CURVES: 1000 Franchise Clubs Failed Last Year
The Wall Street Journal has confirmed what Curves franchise owners have been reporting on UnhappyFranchisee.com for the past two years: Curves franchise owners are closing their clubs, and losing their significant investments, in alarming numbers.
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.
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42 thoughts on “CURVES: 1000 Franchise Clubs Failed Last Year”
While I think its great that WSJ finally decided to do an article about Curves and Howie it is a shame that it is not factual. There is no way in the world that there are 5000 + franchises left in the system. The actual factual number is closer to 3200 period. We believe the FDD documents article that was used as the basis for this article was the one released by Curves at the end of March which was determined to be fraudulent by the State of California. Curves had until the end of June to correct it but was banned from selling new or resale franchises until it was corrected. I would like to see evey curves owner who reads this to send an email to the author, Richard Gibson, of the WSJ story and his email address is at the end of the actual story. If enough owners email him maybe he will do some further reasearch and write the true story of how Howie has screwed over owner’s and continues to use intimidating, extortion and sometimes illegal business tactics to further line Howies and Diane’s pockets with the gold they so worship.
Look at this article! This is disgusting!
AS a curves owner, its is a shamed that howard heavin, the asshole he is, is a thief and a dishonest business man.
Its a shame that NOONE in that company or anyone associated with that company bothers telling anyone the truth, including area directors. They refuse to admit and ot acknowledge that curves int is going to hell..
howard should be prosecuted for his lies and for stealing money.
I hope howard reads this and I hope people realize that his idea was stolen, his goons are assholes and this company SHOULD BE SHUT DOWN. Although I dont think it will be long before they are few and far between.
He has the nerve to call himself a true christian and a CEO??
GREAT FOR YOU PHIL
Everyone need to send an email to the author of the WSJ article and tell him to tell the truth about curves and expose Howie, Diane and Rayassmond as liers, and cheet’s that they are!!!!!!!
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Where are Guest and JD? No comment at all? Guess they need time to come up with a way to explain why a staggering 2,500 Curves have gone under since 2007. That might be the biggest franchise collapse in US HISTORY.
If one-third of McDonalds had closed since 2007, this would be worldwide news and would have gotten media attention years ago. Thanks to the WSJ for bringing attention to our plight – and our cause.
This was my email to the WSJ Reporter:
I am a former franchisee that bought a resale with my husband in 2006. We just read your article. We agree with the idea that they are VERY inflexible. Whatever “Mr Raymond” told you is a bunch of BS. Look at the news. Are companies really going to tell you they run a shady business? No, of course they are going to say they are on the up and up.
They don’t monitor their resales. The resaler can tell you anything they want to tell you because the corporation doesn’t provide you with any feedback on whether the information you are submitting to them from the resaler is legit or not. Curves International also charges you for EVERYTHING and pressures you by using scare tactics and giving you an attitude. We had to pay for our own flight to Waco, our own hotel, all meals etc because it is madatory to receive training before closing on a franchise. They even charged trainees a quarter for water. Gary Heavin totes he is doing this for God and makes the corportation all about religion. He is a snake oil salesman. If you read up on him, and really dig deep in the business of Curves International, there is a lot of shady things going on. There is a website Unhappy Franchisee where you can read all about it. There is also a major lawsuit against Curves International by current and former franchisees. The case is being litigated by Zarco. They are lawyers based in Florida. You can get all the court documents by calling the Waco clerk. In addition, the corporation finds it mandatory to see a lease from a landlord and approves leases that are less than the 5 or 10 year franchise agreement depending on how you buy your territory. Does that make any sense? The only way out of your agreement is to either pay them $10,000 or file bankruptcy. My husband and I had to file bankruptcy. If I had 10,000 I would be putting it into the business. They don’t care at all abouit their franchisees. All they care about is using them and making money off of them. It’s been a year and a half since we filed bankruptcy. We are so happy to be out of that business you have no idea.
I bought a re-sale a year ago. The numbers the seller told me were incorrect. I would like to get out. I have had offers from insurance companies to establish discounted rates for member and CI will not respond. Instead other health clubs in town are benefiting and I keep losing members. They provide no support whatsoever. The only thing they can do is take your money on a regular basis. Can I get into the lawsuit?
