A lawsuit and counterclaim between Planet Fitness owners Mike Grondahl, Marc Grondahl and Chris Rondeau and three New York-based franchisees with whom they are partners brought to light the fact that executives at the Newington, NH-based company had discussed taking Planet Fitness public.
Planet Fitness confirmed last month that discussions for an initial public offering (IPO) took place between June 2011 and November 2011, a month before Planet Fitness filed a complaint in New Hampshire District Court against James Innocenti, Jeffrey Innocenti and Luigi “Gino” LaVerghetta, who are partners with the Grondahls and Rondeau in the PFNY LLC franchisee entity, the largest franchisee in the Planet Fitness system.
The Grondahls and Rondeau claim the Innocentis and LaVerghetta conducted business involving real-estate companies and a contractor without their knowledge, thus violating their agreement. The Innocentis and LaVerghetta filed a counterclaim in January denying the allegations. As of press time, the two sides were still in a legal battle, and new documents were expected to be filed in the court system.
Planet Fitness said last month that it has not made a final decision about an IPO. If Planet Fitness takes the company public, it will be the third public club company in the industry. Life Time Fitness, Chanhassen, MN, and Town Sports International, New York, are the two current public club companies.
Rick Caro, president of Management Vision, New York, says it would be difficult for a public franchise company to show quarterly improvement.
“That probably would be dependent on selling more franchises every quarter, and that’s an unpredictable business,” Caro says.
Harvey Spevak, CEO of Equinox, New York, said in a March interview with Bloomberg TV that his company has no plans to go public. Last year, Equinox acquired the remaining clubs from The Sports Club Co., Los Angeles, which is traded on the Pink Sheets.
Bally Total Fitness, Chicago, had been a public company, but it went private in 2007 after the first of two bankruptcy proceedings.