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CURVES: The Rise & Painful Fall of the Curves Franchise Chain

June 19, 2012

Curves, the women-only 30-minute fitness franchise, once boasted it was the fastest growing franchise chain in history.

Curves now has the dubious distinction of probably being the fastest-failing franchise chain as well.

According to the company’s franchise disclosure document filings, Curves grew to a record 7,877 U.S. franchise locations in 2005.

Just six years later, the Curves system had fallen to just 3523 clubs.

The women’s fitness chain shrunk by more than 50%, a total loss of 4354 U.S. clubs.

Thousands of once-hopeful Curves franchise owners suffered severe personal and financial losses as a result of their failed clubs.

Many who closed prematurely suffered the additional indignity of being harrassed and sued for thousands of dollars in “failure fees” and liquidated damages by Curves International, even after they had lost their entire investments. 

(See more than 1000 comments from Curves franchisees here:  Curves Franchise Complaints.)

Are you familiar with the Curves franchise? Please share a comment below.

Curves Lost More Than 4300 Franchise Clubs in Six Years

Curves founder Gary Heavin opened the first Curves club in 1992 in Harlingen, Texas, and the first independently owned and operated Curves opened in Paris, Texas, in 1995.  The Curves website currently boasts of its rapid growth, fueled by the personal investments of owner-operator franchisees:

Curves caught on like wildfire and opened clubs at an astronomical rate, sometimes more than doubling its number of locations from year to year. This was all done by word of mouth until Curves launched its award-winning national advertising campaign in 2003. What took McDonalds 25 years and Subway 26 years to do—open 7,000 locations—Curves did in under a decade.

The “History” section of the Curves website does not mention that more than half of those locations would close just as quickly.

Franchisees complain that the company failed to innovate, failed to adapt to the changing economy, and failed to keep women interested in the dated, limited workout.  Many charge that, during its growth frenzy, Curves oversold and overexpanded, selling clubs in hopelessly small, unsustainable markets and allowing franchisees to cannibalize each other’s sales.

CEO Gary Heavin Blamed Curves Failures on Greedy Franchisees.

The Curves growth frenzy and subsequent decline spawned a secondary market of Curves “resales,” established Curves franchises sold from original or 2nd or 3rd franchise owners to new owners.  When Curves was hot, many owners unloaded their clubs on hopeful new owners for prices that would prove to be exorbitant.  As Curves’ struggles became more apparent, many franchisees had trouble selling their clubs at bargain prices as low as $1.00.

CHART: Curves Franchise Resales (Transfers)

Year Transfers

(Resales)
Difference

from prior year
Total Franchise Outlets Difference

from prior year
2000 191   1258  
2001 214 23 2221 963
2002 281 67 3903 1682
2003 421 140 6019 2116
2004 729 308 7419 1400
2005 890 161 7877 458
2006 1267 377 7746 (131)
2007 1069 (198) 7090 (656)
2008 792 (277) 6247 (843)
2009 552 (240) 5214 (1033)
2010 379 (173) 4387 (827)
2011 318 (61) 3523 (864)

In comments on the widespread closures, the management of this private and notoriously non-communicative company blame Curves franchisees for the franchise failures. 

In 2009, CEO Gary Heavin was quoted as saying that high SBA loan defaults of Curves franchisee loans were a result of “the overpriced resales of franchises between third parties.”  (Source: CURVES: Franchise Resale Buyer Alleges Fraud).

In 2010, then-President Mike Raymond was quoted by the Wall Street Journal as saying that the widespread closures were the result of a corporate effort to “prune the system” to correct the damage from greedy franchisees.  According to the Curves WSJ story:

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.”

UnhappyFranchisee.com has been covering the troubles and decline of Curves for years.  See CURVES: Curves Posts on Unhappy Franchisee.

ARE YOU FAMILIAR GARY HEAVIN, CURVES INTERNATIONAL & THE CURVES FRANCHISE?  PLEASE SHARE A COMMENT BELOW.

