AusLeisure

Fitness industry franchise Beach House Health and Fitness (BHHF) has entered administration.

While ranked second by BRW magazine in its 2007 'hot franchises' issue, the franchisee has appeared to have been in difficulties for some months, with a number of its franchises tranfering to other groups during 2008.

Earlier this year, BHHF , which operates 37 franchises, was reported to have been involved in claims that it has sold private information about its members, had failed to pay out employee entitlements and had legal action taken against it to reclaim unpaid debts.

In April, a BusinessDay investigation also found that property giant Westfield took action against Beach House in the Supreme Court of South Australia for arrears in rent.

Documents lodged with the Australian Securities and Investments Commission on 11th April showed that Westfield made an application to wind up the company under the Corporations Act. The dispute was subsequently resolved.

In January, the fitness franchisor also borrowed an undisclosed sum from Baystreet, the financing group run by the Smorgon family, to increase its cash flow.

Beach House founder Adam Price told BRW last year he hoped to have 100 franchises around Australia by the end of 2007. Instead, Beach House has closed or rebranded as many as 13 of its clubs.

The closure of the group's Chelsea Heights centre in April, the first Beach House that Price opened back in 1998, was subsequently subject to investigation.

Research by BusinessDay revealed that the private details of Chelsea Heights members, including bank account details, had been sold to a nearby Fenix Fitness Centre without authorisation from members.

Asked about this at the time, Beach House Operation Manager Tony Griffiths said members had not been signed over. Rather it was a "suggestion" that they join Fenix.

But a letter to members, obtained by BusinessDay, said an "amicable deal" had been struck between the two clubs, that Fenix would honour memberships and be in touch with Beach House members.

In addition, Business Day found that former Beach House employees were owed superannuation while the group failed to pay casual employees at its Morwell club over the Easter period.

In May, the group also shelved plans to open a facility in the Gold Coast's Southport Central precinct, instead leasing the location to competitor Fitness First.

At the present time BHHF is continuing to trade and individual BHHF franchises are still operating.

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