Butterfly Life’s Golob: Failed Franchise Owners Should Blame Themselves
March 2, 2008 by Sean Kelly
Filed under BUTTERFLY LIFE
(FranchisePick.Com) Related Reading:
Fortune Article Spotlights Butterfly Life Franchise Woes
Butterfly Life Franchise Lawsuit in Forbes
Franchise Pick’s Most Volatile Posts of 2007: A Wrap-Up
Franchise Dreams Becoming Nightmares for Many Fitness Club Owners
Will the REAL Butterfly Life Franchise Please Wave Its Wings?
IS BUTTERFLY LIFE A GREAT FITNESS FRANCHISE?
Read interviews with Butterfly Life franchisees at UnhappyFranchisee.com
In Stuart Goldman’s recent industry article (Lights Out) about struggling 30 minute fitness franchise concepts provides interesting insights into several fitness franchise chains, notably the embattled Butterfly Life.
According to Goldman’s article, Butterfly Life is in litigation with franchise owners, who allege that, among other things, Butterfly Life salespeople made illegal pre-sale earnings claims that underrepresented their costs and breakeven threshhold. Butterfly Life CEO Mark Golob refutes the claim, saying that the failed Butterfly Life franchise owners just want to blame the franchisor for their own failures and lack of hard work.
Here’s an excerpt:
Butterfly Life
Although 1-2-3 Fit franchisees say they have few resources to file a lawsuit, Butterfly Life and its franchisees are in litigation.
Butterfly Life filed an arbitration last fall against one of its franchisees, Beth Tomei of Walnut Creek, CA, for terminating the franchise agreement in the company’s UFOC and changing the name of her club. Tomei and nine other franchisees then filed a class-action counterclaim against Butterfly Life on Jan. 10 in California through the American Arbitration Association.
Mario L. Herman, a Washington, DC-based class arbitration attorney who is representing Butterfly Life franchisees, says 250 franchisees are potential members in the counterclaim. Herman says Butterfly Life misrepresented itself by orally providing illegal earnings claims, such as stating that the break-even point for franchisees was 200 members and that franchisees would make a profit within their first six months of operation. None of the franchisees have made a profit in that time frame, Herman says.
“We believe that there was a standardized pitch that was provided to everyone before they purchased,” Herman says. “It’s fraud in the inducement of the agreement as opposed to any breach-of-contract, post-signature, post-execution agreement.”
Item 19 of the Butterfly Life UFOC, titled Earnings Claims, states: “Butterfly [Life] does not furnish or authorize sales persons to furnish any oral or written information concerning potential sales, costs, income or profit of a Butterfly Life Center. Actual results may vary from unit to unit and Butterfly cannot estimate the results of a particular franchise.”
Golob, Butterfly Life’s president and CEO, refutes the claims by franchisees that they were misled about how much it costs to operate a Butterfly Life club.
The troubles that continue to plague circuit club companies also extend to business-savvy franchisees who trusted the reputations of some of the biggest names in the industry.
“Whatever they were told was in that franchise circular,” Golob says. “If one of my employees told somebody something that wasn’t true — and I do not believe they did — they still had the numbers.”
The numbers don’t look good for Butterfly Life. In an unaudited financial statement dated Aug. 31, 2007, the company listed losses of $815,255 and pretax losses of $771,361…
* * * * *
…Golob would not provide details about the number of Butterfly Life clubs in operation. He did, however, say that franchisees should be responsible for their failures.
“People think when they buy a franchise, they’re automatically going to make a lot of money,” Golob says. “They don’t realize it takes a lot of hard work. Very few people ever blame their failures on themselves. If for any reason a franchise is struggling, it’s always the franchisor’s fault.
“You really have to feel bad for anybody that invests money in anything that doesn’t make it. But how many health clubs have you known to close their doors for whatever reason? There’s not a franchise out there today that doesn’t have franchises that close.”
Read the article: Lights Out
WHAT DO YOU THINK OF BUTTERFLY LIFE, ITS FRANCHISEE CLAIMS AND MARK GOLOB’S STATEMENTS? YOUR COMMENTS AND INSIGHTS ARE APPRECIATED.
