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Gym industry unfazed by Fitness First sale

Friday, 7 October 2011 | By Michelle Hammond
International gym franchise Fitness First is reportedly planning to sell its Australian and Asian operations, but an industry player says the sale will have a minimal impact on smaller operators.


It was revealed in August that Fitness First, which has more than 90 clubs in Australia alone, is losing members at an unprecedented rate.


Fitness First is majority-owned by UK-based private equity firm BC Partners, which is believed to have paid $1.3 billion to take control of the chain in 2005.


According to reports, BC Partners was seeking to list the group on the Singapore Exchange in September but decided to postpone the move, most probably due to volatile market conditions.


According to The Australian Financial Review, the firm is now looking to the private equity market for interest in its Australian and Asian operations, putting out feelers to potential buyers.


The newspaper said operations could command a price tag of up to $1 million, and indicative bids for the business were due within 10 days.


David Ciantar, Australian general manager for Anytime Fitness, says while the sale indicates “the pie’s certainly growing” with regard to the gym industry, he doesn’t believe the sale of Fitness First will have a direct impact on smaller players.


Anytime Fitness is – as the name suggests – open at anytime, operating on a 24-hour basis. The gyms are also owned and operated by franchisees, unlike Fitness First.


“Fitness First sits in a difference space to where we do. Fitness First [gyms] take a lot larger premises and are also under the franchise network [as company-owned operations],” he says.


“Our priority is working with franchisees to expand the brand. There’s a really good connection with franchisees and their local communities.”


“The other thing is that our franchisees, a lot of the time, own more than one club so they have a lot more presence in terms of their local community.”


While Ciantar is confident Anytime Fitness faces no real threat from Fitness First, he says it’s a different story for independent operators, particularly with the uptake of 24-hour trading.


“In terms of a local club trying to do that, it’s a lot harder than it seems unless you’re a franchisee. We have systems in place to cater for 24-hour business,” he says.


Competition in the market does indeed appear to be heating up, with high-profile entrepreneur Richard Branson announcing the expansion of his Virgin Active chain in Australia.


Virgin Active has a presence in Britain, Italy, Spain, Portugal and South Africa – in addition to four clubs across Sydney and Melbourne – boasting more than 170 clubs in total and more than 900,000 members.


Branson has indicated that he wants to open up to 20 new clubs in Australia over the next four years, with as many as 30 sites believed to be under consideration across the country.