Simply Gym opened in September 2015 on Sundorne Retail Park. However, just a few months later Shropshire Council gave a rival gym permission to open nearby.
Now the decision has been made to close the gym.
Staff were informed of the decision earlier this week and it will close on July 21.
Letters detailing the decision were sent out to members from Andy Hastings, director of Simply Gym.
Mr Hastings said: "We appreciate this will come as a shock and disappointment, but due to the level of competition which has opened up just a few hundred yards away from our site business has become untenable.
"We were very disappointed that Shropshire Council allowed another gym operator to be granted planning permission so nearby, particularly as it was so soon after we opened.
"This decision has not been taken lightly, and we explored all options available.
"Unfortunately the only viable option was to surrender the lease back to the landlords and allow a new operator to take on the premises.
"The club will remain open and trading as usual until Friday July 21. Regarding memberships, we are in discussions with local gym operators who will be keen to offer discounts and promotions to you. In the meantime we ask that in order to maintain access to Simply Gym all memberships and direct debits are kept live and we will be cancelling these in due course.
"This is obviously a very difficult time for staff and we ask you to respect their unenviable position. Thank you for your continued support, loyalty and custom."
Ian Kilby, Shropshire Council's planning services manager, said: “While it is clearly disappointing that this local business has not been able to continue due to the impact of competition from other similar businesses, is not a material planning consideration and cannot therefore be taken into consideration in the determination of a planning application.”
Simply Gym has ouotlets in Telford, Wrexham and Crewe. Membership ranges from £14.99 to £19.99 a month.
About £500,000 was spent on kitting out the space on Henley Way, which was the former CityLink building. There is a main gym, a separate ladies gym, studios and a free weights area.