123 FIT: Franchisees Debate Viability of Franchise, 30 Minute Fitness Biz
October 2, 2008 by Sean Kelly
Filed under Business
(Franchise Pick) Related reading:
Will the 1-2-3 Fit Franchise be the Quiznos of Health Clubs? Is That a Good Thing?
9,509,657 Reasons to Read Disclosure Documents Before Investing
“Quiznos of Fitness” 1-2-3 Fit in Financial Trouble
“They Lie”: 1-2-3 Fit Franchise Owners Sound Off
The 123 FIT organization and franchise concept has taken some heat from commenters on this blog – in part because it is owned and operated by the much maligned (in franchise circles) executives of Quiznos. But 123 FIT is not an isolated target for criticism; the very viability of the women’s 30-Minute circuit training club as a sustainable business model has been called into question. Industry critics and failed franchisees alike complain of high recruitment costs, low retention rates, oversaturation of the market and profit centers that are too limited and too small.
Commenter Pete (anon) claims to be a successful 123 FIT franchise owner. He contends that the 123 Fit company have been given a bad rap, that the 123 Fit concept is sound and, contrary to what many would have you believe, women’s circuit training is “hot.” We invited him to share his view, which he has graciously done. (I’ve edited slightly to delete the side chatter, added line breaks and formatting for readability)
Pete (anon) writes:
Ok. Here are some specifics… these numbers are mine – rounded off… what I will share is tested and true. So let’s get to the business.
Overhead should run $11K – $12K per month. Here is a breakdown.
- Rent $4K.
- Labor (to cover 77 hours – total coverage) $4K.
- Marketing $1000 – $1500.
- Royalities $600.
- Credit card fees and member service fees $600.
- Utilities/insurance $500.
- Eqpt/Debt Service $600 – $1000
Someone had posted they spent $300,000 in 9 months – so they probably paid cash for equipment. If not, add $600 – $1000 for equipment. Either way, this is a good baseline of monthly spending. My experience is that this is accurate month after month after month.
Revenue. For the revenue. I will use 250 members with an average of $33 dollars per member. The avg per member will vary by club. Rough formula for why I am experiencing that. 125 members at full price of $44 and 125 members at $22. The ones at $22 are add ons or members we signed up on special deals whe we first started.
So here is the math –
- $8250 in monthly dues.
- 12 new members per month.
- 10 pay enrollment fee of $100 plus first months dues. That is $1440.
- $2000 – $3000 in personal training.
- 2-3 of the new members prepay $1100 – $1700.
- So you get to $13K – $15K per month this has been my experience.
I know the math is rough. This is where we are but adding the 10 – 12 new members per month. Even if we lose 6 members per month and add 12 we have a net gain of 6 members per month. In 12 months we go from 250 members to 322 members and you can redo the math from there. More monthly dues and more members to sell Personal Training to. So there is the revenue.
Here is where we have found success.
Price. We strictly adhere to the corporate sales tour. It is incredibly effective in showing the value of what we offer. Price is not the issue when the tour is done. So we get full enrollment and $39 plus $5 towel for all new members. The towel program is not optional. We just include it and quote $44. When the towel program was rolled out I can recall several clubs on the call resisted charging for towel service. Most if not all of the big gyms do – the YMCA near us charges $1 per towel. So unlimited for $5 is a good deal.
Advertising. We focus on “weight loss” rather than exercise in our advertising. We do this at the suggestion of corporate. Last spring they launched the weight loss marketing. Once again many clubs resisted it. We embraced it. The respones we get from weight loss ads VS exercise ads is in the multiples.
Employees. Our employees are such a big part of whether we sell things or not. We hire people that are passionate about helping people. They are paid on production. They know they are valued and they belive in our exercise/weight loss programs. Not only does this help us get new members but it helps us sell personal training. People get results, have a positive experience in our club so they spend money with us.
Capital. Fortunately we had the the capital to get through the normal start up and operating period. It took us longer than 9 months to reach where we are. So when I read that someone only gave it 9 months it is important to understand that it sometimes takes a bit to build a business and to get to a tipping point. So I don’t mean berate those that did not have the capital to get to the tipping point – I just assumed people knew it can take some time.
