The Wall Street Journal has confirmed what Curves franchise owners have been reporting on UnhappyFranchisee.com for the past two years: Curves franchise owners are closing their clubs, and losing their significant investments, in alarming numbers.
The statements of Curves International President Mike Raymond in Richard Gibson’s article also confirm what franchise owners have told us in more than 1000 posted comments: The franchisor that invited them to get into business “for themselves but not by themselves” remains both profitable and coldly indifferent to their plight.
More than 2500 Clubs, 1/3 of Curves U.S. Franchises, Have Failed Since 2007
According to the Journal:
Over the past three years its U.S. franchisees have been closing outlets at a rapid rate, shrinking the chain by about a third: to 5,208 U.S. sites at the end of last year from 7,748 at the beginning of 2007, according to a recent franchise disclosure document the company filed with state regulators. More than 1,000 Curves vanished across the country in 2009, while just 35 new locations opened.
While the financial toll taken on the owners of 2500 failed clubs is devastating enough, the number is actually understated. Many Curves clubs have actually been sold once or more before they were closed – so the number of individuals and families who lost significant savings, retirement accounts even homes could far exceed 2500.
U.S. taxpayers have also helped foot the bill for these losses. Many Curves franchises were funded by SBA-backed business loans, and the Curves concept consistently ranks as one of the highest-defaulting franchises. So your tax dollars have been repaying banks for loans on Curves franchise defaults.
Curves International Profitability Rises Despite Franchise Failures
The WSJ reports that while Curves franchise owners were losing their businesses in record numbers, the franchisor actually increased its own profitability. Gibson states that Curves financial statements reveal that, for the year ended Dec. 31, Curves earned $16.4 million on revenue of $84.1 million (19.5%) compared with earnings of $17.2 million on revenue of $128.7 million (13.36%) the prior year.
The decline in revenue reflects lower franchising royalties and equipment sales, but profitability actually increased. However, struggling Curves franchisees and ex-franchisees have complained that CI has callously tried to squeeze every last cent from them, even as they fended off bankruptcy and foreclosure.
It’s not clear how much of the $16.4M in earnings came from closing fees and liquidated damages (future royalties) that Curves International and its collection agency demanded from the thousands of dead and dying Curves franchise locations.
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While I think its great that WSJ finally decided to do an article about Curves and Howie it is a shame that it is not factual. There is no way in the world that there are 5000 + franchises left in the system. The actual factual number is closer to 3200 period. We believe the FDD documents article that was used as the basis for this article was the one released by Curves at the end of March which was determined to be fraudulent by the State of California. Curves had until the end of June to correct it but was banned from selling new or resale franchises until it was corrected. I would like to see evey curves owner who reads this to send an email to the author, Richard Gibson, of the WSJ story and his email address is at the end of the actual story. If enough owners email him maybe he will do some further reasearch and write the true story of how Howie has screwed over owner's and continues to use intimidating, extortion and sometimes illegal business tactics to further line Howies and Diane's pockets with the gold they so worship.
Look at this article! This is disgusting!
AS a curves owner, its is a shamed that howard heavin, the asshole he is, is a thief and a dishonest business man.
Its a shame that NOONE in that company or anyone associated with that company bothers telling anyone the truth, including area directors. They refuse to admit and ot acknowledge that curves int is going to hell..
howard should be prosecuted for his lies and for stealing money.
I hope howard reads this and I hope people realize that his idea was stolen, his goons are assholes and this company SHOULD BE SHUT DOWN. Although I dont think it will be long before they are few and far between.
He has the nerve to call himself a true christian and a CEO??
GREAT FOR YOU PHIL
Everyone need to send an email to the author of the WSJ article and tell him to tell the truth about curves and expose Howie, Diane and Rayassmond as liers, and cheet's that they are!!!!!!!
Where are Guest and JD? No comment at all? Guess they need time to come up with a way to explain why a staggering 2,500 Curves have gone under since 2007. That might be the biggest franchise collapse in US HISTORY.
