Last Saturday, Malaysian gym members and spa goers who subscribed to the True Fitness chain of facilities as well as their workers collectively gasped as True Fitness Malaysia announced that they had stopped all operations entirely. How did they announce this game-changing progress?
By suddenly not opening for business one morning. The day after True Fitness closed all their outlets in Thailand, Malaysian customers and employees came to work on Saturday morning and found that the doors are locked, with their belongings still inside. Some employees only received a simple directive asking them to cancel their morning appointments.
The three outlets – at Sunway Giza, Taipan Subang and Jaya 33 – were closed due to them being “no longer financially viable“, according to their Malaysian website, echoing the reason given for their outlet closures in Thailand on the 9th of June.
This sudden closure – literally sudden, as there are still people signing up for membership on the 9th – left no room for their employees to receive their long overdue pay, and their members with no chance to use the facilities that they paid for in advance.
People are understandably pissed about this. The victims were united through a Facebook group called ‘True Fitness Complaint‘, a group promptly made a day after the announcement where victims could air their grievances and try to come up with an action plan to tackle the problem at hand.
Unhappy staff members also lodged complaints at the Labour Department as well as the Industrial Relations Department (IRD), and while a spokesman for the True Group had stated that they will pay what they owe their 70 staff in Malaysia, the said staff isn’t buying into that.
On the 13th of June, a complaint lodged with the IRD revealed that the company owes some of their former staff between RM5,000 to RM15,000 each in salaries and commissions. The records shared by employees from the three branches showed that True Fitness owes them around RM66,000 in commissions alone. Being the one compiling the list of all affected members, Vincent Goh, the guy leading the refund-claiming efforts through the Facebook group, revealed that life memberships cost between RM8,000 to 9,000, and VVIP members are paying even more than that.
So what can they do now? Well, for starters, they can join the Facebook group to keep up with recent developments on the matter. Other than that, we asked our friends at AskLegal on what can be done in this situation, and there are indeed a few other things to try. Things such as…
1. Call your bank and stop paying for your membership.
Many members, like Vincent Goh from earlier revealed that he still have seven months left to pay for a three-year membership package costing RM3315.05. At the moment, the money in his bank account is still being deducted. According to him, banks will respond that until their own investigations are done (which may take up to 45 days), they won’t take action.
“Their standard reply is ‘that is between you and the vendor and we have already paid the vendor’,” – Vincent Goh, for The Star.
Most gym members pay for packages on a monthly basis. We found out from another former gym network manager, that while some pay lumpsums at the start, most have monthly payment agreements, by which the monthly payments are then relayed to the gym. So technically, the money hasn’t been fully paid to True Fitness. So do check with your individual bank (and send us their replies!).
While that response from the bank may be discouraging, according to EasyLaw, there’s a way around that. First you have to make a police report, which is a little easier now that a lot of people are doing it. Just bring your IC and membership card, and if you want to, agreement forms, receipts or other supporting documents. Once you’ve got your report done, the next thing to do is call the credit card center that you used to pay the gym with.
Some credit card centers might say the same thing as they did to Vincent, that you can’t get back what you’ve already paid. Buuut… you can file a dispute against True Fitness and the bank will process that for you. Different service providers may have different procedures on how to file disputes, so the best thing to do is to call the center and ask.
If the money is being deducted from a bank account, you can call the bank and ask them to stop letting them do so, but that may take some time. Each bank has their own operating procedure, and they may need some time to investigate or get legal advice on whether they can do that or not.
While waiting for the bank or credit card center, you can also…
2. Try asking for help from the Malaysian Consumer Claims Tribunal
In light of the many letters to them complaining about the issue, the Ministry of Domestic Trade Cooperative and Consumerism’s (KPDNKK) Minister Datuk Hamzah Zainuddin had released a statement saying that affected members of True Fitness and True Spa may claim up to RM25,000 through the Malaysian Consumer Claims Tribunal (MCCT) as long as they can produce documents proving their membership and proof of payment. To clarify, this means that they may help you get back up to RM25,000, but no more than that. Also, this:
“The problem with people is that they do not consult us before they sign these agreements. When it closes down suddenly, they now expect the ministry to answer,” –Datuk Hamzah Zainuddin, as reported by The Star.
But a question asked by people upon hearing that statement is where will that money come from? The short answer would be from True Fitness. According to insider sources, the Claims Tribunal is sort of like a mediator for disputes between the consumer and traders. If you feel that a trader has done you wrong, you can ask them to help sort it out. If True Fitness has indeed swindled your money, they can ask True Fitness to pay you back, and should they fail to do so, the Tribunal has its own enforcement force to deal with it.
To get their help, you can try this link.
