AUST. COMPfTmnr' .. CONSUMER CO 1IS::;ION

CAN BERRA

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FormG Commonwealth of Australia

Competition and Consumer Act 2010 - subsection 93 (1)

NOTIFICATION OF EXCLUSIVE DEALING To the Australian Competition and Consumer Commission:

Notice is hereby given, in accordance with subsection 93 (1) of the Competition and Consumer Act 2010, of particulars of conduct or of proposed conduct of a kind referred to subsections 47 (2), (3), (4), (5), (6), (7), (8) or (9) of that Act in which the person giving notice engages or proposes to engage.

PLEASE FOLLOW DIRECTIONS ON BACK OF THIS FORM

1. Applicant

(a) Name of person giving notice:

Australian Fitness Management Pty Ltd ABN: 88 126 140 181

(b) Short description of business carried on by that person:

Australian Fitness Management Pty Ltd is the Franchisor of two fitness business franchise models; 'Plus Fitness Health Clubs' and 'Plus Fitness 2411'. Australian Fitness Management Pty Ltd offers franchisees the right to operate traditional health clubs under the brand Plus Fitness Health Clubs and 24 hours fitness studios under the brand Plus Fitness 24/7. Both franchise models provide franchisees the right to use the systems and images which are the property of Australian Fitness Management Pty Ltd.

(c) Address in Australia for service of documents on that person:

Attn: Nigel Miller Australian Fitness Management Pty Ltd Suite 8 Shop 10/1 Exchange Parade Narellan NSW 2567

2. Notified arrangement

(a) Description of the goods or services in relation to the supply or acquisition of which this notice relates:

Australian Fitness Management Pty Ltd proposes to offer Franchise Agreements to Franchisees on the condition that the Franchisee's use the services of FFA Paysmart Pty Ltd ABN: 62695382965, (Approved Supplier).

FFA Paysmart is a. Levell service provider with the PCI Security Standards Council. The PCI Security Standards Council offers robust and comprehensive standards and supporting materials to enhance payment card data security. These materials include a framework of specifications, tools,

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measurements and resources to help ensure the handling of credit card holder information.

Description of the conduct or proposed conduct:

Australian Fitness Management Ltd requires aU to use the

billing from the Approved Supplier to ensure the following;

i) are able to meet requirements of providing approved with access to all Plus Fitness facilities using same direct debiting supplier. The Approved Suppliers 'product' integrates with other software operates component of

business model that provides consumers the ability to access aU relevant Plus Fitness facilities.

ii) requirements and as set out by the Trading relation to Direct Debit Services and relevant to the state which they conduct their business.

iii) Franchisees are providing their members with direct debit services using a reputable and appropriately licensed service provider as the Approved Supplier.

iv) are a 'secure' direct billing '''...·T''/H·P provider recognised as Standards Council.

v) Franchisees are able to access a competitive pricing structure relevant to the provided, which is likely to better than any similar services provided by any similar provider.

3. Persons, or classes of persons, affected or likely to be affected by the notified conduct

(a) Class or "" ..,ac"_,, of persons to which the conduct relates:

Approved Supplier

(b) Number of those persons:

(0 present time: At date this submission, franchisees are affected. Directors of Australian Fitness Management Pty Ltd own five company owned stores.

(ii) Estimated within the year: Australian Management Pty Ltd estimates that within the next year franchisees will affected by arrangement.

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Where number of persons stated in item 3 (b) (0 is less than names and addresses:

Ms Michelle Wallis Plus Health Club Annangrove

Annangrove Rd, Annangrove, NSW, 2156

Mr Travis Raisin Health Club Gladesville

College St, Gladesville, NSW, 2111

Boswell Health Club Sydney CBD

Courtyard, Lower Level, 201 NSW,2000

4. Public benefit claims

(a) Arguments in support notification:

i) Providing consumers facilities that provide a competitive prices. This in community to access risk of illness associated with

ii) Ensuring customers appropriatel y service provider.

iii) Providing franchisees with an Anlr\Ar"h to own own business with competitive on Australian Fitness Management

iv) Allow Management Pty Ltd to ensure a level of the consumer as well as protects its own brand.

