From cult to chaos: The surprising downfall of F45.

The ubiquitous red, white and blue logo. The 'Team training, life changing' motto. No mirrors. No microphones. No egos.

You probably know all of these things about F45 - even if you've never set foot in one of their gyms.

Everyone knows someone who does F45. And they're usually addicted to it.

Watch: Here's what horoscopes look like when they're working out. Post continues below.

From the endless celebrity endorsements and the 'cult' following, to the impressive Wall Street debut and the millions upon millions of dollars - the fitness chain has been a bone fide success story.

But in recent times, F45 started losing its momentum. 

The stock prices tanked. The co-founder and CEO stepped down and sold their stocks. Franchises closed. People lost their jobs. 

Despite having such a loyal following, at least 11 gyms in Australia having closed down unexpectedly.

And it's not only the franchises that are taking a hit, but the customers too. Many have reportedly been left out of pocket after recent collapses, with some owed up to $1000 for upfront membership payments. 

Jane*, who has been an F45 customer since 2017, has been waiting for her refund for months. In an interview with news.com.au., she said her local F45 gym in the Melbourne suburb of Werribee shut down in August last year. 

"We were so upset," the 39-year-old told the outlet. "They owed me just over $1000 and I thought, ‘when am I going to get my money back’?"

Some of the franchises have even been left to sell off gym equipment to cover their losses.

As Jane shared, the gym started showing cracks at the beginning of last year, when there was minimal equipment available to complete workouts.

"The videos had rowing machines and skiing ergs, and… different sort of bikes, we never got those," she said. "We got suspicious."

It was around this time that her gym had promoted an offer of paying $1000 up front for six months.

So, what's happening?

Below, we take a closer look at the rise and fall of F45.

How F45 became so successful.

Functional 45 (better known as F45) is the worldwide Australian-born exercise phenomenon that went from Sydney to New York, opening up thousands of franchises and making lots and LOTS of money - it's a truly great business story.

Co-founded in 2013 by former Sydney banker Rob Deutsch and Adam Gilchrist (not to be confused with the Aussie cricketer), it was based on a simple idea - to modernise the traditional gym format with a 45-minute high-intensity, group workout.

The workout approach might sound pretty standard now, but at the time the whole thing was revolutionary (HIIT classes were only starting to becoming a thing) - there wasn't much out there like it. 

And it was an instant success.

Within the first two and a half years of operation, the fitness chain went from one gym in Paddington in Sydney's eastern suburbs to around 200 studios. 

In less than eight years, it went on to sell over 2,000 franchises across 63 countries.

In an interview in 2018, Deutsch contributed the instant success to creating a "cult-like environment" which makes clients want to come back.

"We’ve created a way to get people to want to come to the gym. Our clients actually turn up," he told news.com.au.

"Globally on average people turn up to normal gyms once a month. At F45 people turn up more than any other offering, about three times a week," Deutsch said.

"People want an experience and they want to feel a part of a community. It’s not just putting your headphones on and throwing around dumbbells."

"Our clients become friends and they start hanging out and have coffees before and after sessions. Through this cult-like environment we have built a really strong community."

The formula to success? The high prices.

It costs $65 per week to attend the 45-minute classes. Meaning? When you’re paying so much money, you're going to want to attend as many classes as possible. Otherwise, you're pretty much throwing your money down the drain, right?

"We’re way more expensive than normal gym models and that makes people feel like they need to use the service," Deutsch said.

Tactical.

"Our clients stick us with us longer than any other gym model. On average, F45 members stay for about 18 months. Our prices are sometimes 12 times higher than a normal gym, but our clients stay for longer," he said.

The other important ingredient? Keeping the workouts different. No two classes at F45 are the same. 

For example, you can go from doing box jumps and rowing to lifting kettlebells and doing pull-ups on TRX ropes. There are a certain number of stations, a trainer and a large screen with a timer showing what to do next.

This recipe is part of what the company touts as the key to maintaining results.

Along with this unique formula, there's no way you can talk about F45's success without mentioning its gigantic celebrity backing.

Since its inception, the fitness empire literally exploded in Hollywood, becoming a cult celebrity workout with a slew of A-lister fans - including Hugh Jackman, David Beckham, Nicole Richie, Mario Lopez and Cindy Crawford.

