Closing of local gym raises questions

By Megan R. Harrell
Star Staff
mharrell@starhq.com

   The recent closing of Ladies Workout Express, 137 Hudson Dr., Elizabethton, has left some members asking questions.
   The doors to the fitness center were locked last week, and signs were posted referring members to the company's Johnson City facility. Those who have been paying membership fees and who have signed contracts with the company would like to know the reason behind the abrupt closing and where they stand.
   Some have paid in advance for their membership, while others have set up direct payment through bank account drafts. Members say they feel entitled to some answers.
   Carter County Sheriff's Department Sgt. L.C. Tester presented Christine Scurry, the franchise owner of the Elizabethton facility, with notification of eviction Jan. 10, 2003, after months of outstanding lease payments.
   Scurry stated that the corporate company is to blame for the nearly $20,000 in unpaid rent at the fitness center which ultimately led to its closing.
   "I sent the money to the franchise, and they have not been paying the lease," Scurry said. "They signed the lease. My name is not on it."
   According to Scurry, membership fees collected via bank draft are sent directly to the corporation. The company is supposed to use the funds to pay the franchisee's lease each month, but Scurry said that was not happening because Ladies Workout Express was having financial problems.
   In August of 2001, Lady of America bought out Ladies Workout Express of Georgia, Inc. Aug. 13, 2001, New Plan Excel Realty Trust, Inc., owners of the local commercial property, filed for a detainer warrant against Ladies Workout Express for outstanding rent at the Elizabethton fitness facility in the amount of $19,123.
   In October of the same year, Judge John Walton ruled in favor of the plaintiff, and ordered the fitness company to pay $25,357 in overdue rent. Records in General Sessions Court show that only $111 has been paid on the outstanding debt.
   Speaking on behalf of Lady of America, Larry Sargent said even though his company bought Ladies Workout Express, it is not under any legal obligation to pay the debt since it was accrued before the buyout. However, lease payments on the facility did not resume under the new ownership. Sargent admits that Lady of America has not been paying the franchisee's lease but said it is because they have not been receiving payments from Scurry.
   "She has to send the money to us, and when we went to her account there was no money there to pay it," Sargent said.
   Scurry refuted the statement by saying that both Ladies Workout Express and Lady of America electronically deducted money from her account twice a month for rent. She is able to produce documents showing the deductions from May of 2000 when she opened the business, until October of 2001. The total amount deducted from her account during the period of time adds up to approximately $45,000.
   "They have control of that money before I even see it," Scurry said. "They burned me."
   Members who have been paying their monthly fees through scheduled electronic debits are concerned about where their money is going if the lease is not being paid. Sargent stated that as long as the members are provided with a facility to workout that they should not be concerned.
   "Beyond that point, it is not their business where the money goes," Sargent said.
   However, last week's closing of the local Ladies Workout Express left members who signed contracts with the company without a place in Elizabethton to workout. Those wanting to stop monthly payments from their bank accounts, or who would like to have refunds, could be held to contracts they signed upon joining the gym.
   Sargent said that the membership contract states if a facility closes, and an alternative location is provided within 15 miles, the agreement is still legally binding. Members who paid for their fees up front, and who don't want to travel to the Johnson City facility, will not receive refunds unless they have workout agreements with Lady of America.
   Scurry said that she intends to open a new workout facility in Elizabethton, so her members who paid up front can have access to a closer workout facility. She said that she is teaching classes at Iron Works until she opens the new facility under her own name in February.
   Members of Ladies Workout Express wishing to receive refunds or to discuss the terms and conditions of their contracts may call the director of customer service at 480-513-1883.