After suddenly shuttering its nine Fitness Source stores in the Toronto area in late March when its franchisees rescinded their operation agreement, Forzani has re-opened the stores as of May 1.
According to Tom Quinn, Forzani president and COO, about 80 percent of the former Fitness Source employees have been re-hired. He said Forzani planned to retain the stores as they are being operated rather than find new franchisees for them. In addition, the company (TSX: FGL) is planning another store in the Edmonton area to open in fall 2009, he said.
The franchisees -- Mitchell Melnick, Frank Fallico and Peter Zambito -- had confirmed to SNEWS in early April by email that they had indeed returned the stores to Forzani control, rescinding the franchise agreement that had been in place for two years. They declined further comment at that time. Click here to read an April 10, 2009, SNEWS® story, "Potential court review of rescission by Fitness Source franchisees may provide case law in Ontario."
The rescission by the Fitness Source franchisees is in accordance with a relatively new and untested franchise law in Ontario, the Arthur Wishart Act of 2000. However, Forzani has not formally accepted the rescission letter, said Forzani in-house legal counsel Mathieu St. Charles, although both Forzani representatives and the former franchisees agreed Forzani’s subsidiary Sports Experts 2000 would take back the stores.
The two parties are still "going through the process" of determining the outcome, Quinn said.
As of May 12, the website (www.fitnesssource.ca) remained a holding page with the message, "Online sales are temporarily discontinued due to reconstruction of the web site. Please check back soon." Click here to read the April 6, 2009, SNEWS story, "Fitness Source Toronto shuts down as Forzani steps back in as owner-operator."