Planet Yoga second such company to fold in two months
Tanna Chong and Amy Nip
SCMP May 15, 2010
A yoga chain with three outlets and 13,000 members closed suddenly yesterday – the second such closure in two months – owing customers tens of thousands of dollars in prepaid fees.
For many customers, Planet Yoga’s closure was a double blow after they had joined it at a discounted rate following the closure of Yoga Yoga International in March.
Notices posted outside seven-year-old Planet Yoga’s branch in Central yesterday said it had folded because it was short of cash.
It said banks had withheld revenue of more than HK$5 million since September last year, and there was no timetable for the release of the cash, so it had gone into liquidation.
An industry leader predicted that at least two other yoga chains, of about eight remaining, would close this year because of stagnant demand and fierce price competition.
Yim Yuk-yip, who said she lost more than HK$10,000 when Yoga Yoga closed and more with the latest closure, said she wouldn’t join another yoga school. “If you suffered a loss twice, would you want it a third time?” she said. Another woman, who said she had been a member of Yoga Yoga and Planet Yoga, lost HK$10,000 and HK$12,000 respectively in the two closures.
Other customers complained that they had been lured into renewing contracts before they were due through what they said were unscrupulous sales methods.
One said she was asked to sign a second contract five months after the first. “The staff withheld my membership card after I attended a class,” she said. “Then they pestered me from 7pm to almost midnight, until I paid for the second contract.”
But when she looked into the contract details she found it included an extra pre-payment which staff had not mentioned.
“I went to the centre the next day and asked to cancel my purchase but they refused,” she said. She paid more than HK$30,000.
Another woman who said she had signed a two-year contract two months ago, said there had been no warning of the closure.
“I said [to a consultant] that I was worried about sudden closure of the school. But he assured me that the centre had just renewed its tenancy,” she said. She had paid HK$60,000 but had attended only three classes.
Democrat lawmaker Lee Wing-tat said he had been approached by 60 members for assistance and had laid fraud complaints with police for a further seven.
A spokeswoman for the provisional liquidator said refund terms would not be available until the first creditor meeting on May 31. Asked if every member would get back their deposits, she said: “The situation is special and it depends on different cases.”
The Consumer Council received more than 100 inquiries about Planet Yoga yesterday, council chief executive Connie Lau Yin-hing said.
The number of complaints about yoga centres had increased from 188 in 2009 to 199 in the first five months this year, including 12 about Planet Yoga, she said. “When the company closes down, the chance for a student to get a refund is very slim or none at all,” she said. Nevertheless, members could try contacting the liquidator.
Those who had prepaid using credit cards should file a written request to card companies to stop the transactions. Copies of credit card bills and contracts should be included for reference. Consumers should avoid prepayments and opt for companies which offered monthly payments, she said.
Fong Fai, president of the Yoga Association of Hong Kong, said the market had been difficult for two years and predicted two more centres would close this year.
“There was a growing demand after Sars but it has decreased since late 2007. The number of service providers kept going up so malicious price competition emerged,” he said.
Yoga schools relied on one-off payments of new members but new recruitment at some centres had been halved, he said.
The Trade Description Ordinance, which regulates the sale of products, does not cover services.
An evaluation of consumer protection laws was near completion, a Commerce and Economic Development Bureau spokeswoman said. The department was addressing the issue of unscrupulous sales practices, including companies which accept prepayment with no ability or intention of offering services.
Thirty-three Planet Yoga employees sought help from the Labour Department yesterday.