Two years ago, I posted the question IS BUTTERFLY LIFE A GREAT FITNESS FRANCHISE?

The answer came in a torrent of nearly 500 comments from franchise owners, mostly critical of the franchisor company and owners Mark Golob & Tom Gergely.

Our post Will the REAL Butterfly Life Franchise Please Wave Its Wings? prompted 162 comments, and Troubled Fitness Franchise Butterfly Life Lowers Franchisee Royalties garnered 40+ comments.

The woes of Butterfly Life franchisees were also covered by such publications as Fitness Business Pro (Butterfly Life’s Golob: Failed Franchise Owners Should Blame Themselves),  FORBES (Butterfly Life Franchise Lawsuit in Forbes) and FORTUNE (Fortune Article Spotlights Butterfly Life Franchise Woes).

UnhappyFranchisee.com posted interviews with 7 Butterfly Life franchise owners, who told of hard sales pitches, unkept promises and, eventually, failure and bankruptcy.

It was just a matter of time before California franchise regulators swept into action, right?

UnhappyFranchisee.com has posted the Desist & Refrain Order (see BUTTERFLY LIFE: Cease & Desist Order) issued by the California Corporations Commissioner.  It states that from May, 2004 to May, 2005 Golog and Butterfly Fitness, Inc. violated CA corporations codes by collecting franchise fees prior to training.  It also states that Golob & Butterfly Fitness, Inc. made untrue statements in filing its CA franchise registration renewal.

What’s the penalty?  Golob and Butterfly Fitness, Inc. must “desist and refrain” from further violations of CA franchise registration and must “desist and refrain” from making untrue statements in order to sell Butterfly Life franchises in CA.

That’s it.

Funny thing is, Golob has no intention of selling Butterfly Life franchises in CA or elsewhere.  He’s already cashed out… and sold (what’s left of) the whole shebang to Diversified Health & Fitness.

This is yet another cautionary tale to prospective franchisees:  take due diligence seriously and choose your franchise company wisely.

If you think government franchise regulation will protect you… think again.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

graphic:  FranBest.com

logo:  Butterfly Life

The “assets” of Butterfly Life, one of the ailing Curves women’s express fitness knock-off concepts, have been sold to Diversified Health & Fitness, Inc.

Diversified was founded by Roger Wittenberns in 2007, and has acquired a number of seemingly struggling, dying and/or comatose fitness franchise chains since then.

Diversified’s fitness holdings now include Liberty Fitness, Fit For Her, ShapeXpress, Access Fitness, Fit Zone, The Blitz, The Zoo, Sedona and others.

Here’s the company press release announcing the asset purchase:

FORT LAUDERDALE COMPANY ACQUIRES BUTTERFLY LIFE

Diversified Health & Fitness, Inc. of Ft. Lauderdale, Florida announces its acquisition of Butterfly Fitness, Inc., a National Chain of Health Club Franchises and enters the Japanese market.

Thursday, March 12, 2009

Diversified Health & Fitness, Inc., chaired by fitness industry pioneer, Roger Wittenberns, announced today that it has acquired the assets of Butterfly Fitness, Inc., a franchising company engaged in marketing and servicing women-only health club franchises.

Diversified’s franchise portfolio currently consist of approximately 150 fitness clubs in 40 states and three countries and over 500 active licenses to build new clubs. The Butterfly acquisition will push Diversified’s holdings to nearly 200 clubs and will dramatically increase its market share in the women’s fitness club franchise business.

This acquisition has also allowed Diversified to enter the Japanese market with 6 locations. The Japanese market is one of the fastest growing fitness markets in the world

The asset purchase included the acquisition of Butterfly’s franchise agreements, FDD registrations, area developer agreements, manuals, trade names and other intellectual property.

“Diversified will bring much needed corporate support and marketing and operational experience to our franchisees,” said Mark Golob, CEO of Butterfly. “This is a great opportunity to reinvigorate one of the best brand names in women’s fitness.”

