CURVES: Robert Lay’s Story
The American dream of owning your own successful business seems to be going up in smoke for a lot of the Curves Franchise owners. The story you are about to read may seem like a Steven King horror novel but it is a real story that has happened to my wife and I. To all of the past, present and future owners of a Curves franchise please take the time to read the whole story as at the end we explain what we plan to do and how you as an ex or present owner may want to get involved.
My wife and I had owned and operated our own business for over 20 years and had been very successful at doing so. While we were making a great income from our business there was something missing in our life. Neither us felt that we were contributing to society but just taking and we decided to make a major change in our life. That was when we heard about Curves for Women. It was a new franchise that only had 300 or so clubs and for the first time in years we both became excited at the prospect of actually helping people reach their goals. We bought our first club in 1997 located in a city of thirty thousand. From the first day it opened it was more successful than our wildest dreams. Not only were we making excellent money but the personal rewards helping people better their lives was a truly rewarding feeling. I can still remember as if it was yesterday the first time a Dr. of one of our members came in to check out what we were doing as he couldn’t believe the ch
anges his patient had gone through. She had gotten off her high blood medication and had lost over 40 pounds in 4 months. It was truly amazing and over the years we have seen it happen numerous times over and over.
We sold our first club in 2001 and bought two more franchises. My wife became a mentor for Curves International around this time and I was helping to sell franchise for Curves International as so many of are members wanted to own a club. It was at this time that we started to see problems arising with Curves International but we attributed it to the fast growth that Curves was going through. In 2002 we bought two more franchises but this time they were in what was called a metro-area instead of city under thirty thousand in population.
The first problem we encountered with Curves International was in early 2003. Curves sold a franchise that was a corridor of land between one of our franchise’s and the next city 8 miles from our southern boarder. It was obvious to us that the territory didn’t have the necessary population to support a facility and that Curves International was selling any location just out of greed and the fact that there were so many people who wanted a franchise. The people who bought that franchise tried to open up on our border but it had always been an unwritten but followed rule of Curves International that you open in the middle of your territory so that disputes between owners over stealing members from your territory didn’t arise. We immediately filed a complaint with Curves International and they stopped the new owner from opening at that location. Unfortunately for the new owners there were no other commercial locations between the two cities so they were forced into selling that franchise back to Curves International for a loss.
It was also at this time that Curves International started to change personnel. The employee’s who we had a personal relationship with that had started Curves International with Gary Heavin were leaving the company at an alarming rate. Seven employees that were the top management of Curves left or were forced out because of Gary Heavin’s greed. They ended up filling a law suit against Curves which was later settled out of court. It was at this time that Diane Heavin became involved with Curves and a whole new history was being written about how Curves was started. The original Curves member guide which was written by Gary Heavin and June Manley was taken off the market and the new Curves book authored by of course Gary Heavin was on the top 10 of the Times best seller list.. To make sure it was on the Times best seller list all the clubs had to order at least on case. That is when we as owners realized Heavin was a manipulator and not the born again Christian he portrayed to be. It was also at this time that the price to buy a franchise more than doubled in price. This came as quite a surprise as Heavin had always maintained that he would never ever increase his franchise price and he even swore on the bible in front of a group at club camp that he would never break his word on that. Well as we all know he didn’t keep that promise for long, which just shows his greed.
At this point my wife and I became quite concerned and even considered selling our business but other problems arose concerning Curves International that demanded our full attention. In 2004 another Curves location located on our boarder of one of our metro-areas hired two of our employees and stole around 15 members from our club. Both employees had signed the anti covenant not to compete and in our state those agreements are strictly enforced by the courts. We considered going to court but since it was another Curves facility we decided to file a complaint with Curves International. And to let them handle it. What a mistake that was as they did nothing. We transferred the members files but refused to transfer the money for the members dues until such time that Curves International responded to our complaint. We were told by the area director, which was a new position at Curves International, that we were trouble makers and he refused to send any of are clubs the members appreciation bags. Shortly thereafter Curves International resold the corridor of land that had been sold back to them at a loss from the previous owners and they allowed the new owners to open up in nearly the same location that they had refuse the previous owners only a year and a half before. The new owners advertised in our area and ended up getting 10 or 11 members to transfer to their club. Again we held their monthly dues but did transfer the members files. We immediately filed a complaint but again got the same response nothing. It didn’t take long for most of the members who transferred to come back to our club as the other location was small and in a very run down area and to this day that club has not shown a profit and has been sold numerous times over the years for little to nothing.
