A chain of UFC fitness centers have collapsed just after the operator termed in directors amidst a significant authorized dispute with franchisees.
Top Franchising Team, which operated 8 fitness centers mainly in New South Wales, went into administration previous thirty day period, appointing Wexted Advisors to deal with the enterprise.
The decision came just after the group lost a a court fight with 3 of its franchisees above misrepresentations in excess of the profitability of the organizations, which Wexted administrator Rajiv Goyal wrote was the reason it went less than in a report to regulator ASIC.
Previous thirty day period, the federal court purchased agreements with the 3 franchisees need to be voided and that $5.2 million must be paid by the team to the profitable litigants.
Mr Goyal stated Wexted was appointed “shortly just after these orders have been designed.”
Federal Court docket choose Tom Thawley made the decision the team experienced made misleading misrepresentations to the franchisees in relation to gym profitability and break even membership numbers.
Each franchisee had compensated up to $1.4 million in commence up charges and other bills, but experienced built functioning losses of involving $391,000 and $962,000.
Judge Thawley explained that though UFG’s argument that UFC gyms “experienced a verified business model that labored in Australia was a representation of present point,” it could be viewed as deceptive because of to the reality some fitness centers had been not undertaking effectively.
He decided that each the Balcatta and Blacktown franchises had been not financially rewarding at the time.
It is understood that the group’s directors are thinking of an attractiveness as element of “a range of possibilities” following the judgement.
UFG holds the Australian and New Zealand head franchise for United States-based mostly UFC Fitness centers and experienced provided mixed martial arts, elite coaching and tailored particular teaching to clients.
With the franchise holders now in administration it is unclear how much, if any, of the $5.2 million will be gained by franchisees.
Mr Goyal admitted the group may well have been bancrupt “from as early as March,” but that “even more investigations” ended up essential to create a full picture of the business’ finances.
He included it was feasible UFG had incurred “important money owed although bancrupt,” and that he was in the procedure of marketing off any remaining property.
In his report to ASIC, he uncovered the team had noted investing losses from March amounting to a $100,000 deficit for the fiscal 12 months on profits of $1.6 million.
US-primarily based UFC Gymnasium was initially founded in 2009 as an growth of the well-known combined martial arts brand name.
It now operates in about 40 nations around the world earth-broad.
A spokesperson for UFC Health club Australia advised Information Corp the corporation had appointed directors as it was the “best solution accessible” to stabilise its economic condition.
The spokesperson added that “the firm retains total self confidence in the long term” of the brand’s continued survival and accomplishment in Australia.