24 Hour Fitness

Fitness center chain

24 Hour Fitness

Company type| Private
Genre| Fitness
Founded| 1983; 41 years ago (1983)[1]
Founder| Mark S. Mastrov[1]
Headquarters|

Carlsbad, California

United States

Number of locations

| 287[2]

Area served

| 11 U.S. states

Key people

| Karl Sanft (CEO)
Owner|

* Sculptor Capital Investments LLC
* Monarch Alternative Capital LP
* Cyrus Capital Partners LP

Number of employees

| 7,500+
Website| 24hourfitness.com
24 Hour Fitness's former headquarters building in San Ramon, California

24 Hour Fitness is a privately held and operated fitness center chain headquartered in Carlsbad, California. It is the second largest fitness chain in the United States based on revenue after LA Fitness,[3] and the fourth in number of clubs (behind LA Fitness, Anytime Fitness & Gold's Gym),[4] operating 287 clubs across 11 U.S. states. The company was originally founded by Mark S. Mastrov and was sold to Forstmann Little & Co in 2005, and then to AEA investors and Ontario Teachers Pension Plan in 2014.

After COVID-19 forced gym closures and ravaged the fitness industry in 2020, the company filed for bankruptcy in June 2020, closed over 100 clubs, and successfully emerged from bankruptcy under new owners Sculptor Capital Investments LLC, Monarch Alternative Capital LP and Cyrus Capital Partners LP in December, 2020.[5]

## History

[edit]

### Early history and founding

[edit]

24 Hour Fitness was created in 1983 by Mark Mastrov. With the merger of the #2 and #3 largest fitness chains in the United States. Mastrov had been using a local gym for rehab after a knee injury, and turned the gym into a 24-hour nautilus facility after buying out the owner.[1] The company was originally named "24 Hour Nautilus", but in 1996 it merged with Carlsbad, California based company "Family Fitness" (founded by Ray Wilson in 1977) which resulted in both brands emerging as "24 Hour Fitness"[6]

### 2004–2008: Olympics and other sponsorships

[edit]

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, Colorado, in 2004 to be followed by Lake Placid, New York, and Chula Vista, California.

24 Hour Fitness partnered with NBC to develop a reality show, The Biggest Loser, which features 12 to 22 overweight contestants competing to lose weight over several million dollars. The show first aired in late 2004.[7]

Beginning in 2005, 24 Hour Fitness partnered with cyclist Lance Armstrong co-sponsored the Discovery Channel Pro Cycling Team. That same year, 24 Hour Fitness opened its first Lance Armstrong Signature Club. 24 Hour Fitness cut their ties with Armstrong in 2012 after his doping scandal.[8]

### 2009–present: Acquisition and other operations

[edit]

24 Hour Fitness formerly had some 15 clubs in Singapore and China. Besides the United States, it had centers in Singapore and Hong Kong, Beijing and Shanghai in China) through its wholly owned subsidiary California Fitness (CalFit). Its European clubs closed in the early 2000s. CalFit was sold to Ansa Group, a Hong Kong company in 2012; 24 Hour Fitness became an exclusively US gym chain.[9]

Its former affiliate and spinoff California Wow Xperience (CalWowX), a California Fitness offshoot, formerly had member swap agreements with both 24 Hour, then only California Fitness, and at its height ran gyms located in Bangkok, Chiang Mai and Pattaya in Thailand, including one female-only club.[10]

In August 2012, the owner of 24 Hour Fitness put the 416 location gym chain on the auction block with a price tag reported to have been close to $2 billion.[11] After being courted by various interests for over six months, ultimately in January 2012, the board of directors took 24 Hour Fitness off the market. Offers reportedly fell short of the asking price.[12][13]

In May 2014, Forstmann Little & Co. reportedly sold 24 Hour Fitness Worldwide Inc. for $1.85 billion to an investment group led by AEA Investors LP and the Ontario Teachers' Pension Plan.[14][15]

In April 2020, due to the coronavirus gym closings, the company was exploring the option of filing for bankruptcy within the next few months.[16] In June 2020, the company officially declared bankruptcy and indicated plans to close over 130 gyms.[5][17] In December 2020, the company successfully emerged from bankruptcy.[18]

## Operations

[edit]

As of 2023, 24 Hour Fitness operates nearly 280 clubs in eleven states: California, Colorado, Florida, Hawaii, Nevada, New Jersey, New York, Oregon, Texas, Washington and Virginia, with more than 7,500 employees. Its major competitors in the US are Anytime Fitness, Gold's Gym and LA Fitness.[19]

## Criticisms

[edit]

On July 31, 2007, 24 Hour Fitness settled a class-action lawsuit brought against it by 1.8 million current and former members. The plaintiffs claimed damages for the continuation of automatic withdrawals by 24 Hour Fitness long after their monthly memberships were canceled by request.[20][21] In McCardle vs 24 Hour Fitness USA, Inc., the Alameda County Court ruled in favor of the plaintiffs of the class-action lawsuit. In 2010, the court found that 24 Hour Fitness did not act in good faith after denying members who purchased an "All Club" membership access to rebranded locations without charging additional fees not disclosed in the original contract.[22][23]