So with all that said I now want to offer a sincere apology to Barb and any Sean and any others I offended. Just as you are passionate about your experiences, I am too. And members and potential members do read these blogs. When a potential member came in recently and told me that 123 Fit was being trashed on some sites and that caused them to decide not to join I became engaged in this and other sites. I just want to get the word out that many 123 Fits are experiencing what I am. That the future for 123 Fit may very well be better than the experience Barb had with them.
I can understand the bitterness and hurt from folks that were first in with 123 Fit or many other concepts. Certainly there is a learning curve for any business. Even with experienced and long standing businesses mistakes are made – New Coke? But I am sorry people get hurt in the process.
But several of us are making it. I am just here to protect my business – not hurt or berate others. So you have my sincere apology.
….please know that success or failure with 123 Fit does not make you OR 123 Fit bad people. You mentioned I may be Brooksy Smith. Well I am not. I have no love lost for him just an arms length relationship. Trust but verify. But I have come to learn that he is not evil. He did not start 123 Fit so that he could oversee failure. I believe he is doing his best. And based on recent changes and the profitability of many clubs – they may have actually figured it out…
WHAT DO YOU THINK? SHARE A COMMENT BELOW.
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I find it interesting that the first generation of zees with Curves did very well. I read the first CEO’s book. Why is 123 Fit’s first generation , except a couple, gone? Is it because they used the first generation zee’s money that they made up front to start building their empire? 123 Fit’s empire is not even a foundation yet. They are trying. How many people have to get hurt before they build the walls put a roof on their empire? In my opinion if one person gets hurt that is too many.
Sean – thank you for posting a success story of a real 123 Fit owner. I do have one clarification regarding the idea that woman circuit training is “hot”. I am not denying that I posted that commennt at some point. But for clarification – 123 Fit is Coed. About 30 percent of our members are men and that continues to grow along with family memberships. Rrgarding the popularity of circuit training – I was responding to a posting that claimed circuit training was a fad and was fading. What I would point out is that many popular “big box” gyms have recently added circuit training rooms and are spending TV ad money to promote it and charge extra dues for it. If you watch The Biggest Loser circuit training gets great marks. “Celebrity Trainers” that make appearances on Good Morning America and other shows are touting circuiting training. So my point is that from a pop cultural and general awarness position the words “circuit training” are popular and that only helps 123 Fit locations. I did not mean to defend all of the women only 30 minute concepts. Thanks again for the article.
The Fitness business especially the 30 minute circuits have so many zees complaining of losing all their investment. 123 Fit is no different. They only have 28 stores open and several very unhappy. It is not worth going through financial hell all because Pete throws some numbers out there. The fitness business is unpredictable. No matter what they say. Believe me I know. When we opened our 123 Fit they told us all we needed was the circuit. Now they have personel training. They are refining their business on the backs of the hard working people. The CEO couldn’t make it with his own stores. If he can’t what make you believe you can. Call all the former zees and find out what they have been going through. Broken families, bankruptcy and losing all they have worked for.
Pete is a shill of 123 Fit corporate. They are not good people. Remember the fitness business is not predictable.
I think that the concept is solid. The original business plan has changed since the inception of 1-2-3 Fit in 2004. Since adding personal training and nutritional consultation in addition to the circuit gives owners more profit centers to utilize.
Fitness is a tough business to be in period, however it is reasonable to expect a 1-2-3 Fit to make money over time. It is important that any business owner has the fundamental aspects of business covered: adequate working capital, consistent marketing plan and a great staff along with a great product and a solid work ethic.
While there is no gaurantee in any business as to its success, being prepared with the appove fundamental aspects gives you a much better chance.
The numbers needed to breakeven are between 10-15K per month depending on rents and what you pay your staff. It is easy to extrapolate how many members you need to breakeven with simple math based upon what you plan to charge. The corporate office has a software program to help with this process.
