Hong Kong's Consumer Council announced to have received 605 complaints as of Monday morning, involving HK$19 million ($2.44 million) since the sudden closure of gym chain Physical Fitness and Beauty, including from the patron with the maximum to lose at HK$650,000.
Last Friday, the company, which has been in business in Hong Kong for 38 years, said it would suspend all operations with immediate effect pending business restructuring. The decision has affected over 700 employees and tens of thousands of consumers.
Gilly Wong Fung-han, chief executive of the Consumer Council, said during a local radio interview on Monday that on average, each complaint involves HK$31,000. The council received 28 cases which involved victims aged 65 or above, with the highest amount being HK$180,000 in a single case.
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Wong said that some victims had used Physical’s service for over 10 or even 20 years, and some people had signed a 10-year contract worth HK$9,800 only a few days before the gym’s closing. Some victims pointed out that they used to pay by installments, however, they were recently asked to pay in one lump sum. Newly received complaints involve beauty services, and the victims also include beauticians.
Wong pointed out that the Hong Kong Customs and Excise Department had set up a task force to follow up on the case, and the investigation will include determining whether there has been any violation of the Trade Descriptions Ordinance.
Physical Fitness and Beauty previously said that a new investor will step in and provide customers with their remaining services at no extra charge, adding that it is in discussions with landlords about reopening.
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Wong emphasized that the gym must clarify the existence of the new company that is set to take over the business, and the consumers need to understand the details before deciding whether to switch to the new service provider if it really exists. Wong pointed out that Physical is still responsible for refunding consumers.
As for whether it is needed to set a statutory cap on the duration of such contracts, Wong said she believed that a further study would be required, including referring to the latest regulations in other countries and regions. She agreed that it is necessary to review the regulation of the beauty and fitness services industry, which usually involves spending large amounts.
Lawmaker Tang Ka-piu said the Hong Kong Federation of Trade Unions has received requests for assistance from over 100 fitness coaches and beauticians.
Last Friday, he accompanied 50 Physical employees, mainly coaches, to file complaints to the Labour Department.
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Tang pointed out that while specific wage arrears figures are unavailable, based on the earlier announcement by the Mandatory Provident Fund Schemes Authority that the company owes over HK$3 million in MPF contributions for two months, it can be estimated that Physical’s monthly labor expenditure is around HK$15 million, which is a relatively large-scale case of defaulted wage payment in recent years.
According to Tang, so far none of Physical’s employees have received an invitation to work for the new investor.
Lawmaker Leung Hei pointed out that it is unreasonable that fitness centers or beauty companies may ask their customers to sign 10-year or even 30-year contracts. Leung said that practice in some states in the United States, such as subject to a term limit on the contract, could serve as a reference to enhance consumer protection.
Over the past few years, a number of fitness centers of various sizes in Hong Kong have announced closure, including Fitness First, which came to an end in 2022; Goji Studios shut down at the end of 2021; Epic MMA Club and M Boxing Fitness both ceased trading in 2017; and California Fitness closed in 2016.
