F45 co-founder Adam Gilchrist seemingly disappeared as the beleaguered gym franchise posts a staggering 60 percent drop in its share price.
The man who co-founded the once-cult gym with Mr. Gilchrist, Rob Deutsch, reportedly has no idea where he is and hasn’t spoken to him in several years.
Gilchrist’s demise came after he left the company in a $10 million golden handshake earlier this month, and shortly after unloaded his $14 million freshwater trophy home on Sydney’s northern beaches.
Mr. Gilchrist co-founded the F45 business with Rob Deutsch in 2013 with a gym in Paddington, growing into a global franchise and attracting high-profile investors such as Mark Wahlberg.
After Gilchrist stepped down as chief executive, Deutsch said on social media that F45 was plagued with “enormous problems.”
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Deutsch told Daily Mail Australia that his former business friend had taken steps to distance himself from the public eye.
“I was told that… he changed his number… so it might be difficult to locate him nowadays,” Deutsch told the publication.
While the franchise’s share price continues to fall, several high-profile law firms have opened investigations, Australian Financial Review informed.
The Schall Law Firm, a national shareholder rights litigation firm, is investigating claims on behalf of F45 Training Holdings Inc. investors for violations of securities laws, Barrons reported.
The firm will investigate whether the company made false and/or misleading statements and/or failed to disclose relevant information to investors.
Major shareholder and actor Mark Wahlberg cashed in $12.2 million ($17.12 million Australian) in April, before the company posted a massive $55 million quarterly loss and canceled more than 300 franchise sales.
Reporting its financial results after the close of the US market earlier this month, F45 revealed that it had made a net loss of $34.9 million ($50.8 million) in the three months to June with total revenue of $30 million (A$43.7 million), of which some US$19.1 million (A$27.8 million) came from franchise fees.
Its comprehensive loss, which includes foreign currency translation adjustments, was just under $38.5 million ($54.8 million).
“I am pleased with the performance of our studies, which delivered same-store sales growth of 6%, as well as record systemwide sales of $127.1 million ($A185.2 million), representing year year-over-year growth of 23 percent,” F45 interim CEO Ben Coates said in a statement.
Coates said there were 92 net initial studio openings during the quarter, bringing the total count to 1,958.
He told investors that several franchise sales had been canceled after third-party funding fell through.
“In total franchises, sales decreased by 175 in the [US] region,” he said, as reported the Sydney Morning Herald.
“Franchise sales in the US will comprise 132 gross franchise sales, minus 307 terminations during the quarter. The terminations were due to the inability of franchisees to access financing facilities, we announced that the end of [the first quarter].”
When Gilchrist resigned late last month, 110 employees were also laid off, representing nearly half of its global workforce, as expansion plans were significantly scaled back “due to market conditions.”