One of the founders of beleaguered Australian fitness group F45 says a combination of COVID and its ill-considered expansion plans – backed by celebrity investor and board member Mark Wahlberg – may have caused its loss.
F45 revealed this week that its financiers had put the brakes on its expansion plans, prompting the departure of its chief executive and forcing the group to nearly halve its workforce and other costs to preserve cash and stay afloat.
Luke Istomin – the personal trainer who developed F45’s core regimen of 45-minute high-intensity functional circuit training classes based on a motto of “no mirrors, no microphones, no ego ” – says he doesn’t think the company ever foresaw the problem it would have with rapid expansion.
“With some money they were making at the time and the plan to grow really, really fast, I think they bit off more than they can chew,” said Istomin, who co-founded the company with Rob Deutsch in 2013. .
He left F45 in 2016 over creative differences and has since created his own corporate fitness franchise, Reunion Training, which has struggled with the other big issue F45 would have had to deal with: COVID.
“The actual training model I built was phenomenal. But unfortunately the harsh reality of trying to navigate two years of COVID has not been kind to a start-up business,” Istomin said.
“We have just started to gain momentum with people coming back to work. And then last week people were ordered to stay home and work from home again. So we’ve seen this big drop in memberships or people working from home again. »
F45 said this week that $250 million ($357 million) in previously announced loan facilities to fund franchisee expansion “will not be available” and said market dynamics meant franchisees also had to find it difficult to find financing to develop new operations.