Then in 2005 the real problems with Curves International started that we are still contending with today. In one of our metro-areas a competitor by the name of Ladies Workout Express opened up right across the street from our location. Unknown to us they had hired our manager and one other employee from that location and when the employee’s left they had stolen off our computer our member files. They ended up stealing over two thirds of our membership with in a week. The employees had signed the covenant not to compete so we immediately hired a lawyer and prepared for a lawsuit. As I stated before in our state that agreement is strictly enforced but it took four months to get it into court. During this time that location was losing so much money that we decided to move the location next to our other territory so that both clubs could stay open. We sent in the required change of location form to Curves International but never heard anything back from them so we went ahead and relocated in late 05. The owners of the Ladies Workout Express eventually went broke because of the lawsuit and the fact that they would end up owing us monetary damages. They filed for bankruptcy to prevent us from collecting any monetary awards in Dec 05 but we did have the satisfaction knowing that we did what was right
In early 06 we were informed by Curves International that because we abandon that location they were terminating all of our franchise agreements. We immediately requested mediation for all of our clubs which is authorized by our franchise agreements with Curves International. We never heard back from them so we hired a lawyer in Waco, TX to represent us. He proceeded to send them a letter requesting the same mediation process and they did respond to him. They sent him letter stating that it was premature to go through the mediation process at that time as they were in the process of researching our reason for moving. Curves International continued to debit our account for the franchise and advertising fees for all the other clubs we owned but stopped talking the fees for the one territory that they stated we abandoned. The lawyer had us send Curves International a check for the fees and a new authorization form for them to deduct it from our account. Neither our lawyer or ourselves ever heard anything back from Curves International so we all assumed that things were back to normal.
In the spring of 07 we made the decision to start selling off all of our clubs and to completely retire. It didn’t take me long to sell the club we owned that wasn’t in a metro-area and I agreed to stay with the new owner’s to help train them how to run the business. We sent all the documentation into Curves International and the sale was completed by January 08. That freed my wife and I up to concentrate on our metro-area clubs and to get them ready for sale. In Feb of 08 we heard that a Curves club was opening in one of our territories within a mile of our current club. We could not understand how Curves International could do such a thing. We again filed a complaint by phone and e-mail to Curves International and several weeks later we were informed by e-mail that they didn’t know what we were talking about. We were told we didn’t own any franchises and hadn’t since we were terminated in 05. That came as quite a shock to my wife and I as our franchise and advertising fee’s had been deducted all along from our checking account and we had just recently sold a club that they were telling us we never owned. We had a local lawyer send a letter to the new owners explaining the situation and that we would be seeking legal recourse against Curves International and depending on the outcome they were opening themselves up to a potential lawsuit. During this time we had bought and paid in full for the Smart Equipment for Curves International and were waiting for the installation which was scheduled for the June 24th. On June 20th , a Friday we received a phone message telling us that the Curves Smart Installation was canceled and that we had to call Curves legal for an explanation. We left messages both e-mail and phone every 30 minutes on Monday June 23rd and finally late in the afternoon we received an e-mail stating that one of there lawyers would be in touch with us before the end of the day, They never sent an e-mail or a phone call as was promised but by mid day the next day they did respond by e-mail. It stated because of the problems with the members transfers, the fact that we abandoned a franchise, and that we had interfered with the opening of the new franchise located in our territory we weren’t approved for the Curves Smart. Yet in late May they had sent all the promotional ad material for the Curves Smart and of course we had gone to a considerable amount of expense for training the employees, advertising and promotion of the Curves Smart equipment. It was at this point that my wife and I decided that drastic action had to be taken against Heavin and Curves International.
While we still love the concept of Curves we feel that because of the deceptive and we believe fraudulent business practices that Heavin has allowed under his management Curves will eventually end up in the toilet so to speak. After spending many hours on the internet we have found that there are many lawsuits against this man and his company. Just read some of the post’s that are on franchisepick.com from owners concerning the new ten thousand fee if your club goes under and closes to the vitamins that were sold in Feb and March by Ideas in Action at a discount to owners without telling them that they would expire at the end of May. The lack of support and communication from Curves International that all of us owners are going through is intolerable. It is impossible for an owner to get through to them on the phone and good luck if you expect a call back in a timely manor. The fact that we as owners pay a lot of money for our advertising fees and have no accounting of where it is spent and a quite frankly we never see many ads in our area.
I have taken the time to do the necessary research to find several good lawyers who handle franchise law who are more than willing to help Curves owners who are having similar problems with Curves. I for one am going to go after Curves International and Gary Heavin in a court of law. These are not class action but group action lawsuit and if you don’t understand the difference contact me and I will explain it to you. There have been over 200 such lawsuit filed against Curves in the last several years and while some have been settled in mediation others are in the process of going to litigation. If you are a past or present Curves owner who has experienced these problems and want satisfaction whether it be monetary or revenge please contact me. We have several options that we can go and I for one am positive we will win as the other lawsuits have been successful so far and have set a precedent for ours. It is time for the owners of Curves franchises either past or present to stand up together and put a stop to Heavins’s ramped destruction of peoples lives just for monetary greed.
Thanks for reading our post and God Bless you all.
ARE YOU AN CURVES FRANCHISE OWNER OR FORMER CURVES FRANCHISEE?
ARE YOU FAMILIAR WITH THE CURVES FRANCHISE OPPORTUNITY?
PLEASE SHARE A COMMENT BELOW.
Judy,
Your contract has a do not complete clause which some states will up hold while others won’t. You need to check your state laws before you proceed trying to do that. Send an email to unhappyfranchisee[at]gmail.com requesting it to be forwarded to me with your phone number and I’ll gladly explain how you can get around it if you really want to do it.
