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Viva Leisure acquires Plus Fitness’ master franchisor for $20 million
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).
21st July 2020 - Technogym’s Nerio Alessandri says ‘gyms are safe’
19th June 2020 - Plus Fitness opens three new clubs across two states
15th June 2020 - New Queensland retail centre to feature Viva Leisure brands
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
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
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