Law360 (7/21/11): Anytime Fitness Faces Antitrust Suit By Franchisees
Law360, New York (July 21, 2011) -- Exercise club owner Anytime Fitness LLC was sued by a group of its franchisees Wednesday in Illinois for allegedly tying the purchase of a franchise with enrollment in an online health program in violation of a contract and antitrust laws.
A group of 20 franchise owners claim Anytime Fitness violated the Clayton Act and breached its franchise agreement by requiring franchisees to pay a monthly charge for customers' use of Anytime Health, a fitness website maintained by a company affiliate.
“In requiring current Anytime Fitness franchisees to pay for the Anytime Health service, defendant is using the leverage generated by its economic power among Anytime Fitness franchisees to accomplish sales in the fitness website market, an illegal tie-in in violation of Section 3 of the Clayton Act,” according to the complaint.
“The lawsuit was filed by a tiny fraction of the owners of 1,600 Anytime Fitness clubs,” Anytime Fitness spokesman Mark Daly told Law360 on Thursday. “We believe the lawsuit does not have merit and will be dismissed."
Anytime Fitness “is using their market power over the franchisees to force them to purchase an inferior product that they could get for cheaper elsewhere,” plaintiffs' attorney Kevin O'Flaherty told Law360 on Thursday.
The website fee is assessed against the franchise owner, with a monthly cap of $225, according to the complaint.
It is at the discretion of the franchisee whether to pass this fee onto members, but many franchise owners would be forced to eat the cost in order to keep prices competitive, O'Flaherty said.
Minnesota-based Anytime Fitness required its franchisees to enroll members in the website program as of December 2009, but introduced the pricing structure in June 2010, according to the complaint.
The website fee was not included in the original franchising agreement signed by the franchisees, according to the complaint.
Though the agreement stipulates that any disputes between Anytime Fitness and its franchisees be resolved in individual arbitration hearings in Minnesota, the franchise owners said in the complaint that “the cost of individual arbitration in Minnesota would exceed the cost of the illegal Anytime Health fees charged by [the] defendant.”
As the franchise owned by plaintiff Klear Fit LLC I is located in Illinois, the district court has jurisdiction over the action, according to the complaint.
The franchisees are seeking declaratory relief and an injunction preventing Anytime Fitness from charging the website fees.
The franchisees are represented by Kevin O'Flaherty of O'Flaherty Law PC.
Counsel information for Anytime Fitness was not immediately available.
The case is Bliss Reed Enterprises Inc. et al. v. Anytime Fitness LLC, case number 1:11-cv-04892, in the U.S. District Court for the Northern District of Illinois.
--Editing by Christine Caulfield and John Williams.