If one-third of McDonalds had closed since 2007, this would be worldwide news and would have gotten media attention years ago. Thanks to the WSJ for bringing attention to our plight - and our cause.
This was my email to the WSJ Reporter:
Hi Dick,
I am a former franchisee that bought a resale with my husband in 2006. We just read your article. We agree with the idea that they are VERY inflexible. Whatever "Mr Raymond" told you is a bunch of BS. Look at the news. Are companies really going to tell you they run a shady business? No, of course they are going to say they are on the up and up.
They don't monitor their resales. The resaler can tell you anything they want to tell you because the corporation doesn't provide you with any feedback on whether the information you are submitting to them from the resaler is legit or not. Curves International also charges you for EVERYTHING and pressures you by using scare tactics and giving you an attitude. We had to pay for our own flight to Waco, our own hotel, all meals etc because it is madatory to receive training before closing on a franchise. They even charged trainees a quarter for water. Gary Heavin totes he is doing this for God and makes the corportation all about religion. He is a snake oil salesman. If you read up on him, and really dig deep in the business of Curves International, there is a lot of shady things going on. There is a website Unhappy Franchisee where you can read all about it. There is also a major lawsuit against Curves International by current and former franchisees. The case is being litigated by Zarco. They are lawyers based in Florida. You can get all the court documents by calling the Waco clerk. In addition, the corporation finds it mandatory to see a lease from a landlord and approves leases that are less than the 5 or 10 year franchise agreement depending on how you buy your territory. Does that make any sense? The only way out of your agreement is to either pay them $10,000 or file bankruptcy. My husband and I had to file bankruptcy. If I had 10,000 I would be putting it into the business. They don't care at all abouit their franchisees. All they care about is using them and making money off of them. It's been a year and a half since we filed bankruptcy. We are so happy to be out of that business you have no idea.
Lisa
I bought a re-sale a year ago. The numbers the seller told me were incorrect. I would like to get out. I have had offers from insurance companies to establish discounted rates for member and CI will not respond. Instead other health clubs in town are benefiting and I keep losing members. They provide no support whatsoever. The only thing they can do is take your money on a regular basis. Can I get into the lawsuit?
I have an idea.....Curves claims we are a sisterhood. Why can't we establish a LLC that invests in Curves owners assets, and sells them back after they get away from Howie. For example. I don't want to lose my house. If I sell my house to the sisterhood with a quit claim deed for $1. close my store with no assets for CI to attach to, and buy my house back for $2.00 after the heat has settled. Any lawyers out there that can help with this?
Wipedout, please state where I ever said that Curves was a good franchise. Good luck finding it, because I never have.
The majority of my posts are related to unhappy putting information out here that might not be 100% correct, and that people should be careful with said information. Many times I have challenged said information, and he ignores it because he can't back up some of his statements.
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.
As for the pruning, CI isn't the first system to do this and it won't be the last. Hell, look at Quizno's, they were stuck with leases and are now going to open corporate stores in those shuttered stores, and compete with franchisees. Talk about pruning, because those other stores won't make it (probably).
there exist winners & losers in every sphere of human endeaver.
I noticed when we went to club camp, that the vast majority of new Curves owners
hadn't a clue about business, and were ill prepared for the venture..
We made $ millons in profit from four Curves in the boom cycle and sold as
profits declined while we still had viable businesses for sale. THis is what you do
in a "fad" flavour of the moment business,
Look, had you listened to Howie when he was asked about all the money he was making at club camp and he said "money is God's way of telling me I am doing
the right thing"
Understand the Texas gunslinger, bible thumping Redneck and its pretty clear
what your realtionship with Curves International was goin to be.
$10K toclose is just Howies way of opening up another can of WHOOP-ASS
on you. Tell him to shove it via a letter from a lawyer and you will never hear from him again.
MY adivce is "learn business" before you jump at the next bestt
thing.
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. There as sick as Howie and will surly end up in the same place sooner or later. I'd perfer sooner and I'm sure karma will get them in the end....;........