As Gold’s Gym Files for Bankruptcy, CEO Vows It’s ‘Not Going Anywhere’
Gold's Gym CEO Adam Zeitsiff says he expects the company to emerge from bankruptcy "in less than 90 days."
Gold’s Gym, which in early March was touting its resurgence via franchising, filed for Chapter 11 bankruptcy Monday, a move CEO Adam Zeitsiff said “is a direct result of COVID-19 and what this is doing to our business.”
The financial restructuring that will follow for the 55-year-old brand, continued Zeitsiff, “is the best way to make sure we’re here for the next 55 years.”
The Dallas-based fitness company, which closed its 98 corporate gyms on March 16 and, like other fitness brands, saw its hundreds of franchise gyms follow suit because of government orders, won’t reopen about 30 of those company locations. It plans to keep paying its suppliers and vendors while working to emerge from bankruptcy by August 1, though Zeitsiff said that will likely happen sooner.
“We should be out of this in less than 90 days,” he said, as he emphasized Gold’s Gym “is absolutely not going anywhere.”
“We didn’t furlough any of our franchise support team,” he pointed out, adding the restructuring shouldn’t impact Gold’s Gym’s franchisees operating 200 clubs in the United States and nearly 400 more around the world. In fact, Zeitsiff noted, franchisees have reopened gyms in Georgia, Tennessee and Wyoming, all states that have eased business restrictions, and the company planned to begin reopening its gyms in Oklahoma starting Friday.
The company is communicating closely with franchisees—“We spoke to every franchisee before we made this announcement,” said Zeitsiff of the bankruptcy filing—and created an FAQ page specific to the restructuring effort on its website.
“We expect no changes to the level of operational and marketing support that we will continue to provide our franchise organization across the United States and around the world,” reads the answer to the question of “What does this mean for me as a Gold’s Gym franchisee?”
While its company locations have been closed Zeitsiff said it froze membership fees, with most franchisees doing the same, further illuminating the financial impact of the coronavirus pandemic on the business. Gold’s Gym has “very little franchise revenue coming in,” he said. “It’s not fun running a business with no money.”
TRT Holdings, which also owns Dallas-based Omni Hotels & Resorts, bought Gold’s Gym in 2004 and previously explored the sale of the brand in 2018 before deciding to retain its ownership and focus on franchising.
“In 2018, when they put the company up for sale, they were able to see where people who were looking at the business were valuing the business, and they were valuing it on the franchise side,” said Zeitsiff in a previous interview March 10, just before COVID-19 hit the U.S. in full force.
That focus on franchise expansion is still part of the plan, Zeitsiff said today. “We’re going to come out the other side.”
TRT Holdings listed both assets and liabilities of between $50 million and $100 million, according to a chapter 11 petition filed in the U.S. Bankruptcy Court in Dallas.