I purchased a resale of 2 curves in Burlington County NJ. in 2004. What a BIG MISTAKE ! From the first month that I took over the clubs both have consistently
lost revenue each and every month. I tried to sell in 2007 each club for
$25,000.00. Couldn’t sell them or give them away. I paid $550,000.00 so you can imagine how I feel. My Payment to the bank was $8,300.00 each month for 5 years. Slowly this franchise destroyed my family. My retirement and savings are gone. I feel that Curves International ok’d the deal I made to purchase these clubs knowing it couldn’t survive. There are too many clubs. When you think of weight lose you don’t think of Curves you think of Jenny Craig or Nutrisystem. The advertising for Curves is useless. On September 30, 2009 I had to close one club. Curves is demanding future royalties and advertising fees, which I have no intention of paying. My other club is on the verge of closing also. I wish I could go back in time and made the decision not to purchase these clubs. My life has just been devastated every month trying to figure out where am I going to get the money to pay for this failing business. I guess I’m one of the lukcy ones though, I still have my home to live in.
can we do the silver sneakers on our own instead of going through curves?
Is go figure a program that is directly linked to curves or can we use it for other businesses? If I were to go co-ed and maybe lower my prices would curves have a problem with checkdraft amounts? Lots of little questions keep croping up. Hope I am not being a pest.
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To D. Capone,
I completely understand your frustration. I feel for you totall1 We bought our club at a nice membership of 749 members. We werent aware of the rapid decline curves was in.
Almost two year later we are hovering around 589..which is still a nice size, but we survive ONLY beause other clubs in the area are closing..thats no way to do it. BUT corporate did this.
Howard heavin, the lying sack of shit he is oversold terrorteries knowing dam well that many would fail but he did it anyway.
Now curves has what, 4900 clubs left and closing more every day?
The latest bullshit with this club is that we no longer have acccess to curves products like socks and shirts of the month which added to our revenue..
Curves is a failure at a corporate level. Just because someone was at one point a billionarre doesnt mean he or she will stay a billionaire.
The workout itself is fine for the demographics it is designed for. However, I question where out advertising money is going??
do you know that curves decided to NOT market curves smart?
I hate to say it, but we also lost members to other cheaper health clubs like planet fitness and fitness 19..at 19 a month who wouldnt leave!
I sincerely hope heavin looses everything for the greif he causes people..like yourself and others in the same boat!
Good luck seriously! I hope things turn around for you!
hello all. happy holidays. i hope. on monday we closed our second club. my atttitude towards c.i. is bad. when they asked me if I’ve made arrangements to take down my sign I wish I’d responded, “let’s see…. feed my children or pay to remove your name? hmmm…. ” I just told them, i think it’s something i have to negotiate with my landlord. how dare they even ask?
the same thing with the leasing company for curves smart. so they’re all set to give me the song and dance about finding a buyer to assume the lease, then they “notice” that i already had a club close. so the woman’s tone of voice changes and she says, well we’ll have to call you back. but first she did make the observation that our area was “oversold with locations”. hmmm… they noticed that too, did they?
As a Curves owner, we have always practiced good business ethics. We have never used collections other than a non-threating letter informing them of credit card errors or nsf checks in hope that the member would make good. Once in a blue moon, another letter would be sent. After that a member was archieved. Maybe being a nice guy hasn’t paid off in the business sense, but the christainity that was preached to us during club camp has always been upheld by myself and employees. In the next two weeks we will be letting our members know that we are closing our doors. I’ve met a lot of wonderful people and am not looking forward to giving them the news. I have seen signs of “its just about the money” by CI. One instance is them selling marked down vitamins due to expire within a month or so of purchase. I ended up giving them away to my members. Up to about 2 months ago the weight management books could be purchased individually. Smaller clubs such as ours could buy a couple books at a time (couldn’t afford to buy a case). Wouldn’t you know it, I had a lot of ladies sign up for the class – went to order the books and you could know longer buy them individually – YOU HAD TO BUY A CASE!!!! I’ve had calls reminding us that we needed to fulfill our obligation to attend club camp. I informed them that we had fulfilled that obligation and after they did a check……….they did confirm our fulfillment. That didn’t stop them from trying to get us to attend again for a refresher………..well, we all know how much money that they getting for that!!!
We have a ten year lease……..all I see online is a copy of the 5 year lease that has a date of 04/06 on the bottom. How come there is a ten and five year contract? Can anyone shed some light on this.
Did anyone see the convention videos form last month? They make me sick. Or let me rephrase that, Heavin makes me sick.
He tells us that its out own attitude or mental psychie that lets us down it has nothing to do with the economy or his lack of advertising..
he is a GOOD salesmen.. and nothing more..
makes me sick to my stomach
When Curves first started all they had was 10 year agreements but in late 04 they changed and went to the five year contract. All contracts now are 5 years.
Some of you are saying that you cannot make it with x amount of members. I wish I had that many. When I took over this store 2 years ago it had 129 members and was holding its own. Today I have 48. I even went so far as to have c i help me with getting ready for open house. What a laugh that was. Knew I was in trouble then and there when not a single person came. It has been a struggle. Gain a few and lose a few. The day I have to dip into my pocket to pay a bill is the day I lock the door. I love my members as if they were family and I hate for that day to come. Not complaining, it had been a ride of a different sort. All of this is not Heavins fault, a lot has to do with the times but he certainly should have taken a different road if he really wanted to see the money keep coming into his bank account. He sure messed that up and it is only going to get worse for all of us.
