The Securities and Exchange Commission (SEC) has cautioned the public against investing in schemes related to the establishment of fitness gyms disguised as franchise or partnership agreements. In an advisory issued Thursday, the SEC said it has received multiple reports about entities soliciting investments for opening new gym branches through supposed franchise, co-franchise, partnership, co-ownership, or similar contracts that promise profits from income-sharing arrangements. "The public is hereby advised to exercise caution in dealing with these fitness gym companies or individuals representing them, and to refrain from investing or to stop investing in such entities," the SEC warned. According to the Commission, these companies typically entice investors by offering shares in a gym branch or partnership, where several individuals co-own a single establishment. Others offer "co-franchisee" agreements in which investors contribute funds and are promised regular profit distributions, with some claiming "guaranteed" returns through contingency funds. The SEC clarified that these types of contracts qualify as securities under Philippine law. Violators may be fined up to ₱5 million, imprisoned for up to 21 years, or both. The SEC urged the public to verify the registration status of investment offers through its official website and report any suspicious solicitations involving fitness gym companies via [email protected]. Offers involving unregistered securities are illegal. The regulator also warned that those acting as sales agents, brokers, or recruiters for these unauthorized investment schemes could face criminal charges under the Securities Regulation Code (SRC) and the Financial Products and Services Consumer Protection Act (FCPA). Therefore, any public offering or sale of such investments must first be registered with the Commission.