Diversified Chief Executive Officer, Roger Wittenberns, said “This is a great step forward for Diversified and for Butterfly. We welcome our new franchise partners to our family and we are excited to bring our experience and knowledge to such a promising organization.”

Diversified Health and Fitness, Inc. is a franchise holding company for multiple fitness franchise concepts. The company was founded in 2007 and is the brainchild of thirty-seven year industry expert Roger Wittenberns.

The struggles of the Butterfly Life chain and the discontent of its franchisees have been lively topics on Franchise Pick.

The post IS BUTTERFLY LIFE A GREAT FITNESS FRANCHISE? generated 400+ comments, and Will the REAL Butterfly Life Franchise Please Wave Its Wings? generated more than 160 comments.  Also read Butterfly Life Franchise Lawsuit in Forbes and Franchise Dreams Becoming Nightmares for Many Fitness Club Owners for more on Butterfly Life and founders Mark Golob and Tom Gergley.

WHAT DO YOU THINK?  SHARE AN INSIGHT BELOW.

graphic:  FranBest

According to Butterfly Life CEO Mark Golob, rumors of the women’s fitness chain’s death have been greatly exaggerated.

The rumors had been rampant in recent weeks as emails were not returned, phone lines to the corporate office had been disconnected, and the company website disappeared.

Stuart Goldman, managing editor of Club Industry’s Fitness Business Pro, managed to speak to Mark Golob today about the Butterfly Life mystery.  Golob said that the company was strong, though it had downsized and they had moved to a smaller office in San Ramon.  Golob stated that the website will be back online in the next 24 to 48 hours.

According to Goldman’s post:

“We are nowhere close to closing our doors or being out of business,” Golob says.

Butterfly Life is transitioning from a 30-minute club model to a neighborhood women’s fitness center, Golob says, testing the new model with personal training and live classes. Instead of being known as Butterfly Life Healthy Living Solutions for Women, the company is changing its full name to Butterfly Life Women’s Fitness Centers. The company is currently not selling franchises, although once it does, the goal is for the clubs to produce more revenue from personal training and the live classes, Golob says.

“Basically, what we’ve done is re-invented ourselves,” Golob says. “We didn’t want to sell franchises for something where people weren’t doing as well as they should. We’ll come out once this testing is done, and we’ll be selling franchises. I see a great need for a neighborhood women’s club with great classes, great equipment, low pricing.”

Golob would not comment on pending litigation against Butterfly Life involving past Butterfly Life franchisees.

An email reportedly sent last night, Butterfly Life Executive Director of Fitness Services Denny Marsico apologized for their servers being down for nearly 2 weeks, and for not notifying franchisees:

Hi All,

Due to the office move our server has been down for nearly 2 weeks. We are terribly sorry that the email we sent to notify you was not received by most.

However we are happy to say that we are up and running again.  We have many emails to work through, so please be patient as we get back to you over the next few days…. We will inform you as soon as our fax is in operation.

The email contained the new office address is 2415 San Ramon Valley Blvd. # 4158, San Ramon, CA 94583

The phone numbers included in the email appear to be personal cell phone numbers.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

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Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.

Image courtesy of IdeaFarm.

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Read the Full Interview:

BUTTERFLY LIFE: Interview With Franchisee Matt Wilson

After attending a well-orchestrated sales seminar, Atlanta-area franchise owner Matt Wilson and his wife joined Butterfly Life with the dream of being their own boss, helping women improve their health, and getting a good return on their investment.  Once they opened their club, they claim they received no help or support in overcoming their branding and marketing challenges.  Their club closed in less than a year.

UnhappyFranchisee.com asked Matt to share the lessons of his experience, and his advice for prospective franchise owners.

UF: Matt, what was your background prior to joining Butterfly Life? Did you have industry experience?
MATT: My wife, who owned and operated our BFL franchise, has in excess of 20 years experience in a variety of customer service positions including 10 years with a major cellular communications company. For several years prior to our investment in a BFL franchise she was the office manager for a successful salon. For myself, I have 20 years experience working in a variety of sales, marketing, educational, technical and business management roles. Neither of us had experience in the women’s fitness industry, however, my wife has been a patron of competing club’s and national diet programs having lost 40 lbs as a result.