(b) Facts and evidence upon in support of these claims:

i) rp.,'p,,,,p group pricing, which is 14% less than

with other software that operates the that provides consumers the ability to

facilities, which without provider would otherwise not be possible.

iii) debit payment options that are direct debit billing service

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5. Market definition

Provide a description of the market(s) in which the goods or services described at 2 (a) are supplied or acquired and other affected markets including: significant suppliers and acquirers; substitutes available for the relevant goods or services; any restriction on the supply or acquisition of the relevant goods or services (for example geographic or legal restrictions):

The market in which the goods or services described at 2 (a) are supplied are that of direct debit billing services and software for fitness businesses. The affected suppliers will be other direct debit billing service and software suppliers; however there will be negligible effect on these suppliers due to the high number of fitness businesses in the market using direct debit services.

6. Public detriments

(a) Detriments to the public resulting or likely to result from the notification, in particular the likely effect of the notified conduct on the prices of the goods or services described at 2 (a) above and the prices of goods or services in other affected markets:

There are no detriments to the public resulting or likely to result from the notification based on the fact that the franchisee bares the cost of the services provided by the Agreed Supplier.

In respect of the franchisee, there are a large number of gym franchises available in the market place meaning that potential franchisees have a large number of options available to them when determining which franchise model and franchisor to choose.

(b) Facts and evidence relevant to these detriments:

At the present time there are approximately 2.25 million fitness facility

users in Australia. Australian Fitness Management Pty Ltd expects to peak

at approximately 45,000 members by the year 2015. This displays that

Australian Fitness Management's franchisees will not have a significant

market share at its peak meaning that this notification will still not form a

detriment to the public.

7. Further information

(a) Name, postal address and contact telephone details of the person authorised to provide additional information in relation to this notification:

Nigel Miller (Director) Australian Fitness Management Pty Ltd Suite 8 Shop 10/1 Exchange Parade Narellan NSW 2567 Phone: 024648 2099

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AUST. COMPET"IiION & CONSUMER em MISSION

CA'RFRRA

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The Franchisee is only permitted to operate the business from the Franchised Location unless the Franchisee has been granted the right to operate one or more additional franchises in other granted Franchised Locations.

(e) whether the Franchisor may change the exclusive territory of the franchise:

The Franchisor may not change the Franchisees exclusive territory unless a suitable premises in not located within 90 days of signing this agreement, and then only in consultation and under mutual agreement with the Franchisee (see clause 8.1 of the Franchise Agreement).

9. SUPPLY OF GOOD AND SERVICES TO A FRANCHISEE

9.1 For the Franchiser's requirements for supply of goods or services to a Franchisee ­details of:

(a) any requirement for the Franchisee to maintain a level of inventory or acquire an amount of goods or services:

The franchisee is not required to maintain an inventory.

The franchisee must attend and participate in all the initial training modules, programs and sessions as provided by the Franchisor as part of their establishment as a Franchisee.

The Franchisor may from time to time provide the franchisee or the employees of the franchise additional training, coaching, advice and assistance and the franchisee must adhere to that advice or accept such training, coaching, and assistance for themselves or their employees.

(b) restrictions on acquisition of goods or services by the Franchisee from other sources:

The Franchisee may only acquire products or services from approved supplier of the Franchisor. The Franchisor reserves the right to remove or add approved suppliers from the 'list of approved suppliers'.

If the Franchisee wishes to obtain for resale any products or services from a supplier who is not an approved supplier, the Franchisee must first obtain the Franchisor's written approval to do so. Approval as a preferred supplier remains entirely at the discretion of the Franchisor.

c) ownership by the Franchisor or an associate of the Franchisor of an interest in any supplier from which the Franchisee may be required to acquire goods or services;

Neither the Franchisor nor any associate of the Franchisor has an interest in any supplier from which the franchisee may be required to acquire goods or services.

Plus Fitness 24f7 Disclosure Document Preparation Date: 30 May 2011

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(d) the obligation of the Franchisee to accept goods or services from the Franchisor, or an associate of the Franchisor;

Where Franchisor provides coaching, advice and <'<"''''''''''(;;41 document and the Franchise the

of the with training, out in this

advice or accept coaching, and assistance.

The Principal Operator and anyone owning a controlling interest in the if other than the Principal Operator, must complete the initial training requirements to the Franchisor's satisfaction as well as they must complete all additional as the Franchisor may reasonably

support and Franchisor services which are essential features of Franchisee is obliged to accept from the Franchisor, which

requested by the Franchisee.