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Comments

4 Responses to “CURVES: The Rise & Painful Fall of the Curves Franchise Chain”

  1. Pam Hipp says:

    I know the Curves system very well. I joined Curves as a member in 2003. I started working as part time coach in 2004; accepted a manager position in 2005; became an owner in 2009. As I sit reading these articles and owner/ex-owner comments I am bewildered. Like many of the others, I am struggling to maintain my business. I too fell victim to over-pricing from the previous owner and the down turn in the ecomomy. It has not been an easy road. Having said that, I can not figure for the life of me why any of this is the fault of Curves International or Gary and Diane Heavin. I am NOT saying that Curves International is perfect and has made NO mistakes, but I…me myself and I alone, signed a franchise agreement with this company of my own will. No one stood over me and forced me to do so. Certainly no one told me it was a guaranteed success or that it would be easy. No where in the agreement does it say that if the economy tanks, my funds run out, I discover I paid too much, etc. that they will void the agreement and allow me out of my commitment without penalty. As a matter of fact, it spells it out pretty clearly. Most agreements with wireless carriers, cable/internet companies, etc. require a specified term as well. Try to default on these agreements and you will be faced with early termination fees/penalties as well….pretty stiff ones at that. Try explaining to them that you didn’t know the economy was going to take a downward spiral, or that you paid too much for the plan. I have no first hand knowledge of franchise agreements from other companies, but are they “kinder” at default than Curves International. I doubt it. Why do we expect Curves International to just roll over and let people out of their agreements? WIthout recourse? Several clubs around me have closed. For those that followed the specifications of the franchise agreement, things went smoothly for them and Curves International was very gracious and helpful. There was even one case where the franchisee didn’t follow the guidelines and they DID work with her. She wound up paying a VERY small fee. As an owner, I am thankful that Curves has specific guidelines for the equipment when a club closes. The last thing I want is my competition next door getting a Curves Circuit. I understand that the brand MUST be protected for the remaining owners. All of this is spelled out in the franchise agreement. How rediculous is it to complain that you have guidelines to follow when you signed a legal binding document agreeing to follow those guidelines. If you read the agreement prior to signing it none of this should be a surprise to you. I simply think we need to take responsibility for our own actions and not blame others.

    I hope that you will publish /leave this up, even though it does not spew hate or bash the company or it’s founders as all the other comments do, if for no other reason that to bring in a different opinion from all the others.

    Taking responsibility for my actions,

    Pam Hipp

  2. Janice says:

    Pamm, your comment is kinda in the right direction and then most of it is not.

    I think you misinterpret the comments that others are making. We all pay for advertising and I to this day, have never seen a Curves commercial. And if they do advertise, did you see the networks they advertise on? Who the heck watches those networks? No one.

    What about the tasteless bars we have been asked to see, along with a stand that they charged $50! What a pathetic piece of crap. The bars are gross and our profit margin is supposed to be only eight to ten percent and I heard that right out of an Area Director’s mouth. Wow, what moron wants to work to make less than .60???

    And if we honor a coupon, we lose money selling them. The decisions that are being made are not being made with the intention of what is best for us. It is made with the decision of what is best for corporate. I have been told to tell members the bars are great. In reality, they are so bland and gross. I would never eat them and incorporate them into my daily diet.

    Curves has always stood on we are a Christian based company. Christians help people or at least they pretend to advertise that. I am not Christian and could care less about what a bunch of white idiots with low IQ’s think. Yes, I am atheist so hearing the word Jesus and Christianity thrown around, actually makes me sick to my stomach. Jesus have nothing to do with any of this.

    But you are telling me Pamm, that there is no compassion in their hearts? You have read the same stories as I have. So I am sure you read about some getting ill or spouses getting terminally ill and franchisees asking corporate to help them so they can focus on taking care of someone that is dying. Do they have no humanity?

    I agree, the economy tanks, or you made a bad business decision, those are not reasons to think you can just walk away. But for those who are SUFFERING with illnesses, should be treated differently. Compassion is being demanded as that how Curves advertises itself.

    A Christian based company. The same garbage that the politicians try to spew. Christian Christian Christian. Yuck. The last time I looked, I thought being Christian meant you looked into your heart and forgave. Forgave and helped. They hold prayers at Convention and their meetings. What for? Do you know how I want to barf when I am an online meeting and you hear the lame Area Director say God bless at the end of the meeting. You are kidding me right??

    If you present yourself as a Christian, then be one and look into your heart to help others. I too, would like to know where my advertising funds go? I too would like to know why they told us to not charge an enrollment fee for CC and then went just kidding a few months later. I understand it is a new company and they are trying different things to see what works. Some things will and some won’t. I respect that. However, getting us to sell a program that has minimal advertising behind, or bars that are nasty, is plain stupid.

    My clubs are ALL profitable so this is not coming from someone whose world is crashing around her as it is for some of those other owners. I believe any business owner should work and struggle a little, you will know the value of hard work. But the struggles these owners have does tug at your heart. You can’t ignore the plight of others.

    I am stable and enjoy what I do. I have worked other corporate positions and have built an impressive resume for someone in her 30’s. With that said, there are many things that this company does that would make anyone question their ethics.

    I am not in a lot of debt for my clubs, I am fortunate. But those that are, yes, why not question why CI allowed five clubs to open within a 10 mile radius. That was a horrible financial decision that was waiting to crash. They simply did that, cause they were greedy.

    Once touted the fastest growing franchise, now they hold the esteemed title of fasting failing franchise. Why? Greed.

    Curves is not a Starbucks and never will or could be. A good company has control over their expansion. I know that as I have worked for those companies. Curves does not. CI tries to hype up #’s for persuasion, hoping idiots like you hop on board. Don’t be fooled by the very overinflated #’s. Try telling your AD that and see how quickly he/she will shut up and go away.

    They know what they are doing and how misrepresenting they are. And they also know they have no answer. Don’t knock the plight of others, thinking you are presenting yourself as the reasonable one. You can’t even spell right.

