Jump! Swim Schools franchise has collapsed with administrators appointed to its main trading company Swim Loops on Monday, adding to the uncertainty for some franchisees hit by the company's litany of problems.
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The problems with Jump! were first revealed in an investigation by The Age and the Sydney Morning Herald in January this year with dozens of franchisees paying hundreds of thousands of dollars for the construction of swim schools and still waiting for a refund or for the build to start up to two years later.
The franchise is operated through the company Swim Loops, which is owned by Ian Campbell, the founder of Jump!.
Glenn O'Kearney of GT Advisory and Consulting was appointed as administrator to Swim Loops following a wind up application brought by Barry Ryle and Dorothy Ryle from Western Australia, which is listed for June 11.
Jump! operates more than 60 swimming school franchises around Australia, and runs schools in New Zealand, Brazil, Singapore and the United States. Swim Loops represents a majority of the Australian franchisees.
Associated business Jump Loops continues to trade but faces a wind up application in Victoria on June 6.
Mr O'Kearney said his appointment relates only to Swim Loops and does not extend to or affect any other separate related legal entities.
The administrator said while he investigated Swim Loops it would be "business as usual" for Jump! franchisees and staff, and he would ask the court to allow sufficient time for the investigations.
"Over the course of the coming weeks, the administrator will be assessing the financial position of the company with a view to developing a recommendation for the future of the company for consideration by creditors," Mr O'Kearney said.
The administrator said Mr Campbell intends to submit a Deed of Company Arrangement (DOCA) proposal for consideration by creditors in "an effort to provide a better outcome for stakeholders than if the company was placed into liquidation".
A spokesperson for Jump! said the administration would allow it to negotiate with creditors and would not have an impact on the wider group of companies nor its trading franchises who are independent owners.
"The company has been hamstrung with ongoing legacy issues with multiple leases on premises that were unable to gain approvals," the spokesperson said. "This has resulted in an increase in costs and legal expenses that were simply no longer viable for the company."
The spokesperson said no swim schools would be closed as a result.
Mr Campbell said earlier this year about 80 franchisees were still waiting for a swim school site or development approval.
One of the franchisees is Kuljeet Mathur who signed up with Swim Loops for a Jump! franchise in August 2019 and negotiated a deed of termination with Jump! for a refund of the $60,500 he had paid after there was no suitable swim school site.
Mr Mathur said he was concerned he would not get any of his money back following the collapse of Swim Loops.
"I am not sure what funds it will have left, that is the biggest concern," he said. "I don't understand how Jump! has gone into administration when they are opening new schools all over in Singapore and the United States. If it's in administration the banks and secured creditors get the first slice, if there is anything left, but I doubt there is."
Franchisee Juliet Sharpe paid $165,000 for a Jump! franchise two years ago plus more than $100,000 in rent and said she does not expect to recover her money following its collapse.
"It was inevitable and it had to happen and I guess it has just been three years of emotional and financial stress, it has just been unbearable," she said. "Hopefully it will bring some relief and answers."
- SMH/The Age
