As the recent closing of the Kailu, HI Curves for Women fitness center shows, a failed franchise location is a loss for many involved.

In this case, franchise owner Robbi Ugini must deal with the personal and financial agony of defeat.  Her 5 employees are suddenly jobless.  Her 270 members are without a fitness club.  Her landlord has a vacant space, and her lender will, most likely, have a defaulted loan.  And the franchisor will not be receiving future royalties, revenue from purchases or advertising contributions.

What started as a dream ended in disappointment

According to the story by Nina Woo in the Honolulu Star Bulletin, Ugini opened her Curves franchise in 2005.  The initial location in the Enchanted Lake shopping center was doing well with 435 members.  Her lease was up just two years later, and Ugini relocated to another location last year, above Agnes’ Portuguese Bake Shop. The business struggled in the new location, with just 270 members.

Ugini tried selling her Curves for Women franchise for the fire sale price of $15,000, but could get no takers.  Part of what hampered the sale was the additional equipment investment the new owner would have to incur, per the franchisor’s requrements.  When a prospective buyer recently pulled out at the last minute, Ugini decided to close the doors and liquidate.  According to the article:

The closure was abrupt, leaving some 270 members in the lurch. Five staff members also lost their jobs.

“I made sure my staff was paid,” said Ugini. “I had the very best staff in the world.”

Ugini said she is working on notifying everyone of their options. She said members’ payments made on Oct. 5 have all been canceled.

Qualified members can request a travel card, she said, which allows them to use another Curves on Oahu for up to 20 days after they have been issued.

Some have gone to the Curves in Kaneohe, which is owned by a different franchise owner, but it won’t be able to take everyone.

“I am going to contact everyone,” she said. “It’s just going to take me a little more time to get to everybody.”

Some members paid on a monthly basis, some prepaid for three months and others for the entire year.

VR Business Broker calls Curves a fad and the franchisor uncaring

A business broker named Mark Heilbron, a business broker at VR Mergers & Acquisitions, had some harsh words both for the Curves franchisor and the Curves franchise fitness concept, which he categorized Curves as “a trendy kind of business.”   Heilbron said he sold a couple of Curves franchises in recent years, but has listed many that never sold (the glut of Curves resales on the market, some priced at $1.00, has been reported here.  See How to Open a Health Club for Half the Cost, and How to Buy a Curves Franchise for $1.00… or Less!).  According to the article:

“It’s a faddish type of business,” he said. “They made a lot of money and then when the trend went out, people who were still in them lost a lot of money.”

While buyers are more cautious in these economic times, Heilbron said they are still out there, with money they’d rather invest in a business than in the volatile stock market.

“Most people get talked into buying a franchise, and you’ve got to realize, depending on who the franchisor is, that most don’t care whether the franchisee makes it or not,” he said.

With the closure, Curves now has 17 locations on Oahu.  According to Curves International, the Texas-based chain has more than 7,000 locations in the U.S.

Related story (Unhappy Franchisee):  CURVES FOR WOMEN: Business Broker Slams Curves Franchise and Franchisor

CURVES FRANCHISE OWNERS: Share Your Story Here

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Photo:  Bobu.  Licensed by Creative Commons.

(Franchise Pick)  Also read:  Is Curves for Women a Good Franchise Investment?

Franchise Dreams Becoming Nightmares for Many Fitness Club Owners

When Curves for Women franchise owner Logan Chung abruptly closed his two Chicago area fitness clubs, he left his employees without paychecks and members without a fitness program.  However, a group of members have banded together to possibly buy and reopen the Elmwood Park location, and Curves International is hoping to find a buyer for the Oak Park club.

According to the Wednesday Journal:

Two local Curves women’s fitness centers closed their doors, Aug. 31. But a spokesman for the company says they’re hoping to reopen them.

“There are several people interested in taking over the ownership of the clubs, and we’re just waiting for them to submit their paperwork,” said Becky Frusher, a spokesperson for Curves at their headquarters in Texas. “Our main concern is for the members, and we’ll get new owners in the clubs as soon as possible to minimize the disruption to them.”

Logan Chung owned the two locations-one on South Boulevard in Oak Park, the other on North Avenue in Elmwood Park. Employees and members say the closure was unexpected, and Frusher says Chung also has not contacted Curves’ corporate office or returned phone calls.

