Viva Leisure 'confident' that it is dealing with franchising appropriately

ASX-listed Viva Leisure Limited has issued a statement advising that it "is confident that it and its group companies are dealing with franchising appropriately and in accordance with the law".

Released today, the statement follows an article in the Australian Financial Review which reported that more than 50 Plus Fitness franchisees are threatening legal action and making a statement of claim to the company as a result of dissatisfaction over a change to franchise agreements.

As reported by the Australian Financial Review, a group of 53 franchisees operating 64 locations are disputing a change to their franchise agreement that allegedly allows Viva Leisure to open new gyms close to existing Plus Fitness sites.

The change, known as a territorial exclusivity provision, determines the level of protection that franchisees have when their franchisor opens new stores that are likely to compete with them.

The franchisees claim that under the changed agreement any business associated with Viva Leisure could open in close proximity to them

Viva Leisure, one of the nation’s largest gym and health club chains, bought the Plus Fitness master franchise network of 200 franchised outlets from Australian Fitness Management (AFM) in July last year. The company also owns more than 100 other gyms, operating under brands including Club Lime, Fit N First, Pinnacle Health Clubs, GroundUp and Psycle Life.

The letter from the franchisees’ law firm reportedly warned Viva Leisure that they would commence proceedings on behalf of the Plus Fitness franchisees, if their concerns were not addressed within a month.

The letter also included a draft statement of claim for a class action in the Federal Court in NSW on behalf of two applicants.

The 28th April letter warned unless a resolution was found in 28 days, the law firm had been instructed to commence proceedings to “obtain appropriate relief” to address franchisee concerns.

It went on to say, “this relief will include, inter alia, damages, and orders varying the Plus Fitness franchise agreements”.

In response, Viva Leisure released a statement advising of its confidence that it is dealing with franchising appropriately.

The statement advised “Viva Leisure and AFM are engaged in confidential discussions with some franchisees and Viva Leisure has no comment on those discussions including the extent to which the content of the article form part of those discussions.

“Viva Leisure acquired AFM … and is committed to the success of the Plus Fitness franchise network.

“Viva Leisure has invested significantly in the Plus Fitness network and in April 2021 appointed experienced industry executive Gordon Martin as Head of Franchising.

“Viva Leisure is looking to grow the Plus Fitness network to 300 locations and continues to work to support and promote its Plus Fitness franchisees.”