Gold’s Gym: America’s Leading Fitness Placebo?

The rise of inexpensive no-frills exercise chains is part of the landscape of urban professional life.   There are a growing number of new brands – many of them boutique companies targeting specific markets.  But no fitness chain is older or better known than Gold’s Gym founded by bodybuilder Joe Gold in Venice Beach, CA back in 1965.

Gold’s is considered – rightly so – as an industry pioneer.  In part, that’s due to the founder’s close early association with body-building celebrities like Arnold Schwarzenegger and David Draper.

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Body-building, mainly through weight-lifting and core strength training, remains Gold’s primary offering, giving the brand its distinctive identity.

But Gold’s was also the first fitness company to franchise, back in 1980.  Thanks to its unique business model, the company was able to spread its empire far and wide, adapting to local markets across the United States (currently in over 500 locations, especially in southern California and the US Northeast) and to dozens of nations abroad, including India and more recently, China.

Despite its unique origins and history, and its central role in the evolution of the fitness industry, Gold’s has been plagued with a spate of financial and reputational problems that continue to threaten its growth trajectory.

From industry regulators and customers, there have been recurring charges of financial manipulation, excessive customer billing, rampant thefts of cars and other property, and exposure to severe health risks.

And then there’s the sheer fact of rising competition, mainly from smaller boutique gym franchises in specific markets but also from national heavyweights like the YMCA, whose own mammoth growth  has forced Gold’s Gym to close en masse in some locales.

As competition from other fitness franchises has grown, Gold’s has been criticized for offering outmoded equipment and generally falling behind “modern” consumer standards for achieving personal well-being.  In 2016, Gold’s initiated a major innovation program under new leadership.  That’s certainly helped re-brand Gold’s but criticism of the organization and its underlying weaknesses has persisted.

One of the most common consumer complaints – found frequently on website reviews – is that Gold’s continually finds ways to keep billing its customers long after they’ve decided to sever their membership.

Some of the earliest complaints were recorded in South Carolina in 2012. The Better Business Bureau (BBB) received more than 30 reports from disgruntled former Gold’s members who complained that dues deductions from their bank accounts were still occurring long after they’d canceled their memberships.

Gold typically responds to such complaints by saying that they represent “oversights.”  In South Carolina, Gold’s maintained that the clients’ original contract paperwork must have “gotten lost.”   To save face, the gym offered to re-cancel the memberships.

But the BBB has issued “D ratings to a growing number of Gold’s franchises over the years.  A recent investigation in the Washington, DC area found that Gold’s franchises were still trying to discourage cancellations, in part by suggesting that Gold’s memberships could not be automatically canceled.

In some cases, they cited fine print in the original membership contracts that committed the signatories to extended payment even in the event of cancellation.

Another issue, perhaps even more embarrassing to Gold’s, is locker and car thefts, which are rampant, especially in high-income neighborhoods.  In 2019 alone, Gold’s has faced a raft of thefts in gyms throughout Maryland and northern Virginia.  In some cases, current Gold’s members or their friends are preying on other Gold’s members by stealing wallets, cash and credit cards often from unlocked or unattended lockers.  Some of these thieves are also stealing car keys and making off with expensive cars.  It’s become an epidemic.

Gold’s seems unable to maintain security at its gyms, in part because of its relatively low staffing levels but also because security systems are weak.  To maintain members’ privacy, there are no surveillance cameras anywhere near the locker rooms but video coverage elsewhere in the gyms is also sparse.  Gold’s also seems in deep denial about the scale and scope of these robberies, never warning its members to keep their valuables locked up securely.

Another issue is health and safety – and cleanliness.  Gold’s reputation took a serious hit in 2017 when it faced an outbreak of Legionnaires Disease at one of its facilities in Kennewick, WA.   In fact, members have complained about the threat of infection ever since Gold’s decision to cut its free towel service in 2009.  Some locations offer towels for a fee, upon request, but many members forego the use of towels altogether or rely on the gym’s paper towels and sanitizers to wipe equipment down.

Still, Gold’s Gyms are notorious for being the dirtiest around, in part because there are no overall corporate guidelines for keeping the facilities sparkling; to save on costs, many local franchises don’t hire professional cleaning crews, and as a result, puddles of sweat and stink abound.

The biggest challenges Gold’s faces may be endemic to the fitness industry:  Skyrocketing rental costs make many facilities too costly to sustain.  Start-up costs are substantial and it can take a facility two years or more to generate a profit.  Gold’s is already confronting this issue in India.  But problems are also inscribed in the underlying business model.  Gyms like Gold’s experience a rush of new memberships around New Year’s (a popular time for weight-loss resolutions) but also assume that the vast majority of their members won’t actually use their facilities.  In fact, if they did, Gold’s wouldn’t be able to accommodate the demand.

In the end, a large base of indifferent consumers is actually subsidizing the activity of a much smaller group of diehard gym “rats.”

This is one reason Gold’s is so intent on maintaining memberships for as long as possible.  They don’t really care if you’re in the gym – in fact, they’d rather you not be — but they need your money to keep the operation afloat.   Arguably, everyone that wants to visit a Gold’s Gym now and then would be much better off just paying as they go.  Compared to a $600 yearly membership, they might spend half as much.  But then the business model probably wouldn’t work.

Over a half-century since its founding, Gold’s remains a fixture of the urban landscape. It’s a mainstay of the modern fitness culture, but it’s unclear what effect it’s really having on the lives of its members.  Obesity levels are skyrocketing, and according to the CDC, only 23% of Americans get enough exercise.

In the end, unused gym memberships may function as a psychic placebo of sorts.  They’re guilt-inducing, and they also keep consumers in the wellness game.  There’s always the hope that next month – or next year – millions of overweight Americans might finally push themselves to begin a badly needed fitness program.                                                                              And when they do, Gold’s will be there – in spirit, at least.

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