Chung was reached by the Journal recently at a cleaners he owns in Gary, Ind., but he declined to comment.

Carmeline Biscan, a three-year manager at the Elmwood Park Curves, says several employees have yet to receive paychecks for the entire month of August, and a handful of customers also have not received refunds for prepaid memberships.

Renata Mayfield and a group of seven or eight other members are interested in keeping the Elmwood Park location open, which Curves calls its “North” Oak Park location.

Mayfield says they received a starter kit and are waiting on a price to run the location.

“It could be a couple weeks,” Mayfield says. “We were hoping before the end of September that we would have this all straightened out.”

Photo:  Bobu.  Licensed by Creative Commons.

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(FranchisePick.Com)  Also read:

Curves For Women Franchise: 20% of Curves Franchises Closed in MA,

HAS CURVES FOR WOMEN ABANDONED ITS FRANCHISE OWNERS?,

Insider Advice for Curves Resale Franchise Buyers,

200+ comments: Is Curves for Women a Good Franchise Investment?

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In a recent Concord Monitor article, AG bureau looks into gym closings, Kate Davidson reports that 2 more Curves for Women franchises have closed their doors abruptly, leaving their members stranded and their owners’ dreams dashed.  Davidson writes that unhappy members who paid for services they didn’t receive have taken their complaints to the MA Attorney General :

The attorney general’s consumer protection bureau is reviewing complaints against Curves For Women gyms in Concord and Penacook, which closed last month without notice and without refunds for members who already paid membership fees.

The Curves franchises closed during the first week in March, displacing about 400 women who worked out at the two locations, according to owners of other Curves gyms who have taken on some of the members. The memberships are transferable to any other Curves location, but compensation was not offered to women who decided not to move to a new gym.

The attorney general’s office received four complaints in March and April against Atasal Enterprises LLC - owned by Janet Lasata of Gilmanton - which was doing business as Curves For Women in Concord and Penacook.

According to Senior Assistant Attorney General Lauren Noether said the complaints were from members who had paid for services they never received.  The AG lists the complaints on its website as “open - in progress.” According to the story, Atasal Enterprises was “not in good standing” by the secretary of state’s corporation division, as the company failed to file its annual report by the April 1 deadline.

Hat tip to sadderbutwiser for the article link.  Photo:  Bobu.  Licensed by Creative Commons.

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 Photo:  Bobu.  Licensed by Creative Commons.

(FranchisePick.Com)  In it’s article Curves sheds a fifth of its fitness centers, BostonNow Business reports that both membership and number of Curves for women franchise clubs in Massachusetts has declined significantly in the past three years.  According to the article citing information from the Boston Business Journal:

“…Owned by local franchisees, last year the number of Curves gyms in Massachusetts dropped 20 percent to 156 from 194 in 2006, and was down nearly 30 percent from the 218 sites that were operating in 2005, according to research by the Boston Business Journal. Membership levels in the state also dropped 20 percent to 62,400, from 77,600 in 2006.

“A spokeswoman for Curves International Inc., headquartered in Woodway, Texas, attributed the falloff to a shift in company strategy.

“‘We have always tried to keep every club open and that’s not always the best decision,’ said Becky Frusher, Curves’ corporate communications manager. ‘There are some owners who shouldn’t have bought a Curves … that’s normal with any retail business. We’ve taken a different approach of, maybe we shouldn’t struggle to keep every club open.’ …

“Donna Henderson, who manages the 500-member Curves in Watertown, notes that Curves gyms in Waltham, Brookline and Belmont have closed recently…”

“Nationally, the fitness chain’s stature has also flagged. According to Entrepreneur.com’s annual Franchise 500 rankings, the company dropped from No. 2 in 2005 to No. 185 this year.”No experience necessary.  Unless you fail.  Then you should have been experienced.

According to Curves, the reason for the failures was presumably that the franchisees weren’t “business owner” material.  Does that mean Curves tightening up their franchise requirements, and seeking franchise owners with prior fitness club experience?  Not according to their website, which says they assume franchise owners have no experience.  They’re shift in business strategy seems to be to stop feeling bad about it and accept a 20% failure rate as “normal with any retail business.”

So in your search for a solid franchise opportunity, be wary of those who say you can be “In business FOR yourself, but not BY yourself.”  Once you’re OUT of business, you’re definitely BY yourself… So go into it understanding that there’s NO system that, if followed, assures success.

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