CURVES: 1000 Franchise Clubs Failed Last Year

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• 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."
  Jd,
  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.
  small–mind•ed
  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.
  F.Y.I.
  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.

• F.Y.I.

  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?

• Owner2 states:

  '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.

• jd,

  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.