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Mr. Golob,
Let me make sure I get this right. You are saying that you feel bad for anybody that listened to your highly polished sales pitch and invested in a BFL franchise just to have it fail? Really. Yet still you continue to sell them. Guess you don’t feel that bad. I mean unless you have your head completely in the sand, you know what your club failure rates are and should take at least some responsibility. Well I guess you did say it best, “Very few people ever blame their failures on themselves”.
I was thinking back to the day I saw your staff’s sales pitch, I can’t say I remember you saying anything about the franchise struggling and that there was a better than 50% chance we would fail. Yes, I am one of the luck ones that heard a portion of the sales pitch from you directly. What I do remember was you telling us what a great product you had built. How the branding, programs and promotions were getting ready to take off. Then I recall your son Taylor Golob telling us what a fantastic opportunity this was and how in a few short months we would be at breakeven and making money. Let’s not forget Cheryl Hoke singing off the same song sheet, repeating much of what you and Taylor had told us.
So now your position is regardless of what your staff told us we should have known better because all the facts were in the franchise circular? Interesting position. Does that franchise circular truly reflect the “opportunity”? Having read more than one of your franchise circulars I’d say your interpretations of the FTC guidelines for filing are very creative. Of course the recent changes by the FTC make an attempt at correcting these sorts of issues, but fall short of actually forcing franchisor of providing a complete financial disclosure of the franchise.
Well I guess there is one lesson to learn from this.
For anyone considering a BFL franchise, remember, Mr. Golob is in the business of selling franchises. He doesn’t care if you invest your life’s savings and loose it all. He doesn’t care if you loose your house, your spouse or your self respect. Why should he? It’s your fault. You didn’t work hard enough pioneering a product he failed at building into a respectable brand (just like he did with Linda Evans).
BD
BD - OMG! I couldn’t have said it better. He told me personally, before they had a sales staff, that HE would be there to brand, support, provide 100 members before we opened our doors because “everyone wants to be with the new kid on the block!” They would help us sell and provide an experienced staff person to comedown and spend time actually helping us sell. The person they provided was Janet Lossick. She did spend time with us, but it was over lunch. The rest of the time she was on the phone continually trying to sell franchises. By the way, the few names she was able to obtain on our way to lunch never did sign up. Golob also said that Mastrov was the man on board who we could count on to make this franchise successful. Come to find out, once we got to the university, that Mastrov had nothing to do with BFL other than an investor!!!!! I noticed that Forbes was unable to contact him regarding their current article. Smart guy! Bruce Fabel was the other experienced marketing person who was going to take this national. And again, not until we got to the university did we find out he was fired! As far as profitability, Mark told me personally that we would turn a profit in 5-6 months. I found that his usual comment to so many people “you do the math” is the MO he’s known for. I would say that’s misleading wouldn’t you?!?!?! Originally, many of us remember, that the first viewing system was suppose to be a monitor that was actually vertical, shot with two cameras and the instructor was to appear “LIFE SIZE”. Oh, I forgot to mention…this was all verbal and not contained in the franchise circular…oops, my bad! Does this spur your memory Mark! There are enough of us out here who can attest to what I just stated. So much more to say…but that will have to wait until arbitration. I am glad to hear there are finally some area reps that are disgruntled with old Marky. Well, it’s about time since you have the most to loose. All I can say is…..get in line! As for any potential franchisees contact AAFD.org BEORE you buy and also google caleasi. Search for Butterfly Fitness for UFOCs and franchise agreements. If you can make contact with any of the original franchisees (they make it difficult to find this information) you’ll get an ear full!!!!
Controversy seems to follow Mark Golob. At that time, did franchisees know that he and Gergley were sued by Linda Evans? Or about the judgement against them for the way they closed the Linda Evans clubs? Was that a red flag at the time… or explained away?
Sean and all those concerned…check out the web site for BFL today and check the clubs that are no longer there, including those of Area Reps.