I have an idea…..Curves claims we are a sisterhood. Why can’t we establish a LLC that invests in Curves owners assets, and sells them back after they get away from Howie. For example. I don’t want to lose my house. If I sell my house to the sisterhood with a quit claim deed for $1. close my store with no assets for CI to attach to, and buy my house back for $2.00 after the heat has settled. Any lawyers out there that can help with this?
Wipedout, please state where I ever said that Curves was a good franchise. Good luck finding it, because I never have.
The majority of my posts are related to unhappy putting information out here that might not be 100% correct, and that people should be careful with said information. Many times I have challenged said information, and he ignores it because he can’t back up some of his statements.
As for other posts, I point out that the majority of the people that are complaining are people that bought resales. Obviously they bought at inflated prices and didn’t do the proper due diligence to figure it out and now blame CI and the previous owner for not protecting them. Odds are a Curves store cannot function with the debt load that some of these resales took on. As I’ve stated before, the buyer is the one that sets the sales price. It’s simple supply/demand economics.
As for the pruning, CI isn’t the first system to do this and it won’t be the last. Hell, look at Quizno’s, they were stuck with leases and are now going to open corporate stores in those shuttered stores, and compete with franchisees. Talk about pruning, because those other stores won’t make it (probably).
there exist winners & losers in every sphere of human endeaver.
I noticed when we went to club camp, that the vast majority of new Curves owners
hadn’t a clue about business, and were ill prepared for the venture..
We made $ millons in profit from four Curves in the boom cycle and sold as
profits declined while we still had viable businesses for sale. THis is what you do
in a “fad” flavour of the moment business,
Look, had you listened to Howie when he was asked about all the money he was making at club camp and he said “money is God’s way of telling me I am doing
the right thing”
Understand the Texas gunslinger, bible thumping Redneck and its pretty clear
what your realtionship with Curves International was goin to be.
$10K toclose is just Howies way of opening up another can of WHOOP-ASS
on you. Tell him to shove it via a letter from a lawyer and you will never hear from him again.
MY adivce is “learn business” before you jump at the next bestt
Can you believe anyone who has seen the WSJ story and than states that many franchises uses the same excuse “pruning” and justifies Curves as being a typical business. There as sick as Howie and will surly end up in the same place sooner or later. I’d perfer sooner and I’m sure karma will get them in the end….;……..
In response to jd’s comment, “As for other posts, I point out that the majority of the people that are complaining are people that bought resales. Obviously they bought at inflated prices and didn’t do the proper due diligence to figure it out and now blame CI and the previous owner for not protecting them. Odds are a Curves store cannot function with the debt load that some of these resales took on. As I’ve stated before, the buyer is the one that sets the sales price. It’s simple supply/demand economics.”
Due Diligence is the process of evaluating a prospective business decision by getting information about the financial, legal, and other material (important) state of the other party. Due diligence is used most often when buying a business, as the buyer spends time going through the financial situation of the business, legal obligations, customer records, and other documents. The prospective buyer wants to validate his/her opinion of the business to see if it is truly a good decision.
We did our due diligence. Hired an accounting firm and attorneys to look over everything. The owner was bringing in enough each month to justify the cost. I’m not going to go into the details of what happened to me, which is what happened to many of us. We’ve told you before and all you talk about is “due diligence”. If you cannot understand what happened to many of the resales, please stop making comments. You talk big, using words like supply/demand economics, and “due diligence”, but you are a small minded person.
1 : having narrow interests, sympathies, or outlook
2 : typical of a small-minded person : marked by pettiness, narrowness, or meanness
We did nothing wrong. We’ve done everything right. The problem is, we paid for members, who were not really members, and we are a part of a franchise that does not support the Curves name.
The previous owner of our club contacted Curves International and asked, “How do I figure out the value of my club?” Curves International says, “We suggest you take the number of active members, multiplied by the monthly membership fees, then multiply that total by 12. Add to that total, the value of other things like products, equipment, etc. This is a good idea as to what your sales price should be.”
I am still one of the Curves managing to make a small profit most months. Is there anyone out there that has closed or is closing that is within 150 miles of Kalamazoo or Mishawaka In that has a stretching station to sell? Contact the Curves in Three Rivers Michigan. Thanks
Most months? The stretching machine is a great benifit and really does work. I’ll keep my eyes and ear’s open and if I hear of one I’ll get ahold of you asap.
