Planet Fitness (NYSE: PLNT — $7.43 billion) is the leading franchisor of low-cost gyms in the United States. The company’s low price point, as little as $10/month, convenient 2,000+ locations, and branding as a “judgment free zone” have been a hit with consumers. Planet Fitness has also been a hit with investors, shares are up ~350% since the company’s August 2015 IPO propelled by a growing franchise base that’s nearly doubled from 1,066 in 2015 to 2,091 franchised gyms today. At ~40x forward earnings, investors believe the franchise network is healthy and has room to grow. The Bear Cave doesn’t.
Through numerous Freedom of Information Act requests, The Bear Cave has uncovered hundreds of consumer complaints concerning overbilling, fraudulent transactions, excessive fees, and uncancellable memberships. The complaints allege a pattern of misconduct including 1) customers sending multiple cancellation letters that are ignored, 2) cancellation attempts in person that are ignored 3) billing being resumed post-cancelation 4) spurious fees, and 5) Planet Fitness preventing customers from canceling because they owe a back balance, among many other complaints. In addition, The Bear Cave believes Planet Fitness created a fake investor presentation slide to obscure franchisee saturation. After reviewing the evidence, The Bear Cave is left wondering whether Planet Fitness is actually a thriving gym franchise or an illegal billing operation with gyms on the side.
Every year millions of Planet Fitness members attempt to cancel their memberships. Many never go to the gym, some move, and others are off-put by Planet Fitness’s beginner-friendly antics. For example, Planet Fitness gyms have “lunk alarms,” loud alarms that will sound if gymgoers drop weights, grunt loudly, or engage in any intimidating behavior. In addition, Planet Fitness has no squat racks, no barbells, dumbbells that only go up to 75 pounds, and many franchisees host monthly pizza and bagel days. Planet Fitness staff have also turned away guests for having oversized water bottles or oversized builds.
Planet Fitness often boasts these measures ensure a “judgement free environment” for beginners. A skeptic may wonder if these measures are simply designed to discourage frequent gymgoers from joining Planet Fitness.