I don’t see how you can stay open with only 48 members. What size of territory do you have? You are right it is only getting worse for all Curves owners and the worst is yet to come>
Have all the Curves which closed or are closing filled out and completed the “closing packet” from Curves. I see in the packet that you can donate the equipment to a women’s prison. I have a non-profit church camp that would like the equipment……..guess that is out of the question?????
We have about 5 thousand in our town. The surrounding towns, most of which are smaller are too far away for the ladies to drive, or so they say.
I really need to sell my equipment as I do have a couple of small loans out that really need to be paid before I close the doors. I started running an ad for men to join at certain hours. Give a little prayer for us.
unhappy you say the worst has yet to come? how do you mean?
does anyone know how many of these clubs are actually left?
I ask my area director yesterday for help in maintaining this business, let alone growing it and she tells me, dont expect any help from corporate.. in a “diplomatic” way.”
She tells me its our clubs responsibility to survive, not corporate’s.
I told her for the advertising fee we pay each month, its a disgrace not to see where the money is going and she isn’t being honest.
I think she IS being honest when she says “Don’t expect any help from corporate in a ‘diplomatic’ way.” She is paid by CI and probably can’t say much more. CI made it plain to me that they didn’t intend to negotiate in any reasonable manner when they sent the crazy email to my ex regarding their requirements in order for them to “work with you” or me. (Read my story posted on November 27.) They are desperately trying to hold on to what they have and so, in the process are losing franchisees FAST! They are probably having to use the advertising fees to pay other bills. Gary has quit trusting God and has put his faith in himself and his attorneys. It won’t be much longer before he loses everything if he continues on his present course.
Lost Life,
true, she was probably being honest. I dont think he really cares about whats going on in the field. Afterall HE did this..
He probably figured, hell with it, Ill make a fortune selling my stolen idea so what?
I will have made my billions..
I just dont think they care..im sorry..I wish he would lose everything just because of what hes done to people..
I know someone that knows him personally..that he (being howard) used to work for years ago, that told me he wished I never got involved with CI. I will never find a more deceptive , dishonest, yet slick individual than howard..
hes a good salesmen and seems very sincere but hes quite the opposite..
as far as area directors, they are useless..
Carol where is the church camp located ? I’m sure we can find you equipment if we know the area as I don’t think any owners will want to ship it to them because of the cost involved but there is probably an owner close by that has closed .
I’m just wondering…is there anyone out there (someone that closed before their agreement was up and did NOT resell) who has actually gone to court against CI in Waco and what was the outcome? And what did you do with your machines? I hope you didn’t actually destroy them. They were yours! Did you send CI any money for a settlement? I can’t imagine anyone actually sending CI anything after paying for a franchise and the cost of operating it, and then having to walk away from their investment. Please tell us about your experience and what you would do differently, if anything (other than ‘never get involved with CI!’). We need to hear from you!
For the Score keeper – 2 more Curves closings.
We closed our two Clubs in October 2009, after 3 1/2 years in business. These were a re-sale Purchases, and had been open 5 and 2 years prior. We filed for Chapter 7 Bankruptcy in the US Bankruptcy Court and just had our first hearing. All of the assets (including the equipment) now belong to the Bank that had loaned us the funds for purchase.
A year ago there were 7 Clubs in our area, now there are 3. Two other owners consolidated their 2 clubs to one, negotiating with Curves for reduced closing fees.
When I notified Curves of our closing, I received the -e-mail that many have mentioned, “either complete the resale forms or submit $10,000 closing fee”. I began searching the WEB for information about Curves, and discovered this site.
During the past months, I have found you all to be a “Support Group”. Thank you. The different stories have made us realize we are not alone in dealing with a business failure.(We are sorry for the heartache and loss)
Early on, I had the priviledge to talk with Robert Lay, who provided insight into different options. Unfortunately, bankruptcy was the only option we could afford.
I believe there is a reason for everything, and am confident we will weather this storm too, broke but much wiser.
We apologized to our loyal members and staff, that we had to lay off. We did pay all refunds, payroll and taxes, from personal savings/loans, which had supplemented operations for the past 18 months. (Curves even got their Oct Ad and Franchise fees in November, before we could close the bank accounts.
We’ll see what the next steps bring.
I wish everyone a Merry Christmas, and hopefully a better new year, as we each separate ourselves from Curves International, and the Amaze Yourself Franchise.
Merry Christmas to your family too and a Happy New Year and thanks for posting here as it certainly helps knowing that there are many other owners who have had to deal with the problems that Howie boy has caused. It is a shame that he has so far been able to perpetuate this fraud and deceit to so many unsuspecting individuals. For those of us who have decided to sue our day in court will becoming up real soon and and hopefully Howie boy will get his much deserved reward in the amount of a huge settlement.
Carol – you should probably feel comfortable doing whatever you want with your equipment. the last thing I was told by CI (both in February and in December this year) was to donate it to a “non-profit serving women or students”. But my contract says I own my equipment and CI just has the “first right of refusal to purchase my equipment back from me for $1500 (and that’s only the original 8 pieces described earlier in the contract). Find your contract and read it. Additionally, though CI pretends it isn’t so, this right of refusal that they are ignoring pertains no matter how the contract ended, by being voided (as in my ending it by closing my store early) or finishing the license.