CurvesOwner2, obviously you didn’t do enough, because had you done enough due diligence, you would’ve realized that you paid for members that may not have existed. I’m going to assume that the majority of the revenue from a Curves comes from membership fees. During due diligence, you should’ve been asking your accountant to perform ‘Agreed-Upon Procedures’ (i know big word, sorry, but that’s what it is called) on the deposits of all members for a couple of months to determine if their membership numbers were overstated. I’m curious, did you do this and did they issue you a report on their findings?
As for the value of the club, you are saying that Curves suggested that the value of the club was roughly their yearly gross revenue plus assets. In my opinion, that’s a poor way of valuing a franchise. For example, if a Curves does $100k in yearly revenue, and their EBITDA is $10k would you really think that the club is worth $100k (the answer is ‘no’). If someone did pay $100k for the club, odds are they would’ve never made their investment back, unless they managed their variable revenue/expenses after purchase.
Unhappy, I thought you stopped reading my comments, but based on this statement it looks like you are:
‘Can you believe anyone who has seen the WSJ story and than states that many franchises uses the same excuse “pruning” and justifies Curves as being a typical business’
‘Pruning’ happens. Franchisors might not come out and say it as stupidly as Curves did, but it’s out there. Chrysler & GM ‘pruned’ their franchisees during their bankruptcy. Dunkin Donuts will terminate someone’s franchise agreement in a heartbeat if they can. In every franchise system, there are stores that no matter what just aren’t going to make it, and it’s not worth the franchisors time to waste on said franchisees. I’m sure that there are members at all Curves where no matter what the owner tries, the member just isn’t going to make their goals, and the owner has to decide who to concentrate more of their time on, someone who wants to meet their goals and has the drive to, or someone who doesn’t.
I am not one to throw around my credentials, or use “big” words that other people may not understand. I was the accountant of the previous owner of my clubs. I did my due diligence.
The membership numbers were not oversated. The owner was bringing in enough each month to justify the cost. Explain to me if you can JD, how in “due diligence” are you supposed to determine if a member is working out or not?
I don’t know about others, but we were not permitted to look at members files and members personal information until the ownership of the club had transferred to us. We called all the members who were not working out, as instructed by CI. This is when we discovered these women did not know they were still paying. What is ethical about this?
‘I don’t know about others, but we were not permitted to look at members files and members personal information until the ownership of the club had transferred to us. We called all the members who were not working out, as instructed by CI. This is when we discovered these women did not know they were still paying. What is ethical about this?’
And if this was the case, then why didn’t you require an escrow from the seller to ‘account’ for these members that weren’t using the facilities. Had the seller ‘balked’ at that suggestion, it probably would’ve been a red flag. Usually, if they aren’t going to let you look at something, it should raise even more questions.
I’m curious, what was the purchase price?
curves owner 2,
why would you even try to carry on a conversation with such an assh–e as jd. He has never owned a Curves, tells nothing but lies and tries to put every owner down as if they are the reason they failed. It is obvious that he is pro Howie and yet still tries to deny that he is. He has absolutely no business sense and never will. Most of us on this board just ignore him and don’t even read or respond to his posts. That makes him very mad and it shows as he than attacks more but who cares his opinion is worthless. We all consider him a sick joke and by not responding he throws his tantrum and tries to say all the advice we give is incorrect. We have all found if we just ignore his posts he disappears for awhile and than like a bad apple comes back. Obviously he has way too much time on his hands and is probably an unemployed garbage collector who’s wife left him high and dry and he tries to make everyone around him as miserable I he is. “Why even respond to such idiotic posts from someone who knows nothing about what the Curves owners have had to go through with Howie’s unethical, immoral and sometimes illegal business tactics. He really should do due diligence on his own life or maybe look in a mirror and realize what a despicable person he has become. We all feel sorry for him and hope some day he will grow up but until then just ignore him!!!!!
It has been stated that the franchise count listed on Curves.com for all 50 U.S. States plus the District of Columbia amounts to 4,678. The question here is if those numbers are correct and we don’t believe so. In the same post it states that the two states that have the most clubs are CA. with 450 and TX with 297. We know for a fact that those number are not correct as Ca has 295 clubs left and TX. has 185. The count on the Curves.com site are defiantly not correct. The total number of clubs left that are open is around 3400 to 3600 at most and is shrinking fast.
This is a very brief summary of how Curves International does things, based on my opinion. Some things are missing in between, but if I mentioned everything I could write a novel.
