The chain, which employs 1,500 staff in the UK, wants landlords to back a company voluntary arrangement (CVA) that will see it offload 67 of the 147 clubs it runs in the UK to other operators over the next six months.
The deal would leave Fitness operating 80 sites, 57 of which will move to monthly rent payments, while five others will see their rent cut by more than a third for three years to help make it a leaner business.
Eighteen clubs will be unaffected and a further 14 that Fitness rents to other operators will also be sold.
Its 120 landlords cautiously welcomed the proposals because it will give returns of up to 28p in the pound compared to just 0.5p in an administration and could allow them to share around £5m from the company’s turnaround.
Fitness recently secured a deal with most of its lenders to convert debt into equity, but this is dependent on the CVA being agreed in three weeks.
Accountancy firm KPMG, which is overseeing the CVA, said there is already interest in the majority of the sites Fitness plans to sell.
Richard Fleming, UK head of restructuring at KPMG, said: “The CVA proposed by Fitness First gives the company a vital lifeline to avoid administration.”
Fitness, which is the largest health club group in the world with some 430 clubs and 1.2 million members, has along with rival LA Fitness seen its revenues squeezed in recent years by competition from budget rivals.
Andy Cosslett, incoming chief executive of Fitness First, said the restructuring will see the group emerge largely debt free and with the necessary financial firepower to develop the brand.
He added that employees’ jobs will be “protected as far as possible” and Fitness will revamp the majority of the clubs it plans to keep.
Liz Peace, chief executive of the British Property Federation, said landlords will consider the CVA offer on a business-by-business and a site-by-site basis.
But on the whole, they were pleased by the ‘claw-back’ arrangement that would see them benefit from its turnaround.