California Fitness

Country: Hong Kong
Structure: Joint Venture
Industry: Health and fitness club chain

Background
Ray Wilson, founder of Family Fitness, the largest fitness chain in Southern California (now called 24 Hour Fitness), had completed a series of trips to Asia, wher he determined there was a potential to expand the Family Fitness concept.

Challenge
Although Mr. Wilson thought that the Asian market held potential for American-style health and fitness centers, he lacked specific knowledge of the Asian cities and countries and had no contacts with the markets for the raising of capital and the securing of local partners.

Solution
BrandAmerica devised a plan to launch an upscale version of the type of “pure fitness” facility that Mr. Wilson had successfully developed in Southern California in Asia.

The plan coupled Mr. Wilson’s concept, the operating capabilities of Eric Levine, Mr. Wilson's partner and Operations Executive, with a real estate development and management company, owned by a large Asian Financial group. A joint venture was formed to develop the first fitness centers in Asia, under the name "California Fitness." With the real estate expertise and funding brought by the Asian partner, the first site secured for development was in the most popular entertainment district next to the central business district in Hong Kong.

Result
California Fitness became an overnight success, generating revenues that were more than five times the most optimistic projections. The cash flow that came from the first unit propelled the rapid development of a second unit and so on. Less than two and a half years after the first unit opened, the business consisted of four very successful units, three in Hong Kong and one in Singapore, with a forth unit near completion. At that point the partners accepted a US$ 41.5 million buyout proposal, which brought the owners a gain many times the value of their US$ 5 million investment.