BUTTERFLY LIFE: Carol King, Former Franchise Owner

Interview with former Butterfly Life franchise owner Carol King
August 5, 2008

Carol King is a mother and fitness advocate with a degree in physical education from Cal State Northridge. In 2004, she and childhood friend Linda Canale pursued their dream of helping women live happier, healthier lives by opening what they thought was an innovative new fitness franchise supported by a team of dedicated, experienced, trustworthy industry experts. According to Carol, her dream of business ownership almost immediately became a personal and financial nightmare. She now puts her energies into helping to educate potential franchise owners how to avoid the same mistakes she made, and advocating for more equitable treatment of the franchisees of Butterfly Life and other chains.

Carol opened her Woodland Hills, CA Butterfly Life location in October, 2004 and closed in April, 2005. They’ve has lost $240,000 to date.

UF: When did you decide you wanted to own your own business?
Carol: Once my kids were in college, my best friend and I decided to go into business together, found BFL, and felt it would be a great business opportunity for us given on our backgrounds.

UF: Do you have a fitness background?
Carol: I was a physical education major at Cal State Northridge and graduated with a BS degree.

UF: What were you doing prior to owning your franchise?
Carol: Raising my family and working temporary jobs in marketing and sales. My partner and I who have known each other since elementary school decided to join forces with our shared talents. She was a yoga instructor and we always wanted to be able to help women feel good about themselves and be healthy.

UF: Describe the process you went through to determine which franchise to buy.
Carol: We looked into Curves, but there were none available in our area. A flyer from BFL fell out of my newspaper and we decided to look into it. That was in November, 2004. We attended a seminar in Newport Beach, Ca. that same month. The BFL presentation was very appealing and the health and fitness industry was something we always wanted to do. Mark Golob’s story about his past successes, the “dream team” which consisted of Mark Mastrov of 24HrFitness, Bruce Fabel the marketing expert from Nike and Warner Brothers, and Tom Gergley from Linda Evans and the New York Health Club along with other experts in the fitness areas was all very impressive. The presentation also spoke of the substantial profits we would make our first five-six months with breakeven stated within 3-4 months. We believed them…..they were the experts. Golob explained that running this franchise was so easy “you didn’t even need a high school education”. He also stated that only one person was required to operate it. My partner and I thought this was a good fit and that after a few months, we could trade off work days. Believe me, it took more than one person to run this business, especially with 12 hour work days.

UF: How did you first learn about the general concept?
Carol: In the newspaper. At the seminar we attended in Newport Beach, Ca. Mark Golob, Bruce Fabel, Taylor Golob, Sharon Simon (Mark Mastrov’s sister) Denny Marsico and a few others gave talks on this amazing new concept in women’s health and fitness.

What did you find appealing about this type of business?
We could motivate women to feel good about themselves and be healthy without becoming stick thin. We really knew that working with women and helping them become successful was our goal in life. We knew we had the tools to educate them and truly wanted to make a difference.

UF: What attracted you to the company?
Carol: Beside the “dream team” and the great potential profitability, we were told of a special Life Vision delivery system that was the first of its kind. It was in essence a 65” monitor placed on it’s side so it was higher than it was wide. DVD’s proprietary to BFL covering many areas of health and fitness would play in this format….the result would be as if there were a full sized instructor teaching a class. There was therefore no need to hire trainers and minimal requirements to lead classes. This was a great concept. Unfortunately, it never transpired. This “special” delivery system turned out to be nothing more than a large screen television with standard dimensions set in a standard configuration. According to Golob (and after the initial $10,000 deposit was paid), it was too expensive to put the original concept into place.

