Jolt Fitness succeeds in Court application to continue trading

The directors of the breakaway Auckland fitness franchise that rebranded their clubs as Jolt Fitness at the beginning of February have been successful in their application to the New Zealand High Court to continue trading.

Having been told to stop operating with immediate effect by the New Zealand High Court on Thursday, an appeal by Jolt Fitness has resulted in Justice Helen Winkelmann granting a stay until Monday 18th March to allow, according to statement from Jolt Fitness, "the parties to progress discussions towards an amicable resolution of the dispute.

"Both parties are committed to progressing discussions and to coming to an agreement that will ensure the clubs members are not disadvantaged in any way."

The statement continued "this means that the Westgate, Three Kings and Botany Downs clubs have received legal permission to remain open."

Meanwhile, the Franchise New Zealand business magazine has been considering the implications of the dispute for the parties involved and for franchising in New Zealand.

In a feature 'Club Physical the dangers of warring in public', Simon Lord writes "the battle between Club Physical franchisors Paul and Tina Richards and defaulting franchisee Stuart Holder continues to make headlines in the general media. The issue is clearly a significant one for the franchise, as three of its nine outlets were rebranded by Mr Holder as independent outlets under the name Jolt Fitness and their members transferred to the new brand, apparently without the members being asked for their assent.

"Unusually for a franchise dispute, this one has been publicised by the franchisors, who have used media releases and Facebook to promote their version of events while the Court decides whether or not an injunction should be issued to prevent Mr Holder from trading under the new name of Jolt Fitness.

"The latest press release from the franchisor is headed 'Members get physical about broken agreement' and includes a photograph of a demonstration by Club Physical members outside the rebranded gym at Auckland's Westgate Centre. It is not apparent how many people were involved in the demonstration, although several of the banners are in similar handwriting.

"Mr Holder has not spoken to the media to give his side of the issue, and both he and his franchise lawyer, the normally media-friendly Stewart Germann, made no comment to a reporter from TV3's Campbell Live.

"However, according to the New Zealand Herald's report of the injunction hearing, Mr Holder felt he was not receiving sufficient business support from the franchisor in order to stave off competition. A further point of contention was the type of marketing material being produced by Club Physical, including an advertisement which showed aliens shooting fat people with the slogan 'Get the fat people first.'

"Phillip Rice, the lawyer for the franchisor, countered that Mr Holder had bought the three gyms over several years, suggesting that he was happy with the business, and had then cancelled the agreements at the same time as franchise fees - which had been waived for the first two years - became payable. He suggested, 'The evidence shows there was clearly a predetermined plan here to acquire several franchises and at the opportune moment, terminate on some pretext.'

"A decision on the injunction application is due to be released early next week. In the interim, however, the Executive Director of the Franchise Association has been quoted as saying that the case has global implications. Graham Billings told the Australasian Leisure Management website that 'it was his hope that courts would uphold the principle of franchising contracts as a legal document and that people shouldn't break them.' Club Physical is not a member of the Association.

"The idea that the case might have global implications seems a little extreme, as this is hardly the first time that a disgruntled franchisee ...

For more information go to www.franchise.co.nz/article/1617

8th March 2013 - JOLT FITNESS CLUBS STAY OPEN IN AUCKLAND

7th March 2013 - COURT ORDER STALLS BREAKAWAY GYM FRANCHISE

28th February 2013 -  AUCKLAND GYM COURT CASE HAS GLOBAL IMPLICATIONS FOR FRANCHISING

25th February 2013 - MEMBERS GET PHYSICAL ABOUT BROKEN FRANCHISING AGREEMENT