Although the Area Reps pictures are still posted on the web site…those of you that Mark said were such “bad business people”….add 2+2 and figure out “whatever happened to Susie Henderson”? She had the beautiful showcase club in Colorado…….which is also closed! California has only 15 clubs-showing on the web site??? I guess the “smarter” business people were able to hold out hope and had more money than the ones whom Mark thought had such “bad management” skills. OK, boys…you were able with your 30 day extension to barely get in under the wire with the DOC……..are ya’ll seeing the writing on the wall yet? We are NOT going away, we are NOT going to let ya’ll continue to ruin good people’s lives. We are standing united to see justice for ALL. Ouch….being beaten down, broke and scared hurts like hell…..doesn’t it?
Another interesting note for some-does any one know why Janet’s hours have been cut to part time and she is having to freelance in other places? Making a living in Calif. is expensive-just like it is on the east coast! And life goes on….
Sunshine:
I’m going to do a post shortly of the stores listed as open, and those that have closed. It will be a bit rough, so I hope owners & others will give input so I can make it accurate.
A couple of stores at least are for sale through brokers. I also saw this on Craig’s list. It doesn’t say, but it sure looks like BL clubs for sale:
Fitness Franchise For Sale - $27500 (dublin / pleasanton / livermore)
Reply to: sale-726825240@craigslist.org
Date: 2008-06-20, 1:36PM PDT
Owners must sell! This is an opportunity to own a running women’s fitness center for what you would pay in franchise fees to start a club.
The Club is turnkey in that the location (with a favorable lease), equipment, customers and support systems are all in place. For More Information, Please Contact Mark at 925-321-6344.
Key Words: Butterfly Life, Curves, IT Figures, Liberty Fitness, Exercise, 30 Minute Work Out, Group Exercise
That’s a Livermore phone # I think.
Are there other stores for sale?
I am not surprised by what I’m reading. I worked with them when they had Linda Evans Fitness Centers. Everything I witnessed seemed crooked to me.
There was constant drama in the office since their families worked there too. Both wives worked there and Susan Zaeger, the wife of Mark changed to her maiden last name so people would not know she was his wife. She called me a “b****h” when I gave fair notice when I got a new job. I experienced many promises that never came to fruition. The turnover rate was the highest I’ve seen at any job I’ve worked at. I got the heck outta dodge when one day, they locked their supposed CFO out of his office, then pulled all the employees (mostly young in their first jobs) one by one, in a closed meeting with Golob’s lawyer in the room taping them and coaching them on what to say. Ultimately, they parted ways with Linda Evans herself due to some alleged shifty business dealings on the Golob/Gergley part.
These 2 keep failing at businesses, closing them so there’s no debt owed, then turning around and opening other businesses. All the while sitting pretty in their big fat houses and driving around in Porches and Mercedes. I was not involved in the Butterfly Life franchise. But it looks to me like history is repeating itself. I am sorry to all that got involved with these 2 slimy, despicable men.
Luxej - Can’t believe I didn’t see your post in July! You probably know the status of the arbitration that is pending and will hopefully move forward very shortly. There have been sooooo many people who have “come out of the closet” so to speak (old ex friends of the slim balls, ex corporate people, area reps, current and ex franchisees, vendors who were promised huge sales, “good Christians” that were buds with Tom boy……..he always referred to himself as a “good Christian”!!!!) to support us with amazing testimonies….but then again, you probably wouldn’t be surprised knowing their past history. Would you be willing to come forth in arbitration, if necessary, in order to protect others from being victimized by these ruthless scavengers? I’m sure you don’t want to relive any moment you spent with those scammers, and most likely, you wouldn’t have to. If you are willing, let Sean know through this site and he will release my contact information. Thanks for your thoughts and concern.
Please visit and comment on the interview with Butterfly Life franchise owner Matt Wilson.
Please forward these links to others who would be interested, and encourage them to comment.
Franchise Pick: BUTTERFLY LIFE: Unhappy Franchisee Interview With Matt Wilson, Franchise Owner
AllBusiness.com: Unhappy Franchisee Matt Wilson Shares His Expensive Lessons
UnhappyFranchisee.com: BUTTERFLY LIFE: Interview With Franchisee Matt Wilson
Read other Butterfly Life franchisee interviews