24 Hour Fitness

24 Hour Fitness
Private
Genre Fitness
Founded 1979
Founder Mark S. Mastrov
Headquarters San Ramon, California, United States
Number of locations
 400+ [1]
Area served
 17 U.S. states
Key people
 Mark Smith, CEO
Owner AEA Investors, Ontario Teachers’ Pension Plan
Number of employees
 over 20,000
Website 24hourfitness.com
24 Hour Fitness headquarters in San Ramon

24 Hour Fitness is the world's largest (by memberships) privately owned and operated fitness center chain, and third in number of clubs behind Gold's Gym and Fitness First of the UK. It currently has 400+ clubs, 18,000[2] employees in the United States, and an undisclosed number of employees working in a customer services call-center in the Philippines and another call center in Spokane, Washington. 24 Hour Fitness also employs a collections contracting company located in Jamaica. The corporate office is located in San Ramon, California and a processing center is located in Carlsbad, California. The founder is Mark S. Mastrov, and the CEO is Mark Smith. 24 Hour Fitness is currently owned by AEA Investors, a leader in the private equity industry; Ontario Teachers’ Pension Plan, Canada's largest single-profession pension plan – and one of the world’s largest; and Fitness Capital Partners, a fund organized by Dean Bradley Osborne and Global Leisure Partners. It was acquired from the Company from Forstmann Little & Co in May 2014. 24 Hour Fitness operates a nutritional supplement company, Apex Fitness Group, which is also the distributor of the Bodybugg system. Their motto is "Improving lives through fitness."

History

The company began in 1983 as a one-club operation called 24 Hour Nautilus. Mark Mastrov and Leonard Schlemm began the firm, with Mastrov and Schlemm remaining to continue its expansion.

CEO Mark Mastrov hired Mark Golob and Dean Moloney as Vice President of Marketing. Golob created promotional campaigns with Pamela Anderson, Arnold Schwarzenegger and Mike Tyson that increased membership and sales. During Moloney's tenure, he and Mastrov, along with Tom Gergley and Golob, began planning an international chain of health clubs.

In 1994, 24 Hour Nautilus partnered with McCown De Leeuw and soon thereafter acquired the Southern California-based Family Fitness Centers chain, renaming the company 24 Hour Fitness.

Todd Smith and Adam Shaw were responsible for the physical expansion of the company during their initial growth period.

In 2004, 24 Hour Fitness became a sponsor of the 2004-2008 United States Olympic teams. The sponsorship grants memberships to some U.S. Olympic hopefuls and includes upgrades to some U.S. Olympic Training Centers across the country, including renovation of the facility in Colorado Springs, Colorado, in 2004 to be followed by Lake Placid, New York, and Chula Vista, California.

24 Hour Fitness worked with NBC to develop a reality show, The Biggest Loser, which features 12 to 22 overweight contestants competing to lose weight over several million dollars. The show first aired in late 2004.

From 2005 to 2008, 24 Hour Fitness co-sponsored the Discovery Channel Pro Cycling Team.

24 Hour Fitness formerly had some 15 clubs in Singapore and China. Besides the United States, it had centres in Singapore and Hong Kong, Beijing and Shanghai in China) through its wholly owned subsidiary California Fitness (CalFit). Its European clubs closed in the early 2000s. CalFit has been sold to a Hong Kong company in 2012, providing continuity and retaining the name and memberships without the bad closure experiences of CalWowX, whereby becoming an exclusively US gym chain.

Its former affiliate and spinoff California Wow Xperience (CalWowX), a California Fitness offshoot, formerly had member swap agreements with both 24 hour, then only California fitness, and at its height ran gyms located in Bangkok, Chiang Mai and Pattaya in Thailand, including one female-only club. It was also listed on the stock exchange with major Thai corporate partners. CalWowX and CalFit former centers in Korea, Thailand, Malaysia, and Taiwan (10/1/2010) have closed or been sold off, with CalWowX franchised gyms in Korea being abruptly closed on contracted members without reimbursement. Similarly, the CalWowX Thailand was charged with criminal embezzlement by local investment banks before abruptly closing with millions of dollars in debts and angry customers left empty handed who had signed up for lifetime membership. Two more California Wow franchisees had existed in Vietnam, run as private gyms, independently of those in Thailand, likely an unrelated company copying the style and name only.

