UFC Gym Australia goes bankrupt after legal battle
A popular Australian gym chain has collapsed after being embroiled in a legal battle with three of its franchisees.
Ultimate Franchising Group Pty Ltd, UFC Gym Prospect Pty Ltd and Ultimate Franchising Group Properties Pty Ltd – the three parent companies behind UFC Gym Australia – filed for voluntary bankruptcy on May 23.
The three companies held the master franchise agreement for UFC Gym Australia.
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UFC Gym specializes in mixed martial arts training and has several centers across Australia, with more planned to open soon, according to its website.
As reported by news.com.auEarlier last month, UFC Gym Australia and its directors were ordered to pay three franchisees $5.2 million after a court found the company had misrepresented the gym’s financial position when selling franchises.
UFC Balcatta in Perth and UFC Castle Hill and Blacktown in Sydney were the three gyms involved in the four-year legal battle.
It was noted that UFC Gym Australia directors Mazen Hagemrad and Samer Husseini promised potential new gym owners that in less than a year their client base would grow exponentially and that they would break even immediately.
They also lied about the actual cost of starting a franchise.
UFC Balcatta, now renamed Rival Gym, wrote on Facebook that the past few years have been “challenging to say the least”.
“We’ve faced difficulties, hurdles, and obstacles, but through it all, our determination to provide a premium experience for our members has only grown stronger,” the post reads.
“Thankfully, as RIVAL GYM we are not constrained by franchise rules and can now take the reins and create the kind of fitness environment we have always wanted to offer you.”
The gym received a payout of $1,789,848.
UFC Castle Hill was also renamed Rival Gym while UFC Blacktown was closed entirely.
“It’s been a journey and we’ve made some great memories. The trip had its ups and downs, but we certainly had a lot of fun,” the Blacktown Center wrote on social media.
UFC Blacktown received $1,955,996 while Castle Hill received $1,485,643.
Former co-owner of the Balcatta site, Karim Girgis, told news.com.au the court-ordered payment was due on May 22, a day before the company filed for bankruptcy.
He said the three franchises spent a combined $850,000 in legal fees.
“We had to take on debt, borrow money against property and hold on to this business to keep it going. It was very, very difficult,” he said.
It’s unclear how the company’s bankruptcy will affect franchisee payments.
Rajiv Goyal and Christopher Johnson of Wexted Advisors have been appointed Administrators.
Shortly after her appointment, the administrators closed down UFC Paramatta in Sydney.
They continue to seek buyers for the seven other gyms that are still operating: Wetherill Park, Gregory Hills, Rockdale, Bankstown, Macarthur Square and Woolooware in NSW and Ashmore in Queensland.
Wexted and UFC Gym Australia have been contacted for comment.