UF: When did you decide to join Butterfly Life? Describe the process.
MATT: After attending a franchise seminar in August 2006 in Atlanta, GA, conducted by Taylor Golob, Cheryl Hoke and via video conference, Mark Golob. Around the time of the seminar we were actively investigating a Curves franchise and saw a BFL seminar commercial on television. That led us to check out the company web site and sign up for the seminar. Taylor and Cheryl put on a first class, well rehearsed and choreographed sales seminar. Towards the end they incorporated connecting to Mark Golob via video conference, who delivered a rehearsed speech underscoring the points made by Taylor and Cheryl. When all was said and done it appeared the investment was a low risk, high return venture. Especially given that Atlanta was a burgeoning market for the brand and BFL appeared committed to developing the market for the long run.

The appeal for us and we believe with many investors, was with the prospect of being able to help women improve their health while being your own boss. The bonus was there was what seemed to be a good return on the investment. Reality was much different.  CONTINUE READING

Read Other Butterfly Life Franchisee Interviews:

BUTTERFLY LIFE: Jeff Marks, Ex-Franchisee

BUTTERFLY LIFE: Carol King, Ex-Franchisee

BUTTERFLY LIFE: Linda McBride, Ex-Franchisee

BUTTERFLY LIFE: Julie Franco, Ex-Franchisee

BUTTERFLY LIFE: Lisle Head, Ex-Franchisee

BUTTERFLY LIFE: Michael Motes, Ex-Franchisee

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

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FEATURED STORY:

TanWorld: Creating the Next-Generation Tanning Salon Franchise

OVERVIEW Interview with Tanworld V.P. Bob McQuillan

Visit FRANBEST’s: Unbiased franchise information, franchise interviews and detailed, searchable information on 400 franchise and business opportunities.

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Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.

BUTTERFLY LIFE: Jeff Marks, Ex-Franchisee

Butterfly Life is a women’s 30 minute fitness franchise chain that claims to be an improvement over Curves for Women. It was founded by Mark Golob, Tom Gergley, and, supposedly, Mark Mastrov. Golob & Gergley both have checkered pasts and a history of litigation in the health club industry. Many franchisees were attracted by the highly respected Mastrov (of 24 Hour Fitness), whose involvement ceased after they joined. (Read Butterfly Life Franchisees Allege Bait & Switch… of Execs)

Jeff Marks was an early, multi-unit franchisee in GA who claims to have lost $350,000 within a year of opening two Butterfly Life clubs. He says that he paid a $29,000 franchise fee plus a monthly $1000 royalty/marketing fee for each club, yet never received the branding, advertising or operational support promised.

BUTTERFLY LIFE: Jeff Marks, Ex-Franchisee

Read interviews with Butterfly Life franchisees at UnhappyFranchisee.com

WHAT DO YOU THINK? SHARE A COMMENT BELOW.

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America’s Next Top Franchises.

Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.

BUTTERFLY LIFE: Carol King, Former Franchise Owner

Carol King is a mother and fitness advocate with a degree in physical education from Cal State Northridge. In 2004, she and childhood friend Linda Canale pursued their dream of helping women live happier, healthier lives by opening what they thought was an innovative new fitness franchise supported by a team of dedicated, experienced, trustworthy industry experts.

According to Carol, her dream of business ownership almost immediately became a personal and financial nightmare. She now puts her energies into helping to educate potential franchise owners how to avoid the same mistakes she made, and advocating for more equitable treatment of the franchisees of Butterfly Life and other chains. Carol & Linda opened their Woodland Hills, CA Butterfly Life location in October, 2004 and closed in April, 2005. They’ve lost $240,000 to date.