BTW, today’s yahoo lists the top ten cities where home values have continued to climb during these last two years. WACO is number 6, and 6 or the ten are in Texas. So I guess that’s another part of how his perspective on the world is so different from mine.
Today, I had the blessings of the county sheriff as my husband and I broke a window to get back into “our house” to finish clearing out our stuff. The mortgage company had given us until Dec 24th to do that, then locked it up tight last weekend. When we tried to work with them to get to it this weekend, they forgot to finish the paperwork in time. (probably had a holiday party to get to). That kind of experience is obviously very foreign to this guy.
I only have one small personal loan out on my business. Can i file for any kind of bankrutcy without having any big debt,and does this money owed curves at closing count?
Happy New Year Agatha,
Start calling your local bankruptcy law firms. You may have to wait awhile to get an appointment.
There are several varieties of bankruptcy out there (within the confines of the chapter 7, chapter 11, or chapter 13 category). Consultations are free and can answer all your questions. We did three consultations over several months before deciding what to do. Some bankruptcy laws are federal, and some are state, so there are some variances from state to state. The money Curves says I owe them (future royalty and ad fund payments from a contract ended before term) is a significant part of my bankruptcy case.
I know a woman who was sued by Curves Int’l, after she did every thing they asked of her. However, since I closed in March they haven’t done much more than send me two legal letters demanding payment. I think they are bogged down with closures and either no longer investing the effort into legal actions, or just so slow they haven’t gotten back to me yet. However, even though we hadn’t hired an attorney or made a firm decision till October, I was telling them right away (in March) that I was going to have to file bankruptcy so maybe that’s why they haven’t done more yet.
Good luck.
I can only ditto the above problems with curves. We alos thought this was a wonderful way to supplement our retirement when we moved to Florida. Buy a Curves, friends had and were doing well. Mr and Mrs Heaven are not who they appear to be, cazring Christains. Most of the clubs that have closed, the owneres have lost all, and have had to file bancrupacy. Once at a convention Gary said we care about women, well most owners were women. What about us. We to lost all our retirement, our house is being foreclosed on and we are filing bankruacpy. Same issues, clubs opening everywhere around us, on top of us. No attention paid to territory borders, advertsing fee monthly with no accountability and no tv advertising. No support from mama and papa curves just give me give me more money. We are looking to join a class action or group action suit. I also know several other past owners who are looking for the same. We also owned three clubs closed two and are closing our last one. How sad for all of us that were sold a dream that became a nightmare.
So Sad! Dreams that become nightmares! If Curves had been forced under law and regulation to disclose the profitability/success/failure of “founding” franchisees within their system, would this have warned you, Anne Tibbetts? Generally, there is nothing very specific in the franchise agreement about the support the franchisor will provide you. The advertising funds appear to be the property of the franchisor to use as he sees fit.
Unfortunately, because of regulation, franchises can be sold without disclosure by the franchisor of past financial performance statistics of units within systems and, therefore, good faith franchisees buy franchises with no idea of the great risk involved and put too much at risk. Under current law and the law of the average franchise agreement, franchisors can encroach on their own franchisees with immunity under the law.
The great risk of buying “any” franchise is hidden from view of prospective
franchisees because if the risk and profitability were actually understood up front, most prospects would not be willing to put so much at risk to earn so little and to lose so much.
The deck is stacked in the courts against franchisees because of the pre-meditated airtight and invincible un-bargained contracts that are signed in good faith by naive buyers of franchises.
I am sorry for your great loss and pain. Think about how you can help to prevent this from happening to others.
http//thegreatfranchisingrobbery.blogspot.com
Hi Anne Tibbetts,
If you are interested in going after Howie and Curves International send an email to unhappyfranchisee[at]gmail.com here at this site and ask him to forward your email with your return email address or your phone to me and I will get a hold of you asap.
Here’s a sad story of a Curves owner who says she could have pocketed a $700,000 profit had she sold her clubs when times were good, Instead, she wound up broke and bankrupt.
http://boss.blogs.nytimes.com/2010/01/06/has-the-economy-closed-your-exit-door/
It truly is a sad story but its a shame that owner never had the chance to explain the reasons why she had to close. I would bet 9 to 1 that she would have similar complaints as all the other owners who have posted on this site explaining their horror story. .Why can’t Howie figure it out and make the necessary changes that are obvious to make this franchise successful and respectable again? Does anyone actually believe that this franchise will sooner than latter cease to exist? You should because of the rate of clubs closings since December has increased tremendously. What do you suppose Howie will do than? It should be obvious from the wording in the new contract. The ratio of people not willing to resign their franchise agreement on the five year contract is shocking to say the least. Many of those owners are trying to sell but as all owners know by now it is almost impossible to do even for a dollar, Does anyone really think that Howie will be able to resell those territories (churning in franchise lingo) to buyers after he has done his best to destroy this company by his illegal and unethical business tactics. To think that at one time there were over 10,000 clubs and that around 4,000 to 5,000 are all that’s left is mind boggling. Unfortunately the whole Curves story is very sad and I must wonder if Howie will write a book about his demise! The owners day in court is coming very soon, The group action lawsuit will be starting on March 21, 2010 and many individual cases will start to be heard in court starting in the summer of 2010.
