Landmark eyes deal for Fitness First franchise

EXCLUSIVE: Retail giant in talks with Saudi's Al Hokair to buy Leisure Unlimited.

SALE TALKS: Landmark Group is understood to be in talks to buy a unit of Al Hokair, a deal that includes the Middle East franchise of Fitness First.

SALE TALKS: Landmark Group is understood to be in talks to buy a unit of Al Hokair, a deal that includes the Middle East franchise of Fitness First.

Al Hokair Group, the Saudi leisure conglomerate, is understood to be in talks to sell its subsidiary Leisure Unlimited, holder of the Middle East franchise for Fitness First, to the Landmark Group.

UAE-based Landmark has begun due diligence on the deal, which would see the retail giant add the Fitness First gym brand to its franchise portfolio.

A source close to the deal said Dubai-based Leisure Unlimited had been starved of funding in recent months, putting pressure on its growing gym business.

Buyout talks with at least two previous firms had fallen through.

Leisure Unlimited operates more than 13 branches of Fitness First across the Middle East, including 11 in the UAE. The gym chain is owned by private equity group BC Partners, and has 550 clubs worldwide with more than 1.4m members in 20 countries.
 
BC is eyeing a stock market flotation in Asia for the health firm, which is likely to value the business at around $1.80bn.
 
The Landmark deal follows a legal spat between the UK-based Fitness First and Leisure Unlimited, which in May saw the gym chain take out an advertisement in a UAE newspaper for a new franchisee.
 
Leisure Unlimited is understood to have sought legal advice after the move, but the dispute has now been resolved to allow the unit to be sold with its franchise relationship intact, the source said.

Landmark Group is one of the largest retail conglomerates in the region, with more than 900 stores and some 31,000 employees.

A spokesperson for the Landmark Group said: "The Landmark Group has diversified from its core retail businesses into various leisure and hospitality sector businesses over time and the fitness industry would be of interest to the group. We offer no comments on the market speculation of any purported transaction in this space.”

Fitness First and Leisure Unlimited declined to comment on the deal.

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Posted by: george thomas

I've been a member of the Musallah Tower branch for five years. When I first joined, it was still under the management and name of the Nautilus Club. The fee was very reasonable at 3000 dirhams per year and the facilities and maintenance were excellent. If a machine was reported broken one day, the in-house maintenance had it repaired by the next. Then, 2 or 3 years ago, Fitness First took over. Fees went up 50% overnight but were justified on the grounds that all the Nautilus equipment was to be removed and replaced by the latest state-of-the-art sports hardware. Not only that, but the walls were plastered with artist's impressions of the "complete gym renovation" that was to take place in 2008. None of this ever happened. The old Nautilus equipment is still there and at any one time, approximately 30 per cent of the machines are not working. Despite repeated requests for maintenance, some machines have been out of order SINCE LAST YEAR. Repeated AC problems have not been sorted and some days it is so bad you would be as well exercising on Jumeirah Beach. Add that to the fact that the swimming pool hours have been restricted for more than a year because of "staff problems" - meaning that they won't pay for full time lifeguard monitoring. The staff are generally polite and attentive; the management listen to complaints with a smile - but nothing is ever done. The place has gone downhill as fast as its prices have gone up. Unfortunately a lot of new people still sign up - only to discover all the above once it is too late. But word is getting round and I hear more and more complaints every day. Members are now disgruntled and the new sign-ups will soon be vastly outnumbered by those, like me, who will leave as soon as their membership is up!

Posted by: M. Imran

Fitness First is not very different than many firms, who started their business with the pace and promise what was going on in UAE before crisis hit the market. Sudden changes in senario have put FF also in dilema. The business model with up-scale target customers is not very realistic in present conditions. But it is not easy to change the location, equipments and highly paid qualified workers in a short time. The obvious choice is to find an investor or group of people who can put cash injection to maintain the operations. I didn't see much of wrong happenings in FF when they started in UAE. In fact I knew many trainers and employees, who were happily working and planning for future growth within organization. As per my personal experience club business in UAE is like fashion industry. People keep on changing their taste and prefrences. Every second year we want new gym, new equipments with new resolution. Few Clubs, which are doing very well in UAE are those, who care existing members and keep on changing tools to retain or join new members. All the best for FF, its employees and members to overcome the situation positively. Have patience!

Posted by: S Kumar

I have been going to the Burjuman for over 6 months and have seen a big improvement in my health and lifestyle. I am always greeted at reception and belive the staff always try to do their best. its the best in dubai

Posted by: anonymous

Another example of a regional group not caring at all about their employees - The employees have not been paid commission for several months. I have paid up to 10,000 dhs over the past year to FF for my trainer, he does a great job, but has seen none of the funds I have turned over to FF. They have not been paid since March - they pay the miniumum which is on the labor contract and to which they have to pay because the UAE government will check the bank statement. But the rest, they keep saying that it will be paid. Imagine expecting to have a revenue of well over 15,000 dhs monthly, you rent an apartment, maybe buy a car with a monthly payment, expecting to have upwards of 10,000 a month for those expenses. But then FF only pays the minimum of 2000 DHs monthly - what kind of pressure does that put on the employees. AND they continue to open new clubs, including two in Mirdiff. And I bet you the Hokair management continue to drive their fancy cars and they get paid fully. Shame on them

Posted by: Anonymous

The gym serves its purpose by repair and maintenance is an issue. Go to Uptown Mirdif and half the listening gadgets on the treadmills you plug in to for listening to the tvs are not working. And I guess late at night the channels are sometimes changed but in the morning the girls at the desk say they cannot change the channels because only person "X" can do that, like its top secret or something? I believe they should have at least 1 person who is ALWAYS walking around with a bottle of cleaner cleaning machines. Even if someone wipes off their sweat with a towel it would be nice to see the seats and back rests being cleaned with sanitizer and clean towels from time to time.

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