One of the most noteworthy celebrity supporters? Actor Mark Wahlberg.

You don't have to know anything about F45 to know about Wahlberg's involvement with the fitness franchise. He's everywhere on its social media accounts. And vice versa.

In 2019, the actor teamed up with an investment company called FOD Capital to buy a stake in F45. Together, their investment valued F45 at $450 million. 

Wahlberg can be regularly seen plugging the workouts on his Instagram, showing off his physique and touting F45 as his favourite form of workout.

Shortly after Wahlberg jumped on board, F45 was one of the fastest growing franchises in the world, and it experienced an incredible few years of revenue growth. 

According to Superhero, the company went from making $25 million in 2017 to $93 million in 2019.

Some ridiculously big numbers.

After such solid success over such a short amount of time, things started looking very good for the fitness franchise. To put it into perspective, the rapid growth of F45 was faster than franchises like McDonalds and Subway in Australia.

What happened to F45?

But as soon as 2020 came around, something started to change.

All of a sudden, the revenue and share price took a hit, with numbers dropping to $82 million - presumably due to the impact of COVID.

Then, Rob Deutch stepped down as the company's CEO - just shy of F45 going public and making its market debut on Wall Street. 

It was a shock move.

On Instagram he wrote, "As the founder of F45, I’ve had the privilege of helping build the company into one of the fastest-growing fitness franchises in the world. My time at F45 has been deeply rewarding and enjoyable. I am incredibly thankful for the business partnerships and friends made along the way."

"As some of you know, I recently (2 months ago) transitioned out of my role as CEO at F45. I still remain a shareholder. The F45 future is bright, and I look forward to watching from afar. I look to the future with optimism and wish all friends, family, and franchisees a safe journey through this challenging time. I have a sneaking suspicion we will meet again soon in the wellness space.. BE SAFE and THANK YOU for the support."

View this post on Instagram

A post shared by Rob Deutsch (@f45rob)

Off the back of Deutch's departure, the company went ahead with their plans to go public, appearing on the New York Stock Exchange with a $2 billion valuation.

Wahlberg and Gilchrist appeared on the floor of the NYSE to ring the opening bell.

On Instagram, Deutch praised the team for listing, writing: "I genuinely wish Adam, Mike Raymond, the incredible team, and all the franchisees the BEST as the company enters another chapter! Just awesome (ps - I have no involvement in the company, no shares and sold out over a year ago, so I can’t tell you whether to buy or sell the shares."

With plans to expand into China and India, it looked like F45's public debut was setting the company up to tackle global expansion and become one of the largest fitness chains in the world.

In a statement, F45 said: "While Australia - our brand's birthplace - remains a top market for F45 Training, countries like China offer a massive opportunity as its people look to improve the quality of their lives and bolster their health and fitness."

Suddenly, things took a disastrous turn.

Since hitting the public market, F45's stock price plunged, with the brand experiencing a significant decline from its debut price, dropping 88 per cent. 

According to the Financial Review, F45 told investors it had secured a $US250 million (roughly $350 million AUD) line of credit that it would extend to franchisees to help hit its target of opening 1000 new studios in 2022.

However, it was then revealed that the credit line would not be available. 

Gilchrist announced he was stepping down as F45’s chief executive and chairman.

The company also shared that it would be laying off 110 staff "amid changing macroeconomic and business conditions". 

After the dramatic stock price plunge and staff cuts, Deutsch shared his reaction on Instagram, writing: "Never in my wildest dreams could I have imagined this." 

"When I exited, and sold out of F45, I left a healthy, phenomenal, beast of a business. All the way from the company culture to the heartbeat of the business… The workouts. F45 was special," he said.

"I genuinely hope all of the 110 laid-off staff, find happiness and opportunities elsewhere."

Fans of the fitness program were quick to comment, with Deutch pointing to "enormous issues" within the company, while suggesting it was a mistake for the company to enter the stock market.

Image: Instagram @f45rob.

Image: Instagram @f45rob.

Now, F45 are facing class action law firms from the US, investigating whether F45 misrepresented itself to investors.

How did F45 go from a 'cult' to collapse?