Here’s a slightly different take on this “sad” story. Your comments are invited:
http://www.unhappyfranchisee.com/curves-franchisee-regrets-not-sticking-it-to-others/
I have a hard time shedding a tear for Ms. Donofrio when her greatest regret is not having pawned her doomed stores off on someone else for a profit. Her second biggest mistake was perhaps revealing a bit too much of her true self to a national publication.
The story gives me a renewed respect for the franchisees who refused to resell their stores once they knew they weren’t going to work. Kudos to those of you who may have lost your savings but maintained your integrity. Your kids, friends and family noticed.
The story gives me a renewed respect for the franchisees who refused to resell their stores once they knew they weren’t going to work. Kudos to those of you who may have lost your savings but maintained your integrity. Your kids, friends and family noticed.
Thank you for this comment. I am one of those franchisees who refused to sell because if I couldn’t make it work as the original owner, no one could. I wasn’t willing to “give” the club away so that the next owner could build it up. If I couldn’t sell it for a decent price, good chance anyone interested in “picking” up the club would be undercapitalized and doomed to failure. If I was suffering from the cannabalism of other clubs on my borders, how would selling change that? It wouldn’t.
“renewed respect”
are you kidding me?
up until the last minute before i closed my clubs, i would have done anything to have sold them to anyone else. i practically tried to give them away.
i loved my club and i love my members and i was so distraught over having to close and stop serving them.
also, if i could have sold instead of closed i could have escaped the mental baggage that i failed!
finally, and perhaps most important, if i could have sold my clubs, maybe my family wouldn’t be destitute now.
Sure, go ahead and give me credit. i’ll tell you, when i came close to selling i recognized that I was selling someone a risk I didn’t want to live with anymore. but i was hopeful, and i am optimistic, so I can deal with that risk better than some (perhaps).
To “cope” with potential buyers of my failing business, i had to keep defining my business problem like this:
————————————————————————————–
* that it was me personally who could no longer get enough credit to keep the business going in a tough economy.
* that it was me personally who couldn’t buck the shadow of curves international and do something so innovative that my individual franchise could survive and flourish.
* that it was me personally who was making business mistakes.
that was my problem.
Obviously this was not the best business sense, but it was my reality. if i could have gotten enough credit to keep it going (till the economy turns around) i would have been happy to keep trying. i loved my business.
“up until the last minute before i closed my clubs, i would have done anything to have sold them to anyone else. ”
“Sure, go ahead and give me credit.”
Who’s giving you credit for anything? Like the Donofrio chick you wouldve gladly pawned off your mistake so some other family could lose their life savings, their house and enjoy the pleasure of having their car repoed in the middle of the night.
Your list of justifications will probably come in useful to the broker or CI salesperson who resells your territory to the next mark. Don’t expect credit just because you weren’t as good a salesperson as the pro churners.
I don’t think you “get it”. I certainly wasn’t trying to “pawn(ed) off your mistake”. I was hook line and sinker loving my business, even though the money had soured.
I’d been open long enough (~8yrs) that most of my business was women who really believed in their Curves workout. I had about 70 women a day who were working out 3 times a week and feeding me their love of their workout.
Because of this I did have hopes that we could survive and thrive again if we could just make it thru the current tough economy. I was advertising for someone who had the capital to whether the economic storm.
Donofrio is portrayed as someone who wishes she’d sold when the business was profitable. that doesn’t make her a bad person.
Also, for whatever reason (which is not defined) she kept her clubs, and wound up as broke and bankrupt as anyone of us might be.
ps I didn’t just lose my savings, i lost everything except my marriage. and that almost went too.
“Donofrio is portrayed as someone who wishes she’d sold when the business was profitable. that doesn’t make her a bad person.”
No, she’s a great human being. Donofrio says her biggest regret is not getting someone to put an additional $700,000 into a business she now knows was destined to fail. She’s a real peach.
How would you feel if the franchise salesperson who sold you your failed club was quoted as saying that their only regret was not charging you more for your franchise when they had the chance? Or not getting your jewelry… or gold teeth?
Dear Curved Logic.
I Disagree. I don’t think she knew it was ‘destined to fail’.
The point is that she now knows that the four Curves failed. And she wishes someone else had taken over the same businesses having invested $700,000 more than she did.
She doesn’t say she wishes she sold to someone who could’ve succeeded. She just wishes she had walked away with somebody’s $700K.
just because you’re delusional doesn’t make you ethical. These pages are filled with sad stories of people who lost it all because some people like Donofrio (and you) were actually successful in dumping their bad investments before the s*** hit the fan.
The new franchise agreement has a breach of contract clause, that states you will pay $42,280 if you breach. Curves NEVER INTENDED to collect this money from you. What they are doing is settling, they will take $2,500 and THEN THEY WILL WRITE $40,000 OFF THEIR TAXES AS A LOSS. When this happens the franchisee that closed will receive a 1099 stating they have to claim this $40,000 on their income tax. It’s very smart business for CI and whoever thought of it has no ethics. CI is capitalizing on business closing, if you close your only option is bankruptcy unless you have more money than most, you can pick and choose the liabilities you want to declare.
