[updated July 11, 2010]

Most Commented Curves Posts

CURVES: Robert Lay’s Story March 10, 2009  (854 Comments)

CURVES: Negotiating the $10,000 Closing Fee October 12, 2009  (133 Comments)

CURVES FOR WOMEN: Business Broker Slams Curves Franchise and Franchisor November 15, 2008  (124 Comments)

CURVES: Can Indie Clubs Thrive Where Curves Failed? January 19, 2010 (53 Comments)

CURVES Franchisee Regrets Not Sticking It to Others January 7, 2010 (39 Comments)

CURVES DISCUSSION: Benefits of a Franchisee Lawsuit? August 18, 2008  (39 Comments)

CURVES: Should Failed Franchises be Resold? March 31, 2010 (33 Comments)

Most Recent Curves Posts

CURVES Franchise Owners React to Comments That They’re Being “Pruned” July 10, 2010

CURVES: 1000 Franchise Clubs Failed Last Year July 8, 2010

Failure Rates of the 10 Most Popular Franchises April 26, 2010

CURVES: 5 West Virginia Curves Close Abruptly February 22, 2010 (3 Comments)

2009 Curves Posts

CURVES: Complaints of Unauthorized Membership Charges November 18, 2009  (7 Comments)

CURVES: “Another Curves nightmare. Please advise!” November 10, 2009 (7 Comments)

CURVES: Franchise Resale Complaints, Comments October 31, 2009  (1 Comments)

CURVES: Franchise Resale Buyer Alleges Fraud October 31, 2009  (1 Comments)

CURVES: In Oregon, Curves Franchises Die Alone October 18, 2009 (1 Comments)

CURVES FOR WOMEN: Advice on Buying a Franchise Resale February 24, 2009  (15 Comments)

2008 Curves Posts

Curves Franchisee Blames Economy for Closing December 21, 2008  (1 Comments)

CURVES FOR WOMEN: Nearly Half The Palm Beach Clubs Have Closed November 15, 2008  (17 Comments)

CURVES FOR WOMEN: Franchisee a Victim of Fraud? September 14, 2008   (22 Comments)

CURVES FOR WOMEN: Is McCord Brokers Required for Resales? August 13, 2008 (3 Comments)

CURVES FOR WOMEN: An Unhappy Franchisee Tale August 13, 2008 (6 Comments)

CURVES FOR WOMEN: UFOC dated March, 2008 June 23, 2008  (0 Comments)

Another Curves Shuts Down Abruptly June 14, 2008  (1 Comments)

Cape Girardeau Curves Franchise Closes June 10, 2008  (0 Comments)

WHAT DO YOU THINK OF UNHAPPY FRANCHISEE’S COVERAGE?  IS IT USEFUL?  FEEL FREE TO SHARE A COMMENT BELOW.

More than 1/3 of the domestic Curves fitness club franchises have closed in the past 3 years.

In 2009 alone, more than 1000 Curves franchise owners lost their dream businesses… along with their savings, retirement accounts and, in some cases, their homes.

But there’s no cause for alarm, according to Curves International President Mike Raymond.

According to Raymond’s comments in the Wall Street Journal, what may be the largest mass-closing in franchising history is all part of Curves International’s master strategic plan:

Franchisees and industry experts point to a failure to keep up with changing trends—including more flexible hours for busy working women—cheaper competition and the tough economy as major reasons for Curves’ decline.

The company disagrees with its critics, contending that much of the club closings were intended as part of a plan to “prune the system,” according to Curves President Mike Raymond. Some owners had bought into Curves for the wrong reasons, he says, “they were motivated primarily as investors rather than owners.”

No Cause for Concern. Corporate Profits are Up!

Sure, thousands of club owners may be devastated and their club members forsaken, but there is a silver lining:  Curves International actually increased earnings as a percentage of sales, with 2009 earnings of $16.4 million on revenue of $84.1 million.

So the story has a happy ending after all… unless, of course, you are one of the prunees.

Unless, of course, you are  one of the thousands of franchise owners who actually believed Curves International when they said that, as one of their franchisees, you’d be going into business for yourself but not by yourself.

To be fair, if Curves International had stated that their franchise would give owners the opportunity to be, say, superfluous twigs to be eventually pruned from their corporate money tree, Curves never would have become the fastest growing franchise in history…

Now would they?

CURVES FRANCHISE OWNERS:

Share your feelings, opinions and experiences with founder Gary Heavin,  President Mike Raymond and the board of Curves International, below.

