There’s an ancient saying that’s been passed down through generations of fitness franchise bloggers:  Old Fitness Franchises Never Die, They Just Get Acquired by Diversified Health & Fitness.

And just as Blogstradamous predicted, the troubled and troubling 1-2-3 FIT franchise chain was sighted being  led across a misty field by a grim character carrying a scythe and sporting a black “Diversified Health & Fitness” hoodie.

Yes, just after aquiring the Butterfly “I’m not quite dead yet!” Life fitness chain, Diversified Health and Fitness has acquired 1-2-3 Fit, the coed express fitness club created by the supposedly dark knights of franchising, the controversial founders of the Quiznos franchise chain, Rick Schaden and Brooksy Smith.

For more on the acquisition, check out the Unhappy Franchisee post: 1-2-3 FIT Acquired by Diversified Health

Make Millions in 5 EZ Steps!

To understand what I suspect this Diversified is all about, let me share a neat trick I learned from the folks who ran the Java Jo’z and Cuppy’s Coffee scam.  Feel free to follow it to scam a bunch of people and have nobody be able to touch you.

1)  Form a corporation and collect a bunch of money from naive and trusting prospective franchise owners.

2)  Don’t follow through on your obligations.

3)  When the finally music stops and they’re all ready to sue you, sell the assets (including franchise agreements and intellectual property), but not the liabilities of the corporation to a 3rd party.

4)  Since the 3rd party is not liable for you, the franchisor’s, obligations and since your ass is on the beach in Cancun by this time, the franchisees are left to sue an assetless corporation.

5)  When funds run low or you’re bored with golf and tropical rum drinks, return to #1 and repeat.

So what’s Diversified Health & Fitness up to?

Why ask me?  I’m just a lowly blogger who’ll be lucky to vacation under some NJ shorepoint boardwalk this year. OK. I’ll give it a shot…

It seems to me that Diversified Health (kind of an ironic name, aye?) CEO Roger Wittenberns is selling escape pods, and playing the role of the “3rd party” that acquires the assets when the franchisors are ready to bail.

Pretty brilliant, really.  He probably gets these little chains for a song (or a dirge) and can play the savior to the remaining franchisees of the chain, collect their royalties and go after the others for what they might still owe on their franchise agreements.

Kind of like a combination collection agency & hospice program.

I could be wrong… Maybe the folks at Diversified Health & Fitness and franchisees of those they’ve acquired can set the record straight with a comments left below.

Related stories:

BUTTERFLY LIFE: Assets Bought by Diversified

DIVERSIFIED Health & Fitness, ShapeXpress Franchise Complaint

LIBERTY FITNESS Franchise Owner Describes Chain’s Decline

Diversified Health & Fitness Wants Failed Liberty Fitness Owners to Pay Up

“They Lie”: 1-2-3 Fit Franchise Owners Sound Off

Will the 1-2-3 Fit Franchise be the Quiznos of Health Clubs? Is That a Good Thing?

WHAT DO YOU THINK? SHARE A COMMENT BELOW.

Image:  Unhappy Franchisee

Quiznos has announced that CEO Dave Deno has resigned and the franchisor’s founder and largest shareholder, Rick Schaden, is taking over the reins again as the chief executive. 

Deno had joined Quiznos as president in 2007 and became CEO last September.  The company statement said he resigned “for personal reasons.”  Schaden had stepped down from day-to-day operations in 2007 after growing the chain from 18 franchisees in 1991 to more than 5,000 today.

In a released statement, Schaden said:

“I am excited about working closely with franchise owners to improve restaurant operations. I also look forward to spending time with the outstanding Quiznos management team developing new products. Moving forward, our strategy will be exactly as it is today. Our primary focus will be on increasing restaurant profitability for our franchise owners by bringing value and convenience to consumers so that they frequent Quiznos more often.”

Quiznos is one of the most controversial major franchise players in the nation.  According to franchise site Blue Mau Mau:

The Quiznos system has been riddled with problems and litigation over the past seven years. According to some lawsuits, franchisees allege that the company has been engaged in illegal and deceptive business practices, inducing unwitting prospects to purchase and operate Quiznos stores. The documents state that with 4,636 franchises in the U.S. today, a number that is continuing to grow, Quiznos classifies the majority of its franchisees as financially distressed.

WHAT DO QUIZNOS FRANCHISEES, INVESTORS & PUNDITS THINK OF QUIZNOS & SCHADEN’S RETURN? SHARE A COMMENT BELOW.

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

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