  3. Claire Reynolds says:

    I own a club in the UK. We have had exactly the same problems as I see being posted by clubs in the US and Australia and a whole host of other countries.
    Curves take advertising fees but never spend them on advertising. Communication from Head Office and all levels does not exist. They just don’t want to know their franchisees problems and don’t want to be involved at club level. They only thing that they are interested in is that you are running your club within the rules and regs of your franchise agreement. If you close your club, either before the end of the agreement or at the end, they still want to nail you. No matter the fact that you have given 10 years of blood, sweat and toil and completely signed up to the Curves ethos. They call Curves and the franchisees a family. If that’s the case, they could be classed as abusive parents who psychologically torture their children. Curves is not a family and never will be. The only people who are worth their salt in this company are the franchisees and their staff. Curves UK is in meltdown. Clubs here have been closing at an alarming rate over the past few years and the closure rate is now becoming exponential. This is because franchisees have been promised the earth for too long and nobody believes anything that Curves tell us any more. In addition, North Castle have now changed the new 5 year franchise agreements by doubling the monthly franchise fee, increasing the ad fees (when they don’t spend a penny on advertising), including a clause which allows them to increase the ad fees from 3% of gross turnover to 6% at 30 days notice if they so wish, and also a clause which insists that you have to buy the new machines. With turnover already at a critically low level for most clubs, this will destroy almost every club who decides to sign up to it hence almost nobody will sign up to it.

    Curves UK will be almost non existent in 3 years time. We will probably have a dozen clubs left who are still tied into their agreements. Curves was set up by Gary Heavin as a fast growth get rich quick business for Gary and his family. He got out when he knew the writing was on the wall. Why on earth did North Castle Partnership buy into this disaster? Clearly, they did not do their due diligence. A little bit of time trawling the web and reading sites like this one, a bit of time talking to owners and surely they would have got the real picture. But no, just like Curves, NCP also fail to communicate with the people who really run the business – the franchisees. Seems like Gary not only hood winked a lot of franchisees but he also managed to do it to a big ‘professional’ outfit like NCP. Fortunately for NCP, they can afford the hit. The franchisees can’t.

    Gary and Diane Heavin = not nice people.
    Staff working at Head Office level in the US and other countries and who understand how Curves abuse the franchisees = not nice people.
    NCP buying a business which was screaming failure and imminent meltdown = suckers.

  4. Carol Tuzzolino says:

    I owned three locations for a total of 10 years. Luckily, I was on the “rise” end of the spectrum. We were actually fortunate to reap the benefits of hard work . Life, for those of us who are grateful, just didn’t get much better. I believe that CI was also experiencing the same “grateful” feeling. They were reaping the benefits of their work without having to deal with many franchisee complaints, and in many cases, never heard from the franchisees. What a way to sail, let’s do this some more….

    Now let’s talk greed. Advertising was ALWAYS a rip off. CI set the rules, and we followed them. Costs continuously rose, but not dues. CI offered little support and the area managers had no power. This went on for years, and became increasingly frusterating and scary.

    Diane and Gary (Christians when it suited them) expanded into Europe, Austrailia and a few other areas which escape me now. These expansions were fueled by greed and ego, without thought or support for their bread and butter; the original franchisees like myself who worked a good system as designed and were successful. The Heavins spread themselves too thin, lost site of the day to day operations, experienced corporate in-fighting at high levels, and were too high and mighty to listen to anyone who made them what they were. I could go on and on.

    Fast forward a few years. I closed 2 clubs and limped along with my last (and original ) club, which was at the end of the second 5 year term. I was just making ends meet, and I had purchased my own building so I wasn’t even paying rent. (Silver lining!!) Upon announcement that we would be closing, my members got together and signed a petition to donate extra dues ($5-10/month) for me to stay open for one more year. I couldn’t believe it, didn’t want to, but I did it anyway. These 100 ladies were with me for 7-10 years and I couldn’t say no. But 100 ladies didn’t make me any money, it was just for love.

    It was the best year we ever had, I had so much fun with them. However, I had no luck getting CI to allow me to extend operation for one year, rather than an additional 5. I was operating bascially without a proper agreement, which was scary. My members bombarded CI with letters and emails, but not one response. I operated the location for the last year knowing that they were so inundated with other closings, they couldn’t keep anything straight. Isn’t it ironic that I explained this touching situation to CI, and after 10 years and 3 clubs, they wouldn’t bend the rules or accomodate me legally!! Even as their ship was SINKING? Time period 2010-2011.

    So ladies and gents, I know CI has been sold to another principal and the Heavins are no longer involved. They will reap what they have sown, good and bad. My suggestion for all of you who are involved, run the place from your heart. Fire your employees who don’t care about your beloved members, and work more yourself. Know your loyal members, be honest and don’t panic. If you really need to close, do the basics according to your agreement. Then just set a date. CI cannot get blood out of a stone.

    Looking back, yes I understand the stress of making ends meet and worrying that CI will come after you for money you don’t have!! At the end of the day, you will have hopefully learned a lot from your members (how can you not, they really want to tell you their life stories). In addition, you will have learned how to manage employees and run a business. These are skills you may never have had a chance to learn. You can now go foward in life with priceless experiences that apply personally and professionally. Peace.

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