So, where did it all go wrong? How did F45 go from being one of the most successful fitness models in the world to the brink of collapse?

In F45’s press release, it was revealed that a combination of COVID and expansion plans may have led to its undoing.

However, it offered very few details of where it really went wrong, saying that "market dynamics" made it difficult for potential franchisees to get loans to set up a gym.

By cutting its operational expenses and workforce by 45 per cent and slashing expansion plans, F45 hoped it would keep the company afloat and return it to positive cash flow.

After planning to roll out 1500 new franchises, F45 said it would instead aim for between 350 and 450.

Mamamia contacted F45 for comment, but the company declined.

After the devastating stock market plunge, Wahlberg, who owns 26 per cent of the company, showed his support to the fitness empire, calling it "the best workout on the planet."

View this post on Instagram

A post shared by Mark Wahlberg (@markwahlberg)

In another video, he posed shirtless and talked about the intense workout he just completed.

“Here at F45, Coeur d’Alene, we just killed it, I’m telling you,” he said.

“I’m 51 [and] still doing it,” he said.

“F45, come check it out.”

Is F45 still popular?

So, where does the public sit when it comes to the F45 training method? Is it still as popular as it once was?

With more and more fitness companies popping up, each with their own unique format - from Orange Theory to Body Fit Training and Barry's Bootcamp - is F45 still as relevant as it was back in 2013?

While some people praise the high-energy environment for helping them just "get it done", others say there is a downside to the fitness program regarding duty of care.

For example, Katie told Mamamia, "There was this one time where I was going four to five times a week, and I had a bit of a niggle in my rib. I went to one of the classes and was doing these hideous crunch things and the niggle became a bigger problem – I was quietly crying and the instructor came over and [said] 'push through the pain'. So I did, and then I felt like I was winded all day. I ended up going to the doctor who said I had torn an intercostal muscle."

Many other people we spoke to said there is little guidance offered by instructors, and the large group classes have resulted in clients sustaining long-term injuries - although it should be noted that this can happen in any fitness institution without properly trained staff.

For Madeline, she felt at odds with how much she was being pushed and getting injured. 

"I joined back in 2018 and got a wrist injury that was so painful that I couldn't do push-ups and had to go to the physio for a few months. And my shoulder started playing up - like, my rotator cuff. I did it for about nine months." 

Sydney, who was a student athlete, ended up with a knee injury after attending F45. She said, "My issue was that the trainers weren't going around and correcting form, they just motivated people. I'd watch people with horrific form and the trainers did nothing about it."

On the flip side, there are people like Caitlin. She's been going to F45 for three years five to six times a week and loves how you "go in, don't have to think about anything and leave exhausted and happy."

"I go to a studio that is owned by a very dedicated couple, who genuinely care about the wellbeing of their clients," she said.

"They run extra training sessions for people to get their technique right, and lots of extracurriculars for people who are keen for that kind of stuff (from running city2surf to trivia nights at the pub). I would be bummed if they go out of business because I can't think of anything worse than going to a mainstream gym with a million people in it."

As Talia tells Mamamia, your experience with F45 really depends on the individual franchise. 

"I've been to two different F45s, and the experiences were wildly different," she said.

"The first time I went to F45, the trainers were excellent. They were super helpful and made sure when you first started you weren't pushing yourself too hard and just learning the basics and technique, and getting into the rhythm. I was going four times a week for over two years and as I progressed, they really started pushing me hard and to be honest I kind of needed it. All the trainers were really approachable and would always help adjust an exercise if you were injured."

"The second one I went to - I hadn't done any proper training for ages. The trainers [didn't] introduce themselves to me or ask me about my experience. They were really hands off the whole class. [I] didn't go back."

Although F45 has many happy return customers all over the world, these stories point to a lack of consistency in its approach to the safety and education of clients.

What will happen to F45?

Despite the turmoil and massive losses, F45 executives seem confident the fitness empire will come out the other end.

While F45 has a remarkable business story and still remains one of the biggest fitness brands globally, if trends continue to change (and they will), and F45 loses more customers, it may result in franchisees departing from the brand. Meaning F45 may be left struggling to find replacements.

If the past twelve months have been anything to go off - only time will tell.

Feature image: Instagram/@f45

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