SF Franchisee Association Sues Snap Fitness

MINNEAPOLIS, Dec. 18, 2019 /PRNewswire/ -- The SF Franchisee Association, which represents 177 Snap Fitness franchisees operating 260 Snap Fitness clubs in the United States and Canada, filed a lawsuit on December 16, 2019, in Hennepin County (Minnesota) District Court asserting that the system's franchisor, Snap Fitness, Inc., materially breached the franchise agreements it has with all of its franchisees by forcing the franchisees to purchase and use a proprietary club management software developed by a Snap Fitness-owned affiliate that failed to meet industry security standards.

When that software, called Fitware, fell victim to a ransomware attack on November 22, 2018, the franchisees lost all their data and the ability to operate their clubs for 13 days, causing all Snap Fitness franchisees, including the members of the SF Franchisee Association, to suffer significant losses of revenues, profits, and club members. Snap Fitness and its wholly-owned affiliate, GoFit, LLC, have failed to correct many of the problems caused by the attack causing the franchisees to continue suffering losses of revenues and profits.

The SF Franchisee Association, through its legal counsel, Dady & Gardner, P.A., in Minneapolis, first reached out to Snap Fitness in July 2019 to seek a negotiated resolution of this problem. Snap Fitness originally stated it would work with the SF Franchisee Association, but, when Lift Brands, the owner of Snap Fitness, hired Weldon Spangler as its CEO in September 2019, Snap Fitness stated it would not work with the SF Franchisee Association, but instead wanted to work with individual franchisees.

The SF Franchisee Association served Snap Fitness with the lawsuit on November 14, 2019, but has received no response from Snap Fitness or its legal counsel and, thus, filed the lawsuit Monday.

Beginning in January 2014, Snap Fitness required every franchisee to purchase and install Fitware, which Snap Fitness and GoFit designed to operate and/or interact with many of the other items within Snap Fitness' "In Club Technology Package." When Fitware crashed, each of the clubs' 24-hour door access components, panic systems, cameras and surveillance equipment, televisions, MyZone applications, FitnessOnDemand applications, and other related items were largely inoperable.

Fitware crashed on Thanksgiving Day 2018 when it fell victim to a ransomware attack. For the next 13 days, Snap Fitness was unable to process member dues, which left the franchisees without any revenue. The franchisees also were unable to process customer payments or point-of-sale transactions. Franchisees could not process changes of any kind for new or existing customers, including renewal and cancellations.

Although Snap Fitness got Fitware back online 13 days later, it has continued to operate at less than acceptable levels.

The Association is asking the court to declare that Snap Fitness materially breached the franchise agreements. Such a ruling would mean that all Snap Fitness franchisees would have the right to leave the Snap Fitness system.

For additional information, you can contact SF Franchisee Association Director Christina Clark, a Snap Fitness franchisee who operates seven Snap Fitness clubs in western Minnesota and is serving as the Association's spokesperson on this matter, or Scott E. Korzenowski, who, along with Kristy L. Miamen and Rachel D. Zaiger of Dady & Gardner, P.A. who represents the Association and its members.

SOURCE SF Franchisee Association

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