CURVES FOR WOMEN: An Unhappy Franchisee Tale
August 13, 2008
When asked “Is Curves for Women a Good Franchise Investment?” reader ScrdByCurves posted the comment below. The bolded subheads have been added to improve readability.
“Hi and sorry in advance for the long post. I know we are just one of many unhappy ex-owners but hopefully our story can prevent others from going down the same path. And to those happy Curves owners that still making money – congratulations, you are rapidly approaching the other side of the bell curve.
“Here it goes: My wife was a successful business woman when we got married. After having our second child in 2001 she abandoned her career and stayed home with kids. After second pregnancy, my wife started to gain weight and decided to join the hottest women’s health club on earth – Curves. She loved it, but being a business oriented woman that she is, she noticed some inefficiencies that negatively affected the club she was in. So she came to me one day and asked me what do I think if we were to buy one, so she could implement the ideas she had while doing exercises and making extra income. I suggested that she get a part time job there first to find out first hand of what is involved. She did that and coincidentally, 6 months later that club was offered for sale for $320K. It was 1 year old, had 180 members and with $7K/mo rent at a brand new shopping center. I could not understand how current owner came up with this futuristic price and requested a meeting with him. He was extremely confident and his only justification was future profits and historic sales prices of other Curves. They had owned 2 other locations – one with over 800 members and another with over 600 members. After running some #s, I had offered him to buy all 3 for 650K. He did not even return my call. In a meantime, my wife was becoming anxious to own one. It was early 2004 and no new territories existed in our state or even US I believe. The only Curves one could purchase would be a resale.
“We started to look actively and eventually found one for sale within 30min driving distance from us. It had 300 members with $2K/mo rent making about 60K/yr. It was offered for $280K. After some hesitation we decided to buy it for my wife. I figured that the worst case scenario would be that we sell it 5 years later for ½ price and would still come a little bit ahead plus a health benefits to my wife. Oh, how naïve I was!
We went to Texas for training and came back with elevated spirits thinking that we will make a world of difference in our area. My wife eagerly started implementing her ideas and actively participating in all community events. However, the problems began almost immediately. First, we discovered that we did not really have 300 members. The ex-owners that sold us the club had another one within the 2 mile radius. Mysteriously, right after we purchased the club, many members transferred to that other club. We have suspected the foul play but could not prove anything and instead decided to concentrate our efforts on growing ours. It’s been said on this board many times that Curves insists that all their clubs are working as a team, helping each other. Nothing is further from truth. This was a cut-throat competition with devious techniques of luring members to your own club, secretly complaining about other neighboring clubs to Curves Legal, spying by sending friends and relatives to neighboring clubs pretending they are new members and bad-mouthing other clubs in the area to members and other people around.
“My wife’s cheerful demeanor slowly evaporated. She became more aggressive, stressed, tired and exhausted as days passed. She had to let go previous employees who turned out to be still working for previous owners as they have been sabotaging business when my wife was not there by loudly complaining about her to the members and openly encouraging them to leave our club and go to the other Curves the ex-owners had. When one of the members told about it to my wife – she became furious and fired them. Then she discovered that those employees had given away hundreds of coupons for free Curves products that were reserved as a reward to those women who achieve their goals. Over 100 members had 5 or more coupons that they said were given them as rewards for their exercises. Fearing that we may loose more members if we try to revoke them, we had to spend several more thousand dollars buying expensive Curves sweat shirts that everyone wanted.
“All that set us behind considerably and created a lot of tension, but we were determined to make it work. Over the next couple of years we saw that despite of our efforts, we were not gaining new members and have had problems retaining old ones. Our expenses had increased – rent, advertisement, salaries for employees, with revenues steadily falling. We have tried to talk to our Area Directors but received no support, we have complained about it to Curves Int. but received no response. We tried to work with other Curves, participating in co-ops and sharing local ad costs, but it did not bring more members, while we were spending more money than ever. On top of that, Curves Int. asks its franchisees to fax the worksheets that determine the dollar amount of monthly franchise and ad fees. If they do not receive the fax in time, they charge you maximum fees allowed. On more than several occasions, even though we have faxed everything on time (and have proof of that), we have been charged the maximum fees that overdraw our business account and result in overdraft bank fees of $40 for every transaction after that. Then it would take a number calls leaving messages and faxes to get the franchise fees reversed and corrected, but Curves never reimburses you for the bank fees that result from their mistakes. In 2007, we have paid over $1500 just in overdraft fees due to Curves mistakes.
“Slowly but surely, from a profitable club we became a club that sucked money at the rate of $2K-$5K/mo. Several non-Curves competitors in the area started to pop up offering the same thing for 19.95/mo. I have not seen a single Curves TV ad since 2005. In a meantime they continue to collect money for a “national advertisement”.
“Finally, 3 months ago we were forced to shut down the club, refund prepaid memberships to several members and terminate our lease contract.
“Several clubs in our area are listed for sale in the $30K-$45K range – a far cry from 2004 prices. I am sure that those would eventually be shut down as well.
“Curves Int. is trying to collect the $10K from us but our club was purchased by a Nevada LLC where my wife is a single member rather than my wife personally, so they will have a hard time going after our assets and we have no more money to donate them.
“Overall, this is by far the bitterest experience that we ever had in our lives. I am just glad that our family was strong enough to endure it. We had another family addition last year that helped us be together. Now, 4 years and $370K later, our efforts are concentrated on putting this all behind and moving on with life. It had mostly eliminated our hopes for early retirement and good colleges for our kids.
“While some folks here say that it is all our (ex-Curves owners’) fault. I know for myself that it is not us but Curves Int. and those who run it that we have to thank for that. Their extreme corporate greed, total disinterest in Franchisees and, sadly, total lack of any concern for women they say they want to help (because it all trickles down to members that at the end are disillusioned, hopeless and no longer have a convenient place to go to) – that is what is at fault.
“It is very much reminds me of Enron and I sure hope that it will end similarly.
“Thank you Gary. Remember – what goes around, comes around.”