Contact us at UnhappyFranchisee[at]gmail.com

Also read:

CURVES: 1000 Franchise Clubs Failed Last Year (More on the WSJ article)

Robert Lay’s Story (Featuring 850+ Curves franchisee comments)

Curves Posts on UnhappyFranchisee.Com (Directory of posts & discussions about Curves)

photo credit:  stefano lubiana wines License:  creative commons

The statements of Curves International President Mike Raymond in Richard Gibson’s article also confirm what franchise owners have told us in more than 1000 posted comments:  The franchisor that invited them to get into business “for themselves but not by themselves” remains both profitable and coldly indifferent to their plight.

More than 2500 Clubs, 1/3 of Curves U.S. Franchises, Have Failed Since 2007

According to the Journal:

Over the past three years its U.S. franchisees have been closing outlets at a rapid rate, shrinking the chain by about a third: to 5,208 U.S. sites at the end of last year from 7,748 at the beginning of 2007, according to a recent franchise disclosure document the company filed with state regulators.  More than 1,000 Curves vanished across the country in 2009, while just 35 new locations opened.

While the financial toll taken on the owners of 2500 failed clubs is devastating enough, the number is actually understated.  Many Curves clubs have actually been sold once or more before they were closed – so the number of individuals and families who lost significant savings, retirement accounts even homes could far exceed 2500.

U.S. taxpayers have also helped foot the bill for these losses.  Many Curves franchises were funded by SBA-backed business loans, and the Curves concept consistently ranks as one of the highest-defaulting franchises.  So your tax dollars have been repaying banks for loans on Curves franchise defaults.

Curves International Profitability Rises Despite Franchise Failures

The WSJ reports that while Curves franchise owners were losing their businesses in record numbers, the franchisor actually increased its own profitability.  Gibson states that Curves financial statements reveal that, for the year ended Dec. 31, Curves earned $16.4 million on revenue of $84.1 million (19.5%) compared with earnings of $17.2 million on revenue of $128.7 million (13.36%) the prior year.

The decline in revenue reflects lower franchising royalties and equipment sales, but profitability actually increased.  However, struggling Curves franchisees and ex-franchisees have complained that CI has callously tried to squeeze every last cent from them, even as they fended off bankruptcy and foreclosure. 

It’s not clear how much of the $16.4M in earnings came from closing fees and liquidated damages (future royalties) that Curves International and its collection agency demanded from the thousands of dead and dying Curves franchise locations.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Read 850+ Comments from Curves franchise owners.

Email Unhappy Franchisee at UnhappyFranchisee[at]gmail.com

According to CNNMoney.com, the “loan data is from the Small Business Administration, covering loans made from October 2000 through September 2009. The failure rate represents the number of loans in liquidation or charged off, divided by the number of loans disbursed.”

The Matco Tools was deemed the riskiest franchise with a 36% franchise loan default rate.

Cold Stone Creamery franchise was listed as 2nd worst with a 31% failure rate.

The much maligned (& litigated) Quiznos franchise was 3rd worst with a 25% default rate.

The Curves franchise was the 4th worst, with a 16% SBA loan default rate (no surprise to readers of this site or to those who left 600+ comments on our Curves franchise discussion)

Also posting a double-digit default rate is heavily promoted The UPS Store franchise with a 12% SBA franchise loan default rate.

The winners include Super 8 and Days Inn motel franchises with 4% and 6% respectively, Subway with a 7% default rate and Dairy Queen & Dunkin’ Donuts franchises with 8% default rates.

Franchises with the Highest Failure Rates:

Here are comments from the CNN writer, from worst to best:

Matco Tools franchise – 36%: “Tool manufacturer and distributor Matco is the riskiest investment on the top-10 “most popular” list, with more than one third of its SBA-backed loans going bad.”

Cold Stone Creamery franchise – 31%: “The product is sweet, but the financials can be bitter. In the last 10 years almost one in three SBA-backed franchisees defaulted on their loan.”

Quiznos franchise – 25%: “One in four franchise owners was unable to make good on their SBA-backed loan. Quiznos recently settled four class-action suits brought by its franchisees, agreeing to pay as much as $100 million to end years of wrangling over its pricing, royalties and fees.”

Curves franchise – 16%: “The overhead costs are pretty low, but the investment can be risky. Curves’ fast expansion goes hand in hand with a relatively high churn rate, and almost 16% of its SBA-backed franchise loans this decade failed.”

The UPS Store franchise – 12%: “Seven years ago, they [MBE franchisees who converted] filed suit against UPS, and will finally take their case to trial later this month in Los Angeles. Meanwhile, UPS rolls on, adding new franchisees to its network for an initial fee just shy of $30,000.”