Additionally, with regard to finding a facility, BFL claimed that they would provide us with brokers who were experienced and knowledgable in finding and securing proper locations. After four brokers, all located in Northern California, tried and failed to find and secure an appropriate property in the area we had selected in Southern California, they advised us that they lacked experience in Southern California, and had no background regarding zoning and building requirements. We were then directed by BFL to a broker located in Long Beach, Ca., approximately 40 miles from where we wanted to be located. Unfortunately, he secured a location that was not zoned for a health facility but never advised us of this. After we signed the lease, we were told by the Building Department that we could not open. We found an expeditor who said to go ahead and open because once we start paying City taxes they won’t evict us. That’s exactly what we did since we were already tied to a 5 year lease. Mark Golob reviewed the plans for our build-out and thought it was a perfect size. His review was required by the BFL franchise agreement. We were also required to have approx. 1,500 sq.ft., but this building was 3,000 sq. ft. We were very concerned about the amount of our rent, but he assured us that we could bring in more equipment and attract more members based on our size. Therefore, we would make a lot more money. He suggested that we locate near a Curves so we could take their business, since “everyone wants to join the new kid on the block.” As a fluke, it turned out that we were located across the street from Curves. Their side of the street was zoned for health and fitness facilities. The Curves members were very dedicated and became angry at us when we opened so close to them. One of their members joined us, but the rest stayed at Curves. Nobody liked the new kid on the block!

UF: Describe the company’s sales process and your interaction prior to becoming a franchisee.

Carol: Taylor Golob, Mark’s son, called me nearly every other day after the seminar, asking when we were sending the deposit. The sales process was high pressure and featured the dream team, promises of high profitability, Mark Mastrov, life vision, help availlable 24/7, and an assurance that they would supply us with 100 members prior to our opening because of their great branding program.

UF: How was the company’s training
Carol: We spent six days at the “BFL University” in San Ramon, Ca. They bombarded us with overwhelming and confusing computer classes aimed at bringing us up to speed on the operation the new Check Free computer, billing, and accounting system in a day and a half. There were 20 people in our group.

UF: Was it a positive experience?
Carol: Meeting the other people who were interested in helping women was a bonding experience for us. Friendships were formed. We were excited to start our franchise and learn as much as we could so we could be successful. We knew this was our calling. That was the positive experience. Listening to Mark Golob, Tom Gergley and the other trainers was stressful and very high pressure. That was not a positive experience.

UF: What marketing and promotional guidance, programs & support were provided?
Carol: We were advised at the University that they would provide all the local and national advertising necessary to make Butterfly Life a household name. Their advice was centered around programs such as pre-selling memberships before we opened, (but that didn’t work out because no one knew who we were, what the facility would look like, and what the experience would be). In the end, all BFL did was to design flyers and postcards and we were told to use Advo and direct mail to reach our area. Once we opened, we were told that it was solely our responsibility to reach the women in our area, and we should budget AT LEAST $1,500/month for advertising. This was the first time we had heard this. One additional service they provided at the university was to setup and practice dialogues to teach us how to close a contract. That was the most intense part of training. We practiced dialoging most of the days.

UF: Were they effective?
Carol: No. The woman “drill sergeant” who worked with us scared everyone to death. I felt like I was in school always being scolded because I couldn’t get it right. It was definitely not effective. She would dialogue with everyone using different scenarios until she felt you could close a contract. It was very stressful.

UF: How was your grand opening and your first year as a franchisee?
Carol: What grand opening? What first year? We were told that we would have corporate attendance to help organize it and support us (aside from the 100 members at our opening). They were going to place local newspaper articles to promote us and have potential TV coverage. Of course, that never happened!!! I think we had 5 people show up. People couldn’t tell what we did based on the signage that was required by Butterfly Life. For the entire six months that we were opened, the major complaint from everyone who viewed our signage from the street (signage required by BFL) was their confusion as to what Butterfly Life was…,,,.vitamin company, spiritual center, clothing store, etc. Golob and corporate lacked the ability to properly brand BFL which caused so many of the failures.

UF: Was owning this franchise what you expected?
Carol: Are you kidding???? If everything they told us was the truth, it would have been a great experience. We would have made a comfortable living doing what we loved to do, if they followed through with all their “verbal” promises.

UF: Was the initial and ongoing support what you expected?
Carol: There was no support!
The BFL “promised” pre-opening support was non existent. Their Franchise Agreement stated that someone would be with us during our opening. Nobody from corporate was there. Janet Lossick, a sales rep showed up three weeks later!
When we spoke to them and told them what we were experiencing, we were always advised that we were the only ones having problems. They said everyone else was doing very well. We decided to call some of the other franchisees (16 in total) to get their help, and were advised that they were being told the same thing; they were doing poorly and all others were doing fine.

UF: When did things start to go wrong?