Seller wants to sell club. Buyer signs/fills out a non-compete, intent to purchase, approval as buyer documents. It took Curves International 6 months to approve us and process everything. We were not allowed to communicate with Curves International until we were approved as the owners. We got a call from the seller, saying, “You’ve been approved. We need to take care of everything within the next 2 weeks at the latest.” $175,000, was put into escrow, everything was transferred, and the money exchanged hands accordingly. Two weeks later, we attended Club Camp, where we learned the “Curves Way” of doing business, which the previous owner was not following. They showed us a report we could run on goFigure that listed all the members who had not worked out in 3 months or more. Curves International suggested we print out that list and send “Miss you” cards to those members, or call them and invite them in again. When we returned from club camp, we did everything the “Curves Way.” I told my trainers we would be calling all our members who had not been working out in 3 months or more, and they were shocked. They said the previous owner told them they were not permitted to send out “Miss you” cards or call members who were not working out. The first member we called had joined on the day the club had the grand opening and never came in again, yet she had been paying every month for 3 years. With our help, she found the amount on her statement and said she didn’t realize it was for Curves because it said “merchant”. Another Curves owner mentioned in a post that the way a draft comes out is up to the bank. The owner doesn’t make this decision. That’s fine, but as an ethical person, I will not draft someone this way. I changed the system, to an EFT draft that says “Curves” on the bank statement. The following month the calls started coming in. Within 2 months time we dealt with over 200 calls from women, who threatened to sue us for drafting them illegally. We pointed out the previous owner had been drafting them all along, and they insisted she didn’t have a right either. They claimed they had cancelled, in writing. Maybe they did. Who knows? I returned the draft of every person we drafted within the first 3 months of owning our clubs, who called and said they cancelled and didn’t know they were being drafted. The really sad thing is the previous owner of my club is a Christian too. Wait, I meant liar who uses her faith to cover up the fact that she is a horrible person. Her actions ruined our reputation in our community.
I blame Curves International. As the franchisor, they should have made sure the owners were doing things the “Curves Way.” Had the previous owner been contacting these members, we would have been purchasing a viable business. Not something that looked great on the surface, but had crud in the cracks and crevices.
Sorry to hear aboutr your story about Curves but you aren’t alone as many owners have a similar story to tell.
Had Curves originally capped the number of franchises at around 4,000 or so, “pruning” would not have been necessary, and 4,000 owners’ finances woudn’t have been ruined.
Gary and Diane Heavin will be featured in a one-hour prime time program on the ABC titled “Secret Millionaire”. Secret Millionaire is a one-hour alternative series that follows some of America’s wealthiest people for one week as they conceal their true identities while they live and volunteer in some of the most impoverished and dangerous communities in America. Surviving on welfare wages, their mission is to discover the unsung heroes of America—deserving individuals who continually sacrifice everything to help those in need. Throughout this incredible experience, the Secret Millionaires will attempt to remain undiscovered, coming face to face with extraordinary and amazing people battling the odds every day of their lives. On the final day, in an emotional and dramatic climax, they reveal their true identities. Ultimately, the millionaires will each give away at least $100,000 of their own money, changing lives forever.
Gary and Diane’s episode has already been filmed. They spent a week in Houston’s Third Ward, living in a run-down row house with no air-conditioning. For 15 hours a day, they worked with social-service organizations helping AIDS patients, kids with incarcerated parents, and other at-risk groups. At the end of the week, they made a charitable donation that Diane says was “quite a bit more” than the $100,000 the show calls for.
“They spent a week in Houston’s Third Ward, living in a run-down row house with no air-conditioning”
Wonder if they ran into any of the Curves club owners that they pruned?
I was thinking the same thing. Many previous owner are homeless because of Curves. Gary and Diane should be donating money to them.
I am wondering if anyone in Ireland/England is having the same trouble as the States? I know a few clubs have shut down, some over night but want to know the outcome. I am a struggling resale owner who is just managing to pay the bills but not take a wage or able to employ staff so working 10 hour days. According to Waco, I’m not running my club properly due to being burnt out, due to having no staff and I need mentoring or sell up. Obviously both suggestions make them money. I believed in the consept, still do, but not with their rules and regulations of not having extra equipment and only charging certain prices. I want out but am thinking the only way is to file for bankruptcy at this stage as there is no one going to buy a srtuggling club for what I need to pay back loans. Advice?
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i am surprised that bankrupt Curves Franchisees are paying substantial liquidated damages in the form of “closing fees” to CI.