3. Get together with a bunch of people and sue True Fitness gethergether
Disgruntled clients could try to file a class-action lawsuit against True Fitness, but there are a few snafus along that route. A prominent one would be that a spokesman from the True Fitness HQ in Singapore had stated that the True Fitness outlets in Singapore, Taiwan and China belong to a separate legal entity than the ones in Thailand, and probably Malaysia as well.
“The Singapore, Taiwan and China partnership is a totally different legal entity from Thailand. The terms of the partnership are specifically to grow the businesses in Singapore, China and Taiwan. As such, the closure in Thailand will not affect the Singapore outlets or the planned expansion (in China) as announced.” – True Fitness spokesman, for The New Paper Singapore.
Apparently, to file a claim, you have to know which legal entity you’re claiming against, and currently it isn’t clear how many True Fitness entities there are in Malaysia. According to The Malaysian Lawyer, it is normal for a business to structure its activities into different companies within the same group, and currently they have identified a True Fitness Sdn Bhd, a True Fitness World Sdn Bhd and a Fitness Growth Sdn Bhd, but it appears that these aren’t the only ones.
A good start to figuring out which legal entity you’re dealing with is to look at the agreement form they gave you when you signed up. There should be a company’s name somewhere on the agreement like so:
However, simply knowing the company may not be enough. There is also the problem of whether the court will allow the lifting of the corporate veil in this case, which is when the court will go beyond the corporate structure of True Fitness and look at the company or person behind it. For this to happen, there must be clear evidence of fraud or if the separate legal identity of the company is used to evade legal obligations for the courts to even consider it.
4. Worst to worst, CHI Fitness and other gyms might take you in
Within their notice of closure on their website, True Fitness had included a statement saying that they are unable to refund in cash the unused membership months or personal training sessions. However, True Fitness claimed to have arranged for their subscription to be continued elsewhere.
They assured that members will have access to most CHi Fitness clubs, claiming that they have purchased memberships at CHi Fitness for members to redeem and that they will find some place for True Spa subscribers to continue their regiments. This proposal is also accompanied by disclaimers in the same page that their customer service representatives will not be available at CHi Fitness, and that CHi Fitness themselves won’t be able to entertain questions about service redemption.
CHi Fitness, in response to that statement and queries from the victims, had acknowledged that True Fitness did approach them to purchase 2,000 monthly membership passes, but as of the time of this article, the sale has not yet been finalized. CHi Fitness had also clarified that they have no other contract or arrangement with True Fitness to take over their clients’ memberships or training sessions.
Since then, there has been a new notice posted on True Fitness Malaysia’s homepage, updating on the the terms and conditions of the membership redemptions through a new website, which will be online from the 3rd of July.
On a lighter note, since CHi Fitness had denied its responsibility for True Fitness members, some enterprising gyms have cheekily been offering packages for the now gymless True Fitness members. Among them are:
So how is True Fitness expanding in China when it’s leaving its Malaysian members penniless!?
Despite True Fitness and Spa members and employees in Malaysia rallying for legal defense against it, the CEO for True Group, Patrick John Wee, had reassured that business is fine. In fact, the True Group with the help of a Chinese investor, Tongfang Kontafarma Holdings Ltd, is planning to establish 20 clubs in China within the next three years, an announcement that came a week before the sudden closures. The RM156.4 million venture, which sees Tongfang Kontafarma acquiring 51% of True Group’s Singapore and China businesses and 29% of it’s Taiwan business, was completed on the 29th of May. But here’s what’s part of the deal.
“The closure of True Fitness branches in Malaysia and Thailand was required under the franchise agreement between Singapore-based parent company True Group and Chinese investor Tongfang Kontafarma Holdings Ltd.” – The Star, 13 June 2017
Patrick John Wee was reported to have agreed to shut down operations in Thailand and Malaysia by no later than the 31st of December by Tongfang Kontafarma, on the 7th of May, so unless there’s some undisclosed factor, theoretically he actually had enough time to consider other, less abrupt alternatives.
Some Singaporean members fear that True Fitness will follow the way of California Fitness, another prominent gym in Singapore that abruptly closed down last year, due to JV Fitness, the owner, not having adequate finances to keep them running. The story is pretty much the same, except that California Fitness seemed to have financial troubles due to its business model of relying on upfront payment, and charging less than the market price for memberships.
Since California Fitness went bust due to financial difficulties, getting refunds may be a lost cause. As a lawyer had commented on the case,
”Any assets (that a business has) will go towards paying landlords, the tax authorities or employees before it goes towards refunding the customers.” – Mr Amolat Singh, lawyer, for Straits Times Singapore.
As has been established by the CEO himself, True Fitness is not in trouble financially, and closing down business in Malaysia and Thailand is due to the business here not being financially viable anymore instead of being in debt or something. Since the True Group is aiming to pursue an initial public offering on the Hong Kong Stock Exchange within the next two years, perhaps they should clear up this issue with their members and employees as fast as they can.
Or they can just lay low and hope that all potential investors forgot about this huge fiasco two years later.