Celebrity Fitness, yet another gym chain with 24 Hour Fitness roots, is headquartered in Jakarta and runs gyms in Indonesia, Malaysia, Singapore and India.

Neither CalWowX nor Celebrity Fitness had competed directly with California Fitness.

In August 2012, the owner of 24 Hour Fitness put the 416 location gym chain on the auction block with a price tag reported to have been close to $2 billion.[3] After being courted by various interests for over six months, ultimately in January 2012, the board of directors took 24 Hour Fitness off the market. Offers reportedly fell short of the asking price.[4][5]

In May 2014, Forstmann Little & Co. has reportedly sold 24 Hour Fitness Worldwide Inc. to a group of investors for $1.85 billion to an investment group led by AEA Investors LP and the Ontario Teachers’ Pension Plan.[6]

Current operations

24 Hour Fitness has over 4 million members and more than 420 clubs in 18 states. Its major competitors in the US are Anytime Fitness, Gold's Gym, Aspen Fitness, and LA Fitness.

The Member Services call center for 24 Hour Fitness is outsourced through the Alorica Corporation location in Spokane, Wa and is based out of Irvine, Ca. Collections services were once handled by Alliance One up until March 2008, when National Asset Recovery Services took over collections for 24 Hour Fitness. The NARS collections department is out of Montego Bay, Jamaica.

Criticisms

On July 31, 2007, 24 Hour Fitness settled a class-action lawsuit brought against it by 1.8 million current and former members. The plaintiffs claimed damages for the continuation of automatic withdrawals by 24 Hour Fitness long after their monthly memberships were canceled by request.[7][8] In McCardle vs 24 Hour Fitness USA, Inc., the Alameda County Court ruled in favor of the plaintiffs of the class-action lawsuit. In 2010,the court found that 24 Hour Fitness did not act in good faith after denying members who purchased an "All Club" membership access to rebranded locations without additional fees not disclosed in the original contract.[9][10]

Six former employees of 24 Hour Fitness filed a separate class-action lawsuit on July 13, 2010. This lawsuit was brought in the State of California pursuant to allegations that 24 Hour Fitness discriminated based on race and gender in their promotion practices. The claimants are either females, minorities, or both.[11][12]

As of March 2, 2013, 805 complaints had been registered against 24 Hour Fitness with the Better Business Bureau in the previous three years, 276 in the previous 12 months. 24 Hour Fitness has an A+ rating with the private non-governmental organization.[13]

References

  1. ↑ "About Us" (Press release).
  2. ↑ Better Business Bureau Company Profile
  3. ↑ Ross, Andrew (Aug 2, 2012). "24 Hour Fitness, healthy chain, for sale". San Francisco Chronicle. Retrieved 14 April 2013.
  4. ↑ Young, Eric (September 13, 2013). "24 Hour Fitness names new CEO". San Francisco Business Times. bizjournals.com.
  5. ↑ Dezember, Ryan (Jan 31, 2013). "24 Hour Fitness Sale Misfires". Wall Street Journal. Retrieved 14 April 2013.
  6. ↑ http://www.law360.com/articles/543498/forstmann-little-earns-1-85b-in-sale-of-24-hour-fitness
  7. ↑ "Settles in Class-Action Law Suit". San Francisco Business Times. Jul 31, 2007. Retrieved 6 March 2013.
  8. ↑ "24 Hour Fitness Health Club Membership Cancellation and Electronic Funds Transfer EFT Class Action Settlement". Class Action Law Suits in the News. Retrieved 7 March 2013.
  9. ↑ "Courts Find for Plaintiffs Against 24 Hour Fitness" (PDF). Superior Court of the State of California, County of Alameda. Archived from the original (PDF) on 29 September 2013. Retrieved 6 March 2013.
  10. ↑ "Case Settlement Website". Gilardi & Co. LLC. Retrieved 7 March 2013.
  11. ↑ Lewis; Feinberg; Lee; Renaker & Jackson. "Discrimination Class Action Filed" (PDF). Alameda County Clerk of Civil Court. Retrieved 6 March 2013.
  12. ↑ Watt, Brian (July 13, 2010). "24 Hour Fitness employees file discrimination suit". Southern California Public Radio. Retrieved 7 March 2013.
  13. ↑ Better Business Bureau Complaint Review

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