Attorney General Eric T. Schneiderman has announced that Curves International must establish a restitution fund to repay members of 60 Curves franchise fitness clubs that closed in New York in 2009. Additionally, Curves must pay an additional $60,000 to New York State for the costs of the investigation.
In New York, franchisors are liable for refunds on closed franchised health clubs
The Attorney General launched an investigation after receiving complaints that a Suffolk County Curves franchise had closed without notice. Since that club failed to secure a bond as was required by law and refused to provide refunds to its members, consumers sought refunds from Curves International – its franchisor. However, Curves International failed to immediately provide refunds, denying any responsibility for the independently-owned club.
New York State General Business Law states that any contract between a consumer and a franchised health club is also enforceable against the franchisor. According to the Attorney General’s office, Curves International refused to honor that legal obligation and failed to provide refunds to the consumers.
“If you do business in New York, then you have to play by the rules. Curves International – like any franchisor operating in the state – must refund the customers who prepaid for memberships they ultimately could not use,” Attorney General Schneiderman said. “My office will continue to ensure that consumers are treated fairly, and I encourage New Yorkers to learn their rights and report offenses to our office so that we can take action.”
More Than 60 ‘Curves’ Health Clubs Across the State Accepted Fees, Then Suddenly Shut Their Doors…
In 2009, 60 Curves health clubs across New York state went out of business without providing refunds to their members.
According to the Attorney General’s press release, the closed Curves franchise club locations, by county, include:
|County||Curves Closed ‘09||County||Curves Closed ‘09||County||Curves Closed ‘09|
|Cortland||1||New York (Manhattan)||1||Saratoga||2|
More than 1000 Curves franchises closed in 2009
From 2007 to 2009, the Curves franchise chain shrunk by about a third in the U.S., from 7,748 at the beginning of 2007 to 5,208 U.S. sites at the end of of 2009.
In 2009, more than 1,000 Curves franchises closed their doors, while just 35 new locations opened.
When asked for the reason for the widespread closings, Curves president Mike Raymond said it was part of a plan to “prune the system,” sparking outrage from the Curves owners whose investments and livelihoods suffered from the pruning of franchisee-owned clubs.
According to this month’s Franchise Times, Curves International has been sued by more than 266 franchisees and franchise groups. Curves franchise owners have documented their struggles and frustrations by posting thousands of comments on posts on UnhappyFranchisee.com.
How New York members of Curves clubs that closed in 2009 can apply for a refund.
The NY Curves restitution fund is being adminstered by the Better Business Bureau. Consumers who believe they are entitled to a refund from Curves International should contact the Better Business Bureau at 212-358-2857 at 30 East 33rd Street, 12th Floor, New York, New York 10016.
New Yorkers who have had a similar experience with a different business and would like to file a complaint are encouraged to contact the Attorney General’s Consumer Helpline at 1-800-771-7755.
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