A status conference is scheduled for Thursday in New Hampshire District Court before a judge in a case involving the owners of Planet Fitness, Newington, NH, and their New York franchisee partners in PFNY LLC.
Planet Fitness owners Mike Grondahl, Marc Grondahl and Chris Rondeau filed a lawsuit last December against franchisees James Innocenti, Jeffery Innocenti and Luigi “Gino” LaVerghetta, claiming the franchisees conducted business with real-estate companies and a contractor without the knowledge of the Grondahls and Rondeau. The Innocentis and LaVerghetta deny the allegations and filed a countersuit in January.
Peter Tamposi, the attorney representing Planet Fitness, says the case has been evolving rapidly as more information is uncovered. Tamposi adds that additional pleadings are expected to be filed by both sides.
“It’s a business dispute between two partners, no more than that,” Tamposi says. “It has nothing to do with the quality of the brand or the strength of the system at all. The company remains incredibly strong in the industry and strong financially.”
Tamposi confirmed what was outlined in the counterclaim, which was that Planet Fitness had had discussions with the Innocentis and LaVerghetta about taking the company public with an initial public offering (IPO). Negotiations were going well, Tamposi adds, and Planet Fitness had anticipated reaching an agreement.
“We were preparing to do an IPO, and as part of our due diligence for that IPO, we came upon some information which to us was extremely troubling, which ultimately resulted in the lawsuit being filed,” Tamposi says. “This was not an effort on our part at all to disrupt anybody’s business or take over clubs. We’re really just trying to ensure that our partners are playing by the book and using best business practices. What we discovered was [they were not using] best business practices.”
Justin Klein, an attorney representing the Innocentis and LaVerghetta, said last week that his clients vigorously deny the allegations but want to do what is best for Planet Fitness, adding that the lawsuit is “an unfortunate distraction.”
Plans for an IPO are on hold until issues with the PFNY group get resolved, Tamposi says.
“We wouldn’t have undertaken an IPO if we hadn’t felt that management was prepared to undertake the extra duties that go along with running a public company,” Tamposi says. “We’re confident the whole management team was prepared to undertake the duties. They were well equipped to do it and well prepared to do it. We obviously had a lot of talks leading up to the decision to go public, about what being a public company entails. And they believe they were ready to do it.”