BUTTERFLY LIFE: Carol King, Former Franchise Owner

Read interviews with Butterfly Life franchisees at UnhappyFranchisee.com

WHAT DO YOU THINK? SHARE A COMMENT BELOW.

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America’s Next Top Franchises.

Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.

(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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Visit FRANBEST: Unbiased franchise information, franchise interviews and detailed, searchable information on 400 franchise and and business opportunities.

Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.

Stuart Goldman of Club Industry’s Fitness Business Pro, a leading health club industry trade publication, has written an extensive and well-researched article on the struggling 30-minute fitness franchise chains and some of the powerful names that were instrumental in putting the match to this “hot new franchise” phenomenon.

I plan to look at particular points of this article in upcoming posts. Please share your initial comments below.

Here’s an excerpt. Click a link to read the entire article:

Source: Lights Out by Stuart Goldman, Managing Editor, Fitness Business Pro

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.

1-2-3 Fit, Denver, was founded in 2005 by Quiznos restaurant executives Rick Schaden and Brooksy Smith, who combined their efforts with fitness legend Ray Wilson. The 1-2-3 Fit Web site lists 27 stores open in 11 states, with seven more stores opening soon. One franchisee says 22 stores have closed since the company’s inception.

It sounded so simple. It made so much sense. Experienced, knowledgeable people banked on the marriage of a well-known sandwich chain and a fitness industry legend to create an exciting new circuit club franchise. At another promising company, people counted on the experience of a group of investors that included the founder of the biggest revenue-producing chain in the industry.

1-2-3 Fit, Denver, which opened in 2005, was the brainchild of Rick Schaden and Brooksy Smith, two men who made Quiznos a successful national restaurant chain. Schaden and Smith called upon fitness legend Ray Wilson, whose background includes opening several club companies, to help them with their venture into the fitness industry.

“It was the perfect mixture of franchise team and fitness team,” one former 1-2-3 Fit franchisee says.

Butterfly Life, San Ramon, CA, opened in 2003 and had the initial backing of Mark Mastrov, the founder of 24 Hour Fitness who resigned last month as chairman of 24 Hour. Mastrov’s colleagues, Mark Golob and Tom Gergley, had operated Linda Evans clubs in California before opening Butterfly Life.

“With Mastrov’s name, how could you go wrong?” one former Butterfly Life franchisee says.

But according to many franchisees at the two companies, plenty did go wrong…

READ THE REST OF THE ARTICLE

SHARE YOUR OPINION BELOW

Visit FRANBEST: Unbiased franchise information, franchise interviews and detailed, searchable information on 400 franchise and and business opportunities.

Franchisees, customers & experts vote for their favorite new franchises at Top New Franchise: Who’s hot. Who’s not.

(FranchisePick.Com) Read interviews with Butterfly Life franchisees at UnhappyFranchisee.com

Failed, failing and still-struggling club owners of the Butterfly Life women’s fitness chain have not been shy in voicing their displeasure with BL President/CEO/Founder Mark Golob and Chairman/Founder Thomas Gergley [pictured, below].

On recent FranchisePick.Com BL posts (see here and here), Golob gets the most blistering comments, with some characterizing him as “a glorified used car salesman” and “con artist” who recently sold his home for close to $2 Million and is now building his retirement home on 40 acres “with all the dead and/or dying butterflies’ money.”

Thomas Gergley does not inspire comments quite as venomous as Golob’s, but it’s clear that the co-founder and long-time Golob associate is regarded with serious distrust. One commenter characterized Gergley as “good Christian… spewing a bunch of lies.”

Allegations of fraud & misrepresentation

Franchise owners contend Golob, Gergley and Butterfly Life sales reps gave them unrealistic information during the sales process, including cost estimates and profitability threshholds they knew were too low. Franchisees complain that much-hyped branding and advertising campaigns they were promised never materialized. A group of Butterfly Life franchise owners have enlisted the help of the American Association of Franchisees and Dealers (A.A.F.D.), but Gergley and Golob have refused to officially recognize the fledgling franchisee association.