Six former employees of 24 Hour Fitness filed a separate class-action lawsuit on July 13, 2010. This lawsuit was brought in the State of California pursuant to allegations that 24 Hour Fitness discriminated based on race and gender in their promotion practices. The claimants are either females, minorities, or both.[24][25]

## Ratings and reviews

[edit]

As of May 31, 2024[update], 650 complaints had been registered against 24 Hour Fitness with the Better Business Bureau (BBB) in the previous three years, 291 in the previous 12 months. As of May 31, 2024[update], 24 Hour Fitness has a C- rating with the BBB.[26]

## References

[edit]

1. ^ a b c Ryan, Kevin (27 September 2017). "Fitness gurus who turned a workout passion into a business empire". CNBC. Retrieved 30 May 2018.
2. ^ "About Us" (Press release).
3. ^ GmbH, finanzen net. "One gym is taking the workout world by storm (PLNT) | Markets Insider". markets.businessinsider.com. Retrieved 2020-02-26.
4. ^ "11 Biggest Fitness Chains in America". Insider Monkey. Retrieved 2020-02-26.
5. ^ a b Jordan Valinsky (15 June 2020). "24 Hour Fitness files for bankruptcy and closes 100 gyms". CNN. Retrieved 2020-06-15.
6. ^ "24 Hour Nautilus changing its name". SF Gate. 29 July 1996. Retrieved 30 May 2018.
7. ^ "Planet Fitness to Sponsor 'The Biggest Loser'". Club Industry. 2011-10-11. Retrieved 2020-02-26.
8. ^ "24 Hour Fitness Cuts Ties with Lance Armstrong". Club Industry. 2012-10-18. Retrieved 2020-02-26.
9. ^ Zabonick-Chonko, Rachel (2012-08-23). "24 Hour Fitness Sells California Fitness". Club Solutions Magazine. Retrieved 2020-02-26.
10. ^ "California Fitness was pumped for growth, but not fit for purpose". South China Morning Post. 2016-07-15. Retrieved 2020-02-26.
11. ^ Ross, Andrew (Aug 2, 2012). "24 Hour Fitness, healthy chain, for sale". San Francisco Chronicle. Retrieved 14 April 2013.
12. ^ Young, Eric (September 13, 2013). "24 Hour Fitness names new CEO". San Francisco Business Times. bizjournals.com.
13. ^ Dezember, Ryan (Jan 31, 2013). "24 Hour Fitness Sale Misfires". Wall Street Journal. Retrieved 14 April 2013.
14. ^ "Forstmann Little Earns $1.85B In Sale Of 24 Hour Fitness - Law360". www.law360.com.
15. ^ Wursthorn, By Michael (30 May 2014). "Forstmann Little Sells 24 Hour Fitness, Marking Near-Complete Wind Down - WSJ". WSJ. Retrieved 13 March 2024.
16. ^ "24 Hour Fitness weighs bankruptcy as coronavirus pushes fitness industry to brink". CNBC. 2020-04-18. Retrieved 2020-04-19.
17. ^ "24 Hour Fitness declares bankruptcy, expects to reopen most gyms by end of June". MarketWatch. 2020-06-15. Retrieved 2020-06-15.
18. ^ "24 Hour Fitness Emerges From Bankruptcy". Club Industry. 2021-01-06. Retrieved 2023-01-24.
19. ^ Hunter, Glenn. "It's 'Game On' for Growing 24 Hour Fitness". D Magazine. Retrieved 5 June 2018.
20. ^ "Settles in Class-Action Law Suit". San Francisco Business Times. Jul 31, 2007. Retrieved 6 March 2013.
21. ^ "24 Hour Fitness Health Club Membership Cancellation and Electronic Funds Transfer EFT Class Action Settlement". Class Action Law Suits in the News. 23 April 2010. Retrieved 7 March 2013.
22. ^ "Courts Find for Plaintiffs Against 24 Hour Fitness" (PDF). Superior Court of the State of California. County of Alameda. Archived from the original (PDF) on 29 September 2013. Retrieved 6 March 2013.
23. ^ "Case Settlement Website". Gilardi & Co. LLC. Retrieved 7 March 2013.
24. ^ Lewis; Feinberg; Lee; Renaker & Jackson. "Discrimination Class Action Filed" (PDF). Alameda County Clerk of Civil Court. Archived from the original (PDF) on 22 November 2012. Retrieved 6 March 2013.
25. ^ Watt, Brian (July 13, 2010). "24 Hour Fitness employees file discrimination suit". Southern California Public Radio. Retrieved 7 March 2013.
26. ^ "BBB Business Profile - 24 Hour Fitness USA Inc - Reviews and Complaints". www.bbb.org.