Franchises with the Lowest Failure Rates:

Super 8 franchise – 4%: “Getting into the motel industry is pricey… but it’s also a pretty safe bet. Among the handful of franchise brands… a notable number are hotels and motels. Super 8 has the lowest default rate on this top-10 list, hovering just under 4%.”

Days Inn franchise – 6%: “Days Inn is another member of the Wyndham Hotel Group’s franchise family. Launched in 1970, the chain currently boasts 1,900 hotels throughout 15 countries.”

Subway franchise – 7%: “With fewer than 8% of SBA-backed borrowers defaulting on their loans, Subway has a better track record than similar brands — rival sub shop Blimpie has a 46% loan failure rate, and Quiznos is also well into the double digits.”

Dairy Queen franchise – 8%: “Today, it boasts 5,700 locations around the globe and a single-digit failure rate for its SBA-backed franchise loans, making it one of the safer investments in the food franchise market.”

Dunkin’ Donuts franchise – 8%: “Dunkin’ Donuts’ modest default rate is matched by its corporate sibling, Baskin-Robbins, which had a 10% failure rate for its SBA-backed loans.”

ARE YOU FAMILIAR WITH THESE FRANCHISE OPPORTUNITIES?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Source: CNNMoney.com

According to the Niagra Falls Review, members reportedly “worked out the day before and no one said anything and then came in the next morning and it was all dark and empty.” 

The sign on the door read: "Attention Curves members. Sorry closed for business. Thank you for your past support."

Members complained that they had just paid for the month and were given no notice whatsoever.  However, members are free to continue their memberships at other area Curves clubs.

CI’s main concern:  Finding a new owner

The Niagra Falls Review interviewed Becky Frusher, head of corporate communications at the Curves International Inc. head office in Texas:

She said the company will try to find a new owner for the women-only club so members are not disrupted.

"We regret to see any club close," she said. "Our main concern is getting the club back up and running, so that members can continue to enjoy the health benefits of our workout."

Shouldn’t Curves’ main concern be determining the reason for the failure?

While it may seem to members that their Curves franchise club closed overnight, it’s unlikely that it did.

After all, a franchise owner had a significant investment sunk into that club.  The odds are that they have tens of thousands of dollars in outstanding liabilities… money owed to CI, to their landlord, and to other creditors.  Isn’t it more likely that the club closed after a long and protracted effort to keep the club profitable and open?

The more than 500 comments posted here by struggling Curves franchise owners support that conclusion.

Shouldn’t Curves International’s priority be to determine whether the Niagra market could not support that club, rather than to put another owner in the same situation?

And if they find a new owner who reopens the club… will the surrounding clubs then lose the members they took in from the closed club?

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

The closed Curves for Women fitness clubs are:

Curves, Wheeling,

Curves, Martins Ferry,

Cuves, St. Clairsville,

Curves, Cadiz

Curves, Wintersville

According to a news story on the Curves closures,  all 5 locations are owned by the same Curves franchisee:

Curves in Wheeling, Martins Ferry, St. Clairsville, Cadiz and Wintersville closed suddenly Monday, with only a voicemail message saying the closure was permanent and that it was due to national and local economic conditions.

But other club owners say it certainly was not a national thing, and that other Curves locations in this area and across the nation are still going strong.

Linda Mayberry, owner of the Barnesville Curves, has gotten frantic phone calls from members, fearing that all Curves clubs were closing.

She says only five have closed, all owned by the same Wheeling owner….

Mayberry emphasizes the closure was not nationwide.

She said Moundsville, Barnesville and Cambridge are going strong and would warmly welcome members from the clubs that are closed.

West Virginia has the third highest rate of adult obesity in the nation, at 31.1 percent and the eighth highest of overweight youths (ages 10-17) at 35.5 percent.  It trails only Mississippi and Alabama as the fattest state in America.

Many Curves clubs across the country are closing as the economy and member boredom take their toll.

Also read:

CURVES: Robert Lay’s Story

CURVES: Can Indie Clubs Thrive Where Curves Failed?

CURVES: Complaints of Unauthorized Membership Charges

CURVES FOR WOMEN: An Unhappy Franchisee Tale

Tip of the hat to Fitdude for the link to this story

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

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’…

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

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?

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

PACE sells hydraulic exercise equipment like the machines used in Curves franchise clubs*.  In fact, the first Curves club in Harlingen, TX originally used PACE equipment, according to LaDue.  Ironically, PACE is finding a new niche where Curves clubs are struggling.