Hind site is always easy to wish for but the reality is that she didn’t sell and if she had would it have been her fault if the new owners club went south. At the time she wishes she sold curves was still going strong so what is unethical if she had sold out than. I’m sure there are hundreds of owners that wish they had sold in 04 or early 05 but you must remember that in those times the business was still viable and considered a good franchise. In those days there were unethical owners who sold their clubs at highly inflated prices and falsified the actual membership figures to substantiate their selling price. But one must remember that it was Howie who allowed that to happen and knew it was being done but did nothing to stop it . Howie screwed his management team in late 02 and 03 and it took until late o7 early 08 before the curves franchises started to go south because of Howie’s mismanagement. For the one owner who stated above that she tried to hang in there until the economy improves gives the impression that the economy is the reason why so many clubs have closed and that my friends is plain and simply not true. The failure of curves rests on Howie and Diane’s shoulders period. While I would have to agree that owners who are now aware of the unethical business practices that have brought Curves down and continue to sell not telling the buyer of the problems associated with Howie are just as unethical scumbags as Howie is so kudo’s to the owners who have closed but they all need to wake up and make sure that Howie can’t perpetuate this fraud on potentially new owners by speaking up and getting the word out about Curves International and Howie.
SHOCKING and legal? If franchisees unknowingly sign contracts in which a a$42,280.00 FAILURE FEE is disguised in the small print, this works in two ways to subsidize the franchisor and the other special interests.
If the courts might(?) consider the failure of the franchisee mitigates the breach, and the franchisee is close to insolvency, the settlement of the debt owed under the contract is the smarter way for the franchisor to go when the failing or failed franchisee can”t unload the business to another franchisee, and the franchisor doesn’t want to acquire the assets of the business.
If the franchisor wants the assets for himself and can find a third party to buy the assets in a fire sale, the forgiveness of the $42,280.00 FAILURE FEE will work as an inducement for the franchisee to give the business away to the third party. new franchisee, or the franchisor, in order to get out from under the debt.
Law, process, procedure, and accounting rules have all been stacked in the favor of franchisors and those at the top of the pyramid of franchising who take their profits off of the cheap labor and venture capital of those on the bottom of the pyramid have influenced the law, process, procedure, and accounting rules that encourage “stealing by deceit” in our economy.
http://thegreatfranchisingrobbery.blogspot.com
A story about a gym closing reveals that 258 of Florida’s 1,800-plus registered health clubs closed in 2008 alone. No mention of the 2009 figures, but they must be even worse.
http://www.floridatoday.com/article/20100109/BUSINESS/1090323/1006/NEWS01/Gym+closing+frustrates+some+former+members
re: forgiveness of “failure fee” and the 1099 tax form report by Curves.
Just today I was reading a legal argument about how the IRS processes the 1099s issued by mortgage companies after a foreclosure. Some former home owners have been surprised to get big tax bills based on these 1099s. They were erroneous issues but needed clarification by the taxpayers. It seems we may find this to be true with cancelled franchise contracts, if Curves International is indeed, issuing 1099 forms to explain the changes to the IRS.
However, the legal perspective is that the mortgage companies are not required to use the 1099 forms to list a “forgiveness of debt” but they choose to as it is an easy way to report the changes to the IRS. (Apparently this is the same thinking at Curves Internaitonal for their so-called losses) They don’t worry about how the IRS interprets the forms, they just want to satisfy their legal obligation to issue a report in the change of the contract.
And (it seems) the overworked and underpaid peon in the IRS service centers doesn’t stop to think about the context of the 1099s: they just assume the 1099 refers to income received by the taxpayer. Then they issue a notice that there’s a discrepancy in the amount of income reported by the taxpayer and the numbers on the 1099. This notice comes in the form of a (intimidating) letter that holds the processing of the taxpayers return hostage and demands an explanation within 30days.
The consensus of opinion by tax professionals, lawyers and professors (of the responses I read so far) is that a simple explanation in writing that there was no actual financial gain to the taxpayer is enough to dismiss these 1099s (and so to many writers also note that this is also true for any 1099s used to show forgiveness of debts)
For each franchise I’ve closed, Curves International has issued me a legal demand for payment of unfulfilled royalties and advertisement fees. I plan to include copies of these with my 1040 with the explanatory paragraph describing how there is no income.
One commentator noted that
“Congress does not require taxpayers who are insolvent at the time of the debt forgiveness to report debt forgiveness as income. That’s in section 108. Insolvency just means that even after the debt forgiveness, the taxpayer still has more debts than assets to pay them”.
When I closed my franchises it absolutely was because we had more debts than assets (available for payment), don’t you agree?
Also there is an agency called Taxpayer Advocate Service which should be able to help if any of us get caught in such a situation. The only problem is, they too are underfunded and overworked.
Good Luck and don’t forget to check with your state laws too. Just because you signed it, doesn’t mean everything CI put into it will hold up in your state.
Thanks to WipedOut for the link to the original story.