We closed a club in 2009. CI wanted 10 grand. We told them we had no money and offered them $50. a month even though we were making 150 thousand a year from another Curves. The CI knomes were unable to connect the dots.
At first they agreed to $75 a month, then demurred and offered a $2000. closing
fee. We countered at $1000 and they accepted.
Do not under any circumstances pay the criminal Howie Heavin big dough to close. D’ont do it ,hang tough, run them in circles with outrageous offers, threats to sue, sob stories etc, The CI knomes only have so much time for you, they will tire of it if you make good game, and they will settle for peanuts.
How many members do you have at your other Curves? Is that $150,000 profit or total revenue?
Another sign of Curves’ downward spiral: Curves brokerage McCord Business Brokers has NO clubs listed for sale by owners for more than $99,000. Five years ago, you had some clubs listed for $500K.
We paid $175,000 five years ago per club and we paid too much. This is our story http://everyjoe.com/work/curves-franchise-resale-buyer-cries-fraud/. We have discovered recently that we are not alone, and the same thing has happened to many other resales. Regardless of what JD says, there was no way for us to know these women had cancelled and the owner didn’t process the cancellations. We thought we were buying a profitable club, with members who knew they were paying. Yes, some had not been in for 3-6 months, but Curves International said this was normal and they might return if we called them and invited them back in. So we called them, and they said they had cancelled. We told them they were still paying and we didn’t have a cancellation letter in their file. They didn’t see the draft coming out so we had them bring in their bank statement. It didn’t say Curves, so we changed the drafting system because we didn’t think it was right that these members didn’t know they were still paying Curves.
Curves International is responsible for our financial demise, because they set up the guidelines the owners were supposed to follow, but didn’t make sure they were being followed. A national survey of how many women continued to be charged by Curves after they sent in a letter of cancellation, and how many didn’t know they were being drafted by Curves, would be very interesting.
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Curves International sent the following statement from company President Mike Raymond to Consumer Ally:
“When it was brought to our attention by the Attorney General’s Office that certain of our independently-owned franchisees were not treating members in the same spirit of fairness we pride ourselves on, we took all necessary steps to ensure that such was corrected. We look forward to working with the Attorney General to prevent our members from being harmed by any rogue franchisees in the future and helping all of our members on their path to health and wellness.”
Do you think that means that if Raymond becomes aware of instances – even in states other than New York – where “independently-owned franchisees” are “not treating members in the same spirit of fairness” Curves prides itself on, that they will take “all necessary steps to ensure that such [is] corrected”?
Or does the Curves “spirit of fairness” only apply in states where the Attorney General mandates it? ;)
I found this story at http://www.consumeraffairs.com/health_clubs/curves.html.
Brandi of Canyon, TX May 11, 2010 wrote:
Mr. S closed his Curves franchise (April 30, 2010) with only a two week notice and never talked to any of us members. He had his employees (Kristen & Georgia) writing down our questions and they informed us that he would personally call us to answer them. They also promised (per Mr. S) that no more accounts would be debited and full refunds would be made to everyone who was paid after April. Accounts were debited less than two days after being told they would not be, and less than a week before closing and not a single refund has been made to any of the members. He left no way of getting ahold of him either. We live in a very small town, and you just don’t do people that way. He neds to be repremanded and refunds need to be made. I was paid through July 4, 2010 by gift certificate from a friend, and so he not only cheated me, but her as well.
I don’t know what Texas Business Law states, but if these members lived in New York, Curves International would be sending them a check.
Questions. I have been reading the comments and it sounds like Curves franchisees are not allowed to reduce the fees unless approved to run a special program. Is that true?
What kind of turnover rate are you experiencing?
So many are for sell in my area. Are the members ‘dropping like flies’?
Someone on this board said you can’t make a profit with less than 250 members.
Is that true?
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Did CURVES President Mike Raymond Get Pruned?
I have a client who bought a “resale”. The previous owner owned the equipment outright and never leased the equipment. My client purchased the equipment from the previous owner completely. Since Planet Fitness moved in nearby, her membership has suffered. CI wants her to close, telling her she has to 1) destroy all the equipment, or 2) sell out to someone else. What I understand about the law is that she owns the equipment. How does CI believe that they can dictate what she does with equipment that she owns? All they really own is the name am I right, and has anyone else ran into this problem? What did other franchise owners who closed do with thier equipment?