Franchised fitness giant Gold’s Gym has filed for Chapter 11 bankruptcy protection, as it struggles with the impact of coronavirus lockdowns.
In a statement, CEO Adam Zeitsiff said that the move was part of a restructuring process which would see at least 30 company-owned gyms close permanently.
He added, however, that the action would not mean the end of the business, saying that the company was “absolutely not going anywhere” and that it planned to emerge from bankruptcy protection within three months.
“This pre-negotiated filing will enable us to emerge stronger and ready to grow, and it is our intent to be on the other side of Chapter 11 by 1 August 2020, if not sooner,” Zeitsiff said.
“The global COVID-19 pandemic spurred us to take immediate action, including the difficult but necessary decision to permanently close about 30 company-owned gyms, to maintain the strength and growth of the potential of the brand as well as ensure the continued viability of the company for decades to come.
“We have been working with our landlords to ensure that the remaining company-owned gyms reopen stronger than ever coming out of this pandemic.”
The franchised businesses will not be affected by the move, either.
“To be clear, the filing should not impact our licensing division, it is not associated with any of our locally-owned franchise gyms and nor will it prevent us from continuing to support our system of nearly 700 gyms around the world,” Zeitsiff added.
The news comes just months after Gold’s Gym revealed record growth in the business.
In January, the company said it had completed 22 US franchise agreements and a total of 35 new openings worldwide during 2019 – the most in a single year in its history.
The company’s growth during the year focused on emerging markets, with nine new sites opening in Japan, eight in India, five in Saudi Arabia and four in Egypt.
It also secured new international master license agreements for Iraq (five clubs), Australia (30 clubs) and New Zealand (10 clubs).
Also throughout 2019, the company worked to consolidate and optimise brand ownership through franchisee acquisition of company-owned clubs.
Gold’s Gym was founded by Joe Gold in 1965.
Chapter 11 protection has not been available to UK businesses up until now, however, the COVID-19 pandemic has led the UK government to introduce an option that’s being called Light Touch Administration, where the management of a company continues to run the operation during the administration process.