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24 Hour Fitness

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24 Hour Fitness
Type Private
Genre Fitness
Founded 1983
Founder(s) Mark S. Mastrov
Headquarters San Ramon, California, USA
Employees over 20,000
wikipedia:Website www.24hourfitness.com

24 Hour Fitness is the world's largest (by memberships) privately owned and operated fitness center chain, and 3rd in number of clubs behind Gold's Gym and Fitness First of the UK. It currently has 425 clubs and over 20,000 employees in the U.S.A. The company has its corporate office located in San Ramon, California and a processing center located in Carlsbad, California. The founder is Mark S. Mastrov and current CEO is Carl Liebert III. 24 Hour Fitness is currently a subsidiary of the private equity firm Forstmann Little & Company, since its acquisition in a $1.6 billion leveraged buyout in 2005. 24 Hour Fitness operates a nutritional supplement company, Apex Fitness Group, which is also the distributor of the Bodybugg system.

HistoryEdit

The company began as a one-club operation in 1983 called 24 Hour Nautilus. Mark Mastrov, Leonard Schlemm and a third partner began the firm, but eventually it was only Mastrov and Schlemm who continued its expansion.

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

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, CO in 2004 to be followed by Lake Placid, NY and Chula Vista, CA.

24 Hour Fitness worked with NBC to develop a reality show, "The Biggest Loser", which featured 12 to 22 obese contestants competing to lose weight over several months. The show first aired in late 2004 and is still airing as of this year.

Current OperationsEdit

24 Hour Fitness has about 3 million members and nearly 400 clubs in 16 states, and over 20 clubs in five Asian countries. Besides the USA, it has centers in Asia (Singapore, Hong Kong, Taipei and Taichung in Taiwan, Beijing and Shanghai in China, and Kuala Lumpur, Malaysia) through its wholly owned subsidiary California Fitness. Its European clubs closed in the early 2000s. Its major competitors in the US are Anytime Fitness, Bally's, Gold's Gym, and LA Fitness . Its main competitors in Asia are also the same, plus the Fitness First Chain of Australia.

Its rapidly expanding affiliate California Wow Xperience (CEO is a former Cali Fitness executive), is a California Fitness offshoot, has member swap agreements with both chains, and runs 15 gyms located in Seoul and Daegu, Korea (4) and Bangkok, Chiang Mai and Pattaya, Thailand, including one female only club(10). In Asia, its major chain competitors are Fitness First and Gold's Gym.

24 Hour Fitness plans to have more than 1000 clubs in the next five years. With sponsorships with various celebrities and athletes such as Jackie Chan, Lance Armstrong, Shaquille O'Neal, And Andre Agassi.

The call center for 24 Hour Fitness is run by NARS (National Asset Recovery Services, Inc.), with 24 Hour Fitness Member Services being in the Republic of Panama. Collections services were once handled by Alliance One up until March 2008, when NARS took over collections for 24 Hour Fitness. The NARS collections department is out of Montego Bay, Jamaica.

Club LevelsEdit

24 Hour Fitness currently has 6 levels of Clubs: Fit-Lite, Express, Active, Sport, Super-Sport, and Ultra-Sport. In addition 24 Hour Fitness has signature clubs with Andre Agassi, Lance Armstrong, Derek Jeter, Magic Johnson, and Shaquille O'Neal, as well as Jackie Chan and Yao Ming in its clubs in Asia.

Ultra-SportEdit

Generally over 100,000+ Square Feet Amenities include Cardio Equipment, Free Weights, Group X Room, Kid's Club, Basketball Court, Pool, Tanning, Executive Lockers, Massage, Racquetball Club, Rock Climbing and Volleyball. There are 4 Ultra-Sport level clubs: Lakeshore Towers in Irvine, California[1] and 3 Derek Jeter Ultra-sport clubs in manhattan[2].

Super-SportEdit

File:24 Hour Fitness Super-Sport, San Mateo.JPG
A 24 Hour Fitness Super-Sport in San Mateo, California.

Generally over 50,000+ Square Feet, Cardio Equipment, Free Weights, Group X Room, Kid's Club, Basketball Courts, Pool, Sauna, Steam Room, Jacuzzi and Tanning.

Some Super Sport Level have racquetball courts.

SportEdit

Generally over 35,000+ Square Feet, Cardio Equipment, Free Weights, Group X Room, Kid's Club, Basketball Courts, sauna, steam room, spa and Pool.

ActiveEdit

Generally over 20,000+ Square Feet, Cardio Equipment, Free Weights, Group X Room, and a Kid's Club.

ExpressEdit

Contains Cardio Equipment, Limited Free Weights, and Group X Room.

Fit-LiteEdit

Contains cardio-resistance equipment, limited weight machines and small fitness mat. Set up to be a full body circuit to be completed in 30 minutes by rotating machines every 60 seconds when a notification bell chimes.

