Planet Fitness Reports Strong Q2 Sales, Plus a New Jersey Court Ruled on Its Franchise Practices Act

FT’s Picks of the Week highlight notable C-suite moves, brand milestones, tech tidbits and other franchise news, sourced by the Franchise Times editorial team.

Artie Starrs resigned as CEO of Topgolf International to become the president and CEO of the Harley-Davidson motorcycle company. Starrs will remain on at the eatertainment company through September as Topgolf, which franchises internationally, searches for a new chief executive.

Under Starr's four-plus years of leadership, Topgolf's revenues grew over 50 percent, from $1.1 billion in 2021 to $1.8 billion annually, according to the company. The brand also expanded into five additional countries across Europe and Asia during Starr’s tenure.

Between 2013 and 2021, Starrs held leadership roles at Yum Brands subsidiary Pizza Hut, most recently as its global CEO. He was president of Pizza Hut U.S. prior to that, and before joining Yum he served as chief financial officer for Rave Cinemas. Starrs began his career as an investment banker at Wasserstein Perella.  

Noteworthy

In a unanimous decision, the New Jersey Supreme Court ruled that only individual franchisees—not trade associations—have standing to sue franchisors under the state’s Franchise Practices Act, according to Wolters Kluwer’s VitalLaw website. The decision reverses an appellate court’s finding that the New Jersey Coalition of Automotive Retailers could pursue claims on behalf of its members against Ford Motor Co. The dispute focused on Ford’s Lincoln Commitment Program, which NJCAR alleged violated the FPA’s prohibition on differential allowance, credit or bonus pricing.

NJCAR, a nonprofit trade association representing more than 500 dealerships, including 18 Lincoln franchisees, claimed the program created an uneven playing field. However, the state's Supreme Court concluded that the FPA’s language is clear: Only “any franchisee may bring an action against its franchisor.” Because NJCAR is not itself a franchisee, the court deemed the association to lack standing. The ruling reinstates a trial court’s summary judgment in favor of Ford, which had been overturned by the Appellate Division. The Supreme Court determined that, based on the FPA's deliberate choice of language, any cause of action must remain strictly between franchisor and franchisee.

U.S. Rep. Jan Schakowsky, D-Ill., introduced a tweaked version of her bill, the Franchise Freedom Act, which would permit owners to pursue legal action if franchisors violate the Federal Trade Commission’s Franchise Rule. There’s currently no federal right for such action if a franchisor violates FTC disclosure rules, although several states have such laws. A significant addition to Schakowsky’s original bill that was co-sponsored by Reps. Hank Johnson, D-Ga., and Jared Huffman, D-Calif., protects the rights of franchise owners to create and participate in franchisee associations without retaliation or interference from franchisors. The Coalition of Franchisee Associations and American Association of Franchisees and Dealers are among the 45 organizations that endorsed the bill.

Planet Fitness celebrated its 10^th anniversary since going public with a strong second-quarter earnings report. Company revenue increased by 13.3 percent to $340.9 million and systemwide sales jumped to $1.4 billion in Q2. Same-club sales increased 8.2 percent, the company said in this week’s earning’s call. CEO Colleen Keating said the company added nearly 14 million members over the past decade and that it’s expanded its global footprint by more than 1,700 clubs during that time.

Franchise segment revenue for Planet Fitness increased $11.9 million, or 11 percent, to $119.7 million from $107.8 million in the prior year period. Of the increase, $8 million was due to higher royalty revenue, of which $5 million was attributable to a franchise same-club sales increase of 8.3 percent. Meanwhile, corporate-owned clubs segment revenue increased $13.5 million, or 10.8 percent, to $139.0 million from $125.5 million in the prior year period. 

In other Planet Fitness news, the company signed a binding agreement to sell eight corporate-owned clubs in California to an unnamed franchisee. The transaction is expected to close in the third quarter, subject to customary closing contingencies.

Milestones

Jinya Ramen Bar is celebrating its 15th anniversary with a pair of celebrity partnerships. The internet’s Pasta King, Gianluca Conte, who is better known as QCO, launched his Ciao Ramen August 4 at participating locations. Meanwhile, celebrated San Diego mixologist and TikTok star Julianna McIntosh helped introduce the company’s Jul-A-Rita cocktail that is available at select Jinya locations. The company operates about 71 locations in the U.S.

MassageLuxe opened its 100^th location this week in Fresno, California. The Fresno spa is owned by franchisees Lisa Wigfall and Sharon Parker-Gill. Founded in 2007 in St. Louis, MassageLuxe has locations in more than 20 states with plans to double in size in the next three years.

Whataburger is celebrating its 75^th anniversary with throwback 75 cent burger promotion today, August 8, for its loyalty members. Whataburger has more than 1,100 locations in 17 states. The company was founded by Hamon Dobson on August 8, 1950, and, according to Whataburger, its original restaurant in Corpus Christi, Texas, made $50 dollars in its first day of business.

Just for fun

Former NFL star quarterback Drew Brees teamed with Jimmy John’s on his favorite sandwich to support youth causes. The Brees #9 is a custom version of the Italian Night Club that includes salami, capocollo and smoked ham, topped with mayo, lettuce, onions, oil and vinegar and oregano-basil made just the way Drew orders it: #9 with no cheese and Jimmy peppers added.

The sandwich is available nationwide through August 31 with a portion of the proceeds going to the Jimmy John’s Foundation, which supports the Boys & Girls Clubs of America, and The Brees Dream Foundation, which focuses on improving the quality of life for cancer patients and providing care, education and opportunities for children and families in need. 

Brees has invested in several franchise brands, including Smalls Sliders, Walk-On's Sports Bistreaux, Everbowl, Stretch Zone and Jimmy John's. He also has a partnership with Bourbon Street Donuts to expand Dunkin' Brands in Louisiana. 

— Compiled by Joe Halpern