A fitness center company that loses more money each year, that sells lifetime memberships, but regularly closes facilities.
Photo above of the fitness center CaliforniaWOW Women, developed at a cost of 160 million baht, opened in 2006 on Sukhumvit 31 but has since closed.
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Health: Contract gripes get a workout, California WOW risks SET delisting by Chadamas Chinmaneevong & Prapasri Vasuhirun
Frequent consumer complaints about fitness operators have prompted the Office of the Consumer Protection Board (OCPB) to put the business on its list of those subject to contractual controls.
The move, expected to take effect before June, is meant to ensure fairness in services and contracts.
Fair contracts should not require lifetime membership as it is uncertain whether any operator can guarantee such long service, and contract termination can be made with notice, said the agency.
Phairoj Kanungsup, director of the agency's contracts division, said the office received 1,200 complaints from 2005 to 2009 about poor or non existent services or closure of gym facilities, prompting it to deal with the problem.
There are 11 fitness operators in Thailand, though most of the complaints deal with three large players: California WOW Xperience (CAWOW), followed by True Fitness and Fitness First...
...A 38-year-old CAWOW member who asked not to be named said the gym had breached several contract details since she joined a few years ago. These included closing a women-only gym on Sukhumvit Road, which was the sole reason she had joined in the first place.
She said the clubs were too packed for her to attend any classes, particularly after working hours.
If the company is sold, membership benefits should remain unchanged as they are clearly stated in the contracts...
...Yesterday, the Stock Exchange of Thailand suspended trading in CAWOW, pending its consideration of the company's financial status and operating performance to determine whether it might be delisted by March 4. The company's shareholders' equity was found to be less than zero...
...With paid-up capital of 550 million baht, CAWOW posted a loss of 93 million baht in 2007 for its first year on revenue of 1.61 billion baht. Losses rose to 120 million in 2008 on revenue of 1.76 billion. Losses in 2009 and 2010 were 274 million and 466 million baht, respectively.
The major shareholders are a group led by Canadian founder Eric Levine with 38.58% and Major Cineplex Group with 24%. An industry source said offering cheap lifetime memberships would not allow CAWOW to run its business in the long term.
"I think this business model doesn't work because management and maintenance costs for each gym are quite high and they need improvement all the time. With only a small budget, the quality of gyms and products will gradually decline. Salespersons have been forced to meet a quota and they may resort to tricks to meet their targets," said the source.
A few years ago, CAWOW began selling cheap lifetime memberships with fees of around 15,000 to 30,000 baht and an annual renewal fee of 100 baht.
(Source: Bangkok Post, Health, Contract gripes get a workout, California WOW risks SET delisting, 25/02/2011, Chadamas Chinmaneevong & Prapasri Vasuhirun, link)
fitness - physical fitness, exercise: running, lifting weights, sit-ups, push-ups, aerobics, etc... (See Wikipedia)
fitness center - health club, gym, a place which has exercise equipment for exercise, also aerobics and other programmes (See Wikipedia)
California Wow - a leading fitness center company in Thailand (See website)
True Fitness - a leading fitness center company in Thailand (See website)
Fitness First - a leading fitness center company in Thailand (See website)
Consumer Protection Board (CPB) - the Thai government agency that protects the rights of consumers, now operating under improved rules created by the post-coup legislature (See website)
consumer - someone who buys and uses goods and services ผู้บริโภค
complaints - when people say there is something wrong and they want it changed
operators - businesses running a certain kind of business
prompted - caused
contract (noun) - a written (or oral) agreement that is legally binding สัญญา
subject to - make someone live under a new law or regulation (or experience something they don't want to experience)
contractual controls - when the details or terms of a controlled (here: by government regulation)
fair contracts - contracts that do not cheat customers
termination - the act of ending something
contract termination - the ending of a contract
expected - believe will happen คาดว่า (จะเกิดขึ้น)
take effect - when some new law, regulation or policy officially starts or begins
ensure - to make certain that something happens or is done รับรอง ให้ความมั่นใจ
uncertain - don't know what will happen, not 100% sure ไม่มั่นใจ
guarantee - a promise that something will be done or will happen คำรับรอง, การประกัน (See glossary)
notice - information or warning หมายเตือ
division - one part of a large organisation
facilities - a specially equipped place to do a certain activity (for example, athletics facilities), the buildings and equipment for an activity สถานที่และสิ่งอำนวยความสะดวก
prompting - causing
players - an important company, person, or country in an industry ผู้ค้าคนสำคัญ หรือผู้ค้ารายใหญ่
reason - an explanation of an event, why an event happened เหตุ ; เหตุผล ; สาเหตุ
the sole reason - the one and only reason
breach contract - breaking a contract, not following the terms of the contract, not doing what the contract says you must do
packed - crowded; full of people or things แน่น
working hours - from around 8 am in the morning to around 5 pm in the evening, the time period when most people are working
benefits - money, services, or goods you receive (from a government, company programme, membership organization) เงินช่วยเหลือ
membership benefits - the things you get from being a member of an organization
suspended - stopped for a period of time (temporarily)
suspended trading - when the buying and selling (trading) of stock shares of a company is stopped for a period of time
pending - waiting to be dealt with, settled or completed ยังค้างอยู่, ซึ่งยังไม่จบสิ้น, อยู่ในระหว่าง
consideration - giving careful thought to something before making a decision
status - the situation, state or condition at a point in time, official or legal position สถานภาพ, สถานะ
performance - how well or badly something works (or whether an investment provides a reasonable return)
determine - decide what will happen กำหนด to officially find out or decide something ตัดสินใจ ชี้ขาด
listed - when the stock shares of a company begin to be traded on a stock exchange
delisted - when trading of the stock shares of a company on a stock exchange is ended
equity - the value of a company's shares กรรมสิทธิ์หุ้นส่วนในบริษัทห้างร้าน
shareholder - a person who owns shares of a coroporation, part owner of a company
shareholder's equity - same as equity
capital - money invested in a business (See glossary)
paid-up capital - the proportion of the issued capital which has been paid for by shareholders (See Wikipedia)
revenue - income from taxes or business activities รายได้
founder - a person who establishes an institution, business, or organization ผู้ก่อตั้ง
source - someone who gives information แหล่งข่าว
business model - the plan a company uses to generate revenue that includes product and service offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies (See Wikipedia and Google Definitions)
maintenance - work that is done to keep something such as a building, machine, or piece of equipment repaired and in good condition การซ่อมบำรุง
improvement - when something gets better or when you make it better การปรับปรุง, การทำให้ดีขึ้น
budget - an amount of money able to be spent on something งบประมาณ (See Wikipedia)
decline - a weakening or reduction
sales quota - the value of products or services that must be sold if a sales person is to keep their job and not be fired
targets - goals or levels you plan to achieve
annual - happening once a year ประจำปี
renewal - growing strong again (became weak in the past)
fee - an amount of money that you pay to be allowed to do something ค่าธรรมเนียม, ค่าตอบแทน, ค่าบริการ
annual renewal fee - the amount of money paid each year to continue receiving a service
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