As Planet Fitness considers an initial public offering the company has been in the news recently for a few lawsuits as well as expansions by some of its franchisees Photo by Jennifer Ray

As Planet Fitness considers an initial public offering, the company has been in the news recently for a few lawsuits as well as expansions by some of its franchisees. Photo by Jennifer Ray.

Two Cases Related to Planet Fitness Result in Pay Outs

Two lawsuits related to Planet Fitness' original owners and a franchisee have led to payouts of about $4 million. 

As the current owners of Planet Fitness, Newington, NH, consider an initial public offering, the company's original owners have been ordered to pay $3.2 million related to the sale of the company and a franchisee has been ordered to pay $750,000 on a liability claim. 

In the first case, PFIP LLC, which originally owned Planet Fitness, has been ordered to pay $3.2 million to America's Growth Capital (AGC), its advisers, for its help in brokering the 2013 $505 million sale of the majority of the company to TSG Consumer Partners LLC. A Massachusetts federal judge ruled that PFIP had a fiduciary duty to pay AGC for its advising role, even though the eventual purchaser of the chain was not specified as a target buyer in the contract PFIP had signed with AGC. The judge in this case relied on documentation and testimony that PFIP had encouraged AGC to pursue TSG, whether or not the company was listed as an early suitor, and that in the eventual sale of Planet Fitness to TSG, AGC would be entitled to compensation. 

The court, though, awarded only half the amount of damages AGC had requested. AGC argued that it was due $6.4 million in damages, calculated as 1.33 percent of a claimed sale price of $525.8 million. Court documents set the proper damages at 0.5 percent of an actual sale price of $505 million, and awarded AGC $2.525 million plus $702,960 for prejudgment interest.

Planet Fitness is reportedly considering an IPO and declined to comment on the judge's order in this case, only stating that TSG was indemnified by PFIP. PFIP was operated by Mike Grondahl, Marc Grondahl and Chris Rondeau, who now own a minority stake in Planet Fitness. 

On the heels of the AGC decision, a Planet Fitness franchisee in Branford, CT, also settled a $750,000 lawsuit brought by Susan Butler, a 62-year-old fitness club patron. Butler contended that during a 2009 personal training session using a Bosu ball she was "catapulted" into the air, landing on her hip and wrist and breaking both. Butler's lawyers argued that both the gym and its personal trainer were responsible for the accident, and were not sufficiently aware of the dangers of working with the equipment.

A key issue in this case was whether Butler's signing of a waiver against personal injury during a club workout would be considered valid. Last week a Connecticut judge ruled that it would not, and so the Planet Fitness franchisee moved to settle through mediation.

Regarding the Butler case, a Planet Fitness spokesperson would say only that the company is "fully indemnified" by the franchisee at whose location the incident took place.

These two suits were followed by another one filed yesterday by a woman who asserts the company violated her civil rights by allowing a transgender woman in the women's locker room and breached her contract by not telling her that the company's policy allows transgender people to use the locker room of their choice.

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