Gergley letter promises “upgraded franchise system in 2008″

On December 11, 2007, Gergley distributed a letter to current Butterfly Life franchise owners. “Dear Valued Butterfly Life Franchise Owner:” the letter begins. “I am writing with exciting news for Butterfly Life franchise (BLF) owners in 2008.”

In the letter, Gergley announces that franchise owners will have the opportunity to enroll in an “upgraded franchise system in 2008.” The benefits for those who enroll include a $200/month reduction in royalty fees, group training schools, workshops and membership programs designed to boost revenue and member results. It doesn’t say what the requirements for enrolling in the upgraded system might be. (Why, one might ask, aren’t these simply improvements to the same system?)

Additionally, Gergley announced the formation of a 7 Member Franchisee Advisory Council (FAC), a 7 Member Area Representative Council (ARC), and assistance in selling franchisee clubs and equipment at no commission, and sharing 50% of the franchise fee from resold territories with the franchise owner who previously failed there.

Call me a cynic, but when the “exciting news” from your franchisor is that after you lose $150K they’ll cut you in on the action when the next, er, franchisee comes along… well… you know it’s going to be another one of them years…

YOUR COMMENTS, AS ALWAYS, ARE WELCOME.

Related Posts:

Butterfly Life Chairman Gergley Offers Commissions to Ex-Franchisees

IS BUTTERFLY LIFE A GREAT FITNESS FRANCHISE?

Will the REAL Butterfly Life Franchise Please Wave Its Wings?

Franchise Dreams Becoming Nightmares for Many Fitness Club Owners

Franchise Pick’s Most Volatile Posts of 2007: A Wrap-Up

Photo Credit: Anon.Rosie licensed via Creative Commons. Used by permission.

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Visit FRANBEST: Unbiased franchise information, franchise interviews and detailed, searchable information on 400 franchise opportunities.

Top New Franchise: Who’s hot. Who’s not.

(FranchisePick.Com)  Read interviews with Butterfly Life franchisees at UnhappyFranchisee.com

Finding reliable information on a given franchise opportunity can be a challenge. Sometimes you have to sort through wildly conflicting views and accounts.

For example, we sought out information on a fitness franchise opportunity called Butterfly Life in our post IS BUTTERFLY LIFE A GREAT FITNESS FRANCHISE?

The comments seem to be describing two different companies.

Mary Says: …the corporate staff has always lacked competence and professionalism from the beginning.
Kathy says: …There are many clubs all over the US that find a year or two later they are not even close to breaking even.
Linda says: the owner only believes in money and gets it by harrassing potential franchisees with verbal lies…
Claire says: I have heard of so many closures and personal bankruptcies from former franchisees… They take your money and ignore you!! Don’t go there.
Leigh says …run, run, run away!

However…

Phil says: The best fitness franchise for Women’s Fitness is Butterfly Life… a winning formula for members’ success and ours.
Susan & Jamie say: …we are very grateful to corporate for all the support you have shown. I feel that you care and want us to succeed and are doing everything you can to help us make it happen.
Cynthia says: … if I need something or have a problem I know that I call or e-mail someone from corporate office and I am going to get a response right away, often within the hour… I could not ask for a more supportive environment than the one provided by the corporate office at Butterfly Life.

Hard to believe these people - all supposedly franchisees - are talking about the same company. The lesson is that if you only speak to a person or two you may be getting only one side of the story. Hear only the negative, you may miss out on a great opportunity. Hear only the positive, you may buy into a financial nightmare.

The moral of the story? Keep asking and keep digging until you get a sense for the truth of the situation and the opportunity you’re considering.

ARE YOU FAMILIAR WITH BUTTERFLY LIFE OR SIMILAR FRANCHISE OPPORTUNITIES? HAVE YOU EXPERIENCED CONTRADICTORY ADVICE ON FRANCHISE OPPORTUNITIES? SHARE YOUR EXPERIENCE; LEAVE A COMMENT.

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