CURVES: Negotiating Curves Closing Fees

CURVES franchise: Negotiating Curves Closing Fees

Struggling, failing and soon-to-close Curves franchise owners seek information and advice from Unhappy Franchisee on how to handle the demands Curves International is placing on them.    One of the frequent topics is the club closing procedures, and how to negotiate with Curves International in regard to their demands for “failure fees” and often tens of thousands of dollars for “future royalties.” (Also called “Liquidated damages”)

If you have advice or experience closing one of more Curves clubs, please share your experience below.

From the post CURVES: Robert Lay’s Story, here’s an exchange regarding the closing fee:

Donna  Submitted on 2009/10/08 at 2:41pm

HELP!!! I have read some of the horror stories listed. I to have to close my club. I can not get anyone to return my calls from CI. I do not know what to do. I have had my club almost 7 years and have paid my dues. I do not have 10,000 dollars. Because of the recession I have to close. I love my members and hate to dissapoint them but I have no choice. The closing packet was sent to me but I’m scared to send it in. Is there any help out there? I have to do what I need to do today. Will they let me out without the 10,000 fee. Has anyone out there been in my shoes. Please someone respond as I need advice and help NOW.

CA ex-owner  Submitted on 2009/10/08 at 8:21pm

We’ve all been there! Our club has been closed for over a year. We refused to pay the $10,000. They emailed us two more times, first lowering it to $8,000, then to $6,000 – we still refused. Next came a letter from Curves Legal stating we now owed fees for the remainder of our franchise agreement, somewhere in the amount of over $42,000, with a fair amount of scare tactics! (Read our story above: CA Ex-owner on October 16th, 2008) We then sent a letter back to legal, refusing to pay anything and the reasons why. Now I will knock on wood before I say this, but it has been over a year that we sent them that letter and we have not heard a thing yet.

We are not part of the legal action that many of the people above are pursuing, and I’m sure someone will respond on how to proceed in that direction, or direct you to on what other options you may have. Remember, you are not alone, we’ve all been through this horrible experience. It hardly makes it better, but at least maybe knowing there are so many of us out there, you might feel a little better…

CurvesAnother Curver Submitted on 2009/10/09 at 12:15pm

Hi Donna.
Like You, I had to close my club. I closed it Feb 28th this year…
Of course I did everything I could to keep Curves International properly informed and I asked them for advice on the best way to proceed…

The one thing they did spell out, there is no “standard” $10,000 fee. At least Not Anymore. They said, if I write a letter asking for a settlement instead of paying all the outstanding royalties and ad fees, then they will put it to a review board and the review board will make a suggestion for a settlement. Then they told me not to write a letter but to hold onto the closing packet.

Well, then they forgot about me for 6 or 8 or 10 weeks. I think it was sometime in May that I got a notice that I owed some $40,000 for the balance of royalties and such…
however, i did inform them that i was filing for bankruptcy. they never asked for the bankruptcy attorneys name or the case number. i am just now filing, so they havent gotten any legal notices yet either.
since then I have not heard one word. it’s been what, 7 months since I closed. ridiculous…
i do have another franchise, that i’m struggling to hold onto, and you would think maybe that’s why they’re giving me some slack…
they are very frustrating but i think they have a backlog of closed cases. i have been told by others (gossip?) that they are understaffed and overworked. of course they’re busy with the big lawsuit that “unhappy” is part of it. and all the little lawsuits. i would like to know more about gofigure’s lawsuit against them too.
my attorney told me not to worry about any of it, because our state law supercedes whatever was written in the franchise agreement….

Donna  Submitted on 2009/10/12 at 12:21pm

Robert was right on. Settlement from 10,000 now wanting 2,500. And its only been 12 days. I don’t close until Oct. 30th. They were also nice and I wouldn’t have to pay it until the end of Nov. I wonder If I ask nice they’ll say i don’t have to give away my equipment to another Curves or destroy it -I can do what I want with it. What do you think?

HAVE YOU SUCCESSFULLY NEGOTIATED CURVES CLOSING FEES?  IS CURVES OR THEIR LAW FIRM HARRASSING YOU FOR CLOSING FEES & DAMAGES?  PLEASE SHARE YOUR EXPERIENCE BELOW.

This post was originally published October 12, 2009 and updated June 20, 2012

Contact UnhappyFranchisee.com

307 thoughts on “CURVES: Negotiating Curves Closing Fees

  • November 13, 2016 at 7:48 pm
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    Curved out. You’re in the same situation we were in – your story is identical. When you search for franchises at the top of this page, most well known franchises don’t seem to have negative comments, CURVES and NORTH CASTLE are the problem which is why they’re ranked by Forbes as in the bottom 10 of all franchisees. Should you negotiate with Curves? There are a lot of pages on this site devoted to Curves and it would take a few hours to read all the stuff posted, it’s that bad and most simply can’t pay. Seek legal counsel. In BC you can get 30 minutes of legal advice through the “Lawyer Referral Service” for $25 and I had to do this and it was well worth it. But I’ll sing this from the rooftops, THEY OWE US and are unlikely to take you to court because in all these pages, if we’re this far away from Texas they don’t have the resources to start something – and to get what? Broke is broke. It’s largely their lack of business acumen that led to our failure and inability to be a “going concern” paying their fees and making a living ourselves.