The fitness business will always be around as long as there are people. The question is how well you position yourself in your market and follow through with working your business plan.
While it is true franchises have closed their doors, others are making money and continue to operate. It is not true that the clubs making money bought out a failing club. Every club making money is owned by the original owner. All the closed locations remain that way and no second generation franchise owner came in and re-opened the old location at a cheaper price.
1-2-3 Fit is a great workout and a great place to work. While the business will not be for everyone, there will be closures as in any business.
Best of luck to all!
The circuit is good. 123 Fit is not good. Is franchising all about selling a business concept and not directing their zees to success? If most of the former zees ever thought for a moment we needed to have $10,000 to $15,000 a month to break even I know most would of never signed he franchise agreement. I also know the reason you do not have second generation zees is most knew how Quiznos grew their empire. I for one did not accept a managerial contract because several of the former zees got screwed big time.
123 Fit is not the only 30 minute circuit that has hurt people. Is it really solid? Your really trying to mislead people. How many clubs are making it? Only 2 or 3? Other’s are not happy. If it is so about having $10,000 – $15,000 a month to break even why wasn’t this disclosed to all the former zees. We were told a lot less. Anything that affects your decision to sign or not to sign has to be disclosed. (Contract Law) Why was several clubs told the build out would be half as much and when it came back it was $50,000 more? I should print out what you said because it was never disclosed to us that is what we needed. In fact the 2006 UFOC said total estimated investment at the most is $115,000 with no capital required. Why is it in the 2007 UFOC they now require $70,000 liquid cash?
Bottom line why are so many 30 minute workouts, Curves, Butterfly Fitness, Contours Express having so many problems? 123 Workout is not bad. I am sure the other’s above have good workouts too. If people believe 123 Fit is exceptional it is just Life Fitness equipment and the YMCA’s and other establishments have it. Stop misleading people. Why did the CEO close 2 of his clubs and the club in the old headquaters on Larimar has been moved? Please stop the BS and be honest. If you were honest with us nobody would of gotten hurt. Just keep writing and giving us more evidence of how dishonest you are.
All of the UFOC’s have a liquid cash requirement. If you look at yours it is there, I promise.
Yes Life Fitness makes the 1-2-3 Fit Simbio equipment. However, it cannot be sold to any facility less than 3000 square feet. This is to keep it competitive in the small gym market. Yes, a YMCA could get it, however, people leave the larger gyms to go to the smaller ones for various reasons. Not all, but some do. This makes 1-2-3 Fit very competitive in the small gym marketplace. In fact, it is the only co-ed circuit gym that I am aware of, which also differentiates 1-2-3 Fit. 1-2-3 Fit also has a study done by ACE at Swedish Hospital showing it is a great workout.
Yes others may have failed, but you should not assume everyone in the system is also failing.
Focus your energies on something positive rather than bashing others who are doing well.
Thank you.
Let’s look at some that are working.
1-2-3 Fit Owner:
Which 5 or so clubs would you say are examples of 1-2-3 Fit franchise locations that are doing well, are implementing the program properly, and maintaining a decent membership base?
Are they using programs that weren’t part of the initial program?
Go to Life Fitness and our circuit is for sell to anyone. In fact they will help you set up your circuit by giving you diagrams of how you can set it up. This is for people who what to open a business that is not a franchise. Who is telling you 123 Fit equipment is exclusive for clubs under 1700 sq. ft.? Go to lifefitness.com. They claim the circuit was never exclusive to 123 Fit. In fact I saw the CEO and his girls from the headquaters peel off the name life fitness and put the Simbio stickers on our equipment.
I have also looked at you tube and saw many of the Butterfly Fitness equipment that look very similar to 123 Fit’s equipment.
The test at Swedish Medical Center never said that 123 Fit had the World’s Best Workout. I am sure many of the fitness clubs have good or even better workouts. I do love the workout. I still workout on my circuit.
If you are doing well I know there are concrete reasons for any success. Low build-out cost, low rent and help from family members. Even clubs with low build out cost are now having problems. Stop misleading people.
