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Gold’s Gym International, Dallas, filed for Chapter 11 on May 4 as a way to financially restructure the company after the worldwide shutdown of businesses from the COVID-19 pandemic affected the company, CEO Adam Zeitsiff shared with Club Industry.
The filing is for the corporate entity and does not involve franchisees, who make up the majority of Gold’s Gym locations, Zeitsiff said. He expects the company will emerge from Chapter 11 by Aug. 1, if not sooner.
“We are filing this to restructure the company, and this is strictly as a result of the pandemic,” Zeitsiff told Club Industry. “We were on a massive turnaround. We were refranchising stores, awarding company-owned stores to franchisees. We were all over the place growing our business. We were ahead of plan for the year. And then COVID-19 hit, and this is simply our way of acting swiftly to ensure we have a long-term viable and sustainable business.”
In fact, Gold’s Gym International had just come off its strongest year of worldwide growth in company history, finalizing 22 American franchise agreements and opening 35 locations in 2019, the latter of which was a company record, the company shared in January. In early March prior to the COVID-19 shutdowns, Gold’s Gym refranchised 24 locations in the Washington, D.C., area and refranchised two locations in Los Angeles and eight in Tennessee.
But the COVID-19 pandemic caused Gold’s Gym International to temporarily close all of its company-owned gyms on March 16. That week, it froze membership dues at its company-owned clubs, and that month it also furloughed 98 percent of employees at company-owned gyms.
Zeitsiff declined to share how much money the closures have cost Gold’s Gym, but during this time, the company has brought in no membership revenues, royalty revenue or other revenue, except minimal revenue from licensed apparel, products and consumables.