One of the founders of the embattled Australian fitness group F45 says a combination of COVID and its rash expansion plans – backed by celebrity investor and board member Mark Wahlberg – may have been its undoing.
F45 revealed this week that its financiers had put a brake on expansion plans, triggering the departure of its chief executive and forcing the group to slash nearly half of its staff and other costs to preserve its cash and stay afloat.
Luke Istomin – the personal trainer who developed F45’s core regimen of 45-minute functional high-intensity interval and circuit training classes based on a motto of “no mirrors, no microphones, no egos” – says he doesn’t think the company ever foresaw the problem it would have with rapid expansion.
“With a bit of money they were making at the time, and the plan to grow rapidly, very rapidly, I think they bit off more than they can chew,” Istomin, who co-founded the company with Rob Deutsch in 2013, said .
He left F45 in 2016 over creative differences and has since set up his own fitness business franchise, Reunion Training, which has struggled with the other significant problem F45 would have been dealing with: COVID.
“The current model of training that I’ve built out has been phenomenal. But unfortunately, the harsh reality of trying to get through two years of COVID hasn’t been kind for a startup business,” Istomin said.
“We just started getting traction, people coming back to work. And then last week, people got the orders to stay at home and work from home again. So, we have seen that big drop off in memberships or, people working from home again.”
F45 said this week that $US250 million ($357 million) worth of previously announced lending facilities to fund franchisee expansion “will not be available” and said market dynamics meant franchisees were also having trouble finding funding to develop new operations.