Carol: In December of 2004, when we contacted Golob with some problems, he advised us that he was in the business of selling franchises….not running them!

UF: What was it that made you an unhappy franchisee?

Carol: Lack of promised support and Mark Golob!!!!! He refused any suggestions for improvement or change from anyone.

UF: Have you tried to resolve your issues with the franchisor?

Carol: Are you kidding!…..many times!

UF: What was the outcome?
Carol: We had the AAFD try to informally mediate our issues three times between 2005 and 2007. We had a formal mediation in San Ramon in November, 2007, (because Tom Gergley advised Bob Purvin that they were ready to settle and write a check to resolve the issues). After spending thousands of dollars to bring in our attorney, the trustees and Bob Purvin of the AAFD to mediate we were advised that NO checks would be written (deja vous all over again).

UF: What is your current situation?
Carol: We have filed a complaint with the Department of Corporations and are awaiting their decision as to whether they will pursue charges against Butterfly Life. We also filed a counter arbitration and a counter class action arbitration against Butterfly Life in January, 2008.

UF: What were the positive aspects of your experience?
Carol: The people that we met in our class. The support that we have had from the other franchisees has been very positive. We have learned a tremendous amount about franchising. We also learned how the mediation process works……….it doesn’t!!!! The sad part, I have found, is that the franchise legal system in this state and country is completely AWARE of the problems surrounding franchising but ignores pleas for help unless they are publicly challenged………and that doesn’t work most of the time! I have sent long detailed letters to the DOC, the Governor’s office, FTC, Ca. Attorney General, US Attorney General and State Assemblyman Todd Spitzer. In most cases, I’m still waiting for a response.

UF: What would you like to see happen at this point?
Carol: Restitution and recission for all the members who believed in their hyped stories, and either a cessation of or a complete change in the culture and operation of BFL corporate, as well as a plan to help those franchisees now opened and struggling.

UF: Do you think that the franchise concept is a viable?
Carol: We all would agree that the concept is a good one. It will never be viable unless corporate makes drastic changes in personnel, corporate culture, and efforts to follow through with the service and support that they have promised so many franchisees (and area reps).

UF: What mistakes did you make?
Carol: Not looking into the personal backgrounds of the principals of BFL (especially regarding prior lawsuits). Not looking more seriously into established and reputable franchises. (There was no information on BFL since it was a start-up company. Not realizing, that when we were at the BFL university training and were advised that the Life Vision system was going to be a large television and not the system touted as revolutionary was such a huge red flag. And, during the same time period when we were advised that Bruce Fabel was no longer with the company, that this was another huge red flag.

UF: Looking back, what would you have done differently?
Carol: NEVER PURCHASED IT!!!

UF: How has your franchise investment decision affected your life?
Carol: It has thrown my family into financial chaos. I have chosen to dedicate an incredible amount of time to protecting other innocent victims from falling prey to the same thing so many of us have fallen into with BFL. I pulled together other franchisees to form a Chapter under the AAFD to try and exert force against BFL. It has also taken me approx. 3 years, three attorneys, the AAFD and several hundred pages of backup documentation to get the complaint we filed with the Department of Corporations recognized and into their system.

UF: What advice would you give to prospective franchise owners?
Carol: I believe the biggest issue is that franchises are not required to post their profitability statistics, unit failures and/or reasons for unit closures. Without this information, I would advise any potential franchisee to shy away from purchasing ANY franchise.

UF: What questions should they ask?
Carol: Pay the money to have an attorney look over the Franchise Agreement. Ask about the
profitability of existing units, reasons for resales and/or unit failures and closures. They should also ask if there is a franchisee association they can contact.
Extremely important is making phone calls to as many prior (all of them if possible) and current owners as listed in the FDD. Keep in mind the closed franchisees phone numbers are probably not current, so they may have to write to them. The phone numbers listed are for the franchise locations, but their home addresses should be listed. They should make sure that their calls are made to franchisees especially who have been opened at least six months. They should also check ALL blogs on the internet.

UF: What warning signs should they look for?
Carol: Keep in mind that VERBAL presentations have nothing to do with the Franchise Agreement. If what franchisors are telling you is not stated in the agreement, then that is a definite red flag and you have to ask them why.