Last Updated on July 25, 2020
It came to a shock that True Fitness gym chain suddenly ceased all its operations in Malaysia and Thailand. Basically the gym chain just shut down without prior notification to their members and even their staff.
All along, I have always disagreed with True Fitness’s business model. From the time True Fitness started operating in Malaysia, credit card issuers have received many complaints from their customers. Basically True Fitness accept payment under extended payment plan (EPP). Meaning, when a customer signs up for 1, 2, 3 years or as a lifetime member, the entire amount is upfront paid by the bank to True Fitness. After that, the bank, who have already paid the money to True Fitness will need to collect back from the customer in zero interest installment plans. And the liability is on the customer because the customer have signed a black and white agreement to give consent in the manner payment method. Because upfront the payment is already paid by the bank, the customer would be owing the bank money.
Many customers would think it is the bank’s fault and starting arguing with their staff as well as threatening not pay and to default in payment. This action puts the customers on the losing end because after about 5 months of not fulfilling the minimum payment, the customer’s account will go into CCRIS record. This will impact the customer to get future any loans or credit facilities.
Customers would need to check with their issuers on what is the best course of action to take. But try not to default in the monthly payments as it would affect one’s credit rating and one will not be able to buy a car, get a loan or buy a house without clearing the CCRIS. It is not worth to get one’s credit standing scarred because of this.
True Fitness during the closure had mentioned that members can go to Chi Fitness network. In terms of gym setup structure, Chi Fitness’s facilities are not equal as True Fitness as they do not the kind of space, large exercise studio or equipment. I have some friends who previously have joined large gym network who went to Chi Fitness and stay there. Sometimes smaller gyms are able to make up back in terms of services and personalization. I was told that Chi Fitness only can provide 1 month free pass to the ex True Fitness members- and they are willing to honor the passes that True Fitness have obviously bought in bulk from them. However after that, the ex True Fitness members would need to decide if they wish to join the gym, other gyms or exercise on their own.
On the contrary, Fitness First gyms have a more ethical operation way whereby they collect membership fees mostly on monthly basis (they also have extended installment plan but it is not widely used). But Fitness First would bind their members for 1 year (excluding any period where they freeze their membership). Sometimes they may have offers whereby they bind their members for longer duration. I have friends who after deciding they do not wish to be members would just stop their credit cards instead of giving notice. A friend did that and when rejoined back, have to upfront pay a penalty of about RM299 for quitting the previous membership without prior notice.
Still, monthly collection is a more honest business method to collect membership fees. In this method, should the gym cease to operate, its members would not be left in a lurch. Also, the gym will not be collecting ‘future payments’ which may temp the business to overspend on future revenue, resulting cash flow problems.
Previously True Fitness have been offering life membership to their members which would upfront bring in a large chunk of revenue (remember banks pay the gym upfront and collect back on monthly basis from their customer). After the member finish paying, it only cost about RM100 plus per year to sustain the membership. If many members have signed up, how would a large chain gym with such high operation costs able to sustain? One of my family member actually is a lifetime member of True Fitness and now he lost everything and have to rejoin another gym. Fortunately for him is he had signed up as life member for many years already but some of his friends were not so fortunate.
Therefore in future before signing up any gym, check on their payment collection method- is it monthly or do they offer attractive baits to temp someone to sign up for extended payment method/installment plan? There are a few gym networks that have closed down/merged in the recent years as they are unable to sustain the high operating costs.
