Isa, F45 Training Burleigh Heads, F45 Training Gold Coast, based across Queensland, and F45 Training Tweed Heads, on the NSW-Queensland border.

Commenting on the expansion of C3 Training, Honeine told News Ltd “we’re speaking with brokers all the time, where can we find locations (for our gyms).”

In doing so Honeine’s broker discovered 151 F45 franchisees were trying to sell up their businesses.

Honeine explained “unfortunately (for) a lot of F45 (franchisees), if they can’t exit their lease, they’re going to be forced to shut down.”

As a result, C3 Training took over the F45 Padstow gym in Sydney’s west in early October.

The Padstow branch couldn’t find a buyer so, Honeine advised “we went in there and took over the lease.”

It has since been repainted and the logo has been replaced with that of C3 Training.

In July, the owner of F45 Drummoyne in Sydney’s inner west moved to C3 Training after seeing his membership base dwindle to one third of its original size.

The Drummoyne company director, Jack Burke, told News Ltd “at its peak, F45 Drummoyne had over 300 members” but then this “slowly dwindled away to fewer than 100 members”.

Since switching to C3 Training Burke claims his membership base has jumped by 50%.

Commenting on the transformation, Honeine noted when F45 arrived in the market it “pioneered the concept of group training at a huge scale and set the foundations for the rest of the industry to build on … but since then the product hasn’t evolved.

“And of course, COVID-19 was a real catalyst for a lot of people who sought out other training options.”

According to Honeine, the F45 training model can also lead to members facing a plateau in their progress due to the repetitive nature of the workouts.

F45 was a 'slow motion train wreck'
Tom Dowd, F45's newl appointed Chief Executive, has advised that he is optimistic that e company can be turned around in spite of reporting losses of US$372.3 million in 2021 and 2022.

Speaking on the Future of Fitness podcast in the run up to the release of the company's latest results, Dowd said F45 had been a "slow motion train wreck", but that new management is now in place and resolving the issues

Despite being entangled in a number of legal challenges, Dowd acknowledged that the business had suffered from a lack of management expertise, commenting "(the management team wasn’t) focused on running a good business - they didn't even review P&Ls.

“They were behaving like cowboys, running around trying to sell franchises and not focusing on how to be profitable or looking after the franchisees.

“I dealt with the (previous) F45 (management) team as an investor and it was frustrating due to their lack of ability to be decisive, which is critical to any business."

Images: The new C3 training in Padstow gym (top) and in its former guise as an F45 gym.