On 9 June, the popular fitness chain True Fitness announced that it will be closing its entire business in Malaysia, causing havoc for its members and its staff. According to a fitness trainer at one of the branches: “They robbed us, the staff and members. They just up and closed, without warning, that’s why there’s so much drama going on.”
True Fitness issued a statement expressing regret and remorse, directing its members to Chi Fitness to redeem memberships and personal training sessions at the competing fitness centres. Quickly following, CHi Fitness released a statement saying that there is no agreement between True Fitness and CHi Fitness to honour membership transfers.
According to Ashley Paulus, operations director, CHi Fitness, True Fitness only engaged CHi Fitness to purchase RM20,000 worth of one-month memberships redeemable for its members. “We were never approached or offered to take over their membership, their database or to honour any of the lifetime memberships with True Fitness,” said Paulus.
CHi Fitness only has a certain limit of one-month membership passes to fulfil so started 3 July 2017, the passes will be honoured based on a first-come-first-serve basis. According to True Fitness’ site, corporate will be in contact with members starting 20 June on redemption procedures.
Former employees of the failed fitness chain have rallied together to lodge a report with the Labour Department on owed salaries and compensation. According to Shahrul Hamiri Shahruddin, who managed the Sunway Giza branch before its closure, True Fitness owes up to RM27,000 in commission to seven staff.
“We have gotten our salaries for last month. We just want to fight for our commissions and also a compensation for being retrenched without notice,” said Shahruddin.
In response, the parent company based in Singapore said that it will be making payments to all its 70 staff in Malaysia by 23 June 2017. When contacted for an explanation, a True Group spokesperson said that its operations in Singapore, Taiwan and China were subsidising operation in Malaysia because the market was loss-making.
“We express our sympathies about the matter that has happened, we tried to exhaust all our other options but there were not alternates available except to consolidate the business in Malaysia.”
Malaysia was not the only market affected. In a statement released by True Group’s CEO Patrick John Wee, the closure includes its Thailand branch as well. The decision comes after True Group entered into a franchise deal with China-based Tongfang Kontafarma.
The deal is worth USD36.7 million, which will see Tongfang Kontafarma as the majority shareholder of the franchise, including 29 per cent of the business in Taiwan.
Over 10,000 True Fitness Malaysia members were affected. The fitness chain offered instalment as a form of payment and sold lifetime memberships that range between RM8-9,000. Members are rallying together to file a suit against True Group, claiming that their respective banks are continuing to charge them the monthly credit card instalments for the now defunct membership.
The company has stated clearly upon the announcement of cease operation that it will not be refunding any customer, new or existing. According to one long time member and a lawyer, the contract between the entity and its members is that “management must provide a 30-day closure notice.”
The fitness centre sector in Malaysia has gotten competitive in recent years, with regional chain Anytime Fitness and CHi Fitness growing fast in prominence with newer equipment and better facilities. In February, two big chains Celebrity Fitness and Fitness First merged, forming the largest fitness club in Asia.
True Group is distinctly known for its yoga-centric programme, which has allowed the chain to branch into multiple subsidiaries in Malaysia, including True Fitness, True Yoga, Fitness World, and Fitness Growth.
While members are left in a limbo, one thing is for sure: True Group will be purchasing batches of one-month memberships from CHi Fitness over a two-year period for former members to redeem.