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Viva Leisure acquires Plus Fitness’ master franchisor for $20 million

Viva Leisure acquires Plus Fitness’ master franchisor for $20 million
July 22, 2020

Viva Leisure has acquired Australian Fitness Management, the master franchisor of Plus Fitness, for $20 million.

Announced today, Viva Leisure's acquisition sees it add 197 franchised locations across Australia, New Zealand and India to its operations for an upfront consideration of $18 million, with up to $2 million in additional payments to be made if key performance indicators are met.

The acquisition was struck on a multiple of 12 times Plus Fitness’ net profit after tax, including the deferred earn-out payment.

Plus Fitness’ franchised clubs - 190 in Australia, three in New Zealand, four in India - have approximately 175,000 combined members and revenues in excess of $100 million.

The combination of the two business will consist of 280 owned and franchised clubs comprising over 270,000 members, making it the fourth largest in Australia.

The purchase offers the business the opportunity to acquire existing franchise locations who may wish to exit and convert into corporate owned and operated locations, with Viva Leisure securing first right of refusal on any franchised club for sale.

It also fits Viva Leisure’s stated strategy to expand into new markets - Western Australia, South Australia and New Zealand, while also providing exposure to India, while also presenting the opportunity to expand Viva Leisure’s other brands into new acquired markets.

In addition, more than 40 new Plus Fitness locations with deposits received are set to rollout.

Completion of the transaction is conditional on the satisfaction of customary conditions precedent and a restructuring of Australian Fitness Management's existing lease and sublease arrangements, and is expected to be completed by 31st August 2020.

Founded by John Fuller and Nigel Miller, Australian Fitness Management (AFM) opened its first franchised location in 2009 and quickly grew to multiple locations in NSW, before expanding into Western Australia, Victoria, Queensland and South Australia.

AFM opened its first club in the ACT in February 2020 and entered New Zealand in 2015 and India in 2018.

Commenting on the acquisition, Viva Leisure’s Chief Executive and Managing Director, Harry Konstantinou, advised “the acquisition of the Plus Fitness brand, systems and Master Franchisor, including the Master Franchise licence for New Zealand, and a first right of refusal on the existing 197 locations makes this the most exciting and largest opportunity in our history.

“It expands on and continues to cement Viva Leisure’s position as a leading and fast-growing health club owner and operator in the Australian market.”

The company will retain the services of Fuller and Miller under employment contracts with a minimum term of 12 months.

Viva Leisure’s performance post lockdown
Last week, Viva Leisure released a positive market update informing shareholders on the company’s recent performance.

According to the announcement, Viva’s facilities have been trading above management’s expectations following their re-opening.

It announced that 94% of its locations are either operating or undergoing scheduled refurbishment and will re-open shortly. Viva also informed the market that operations in the Melbourne metro area account for only 4% of the company’s membership portfolio and are not operating due to government COVID-19 lockdown restrictions.

Viva also reported that membership levels have recovered to 98% of pre-COVID-19 levels. According to the company’s management, the significant recovery in membership is above its expectations. Viva currently has 95,400 operating members and around 10,000 memberships suspended due to restrictions. The company also provided an update on landlord arrangements, with Viva successfully negotiating waiver and deferral arrangements with over 75% of its landlords.

Images: A Plus Fitness gym (top) and Plus Fitness founders Nigel Miller and John Fuller make a chairity donation in 2019 (below).

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19th July 2020 - Without JobKeeper 60% of Australian fitness businesses will close in less than a month

17th July 2020 - Reopening approved for Plus Fitness Campbelltown following temporary COVID-19 closure

1st July 2020 - Temperature screening system launched to help safeguard sports and fitness clubs against COVID-19 transmission

19th June 2020 - Plus Fitness opens three new clubs across two states

15th June 2020 - Fitness Australia calls for national consistency in state government gym reopenings

15th June 2020 - New Queensland retail centre to feature Viva Leisure brands

14th June 2020 - Australian Institute of Fitness’ Steve Pettit says industry ‘will never look the same as it did pre COVID-19’

25th May 2020 - Viva Leisure prepares for gym reopenings

7th April 2020 - Two-thirds of the world’s fitness clubs are currently closed

26th March 2020 - Viva Leisure sheds more than 1,000 staff in 48 hours

2nd March 2020 - Viva Leisure reports ongoing growth and reveals new boutique brand

17th February 2020 - Plus Fitness opens first Canberra gym

14th February 2020 - Viva Leisure opens new sites and completes Fit n Fast Health Clubs acquisition

31st January 2020 - Plus Fitness opens latest Indian gym in South Mumbai

17th December 2019 - Further growth for Viva Leisure with enhanced keyless club entry and launch of dedicated DAB+ radio station

2nd December 2019 - Viva Leisure looks to raise new capital as it announces acquisition of 13 Fit n Fast clubs

12th November 2019 - Viva Leisure expands Queensland operations with addition of two more Healthworks clubs

16th September 2019 - Plus Fitness franchisees raise $70,000 for Beyond Blue

9th September 2019 - Plus Fitness growth continues with Australian and international openings

28th August 2019 - Viva Leisure 2018/19 financial results exceed prospectus forecasts

22nd July 2019 - Viva Leisure follows ASX listing with acquisition of Fitness 24/7 clubs

3rd July 2018 - Plus Fitness General Manager reaches 10 year management milestone

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