Las Vegas Sun

July 12, 2024

Fitness center franchisor accuses Vegas couple of contract breach

A franchisee of three Anytime Fitness locations in Las Vegas is being sued by the franchisor, which claims the Southern Nevada operator is opening local fitness clubs under another brand in violation of its contract.

Anytime Fitness Inc., based in Hastings, Minn., filed suit last week in U.S.. District Court in Minnesota against Lawrence Fagan and Linda Fagan and their companies.

Anytime Fitness charges in the lawsuit that the couple for the past 16 months was taught by Anytime Fitness how to develop and successfully operate 24-hour limited-service fitness businesses under five-year franchise agreements.

The contracts prohibit the Fagans from competing with Anytime Fitness (AFI), the lawsuit says.

"Defendants have blatantly and brazenly breached their non-compete and appear to be planning to breach their five-year commitment to AFI. They have recently opened and begun operating a business known as 'LifeStyle Fitness 24/7' in the same Las Vegas market as their Anytime Fitness centers, and are currently constructing a second 'LifeStyle Fitness 24/7' location, which they intend to open within three weeks. They have indicated that they then intend to convert their three Anytime Fitness franchised locations in Las Vegas to 'LifeStyle Fitness 24/7' locations to compete directly with Anytime Fitness and its existing and future franchise locations or close their Anytime Fitness locations and transfer the members to the 'coming soon' location," the lawsuit charges.

The defendants specifically are accused of opening a LifeStyle fitness club at 6300 W. Charleston Blvd., the location of an Anytime Fitness club that was operated by another franchisee but was later closed.

The suit accuses the couple of using Anytime Fitness' trademarks and confidential information in promoting their new businesses. Anytime Fitness also claims one of the Fagans' managers is involved in the new business on West Charleston.

The Fagans could not immediately be reached for comment on the allegations Monday -- phone and e-mail messages were left with them.

However, in correspondence attached to the lawsuit, they recently told an attorney for the Minnesota company that they are not involved in any competing businesses that would violate their non-compete agreement.

"We had been involved with the store at 6300 W. Charleston Boulevard," they said in an Aug. 17 e-mail to an Anytime Fitness attorney. "We worked directly with your client in an effort to re-open the failed Anytime Fitness franchise at that location for many weeks.

"Our efforts to re-open the location were ultimately abandoned due to unsatisfactory financial projections," the e-mail said.

"To the best of our understanding, none of our club managers are involved in a competing business," the e-mail said.

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