Controversy and criticismEdit

Class action lawsuitsEdit

On February 7, 2005 a class action lawsuit was filed in the Superior Court for the County of San Francisco (Case No. CGC-05-438478) alleging 24 Hour Fitness conducted illegal business practices. The allegations include the collection of dues beyond the term of monthly membership agreements. Other allegations include failure to comply with statutory print size requirements on agreements. State law requires font sizes on contracts to be of size 14 or greater. The lawsuit pertains to those who entered into monthly membership agreements after January 1, 2002 and before January 1, 2006. The lawsuit is set to go to trial on April 2, 2007. On December 25, 2006, members of the Class were notified.

On November 10, 2005 a class action lawsuit was filed in the San Francisco County Superior Court regarding allegations of fraud and illegal business practices. In the lawsuit (Case No. CGC-05-446492), the plaintiff alleges "24 Hour Fitness took money from its monthly membership customers by continuing to withdraw money from customers’ checking or credit card accounts after the customers gave notice of their desire to quit." [1] 24 Hour Fitness is currently defending the case in San Francisco Superior Court.

The two class actions which were filed in San Francisco seek relief only on behalf of California residents. A nationwide class action, which seeks relief on behalf of members in all the states in which 24 Hour Fitness does business, was filed on October 2, 2006 in the United States District Court for the Central District of California, in Friedman, et al. v. 24 Hour Fitness USA, Inc., et al.

On March 7, 2007 a class action lawsuit was filed in the Superior Court for the County of San Diego (Case No. GIC-873193). Posadas-Romesberg, et al. v. 24 Hour Fitness USA, Inc., et al. alleges 24 Hour Fitness violates California's Business and Professions Code for failing to pay Group Exercise instructors for the time they spend doing a number of work activities, including preparing class choreography, setting up the class space, clearing the class space, completing paperwork and finding replacement instructors as needed. [2] The action seeks relief only on behalf of instructors residing in California.

On July 30, 2007 a class action lawsuit against 24 Hour Fitness was settled in San Francisco Superior Court, though 24 Hour Fitness continues to deny any wrongdoing. The suit challenged the membership fees that were collected for several months after monthly members canceled their contracts. "Class members are entitled to choose settlement benefits, depending on their situation, including partial refunds, free personal training or membership upgrades, contract modifications and transferable 30 and 45 day Club Access Passes." [3]

Super Sport Controversy Edit

24 Hour Fitness has a long history of selling pre-paid memberships with provisions for lower lifetime annual renewal rates. Many members had purchased such memberships after being told they would have access to "all clubs". After later opening the new category of "Super Sport" clubs, 24 Hour Fitness denied these lifetime members access to these clubs, instead stating they would need to pay to upgrade their membership. In addition, some of the new super sports (i.e. Millbrae [4] and Moraga [5]) were billed as super sports but did not contain any of the amenities of a supersport that were once listed [6] but now have been pulled on the 24hourfitness website with no explanation. Most notably absent from these clubs is a swimming pool, basketball court, and square footage both are under 25,000 square feet which would make them two levels lower as an active club. These clubs were sold as super sport due to the higher rates and the requirement to upgrade your membership even if you previously had access to "all clubs"

Employee Controversy Edit

Template:POV-section As of October 2008, 24 Hour Fitness management prohibited Sales Counselors at Super-Sport clubs from selling pre-paid memberships, due to the focus on more EFT which in the long run is more profitable for the company. Sales counselors made the most of their money off commission, and with pre-paid memberships, that is where commission was most profitable for the counselor. Being unable to sell prepaids at Super Sports, Sales Counselors noticed a decline in their wages due to not hitting their sales goals. The only way a counselor was allowed to sell a Pre-Paid membership was by transferring the agreement to a Sport Club which resulted in the Sport Club gaining credit for the sale not the employee at the Super-Sport. In addition most of the company's counselors who grossed the most in the district due to selling Pre-Paid memberships were "let-go" for Loss and Prevention Violations due to their past selling of Pre Pays without any sort of prior notice.

As of December 2008, 24 Hour Fitness instructed all Employees minus the sales counselors to direct any sort of walk-in guest and any sort of member referral to either the Club Manager or the Sales Manager not a Sales Counselor unless directed by the Sales Manager or Club Manager. Reason being that Sales Managers and Club Managers do not receive commission. Having a non Membership Counselor write a membership agreement gives the company the entire profit of the agreement having not to pay out commission to the Sales Counselor. [7] Sales Managers and Club Manager were instructed by corporate email and/or conference call to write the majority of the agreements. In addition, many sales counselors have had their hours cut into split shifts, with sales counselors working generally at non peak hours. During peak hours, there is always a Membership Manager and Club Manager signing up the majority of new members. With this, the company has cut their commission payments. As of January 2009 Pre-Paid agreements were allowed to be sold at Super Sports once again but under certain guidelines. [8][9]

ReferencesEdit

External linksEdit

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