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Shocking Blow: UFC Gym Chain Crumbles Under $5 Million Debt and Franchisee Legal Battle
The operator of a popular chain of UFC gym(s) has gone into administration, leaving creditors owed more than $5 million. The collapse of Ultimate Franchising Group comes as a result of a major legal dispute with franchisees over misleading representations regarding the profitability of the businesses. The court battle, which ended in favor of the franchisees, exposed the group’s misrepresentations about gym profitability and break-even membership numbers.
Three franchisees took legal action after incurring significant operating losses, ranging from $391,000 to $962,000, despite investing up to $1.4 million in startup costs. The Federal Court ruled that Ultimate Franchising Group had made misleading statements and ordered the group to pay $5.2 million to the successful litigants. The court’s decision prompted the company to call in administrators and led to its subsequent collapse.
Wexted Advisors has been appointed to manage the business during administration. The administrators are currently assessing the financial situation and attempting to recover funds for creditors. The future of the franchisees and their ability to recoup their losses remains uncertain.
The collapse of UFC Gym Australia has sent shockwaves through the fitness industry, raising questions about the viability of the franchise model and the obligation of franchisors to provide accurate financial information to potential franchisees. The directors of Ultimate Franchising Group are considering an appeal against the court’s decision and are exploring various options moving forward.
It is important to note that the administrators suspect the group may have been insolvent since March and are conducting further investigations into the company’s financial affairs. They are also in the process of selling off any remaining assets to recover funds.
The fallout from this legal battle and subsequent collapse serves as a cautionary tale for both franchisors and potential franchisees, highlighting the need for transparency, accurate financial disclosures, and diligent due diligence when entering into franchise agreements.
In a stunning development, UFC President Dana White is gearing up for a crucial sit-down with top executives at ESPN to discuss the future of their partnership. The stakes are high as the current broadcasting rights deal between the UFC and ESPN is set to expire in 2025.
White revealed in a recent interview with Sports Business Journal that he has scheduled a meeting with Mark Shapiro, President of Endeavor, and Jimmy Pitaro, President of ESPN, within the next month to explore the potential extension of their collaboration.
The UFC and ESPN joined forces in 2019, making ESPN+ the exclusive provider of UFC pay-per-view cards. This partnership has significantly contributed to the global popularity and reach of the UFC.
While White is eager to continue the fruitful partnership, ESPN remains non-committal about a new deal. Matt Kenny, ESPN Vice President of Combat Sports Programming, emphasized their appreciation for the UFC but stopped short of making any promises.
Before ESPN, the UFC had broadcasting agreements with Fox Sports and Spike TV. However, their current ESPN deal has undoubtedly elevated the promotion’s status.
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