    There is NO RISK on their part. They collect money from us, dictate what we should do (not entirely a bad thing for the Franchise image), but they’ve contributed not ONE thing to building the brand other than a prettier website. Their attempt at brand building through (see the bottom of the Curves website) web promotion have failed. Who really reads “People” or “Family Circle”, etc., online? Their “promotion” attempts at this and social media for the last 3 years have utterly FAILED. We still believe in the Curves workout, BUT, the brand needs to be built at the corporate level who HAS to educate the public on why the Curves workout and formula are still relevant to ladies everywhere. I work in retail/service and people will pay more if there are recognizable benefits. Oddly, Curves advertising people agree with me, upper management doesn’t, and I was very vocal in my views to anyone at Curves who’d listen. Problem is there’s a huge level of incompetency there because they simply have zero experience running a franchise because almost everyone who’s run clubs “in the old days when it was great”, are GONE. All they do now is offer more courses which simply “pretty up” the same old ideas that worked 20 years ago. There’s nothing new and exciting (Body Moves is good), but try to respond to our local market and have hand weights or hula hoops or a couple of stair climbers or whatever and you get shut down.

    This is what we know. North Castle has downsized personnel and is running a lean ship. Their shareholders still have faith in Raymond and Mike, but eventually their excuses (and blaming the franchisee’s) on why an organization that was the leading Womens Gym with over 10,000 locations in North America is less than 1,000 today will wear thin and the shareholders will force a change.

    “I” was blamed for not trying hard enough, but I told them “in 2015 I paid them $9,300 in ALL charges & fees and LOST $6,500 (before accounting adjustments such as depreciation), therefore THEY did not give me good value and THEY failed ME. I have a line of credit to pay off of $114,000 so I can’t go bankrupt and it’ll take 10 years to pay off at which time I’ll be 73. When I purchased Curves I did searches but I didn’t find this site – too bad – I wouldn’t of read these pages and made different decisions. My girlfriend managed the club and took 20 hours of pay every 2 weeks because she believed. I believed and didn’t take a penny – like most owners who are struggling. In a metro area of 2.5 million people there are only 8 clubs left and one or 2 will be gone next year.

    If you plan on paying them something (I’m an accountant), set up a spreadsheet in Excel. In each column start off with how many members you had EACH month since you started. i.e. Column A titled Jan 2015 you might put 200, Column B titled Feb 2015 you put 180, Column C titled Mar 2015 you put 172… You get the idea? You’ll see a pattern. Let’s say that’s a 5% drop in membership each month. Then you continue out till the end of your lease dropping the membership number 5% each month. In the row below calculate your 5% franchise fees for EACH month, and in the row below that calculate 3% advertising fees. Do that for every REMAINING month after you close till your franchise period would of ended. This means and I’ll do a calculation for you.
    March 2016 (assumed you closed) – you had 172, so April would be .95×172 = 163
    Multiply this by the average membership – 163 x $44 = 7172 for April 2016.
    Franchise fees = $7,172 x .05 = $358.6 Advertising fees $7,172 x .03 = $215.16
    And let’s say your franchise agreement ends Dec 2017 – 21 months left.

    You should come out with an amount owing on POTENTIAL fees of $7,567 based on a 5% declining membership.

    I guarantee Curves will ask for the maximum amount (also I’m sure they like the scare factor) $795 Franchise/mo & $395 Ad fees/mo, and will ask for $1,190 x 21 = $24,990 and they’ll add to that other fees you might of paid for OS $29/mo ($49/mo for some), and CurvesSmart $89/mo plus EFT and online fees. So they’ll add on at a minimum

    $29 x 21 = $609 for OS charges and $89 x 21 = $1,869 for CurvesSmart.

    $24,900 + 609 + 1,869 = $27,378 will be their minimum demand. Read all the comments on this site. http://www.unhappyfranchisee.com/category/franchisor/curves-for-women/

    They’ll come back with a much lower number ($13,000) and if you say you can’t pay that, it’ll go back up to $27k!

  • November 14, 2016 at 7:37 am
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    I will try not to pay them at all. I will Let you know how I make out.

  • November 27, 2016 at 5:34 pm
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    I was doing research and came across a line on one of these pages “Gary & Diane still own 60% of Curves”! That would explain why they are still on the board. That would explain why North Castle still refers to “shareholders” – that means not just NC shareholders, but Gary & Diane. While the 60% number gives G&D controlling interest, I couldn’t find out anything confirming it, but I did find this on the North Castle website where Gary states “we believe our partnership with NC….”!!!!

    http://www.northcastlepartners.com/news-media/north-castle-partners-invests-in-curves-international/

    I also found this 2011 article that’s really interesting.

    http://clubindustry.com/blog/examining-state-curves

    In it Mike Raymond states “We made it easy for them to decide to leave by announcing a policy that removed any penalties for closing”. Is this because they have (according to other pages on this website) that Curves has over 200 lawsuits filed against them that they’re in court with and don’t have the man power to deal with franchisee’s who are abandoning ship well before their franchise closing date?

