PETALING JAYA: The closure of True Fitness branches in Malaysia and Thailand was required under the franchise agreement between Singapore-based parent company True Group and Chinese investor Tongfang Kontafarma Holdings Ltd.
According to Tongfang Kontafarma's May 7 announcement of the franchise deal to the Hong Kong Stock Exchange, True Group CEO Patrick John Wee, referred to as Mr PJW, agreed to shut down the fitness chain's operations in Thailand and Malaysia by no later than Dec 31.
An announcement on investor relations website irasia.com, which The Star accessed, states that if Wee failed to do so, he and his company's subsidiaries would be liable for the franchise fees.
The transaction for the US$36.7mil (RM156.4mil) venture, which sees Tongfang Kontafarma acquiring 51% of True Group's Singapore and China businesses and a 29% acquisition of its Taiwan businesses, was completed on May 29.
Tongfang Kontafarma chairman Huang Yu announced to the Hong Kong Stock Exchange that True Cayman Group will open 20 new outlets across China by the end of 2019 with a US$5mil (RM21.3mil) injection by Tongfang Kontafarma.
True Fitness Malaysia announced last Saturday that it had ceased all operations of its gyms and spa facilities because it was "no longer financially viable due to evolving market conditions".
The abrupt closure left 100 True Fitness Malaysia staff jobless without any notice.
The employees are also accusing True Fitness Malaysia of not paying over RM66,000 in salaries and commissions.
Members of the fitness club are also in a limbo over the status of their membership, for which they paid thousands of ringgit.
When contacted, a True Group spokesman in Singapore said, "No one from here will be able to comment ".