Our UFOC is 2006. There is no $70,000 liquid cash requirement. Interesting in the 2007 UFOC there is a $70,000 liquid cash requirement. I wonder why.
Many issues to address:
Q. Barb said: “If it is so about having $10,000 – $15,000 a month to break even why wasn’t this disclosed to all the former zees. We were told a lot less. Anything that affects your decision to sign or not to sign has to be disclosed.”
A. It is illegal for any franchise to give a breakeven point in any dollar amount. I do not believe anybody told you it would be a lesser amount to breakeven, because they cannot do so legally. 1-2-3 Fit has a software program which allows potential franchise owners to input all data (costs and reveunes) such as pricing, number of members joining, number quiting etc… It is designed to allow potential owners to plug in their own numbers to decide where their potential breakeven would be. This is given to all potential owners.
Q. Barb said: “Go to Life Fitness and our circuit is for sell to anyone. Who is telling you 123 Fit equipment is exclusive for clubs under 1700 sq. ft.? Go to lifefitness.com. They claim the circuit was never exclusive to 123 Fit.”
A. Go to the Life Fitness website get their contact information and call or email them and try to purchase the equipment for a gym larger than 3000 sq feet. You will be denied. Life Fitness re-brands their equipment with the Simbio logo for 1-2-3 Fit. Other companies can also private label equipment. It is a common practice with many retial items. Nobody else can get Simbio private labeled equipment from Life Fitness, making it exclusive to 1-2-3 Fit. That is where it comes from.
Q. Barb said “The test at Swedish Medical Center never said that 123 Fit had the World’s Best Workout.”
A. The test at Swedish Medical Center said that the 1-2-3 Fit workout burns more calories and is better for your body than other workouts tested such as aerobics, weight lifting, running, Curves, pilates, yoga etc… The test was performed at Swedish Hospital at the Cardiovascular Wellness Center under the direction of the American Council on Exercises Chief Science Officer, Cedric Bryant. It was a truely a scientific test done professionally and will withstand scrutiny if challenged.
Q. Barb said: “If you are doing well I know there are concrete reasons for any success. Low build-out cost, low rent and help from family members. Even clubs with low build out cost are now having problems. Stop misleading people.”
A. Of course there are concrete reasons for success. These include hard work, great product and marketing and location among others. How have I mislead people in anything I have said. I have been very forward and upfront in everything I have posted. What I find interesting is that you mention how you have contacted all the owners and have this great inside information and I never recall hearing from you. Why dont you contact the clubs doing well and hear from them? Get a fair and balanced set of facts before siding with others in your same position. Doing so is just plain ignorance.
YOU are misleading people with untrue statements and not backing up what you say with facts as I have pointed out.
As always, I wish everyone the best of luck in all endeavors.
What location are you from? Are you aware of how many clubs never opened or closed? The equipment is not exclusive to clubs under 3,000 sq. ft. Besides why would the CEO close his clubs? The system is not working. I have not talked to current new owners. I have talked to many former owners. I talked to many existing club owner when I was in the club. All the clubs that closed previously before we signed were either very hard to get a hold of or were still on the honeymoon stage of opening their own business. That is why calling all the zees before you buy is not the best investigation. People when they are open have to stay positive. When things go bad though they are willing to face the reality of what is going on. Some will be open and some will still be evasive. All the people we went to training with have closed their doors except for Rich. I assure you there are unhappy zees still running their clubs. You make it sound like everyone is making it. I hope they are because financial hell is horrible.
You haven’t read the archives in the Seattle Times. It said the test at Swedish Medical Center was filled with equipment from 123 Fit. The company simply took magazines like Diane from Curves and compared it. Now Curves claims it burns 500 calories.
I have talked to the former zees. Do you want me to specific? Then you get specific on your location and who you are. If you want an all out debate than tell me who you are. We know who lies in this corporation. Stop painting a rosy picture about this company. They have hurt people from Quiznos and 123 Fit. They are the same people.
In your above statement you said:
“The system is not working. I have not talked to current new owners. I have talked to many former owners.”
