DIVERSIFIED HEALTH: Testimonials From Failed Franchisees

Today’s amusing lesson in why you should dig deeper than the franchisor’s franchise marketing web page comes to us from Diversified Health & Fitness.

Diversified Health & Fitness, founded by “Dynamic leader, Successful Entrepreneur, Steadfast Friend and beloved Father” Roger Wittenberns, is sort of the fitness industry hospice for terminally ill franchise chains.

If you look at the franchise marketing page for Diversified Health & Fitness concept Fit For Her, you’ll see that they tout the safety of investing in a franchise with the bogus, widely discredited claim that “90% of franchise businesses are still operating after 10 years, but 82% of independent businesses fail.”

(Read Lies, Damn Lies & Franchise Statistics for more on FranBogies)

Another Diversified Health & Fitness web page contains testimonials from 7 Diversified franchise owners representing 8 clubs.

Funny thing is, 2 of the 7 franchisees currently featured in Diversified testimonials have closed their clubs.

The testimonial of Carol Weickardt, franchise owner of Shapexpress of Pewaukee, Wisconsin, still reads:

…I have been with Diversified since July 1, 2008. Although this is not a long time… I really appreciate working with a dependable company like Diversified that who I feel I can put my trust into to help my business succeed.

ShapeXpress of Pewaukee, WI has been removed from the location directory and the phone has been disconnected.

Ray Shoaf’s testimonial currently reads:

I am currently in the process of opening… Fit For Her in Sherman, TX… The consistent help and support provided by DHF is unlike any in the industry and sis sure to make any of the unique health and fitness brands be a huge success!

Ray Shoaf’s Fit For Her franchise in Sherman, TX reportedly closed a month after its grand opening.  He came under fire after he allegedly continued to bill members for 6 months after the club closed.

(See the post: DIVERSIFIED HEALTH: Fit For Her Members Cry Fraud).

25% of Testimonial Clubs Fail in the First 2 Years?

Just a thought… It might be wise for Diversified Health & Fitness to rethink its claim that 90% of franchises succeed when, in fact, 25% of the franchise clubs featured in the company’s own testimonials didn’t survive 2 years.

Just sayin’…

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DIVERSIFIED HEALTH: Fit For Her Members Cry Fraud

“"Diversified Health has a pattern of doing this same type of thing, where they open a franchise and then go out of business and continue to draft the member’s accounts."  Jim Hall, Nautilus Fitness Centers, Sherman, TX

Franchise owner Ray Shoaf has high praise for Diversified Health & Fitness, the Fort Lauderdale-based conglomeration that collects and operates troubled and/or dying franchise fitness chains.  Shoaf’s franchise testimonial is prominently featured in Diversified Health & Fitness marketing materials.  However, Shoaf’s Fit for Her franchised club in Sherman, TX closed a month after its grand opening… and former members have few kind words for him. 

Members billed for 6 months after Fit For Her club closed

According to a KTEN news report,

“Fit For Her in Sherman closed down a month after its grand opening, but the gym continued to draft its former members bank accounts for over six months. Two members we spoke with say the tried to cancel their accounts multiple times, but after failed attempts both decided to cancel their bank accounts to stop Fit For Her from continuing to debt their accounts.”

Diversified Health & Fitness Allegedly Stiffs Competitor, too

According to the news report, parent Diversified Health & Fitness worked out a deal with the local Nautilus club to honor the Fit For Her memberships.  “Once Nautilus and Diversified Health and Fitness reached an agreement,” the report states, “Fit For Her members began working out at Nautilus, but Nautilus never received a dime from Diversified Health.  Jim Hall, owner of Nautilus in Sherman says, ‘Fit For Her never paid us what they were suppose to pay us.’”

The good news?  It seems the club was no great loss.

Online reviews indicate the Sherman, TX Fit For Her club – with a one-star rating – is no great loss.  One reviewer wrote:

   …The place is always nasty. Most of the employees are rude… There is always some reason that the gym is closing down, rather it be for the electric getting shut off or because of malfunctions with the card reader. its ridiculous, i mean how can someone run a business like that….He is always late paying his employees, and everyday that he is late on payment for them, there is always another excuse that comes up, ALWAYS, it never fails, then he refuses to pay his employees what he owes them after they no longer work for him… Ray Shoaf needs to learn a little about the management of a business before he trys to start something up, and be a little bit more professional with the way that he runs things…

Guest wrote:

WOW!!!  Place closed Down less a Year for not paying his bills or employees. Equipment was so out dated! When you try to call the place there is no anwser why he closed down, as well no REFUNDS! He is also closing the fitness center in ANNA "The Zoo".. So he scammed… members of there money, Since the finance company will [not] stop payment!

Is billing members of closed clubs normal for Diversified Health & Fitness?

Ray Shoaf’s glowing testimonial for Diversified Health & Fitness is prominently featured in the company’s franchise marketing materials.  And it seems that he indeed has years of experience running Diversified-affiliated health clubs.  According to franchisee Ray Shoaf’s Linked In profile, he owned and operated Lady of America fitness centers for 14 years, owned the Sherman Fit For Her club and still owns The Zoo fitness club in Anna, TX.  All three of those chains are or were affiliated with Diversified Health & Fitness.

It makes one wonder:  Is billing customers for 6 months after a club closes just the way things are done at Diversified Health & Fitness?

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Diversified Health & Fitness Wants Failed Liberty Fitness Owners to Pay Up

Unhappy Franchisee received this email from a former Liberty Fitness franchise owner.  He claims that a year after closing their failed fitness club, the new franchisor owner, Diversified Health & Fitness, decided to hit them up for future royalties for the remainder of the 10 year agreement.

Talk about adding insult to injury. Here’s the email:

About 4 years ago, my wife wanted to open her first business and enjoyed working out in a ladies-only gym. So after a little searching around options, she bought and opened a Liberty Fitness franchise . At it’s peak there were about 61 franchisees and it seemed to be growing (there were about 50 when my wife opened).

After spending over $250k in purchase, buildout, and continuous / mounting monthly losses, she notified the current franchise owner that she would close her club at the end of 2007 (about 4 months notice) – she was open for total of 3 years. In October 2007, Diversified bought the franchise and my wife notified them that we were closing, and had notified the prior owners of this too. We actually closed [in] 2008, with all monthly fees to Diversified fully paid up (minimum monthly fees for franchise including marketing etc which was never done).

In January of 2009, we get a surprise letter from an attorney for Diversified that they were trying to collect 7 years FUTURE franchise fees; about $250k. They said they interpreted the franchise agreement as REQUIRING us to operate for 10 years. Several Liberty Fitness franchisees that closed are getting similar letters; there are only 6 open and rumor has it three are about to close. Several clubs closed before Diversified, and this was never an issue – they just closed, done deal.

Even in the short period we worked with Diversified (about 3 months) they were aggressively trying to get us to pay a franchise exit fee that was NOT written in the contract for Liberty (maybe it was there for Shapexpress or for other franchises and they got confused; we never did understand it). But they went silent for a year, and now this shakedown.

Is this common in this industry, or even just this segment (women’s health clubs), or is it just Diversified? I’m surprised with this development and the almost total collapse of Liberty Fitness that there are no BLOG reference points ala the Shapexpress blog.

You know times are hard when companies are looking to defunct businesses for revenue.

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