14% of Florida Health Clubs Closed in 2008
Another Curves closes. But check the comments to the article. Apparently, one Curves is now open 24/7.
http://www.santacruzsentinel.com/localnews/ci_14181581
Gary Findley, once President of Curves and, I believe, an early franchisee has been promoted to Snap Fitness COO. Snap Fitness claims to have 2000 sold and to be opening 30-40 clubs per month.
http://www.franchising.com/pressreleases/14155/
“Apparently, one Curves is now open 24/7.”
Has anyone else heard of a 24 Hours Curves (with Keycard access) as the commenter reports in CA? Think this is CI approved or a renegade franchisee?
The comments on the Santa Cruz article were also interesting as the Curves/Heavin “anti-choice” controversy obviously still resonates in CA.
Oh, yes there is even a 24/7 Curves Owners Group. CI is not happy about the 24/7, but owners say they are doing everything possible just to keep their Curves open and pay the bills. Some are just calling it “extended hours” and not staffing their club all hours it is open. So I guess it is not CI approved.
What other things are Curves owners resorting to to try to remain open (that are not part of the approved concept)?
Have some Curves gone coed or have coed hours? Or are selling product lines they’ve added themselves?
There are many curves clubs that are 24/7 even though /Curves International has stated it is not approved. The group that has gone 24/7 has seen an increase in membership and it has definitely been a good and positive business decision for most clubs that have gone that route. Curves International has stated that they would not allow an owner to sell or transfer ownership of a club to a new owner if it was a 24/7 club.
Curves International has several clubs that are co-ed and are testing the waters so to speak on that concept and there are clubs that are allowing men to work out at different hours than women. While it has always been the unwritten policy of Curves International that the clubs were only for women they have been sued for discrimination and lost several court cases on this. They tell all owners that if a man comes in to join you must by law let him join and allow your women members to force him to quit. They even changed their name from Curves for Women to just Curves because of the discrimination cases they lost in the courts a few years back.
There has been an interesting development in the 24/7 clubs as of today but I am not in the liberty to explain what has happened as of yet but will keep you informed of what is happening on this in the next few weeks. I can tell you that Curves International is once again using underhanded and unethical tactics to try to prevent any more 24/7 clubs and to close the ones that are open.
I had also heard through the grapevine that Curves was looking at the possibility of adding coed hours after hours; it looks like a few selected clubs have either been given permission or are doing it on their own. In fact, I have known of several Curves owners over the years who have experimented with non-approved products/programs to try to add extra profit. It’s too bad when a franchisee feels they must violate their franchise agreement in order to be successful.
The problem of members hitting a plateau are only going to be realized faster if/when men start using the Curves nonadjustable equipment. Men want to feel more resistance; that is the nature of the beast.
Rather than increase profits by attracting a whole new segment of the population, allowing men on this equipment is only going to speed up the inevitable.
As a non-franchise competitor of Curves, my business has taken a very nice jump in sales as Curves clubs continue to close across the country and others want to open a club without the high franchise overhead to service the members left hanging. If anyone is interested in information on my program, email the ADMIN and he will see that it gets to me.
I think my area is spread out enough I have 20,000 people in my town, and get in 11-25 new members a month. (We are not growing) Every January I start with the same membership level. Why? Just as my kinesiology instructor said about circuit training is that “Think of your favorite dessert, then image eating it every day. How fast would that sweet become your least favorite?” We are not doing enough to keep our members in our clubs. CI talks about getting new members…I get them how do I keep them. What is there answer? More activities! I do tons of stuff every day, but it is not that! Our company fails because we fail to deliver results. We need to offer more to our members. We need them to lose weight. I could not believe in the fall 08 Diane mag it had a member who was upset about coming to Curves and not losing weight. What was Gary’s response to this member who had been coming for over a year? Your are internally getting healthier.
I spoke to a new owner today in a near by town and last year she said the club lost 250+ members. I know she paid a good amount for this club, and that she thinks she can turn the attrition around. Good luck with that. (Just so everyone knows we are in an area that has not been hard hit by the economy. TEXAS) We have had some hard times but I think the unemployment rate is only slightly over the norm. My club is unsuccessful not because I don’t work at it, but the basic concept is unsuccessful. It works for awhile and then women get tired of it.
My kinesiology teacher said that my club’s biggest problem is group activity. Without the classes the members are solely on their own. They may have a friend or an encouraging staff, but they do not have the competition that comes from trying to out do the girl next to them. (We do have competitions at our club) What he meant was we need the excitement of working toward a short term goal that group workout offers. The basic concept is good, but we have too many holes that need to be plugged. We need to offer more to our clients not just another shirt. Really who wants to give them another 2x shirt. I want to give that client a M size, but I just don’t think I have been given all the tools I need to get these over weight women to see the results that makes them motivated to stay.
I currently put a 3-4 hundred dollars of personal money into the business each month, but since my loan note is for a $1,000 I keep it open. I will not sell it to someone else, because they would just have to close it down. I love the women at my gym and want them to lose weight. I hope to keep the club open, but it is so much work with no pay. I have never given my self a pay check from my club, and I have owned the club since 06. Gary how is your private jet? My house needs repairs that we can’t afford! My Christmas present to my 3 little children was a repair bill for our family car. (We did manage to give them each two presents but it was not a happy Christmas) I am sure your little girl got everything she wanted.