Stuart Goldman of Club Industry’s Fitness Business Pro, a leading health club industry trade publication, has written an extensive and well-researched article on the struggling 30-minute fitness franchise chains and some of the powerful names that were instrumental in putting the match to this “hot new franchise” phenomenon.

I plan to look at particular points of this article in upcoming posts. Please share your initial comments below.

Here’s an excerpt. Click a link to read the entire article:

Source: Lights Out by Stuart Goldman, Managing Editor, Fitness Business Pro

The troubles that continue to plague circuit club companies also extend to business-savvy franchisees who trusted the reputations of some of the biggest names in the industry.

1-2-3 Fit, Denver, was founded in 2005 by Quiznos restaurant executives Rick Schaden and Brooksy Smith, who combined their efforts with fitness legend Ray Wilson. The 1-2-3 Fit Web site lists 27 stores open in 11 states, with seven more stores opening soon. One franchisee says 22 stores have shut since the company’s inception.

It sounded so simple. It made so much sense. Experienced, knowledgeable people banked on the marriage of a well-known sandwich chain and a fitness industry legend to create an exciting new circuit club franchise. At another promising company, people counted on the experience of a group of investors that included the founder of the biggest revenue-producing chain in the industry.

1-2-3 Fit, Denver, which opened in 2005, was the brainchild of Rick Schaden and Brooksy Smith, two men who made Quiznos a successful national restaurant chain. Schaden and Smith called upon fitness legend Ray Wilson, whose background includes opening several club companies, to help them with their venture into the fitness industry.

“It was the perfect mixture of franchise team and fitness team,” one former 1-2-3 Fit franchisee states.

Butterfly Life, San Ramon, CA, opened in 2003 and had the initial backing of Mark Mastrov, the founder of 24 Hour Fitness who resigned last month as chairman of 24 Hour. Mastrov’s colleagues, Mark Golob and Tom Gergley, had operated Linda Evans clubs in California before opening Butterfly Life.

“With Mastrov’s name, how could you go wrong?” one former Butterfly Life franchisee says.

But according to many franchisees at the two companies, plenty did go wrong…

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Tags: 1-2-3 Fit Franchise, Butterfly Life Franchise, Contours Express Franchise, fitness franchises, Mark Golob, Mark Mastrov, Quiznos franchise, Rick Schaden, Tom Gergely

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(FranchisePick.Com)  FranchisePick.com is broadcasting remotely from Whitefish, MT this week.  See our first transmission here:  The New Frontier of Franchising: Whitefish, MT

Has Curves for Women deserted the franchise owners who built the startup into a 10,000 unit chain and global brand in order to cash in on more lucrative profit centers?  That’s the contention of FranchisePick.com reader “Another Curves Owner” who left the following comment on a current post on the Curves for Women franchise woes.  What do you think?  Leave a comment below.

AUTHOR:  Another Curves Owner 

To fellow ‘Curves Owner’,

I too own more then one Curves Franchise. While I agree that some clubs shut due to poor business practices, but that statement does not paint the true picture. Curves International itself is to blame for the vast amount of the closings in part due to: overbuilding, lack of support for the franchisees, lack of adverting and change of business model among others.

• Overbuilding
Curves has over saturated many markets to include where I’ve my clubs. Fact is in my state, the Sales Director never set foot not only in the cities where I’ve clubs but also in the say where they’re located. At the Curves Convention of 2006 Gary Heavin (sic) the CEO stood before us and stated that many clubs were going to have to close due to the overbuilt system. He further stated that this was part of the so called, “franchise wars” in which he claimed victory. Furthermore, Curves International encouraged their franchisees to split their territories which further caused cannibalization.

• Lack of Support
I cannot tell you how many times we’ve asked for help from Area Directors, Regional Directors, and Curves Corporate Officers for assistance. None of which have helped us in areas of; other owners advertising in our territories, offering corporate discounts to business in our territories, obtaining payments from transferred members from other clubs. The response we have received is either null or statements such as, “Try to get along with each other.” Fact is Curves has never taken a club away from an owner for breaking such rules. Now that this is know by owners, the owners pretty much do whatever it takes in order to survive. Can you blame them with the amount of overbuilding that Curves has done.

• Lack of Adverting
Curves owners are required to pay 195 dollars a month for national and regional advertising. Lets do the math shall me? For 10,000 clubs that comes out to 1.95 million dollars a month for adverting or 22.8 million per year to be spent on advertising. That’s an enormous amount of money. I’ve seem more advertising for franchises such as Subway and Jiffy Lube then from Curves.

• Change of Business Model
The general public has become more aware of Curves for its energy bars and cereal then for fitness. Curves has changed direction with its partnership with General Mills. Fact is that Curves Owners can NOT get these products at discount rates. The owners have found that it is cheaper to obtain these products from the local supermarket or through Office Depot. Why is that? It is easy, Curves International new direction is now hard product based then through franchising.

Lets face the hard truth. Curves club owners are in the fitness business. They are the ones who deliver the service of fitness and wellness. Curves International is in the Franchise business, a business of selling franchises to individuals which they’ve done very well in and made a lot of money. Now that that business model, of franchising a business concept has reached its peak, Curves International needs to find other ways to make money. The way Curves international has done this is though product promotions by having Curves owners promote non-Curves items in their clubs for other business. The Curves owners make no money on this but I seriously doubt that Curves International did this for free. Still not satisfied with that model, Curves international whipped up a receipt for an energy bar and a cereal, but their logo on it and with General Mills is now selling it to the general public. Oddly enough, not even Curves International franchisees can get the best price for these items. It is shocking that Curves franchisees can get it cheaper at the local grocery stores! Furthermore, Curves has partnered with Avon in selling Curves logo’d hard goods, specifically clothing items. That partnership with Avon has netted Curves International tens of millions of dollars annually. That’s a fact, not a guess. Yet, each and each Curves owner has had difficulty in obtaining such items from Curves Intentional wholly owned subsidiary, “Ideas In Action”. Why is this? Probably because it is more lucrative for Curves International to sell through Avon..

This sad fact should be a wake up call that Curves International never did nor ever will value its franchises. The vast majority of the franchisees have worked very hard and many put their life savings into these businesses and built the name brand recognition that it now has. Now Curves International is cashing in on the brand name. But rather then share that with those who worked so hard and so long, Curves international has gotten greedy and built new relationships with others in order to squeeze what ever dollar it can make.

Curves no longer sells new territories in the US. Why is that? Two reasons really, first one is over saturation. But would Curves sell more territories if it could? Absolutely, but it does not. That brings us to the second reason why Curves has stopped selling franchises is the US – Lawsuits. Currently, Curves International along with Gary Heavin is being sued by no less the 350 angry broken franchisees and former franchisees for breach of contract and unfair trade. This number is growing and will continue to grow as the Curves continues to allow the system to implode and fail to repair their broken system.

For every one current operating successful Curves club there are literally dozens of unsuccessful clubs, meaning closed clubs or clubs bleeding money each and every month. Make no mistake, many owners lost tens of thousands of dollars and hundreds of thousands of dollars. The Curves landscape is littered with bankruptcies (both business and personal), lost homes, kids removed from college due to losses, broken marriages and even one suicide.

This in not an invention of imagination or exaggeration, this is fact. This is fact that Howard Gary Heavin will have to answer for in a court of law.

WHAT DO YOU THINK?  LEAVE A COMMENT BELOW.

Visit FRANBEST: Unbiased franchise information, franchise interviews and detailed, searchable information on 400 franchise and and business opportunities.

Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.

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