In an interview posted on FranBest.com, (see PACE Express Circuit Training Equipment)  LaDue states:

One of our biggest areas of growth right now is selling into markets where a Curves club has just gone out of business. There may have been 50-60 loyal members who loved working out but have been left high and dry; maybe this was not enough members to cover the high franchise fees, but usually more than enough to cover basic expenses.

LaDue gives the example of Kimberly Ellingsen, a former Curves member who opened her independent New Image Fitness when the local Curves club closed.  According to LaDue, Ellingsen “had over 50 former Curves members signed up before she opened her PACE club, then recently had her grand opening and signed up dozens of new people.”

[Pictured, above right: Rande LaDue, Owner, Hydraulic Fitness Products.  For information on PACE exercise equipment, email PaceEquipment@gmail.com]

Independent clubs pay no franchise fees or royalties.

How could an independent club – with no established branding or name recognition – survive where a powerhouse like Curves could not?

The most obvious reason is cost.  Independent clubs cost less to start, and less to operate.  In some low-volume locations, that cost difference could be the difference between success and failure.

According to the Curves website, the cost of a Curves franchise is $24,900 (new equipment) or $19,900 (refurbished equipment) with delivery of the Curves equipment ranging from $3,000- $5,000.  A PACE new equipment package is well under $15,000, with training included (normally a $1000 option).

According to Curves, “Curves charges a monthly franchise royalty and a monthly advertising royalty based on a percentage of gross revenues….The franchise royalty is 5% of gross revenues, with $795 being the maximum monthly payment by a franchisee and $195 being the minimum. The advertising royalty is 3% of gross revenues, with $395 being the maximum monthly payment by a franchisee and $95 being the minimum.”

Independent clubs pay no franchise or advertising royalties, as opposed to yearly costs ranging from $3480 to $14,280 Curves owners must pay.  Additionally, Curves owners have other costs, including mandatory purchases and program participation costs.

Independent clubs have freedom to experiment.

Franchises like Curves are based on conformity and compliance; they build their brand by enforcing consistent standards throughout their international network of clubs.  Curves franchise owners do not have the freedom to, say, add a line of retail products on their own, or to promote their club as co-ed.  In smaller, extra-competitive or nuanced markets, finding new and creative ways to add revenue or grow membership may require out-of-the-box initiatives that would not be approved by a national franchise.

In recent discussions on UnhappyFranchisee.com, some Curves owners have complained that they have trouble retaining members who plateau and/or get bored with the non-adjustable Curves hydraulic equipment, yet they are prohibited from going to weight-based machines or even the adjustable hydraulic machines offered by PACE.

Curves franchises face stiffer penalties for failure.

The penalties for failure also seem to be greater for Curves owners than independent operators.  Many comments by Curves owners here (see the comments on Robert Lay’s Story) cite the fact that they are pressured to pay closing or “failure” fees if they cannot remain open for the full term of their agreement, and that they are pursued for “future royalties” despite having done their best to keep their Curves clubs open.

Independents stake their claims.

There’s no doubt that Curves pioneered the concept of circuit-based express fitness clubs.  However, many, many franchise clubs are fighting for their survival in oversaturated or underpopulated markets.  Where these clubs cannot survive, independent clubs – unburdened by franchise fees, royalties and corporate mandates – may be able to thrive.  If they do, the independent owners and suppliers like PACE will have Curves to thank.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

* According to LaDue, PACE equipment differs from the Curves machines in that PACE equipment can be adjusted to increase or decrease resistance.

The Florida health club failure statistic is cited in an Florida Today article on the closing of the Ten Minute Gym location in Melbourne, FL.  The location of the failed Ten Minute Gym was previously home to Simply Fit and, before that, a Lady of America fitness club.

The owner of the club, Max Salinas, blames the economy and local competition on his club’s closing.  It appears that the owner of the independent club is trying to help transition members with the least amount of inconvenience or financial loss:

Salinas, who closed a Ten Minute Gym in Rockledge two years ago, promised to make good on debts he owes to Reinig and others, either by arranging gym memberships at nearby health clubs or making straight refunds once he collects money from selling the equipment at the Ten Minute Gym, 2447 N. Wickham Road.

According to state regulations, once a health club closes and people have deposits down, they either have to get a refund or the owner must arrange for a similar facility, within five miles, to honor the contract…

According to Florida Today, Ten Minute Gym provided a “supervised, high-intensity workout in less time that it took at other health clubs.”

Tip of the hat:  Thanks to WipedOut for the link to this story.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.