The Franchisee must purchase products, equipment, suppliers, which may include the Franchisor. Other than

and supplies from approved Franchisee is obliged

to accept goods from the Franchisor or an associate of

goods or C!AI'vl"'AC! to the Franchisee: (e) the Franchisor's obligation to

.. Inclusions in of Franchise detailed in clause 13.6 and Annexure F of this Disclosure Document);

.. The Manual, including any modifications or supplements;

.. The System, including any modifications or supplements

.. Initial training program; and

.. Assistance in evaluating suitability and selecting and location of Franchisee's Plus Fitness 24/7

Further details of Fitness 24/7 are contained in item 15 of this Disclosure Document.

(f) whether the Franchisee will be offered the right to be supplied with the whole range of the goods or services of the franchise:

The Franchisee will offered the right to supplied with range of the or services of the

(g) conditions which the Franchisee can return goods and to whom:

Franchisee may only return goods in accordance with the terms and conditions of supply between the Franchisee and the supplier.

(h) conditions under which the Franchisee can obtain a refund for services provided by the Franchisor and from whom:

If the Franchisee the Franchise Agreement during the cooling off period the will refund to the Franchisee, all payments made by franchisee less

Plus Fitness 2417 Disclosure Document Pr."""",finn Dale: 30 2011

reasonable In all other cases, subject to any laws, franchisee cannot obtain a refund for services provided by Franchisor.

(i) whether the Franchisor may change the of goods or services and if to what extent:

Franchisor may from time to time change the of products and which Franchisee is to sell from Plus Fitness

U) whether the Franchisor or an associate of the Franchisor will receive a rebate or other financial benefit from the supply of goods or to the Franchisees, including the name business providing the or financial benefit; and

The Franchisor associates Franchisor may receive rebates or other financial benefits from supply of goods or services to Franchisees. The franchisor a rebate or benefit from the following

II PayS mart Ltd (ABN 382965)

II Worldwide Sports Insurance Ply Ltd (ABN 30 1 444828)

II ELK Pty Ltd (ABN 37 090 820

(k) whether any or financial benefit referred to under Item 9.1 (j) are shared, directly or indirectly, with Franchisees:

The Franchisor and associates of the Franchisor may, at its sole discretion, retain the rebates.

The Franchisor shall not share the rebate directly with the franchisees.

Franchisor may in its sole discretion share the retJlatEls indirectly but is not obliged do so.

1O. SUPPLY OF GOODS OR SERVICES BY A FRANCHISEE

10.1 For the Franchisor's requirements for supply of goods or services by a Franchisee ­details of:

(a) restrictions on the goods or services that the Franchisee may supply:

Franchisee may only supply OOC)OS and services are supplied or approved by the Franchisor.

The must sell or offer for sale only such products and services as have expressly approved for in the Manual or otherwise in by the Franchisor.

Plus Fitness 2417 Disclosure Document Preparation Date: 30 May 2011

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(b) restrictions on the persons to whom the Franchisee may supply goods or services:

There are no restrictions on persons to whom the may supply goods or services.

(c) whether the Franchisee must supply the whole range of goods or of franchise:

or ,.;or"""..'", of the franchise. Franchisee is required to supply the whole range of

11. SITES TERRITORIES

11.1 policy of Franchisor, or an associate of the Franchisor, for of as many of the following as are relevant:

(a) to be occupied by franchised business:

Whereas the Franchisor will from time to it is responsibility of the Franchisee to identify a proposed site for Franchise. Franchisee is responsible for conducting own due diligence in satisfying itself the Franchisor that the site is suitable for the operation of the franchised business. This does detract form site needing to be approved by the Franchisor. Under terms of the Franchise Agreement the Franchisee confirms its approval of its Franchised Location and has:

II made all necessary enquiries and conducted its own diligence in to the suitability the Franchised Location or the proposed

II absolutely and unconditionally itself as a result of inquiries and due diligence as to suitability of Franchised Location for the conduct of the business;

III entered into the Franchise Agreement as a result of the Franchisee's own assessment of all of matters.

(b) the territory in which the franchised business to operate:

The Territory will be determined by Franchisor in sole and absolute discretion. The Franchisor will its determination on the Franchised Territory in consideration of a number including, amongst other things; demographics of the area, location of other Franchise and Plus 2417's, location of

considered as competition to Plus 24/7.

11 & 11.3 Details of whether the territory or site to be franchised has been subject to a franchised business operated by a previous franchise granted by the Franchisor and, if details of the business, including circumstances in which the previous Franchisee ceased to operate.

Any information or required provided under these paragraphs are specified in Annexure C of this Disclosure Document.

Plus Fitness 2417 Disclosure Document Preparation Date: 30 May 2011