Singapore

Members enraged by California Fitness' sudden closure

California Fitness shuts remaining outlets. Woman hit by double blow after buying $4,000 package says:

She parted with over $4,000 when she signed up for a gym membership with California Fitness on Jan 21.

Her hopes to frequent its Ngee Ann City branch to get in shape were dashed when the outlet shut just weeks later in February.

Ms Ervina Sugiarti, a permanent resident, claimed a clause in the contract prevented her from seeking a refund if there was another branch 10km away.

The 39-year-old, who is married with two daughters, said that as there were other branches in Bugis, Novena and Raffles Place back then, the fitness chain refused to refund her.

Instead, it let her change to the Novena Square branch. However, she did not continue to use her package as the location was not convenient.

The second blow came when she learnt that the chain's last two branches at Novena and Bugis had shut yesterday.

Ms Ervina could not recall the duration of her membership but said she had utilised only a handful of gym and personal training sessions before the outlet closed.

The beauty therapist, who earns $2,700 a month, told The New Paper in a telephone interview: "To me, the money is a big amount. I am not confident I can get it back. I feel it is unethical.

"No more memberships any more, least of all a gym membership. This incident has scared me off things like that."

TNP PHOTO: NOOR ASHIKIN ABDUL RAHMAN

LACKED FINANCES

In a media statement sent out at 12.03am yesterday by provisional liquidators from financial advisory company Ferrier Hodgson, it was revealed that JV Fitness - which owned and operated California Fitness outlets in Novena, Bugis and Raffles Place - lacked finances to keep them running.

The statement read: "JV Fitness does not have adequate liquid resources to continue its operations and therefore all outlets in Singapore will be closed from today until further notice."

The news came after the sudden closure of its Raffles Place branch last Saturday and all 12 Hong Kong branches earlier that week.

Members took to social media, including the chain's Facebook page, to express their anger and disbelief.

A Facebook page called "California gym claims" was set up with enraged members discussing their legal options in the wake of the closure. To date, it has over 900 members.

A Change.org petition, calling for the Ministry of Trade and Industry's assistance in getting refunds for members, was set up after the Orchard branch closed in February and now has more than 2,100 signees.

Mr Jeremy Au Yong, a private tutor, launched the petition in February to protest against California Fitness' "business practices" and express his worry about the chain's future.

The 40-year-old, who signed up for a four-year membership that cost him over $2,000 two years ago, said: "When its Orchard branch closed, I felt it was a sinking ship, a Titanic that has hit the iceberg. Now it is just deja vu and bad PR in the mix. It all boils down to lack of accountability and transparency."

Mr Au Yong, a member since 2010, blamed its "unsustainable business model".

"Based on my observations, there aren't many new sign-ups... always the same old faces. We are frequent customers who turn up pretty often, and you can't make us pay any more for extra classes and services. We are like cows that can't be milked any further."

$1,700 PACKAGE

Another member, who moved here from the US four months ago, signed up for a two-year package that cost him $1,700 in April.

He last went for a gym session at the Novena branch on Tuesdayand said all seemed fine.

He said that the staff had been "pushing for sales" from the start.

He said: "I am disappointed, and I want to know what my options are.

"We learnt of it only when our personal trainer contacted us at 3am. They should have told us of the situation up-front and kept us in the loop on their next move. Now there is no way to contact them."

When approached, other gym owners cited competition as a possible reason for the closure.

Mr Jim Lim, 48, director of Momentum Lab, said: "In Singapore, it is a small market. There are so many other fitness studios (that have specialities) like CrossFit, yoga and pilates.

"The industry has become smaller with more players in the market."

Ms Elinn S. Ahmad, 34, owner of E's Fitness, also pointed out that a downward-spiralling reputation due to the lack of upgraded equipment could be a reason.

"California Fitness is an old gym. Nowadays, people want new machines, new staff, new facilities," she said.

Staff member: I haven't even got 1st pay cheque

He began working as a member service officer at California Fitness several weeks ago.

The 23-year-old, who did not want to be named, started out at the Raffles Place branch before he was abruptly transferred to another outlet on Sunday.

Now, he is unsure if he will get his first pay cheque of $1,500.

At 10pm on Tuesday, he said the staff received a message in their WhatsApp group chat from their manager, informing them they did not need to report for work as the gym had ceased operations.

At 7am yesterday, they received another group message, this time telling them to go to the outlet for a meeting at 9am with the liquidators.

He did not attend the meeting due to the short notice and told The New Paper: "We are basically jobless. We have it bad too, just like our customers, because this is our rice bowls we are talking about."

NO INDICATION

He said they had no indication the chain was closing, but the staff could sense something was amiss once they heard that all branches in Hong Kong were closed.

"I feel cheated. As staff, we should know more than they let on," he said. "At least give hints instead of pretending everything was okay."

After his shift last Friday, he was told the Raffles Place branch was closing, and he should report to another outlet on Sunday.

"The atmosphere suddenly changed... It was more emotional, and we didn't know why. There were also urgent meetings being called," he said.

"Customers had been worried after hearing the news in Hong Kong, but we were given a script to tell them that the branches there and here operate differently."

He said he was pretty sure that personal trainers, fitness consultants and managers were also kept in the dark.

"Maybe that was why the fitness consultants were still selling packages, and people were still buying them," he said.

"Nobody knew it was going to happen."

He added: "I am jobless and very annoyed."

Other California Fitness staff that TNP spoke to seemed equally affected.

A personal trainer sounded dejected when contacted and said he was "in shock".

"Our boss told us last week... I am not in a good condition to talk," he said.

Another staff member, whom TNP contacted at 3pm yesterday, said he was still contacting members.

Lawyer: Odds of getting refunds remote

Q&A with Mr Rajan Supramaniam, lawyer at Hilbourne Law LLC

What can a California Fitness gym member do about the sudden closure?

A consumer can consult a lawyer and get legal advice. They can also explore options to see if the Ministry of Trade and Industry can render any assistance.

Can members take legal action against California Fitness for selling them packages days before the sudden closure?

This isn't a clear-cut cheating case or scam. It's more like deceiving of customers and unethical business conduct. For this, we have to look at what each member's individual contract says before we can say what can be done.

What is the likelihood of California Fitness members getting refunds?

It seems very dim. Their chance of getting their money back is very remote because of the debts that California Fitness faces. In the process of liquidation, customers are ranked lower in terms of priority of funds. Priority goes to other categories of people, such as secure creditors. If customers can get a pro-rated refund, it's already good enough. At least they get something back.

Case: Ask bank for chargeback

In just one day of California Fitness' closure yesterday, the Consumers Association of Singapore (Case) received 225 complaints from the gym's customers.

The number of complaints, tabulated as of 5pm, was more than double the 106 complaints the consumer watchdog received from Saturday, when the Raffles City outlet closed, to Tuesday.

Case's executive director Seah Cheng Soon said: "Case is in the midst of contacting the provisional liquidators and will update our advisory in due course."

He also advised gym members who are paying for the membership by instalment to ask for a chargeback from their issuing bank.

If the chargeback claim is valid, consumers will not be liable for that payment and any recurring payment to California Fitness.

"However, certain consumers may still be liable to make monthly repayments to the bank if the bank had already paid California Fitness in full," said Mr Seah.

"Affected consumers can also ask to cease Giro payment to California Fitness."

Consumers who require assistance can contact Case at their hotline 6100-0315.

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