    It’s also an eye opener into Curves decline and how they’re pinning their hopes on China & India. There is also this statement “Raymond went on to say that many Curves clubs that are sold get turned around by energetic new owners”. That’s the same rhetoric they spouted in the June 2014 Forbes article used and EXACTLY what Curves told us just before the article came out. They told us “We’ll be featured in Forbes and it won’t be all positive because unhappy franchise’s were quoted but we feel that everyone who operates their franchise in “The Curves Way” will be successful.”

    http://www.forbes.com/sites/karstenstrauss/2014/05/27/crash-diet-after-shedding-thousands-of-locations-can-curves-get-back-in-shape/#6fabfa0363f8

    We took over an existing franchise that was doing OK in June 2011 – we were “energetic new owners”. My girlfriend had been the manager in the “Golden years” when our club had over 800 members, when the owner and son were paying themselves $160,000 a year. I had been in retail for 40 years and had been an accountant for 30 years and was an enthusiastic gym member. We would of been considered Raymond’s “dream owners”. We took our club from 235 to 252, then, even with vigorous promotion watched it melt away when el-cheapo, no frills, no service gyms opened up in our town. From 10,000 clubs at it’s peak, in one article I just read Curves had 4,000 locations in 2011 in North America. Wiki says in May 2016 they had 1035. It’s probably less than 1,000 now (3 Curves have failed in the our area since). Again, I say, if you tried 1/2 as hard as we did, it’s not your fault. North Castle, Gary and DIane failed EVERY franchisee. Buying Jenny Craig brought us nothing, it may of been good for corporate. They asked us to take on Jenny Craig, but with $50,000 in licensing, permits, equipment and their endless checklists, regulations and training we would of just gone deeper into debt.

    We’re sooooooo glad to be out.

  • November 27, 2016 at 7:34 pm
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    Great read. I keep feeling more at ease with closing. Only a few weeks left. I haven’t told Curves yet? Anyone have experience with this? They have bigger problems than me closing.

  • November 28, 2016 at 3:07 pm
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    Could a stand alone gym based on the concept of Curves succeed?

  • November 28, 2016 at 4:16 pm
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    Yes. It’s the franchise fees, strict rules, and lack of any extras that kill Curves.

  • December 6, 2016 at 2:27 am
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    Bill, I know of a Curves that refused to renew when their franchise ended. Curves actually came out to their club to review them at one point because they had the old gear and were thinking of continuing with Curves one more year. Curves refused to renew them because they refused to make changes including removing 2 pieces of equipment. They simply said “No Problem, we aren’t renewing then”, and Curves came back and asked them to consider continuing on for another year. Their franchise ended, they renamed their club, added more interesting features club members would be interested in, and are doing OK – including BUILDING membership. Curves has asked them to cease and desist their business immediately and threatened legal action. This is not the only Curves that has rebranded and stayed in business that I know of giving Curves the heave ho.

    When you got your franchise, Curves sent a PDF that was 300+ pages long listing all the Curves open, all the Curves who’ve ended, all the current, pending and settled lawsuits and all about the Curves organization. The 2nd set of paperwork was the ones that you had to sign and fax in. In all my documentation they don’t refer to each other. We were supposed to get employees to sign documents saying that if they quit they wouldn’t compete against us, and if there’s anything in your documentation that limits you that way, it’s a problem. Get legal advice. I needed some so I contacted the local legal services and got a 30 minute appointment/referral for $25. So check your documentation to see where you stand.

    As a Franchise you have NO control if you play by Curves rules the way they want you to. You have NO ability to respond to your market or make the changes needed to keep your business viable. In 2015 I paid Curves over $9,500 in fees, advertising, OS, Mytrack and all other fees they nickel and dime you on and I lost (before accounting adjustments like depreciation) over $6,500. I made it known to them that there was NO way I got $9,500 of value from them, but it points out that I would of made a profit if I hadn’t been part of their operation.

    In the top right hand corner of this page do a search on other well known franchises. No one complains about Subway or MacDonalds because Head Office keeps their product interesting and works hard for their franchisee’s. Forbes listed Curves as one of the 10 worst franchises for a reason and If Wikipedia says there were 10,000 franchisees in 2006 and in May 2016 there were 1,035, you can probably guess that there are less than 1,000 now, as I know of 5 that have folded in my area alone. Will Curves sue if you reopen under a different name? 3 of the Curves that have folded did so with no warning to Curves and I’m sure Curves in all their belt trimming doesn’t have the manpower to do anything serious other than threaten.

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