BUTTERFLY LIFE: Julie Franco, Ex-Franchisee

Interview with Julie Franco, Ex-Franchisee, Butterfly Life
August, 2008

Prior to becoming a Butterfly Life franchise owner, Julie Franco of Meridian, Idaho managed a self-storage business for 23 years and handled the accounts receivable administration for her husband Chris’ business. After actively working out at another women’s fitness facility, Julie searched for a women’s fitness franchise she could open and answered an ad for Butterfly Life. The couple have lost $285,000 to date.

Location: Meridian, Idaho
Franchise owned: Julie & Chris Franco
Time period of ownership: 28 months owned/ 20 months operating open facility
Franchise fee: 29,500 Royalty: $600 Marketing/other fees: $400
Total investment to date: $ 285,000

UF: Describe the process you went through to determine which franchise to buy.
Julie: I went online to look for women only facilities and came across Butterfly
Life. I was excited about the concept of the club with classes, and weight plate machines.
Plus the lecture series for nutrition, fashion & the (never seen) medical lectures sounded
very unique.

They sent a DVD about the Butterfly facility, but that really did not show much. It was not until I had a phone-internet call where Mark Golob explained the facility and what it had to offer, along with all the branding they were doing and going to do to promote the club.

UF: What did you find appealing about this type of business?
Julie: I really thought women would enjoy taking the classes, and working out with better weight machines.

UF: What attracted you to the company?
Julie: Reading the bio’s of Mark Golob and Tom Gergley . What was exciting was to see that a successful club owner Mark Mastrov from 24 hour fitness was a part of Butterfly Life, along with the rest of the management team. I was told that they had so many years in the fitness industry and Mark’s background in Marketing.

UF: Describe the company’s sales process and your interaction prior to becoming a franchisee.
Julie: They were very persistent in phone calls and locking in a time to talk with Mark via the Internet
follow long. My husband and I went to visit BFL headquarters in March 05 and were taken
around to a couple of facilities. (Most had just opened for a couple of months).

UF: How did you come to decide to buy the rights to open multiple clubs?
Julie: During their seminar of October 2005,and before I opened my first club, Mark Golob told me how the franchisee fee was increasing to $59,000 in June 06 and the monthly fees were going to $1000.00 for royalty and $400 advertising. This was due, in part, to the TV show he said was going to start airing June 06. Mark did his fast talking and I signed for three more clubs (even though they knew at the time I needed the UFOC for 10days before I could legally sign the franchise agreement).

Needless to say the TV show did not air and the franchise fee did not go to 59,000. The royalty fee went to $1000, but they dropped the advertising fee of $400.

UF: How was the company’s training and pre-opening support?
Julie: I felt the training was just adequate. I left feeling uncertain that I could show people how to work the weight machines properly.
Overall, I had mixed feelings. At this time Mark showed us the 30-minute TV show that was getting close to going on air. Mark also informed us that Mark Mastrov was no longer with the company because he just sold 24 fitness and it was a conflict of interest. I was upset because I believed Mark Mastrov was a big part of the company.

UF: What marketing and promotional guidance, programs & support were provided?
Julie: We were given places to call for mailers. There were a couple of different suppliers. They also put together TV ad you could buy for the 1st of the year. The TV did not prove to be that effective. Mark always talked about the big nation wide campaign of July 06. Again this did nothing to boost sales anywhere. I just don’t believe they ran the big campaign. Nobody saw but a couple of the commercials, these were on at bad times. The commercials always looked to homemade and were just not that inviting.

They were suppose to do full page ads in women’s magazines in October 06. They only ran half page ads in a franchise magazine to sell more franchises.

UF: How was your grand opening and your first year as a franchisee?
Julie: Grand opening was a little disappointing. Janet is suppose to be with you the first three days of your club. Mark scheduled a seminar in my town October 26th 2005 to sell more franchises. My club would not be open for another two months. Janet came up to go over the opening check list and told me it would be better that she came before I opened. It wasn’t, she spent most of her
time running Mark and Taylor from the airport and the seminar. I had maybe 10 hours out
of the three days.

UF: When did things start to go wrong? What was it that made you an unhappy franchisee?
Julie: I guess right after I opened and realized that trying to sell memberships and getting the brand
name out there was going to be a challenge. Having a tag line of (healthy living solutions
for women) did not help. No one knew it was a women’s workout facility.

UF: Was owning this franchise what you expected? Why, or why not?
Julie: It was a good experience in meeting wonderful women. The hard part was getting frustrated because I was not trained as a personal trainer and women have questions about their muscles, if their doing a exercise why is something hurting, etc.
I was also told that only one person is needed to run these facilities and then later was told it would help if I hired someone so I could do more outside marketing.

UF: Was the ongoing support what you expected? Why or why not?
Julie: They tried to do phone meeting every month or so, but it got to almost be the same stuff talked about every time. Corporate did not like to be questioned or challenged on any topic.

UF: What were the positive aspects of your experience?
Julie: Meeting wonderful women and seeing them make positive changes. But that even changed when renewal time came around and the cheaper club with more to offer opens down the road.

UF: Have you tried to resolve your issues with the franchisor? What was the outcome?
Julie: Joining the AAFD group and banding with other franchisee to hold them accountable for overstating the amount of money the clubs were taking to open. The time we were told everyone was breaking even. And the promise of national branding of the franchise. We were told that
Butterfly Life clubs would shut down the curves club.

UF: What is your current situation? What would you like to see happen at this point?
Julie: We are in debt around 285,000. I don’t see being able to get out of debt for 15 years. I would like Mark and Tom to take responsibility for the misinformation given to induce us to purchase a
facility. If I had correct numbers and facts I would have never opened a club.

UF: Do you think that the franchise concept is a viable?
Julie: No. The weight machine did not have enough weight to keep the ladies who were in better shape
challenged after a year they plateau out. The classes were good, and the nutrition lectures
were good, but the fashion was really bad. We never received any of the medical lectures.
We also were supposed to be able to incorporate their vitamins and shakes to make
additional income. (again items promised that never happened) The clubs were too large
without additional workout item such as bikes, treadmills, ect. This would have helped to
attract the ladies who wanted a little more from their health club.

UF: What mistakes did you make? Looking back, what would you have done differently?
Julie: Signing on the dotted line. Would have waited to sign for the additional clubs until after the first one was successful.

UF: How has your franchise investment decision affected your life?
Julie: It has been very stressful to know that I have negatively affected my family. We are middle income. We had a decent savings, no credit card debt and enjoyed life. We were excited to open another business so that when my husband decided to close his business we would have the ability to have another income. Now we have no savings and more credit card debt then we can handle. It will be years before we are out of debt. This affects every part of your life.

UF: What advice would you give to prospective franchise owners?
Julie: I say get everything recorded to what they tell you about the costs of opening the facility and if they make claims of breaking even in a certain time frame make them show you the proof. Wait a year and see what other clubs are doing. Make sure you get the full list of all closed franchisee and call all of them before you make your decision. Tape all phone calls and meetings.

UF: Thanks, Julie
Julie: Thank you.