How can you claim the current system is not working if you have no contact with current owners? Of course if your only point of reference is closed club owners, then you will hear it did not work. However, if you were to contact existing club owners you would find people who are happy and making money.
You are being very one side, which is misleading. Please do everyone a favor and try to see both sides, not just yours.
You also said:
“You haven’t read the archives in the Seattle Times. It said the test at Swedish Medical Center was filled with equipment from 123 Fit. The company simply took magazines like Diane from Curves and compared it. Now Curves claims it burns 500 calories.”
How do you know what I have read or not? I have read the archives to the Seattle Times, as well as talked to the Dr. from the Cardiovasculary and Wellness Center (Dr. Tipps) who ran the study as well as talke to Dr. Cedric Bryant, Chief Exercise Physiologist from the American Councel on Exercise who oversaw the study. Please do not insult me by assuming you know what I have read or not read.
Regarding the study, yes 1-2-3 Fit equipment was used and filled the space during the study. This was done so they could do the study, duh! When comparing to Curves, they used a study ACE had done using the same metrics a few years earlier. ACE is in the business of verifying health and fitness claims.
If you believe Curves burns 500 calories, I question you knowledge of fitness. When ACE performed their study, they showed Curves burn approximately 160 calories. If you are better equipt and knowledgeable than ACE and the Cardiovascular Wellness Center at Swedish Hospital, then I will defer to you and your claims. Until you can prove otherwise, I will go by their studies and results, which most of the fitness world does recognize as an authority on such matters.
Does this mean franchisees were not hurt early on? No, but it also doesnt mean that your experience is true for every single solitary 1-2-3 Fit franchise forever.
You should start a blog for all closed club owners who dont have any consideration for those who are making a go at it.
I feel for you and your loss, however, you have nothing but negatives for the remaining club owners trying to make it work. Please be considerate of others and remember your experience is not how everyone elses is or was.
Best of luck!!!
How do you know I don’t know more? There are unhappy current zee owners. That is as far as I will disclose out of respect of those owners. I am happy you are making it. I want everyone to be prosperous.
I just hate people who are unethical in their business practices. There are current owners that feel the same way.
I believe I am being honorable by disclosing the truth.
I am not the only former zee posting comments. You must know that.
123 Fit is not the only zor that has unethical business practices to entice people into signing a franchise agreement. Haven’t you studied the World Of Franchising? I haven’t only studied 123 Fit but other franchises. There are some good zors out there. The good one’s do not gouge their zees. They are there to guide them and help them reach success. You make it sound like the zor hasn’t any responsibility in branding the name or anything except to cash our checks. You are misleading people again that all the zees today are indeed happy and making money or close to breaking even. I may get my information second hand but I know the information is from good honest people. I have talked to current zees. Again out of respect I will not disclose any of them because I am a person of my word. They tell me not to say anything I will not. It will be interesting what will happen in 6 months to a year. 123 Fit is losing clubs. They are losing members . I understand another bit the dust recently. That makes 27 left. I understand some of the clubs aren’t selling that many vitamins. This is not negative this is reality.
Good luck to you. I do not want anyone to suffer financially. Just stop misrepresenting people and hurting others. It will come back on you.
Best wishes to the current zees. Prepare for the worst case scenario. Make sure you have enough money for a year and leagal fees to reorganize if something happens. Have a backout plan. This is information that the first generation zees did not have. If I did not care I wouldn’t be telling you this.
I love the circuit. The product is not the issue here. It is the business side. In fact I still workout on the circuit in my basement.
The study at Swedish Medical Center said it was good for the time pressed. You get a good workout in a half an hour. It worked better for me when I did it for an hour. Everyone is different. Curves worked for me. I worked harder than most. I saw members in my club that worked harder than others. I assure you some just glided through the circuit. I loved my club. I still talk to the members.
Many zors have special studies on their products. Many zors have icons and famous people endorse their products. I would be more impressed to have franchise attorney’s endorse good franchises instead of the zor telling us how great they are. That would mean more to me than having Ray Wilson endorse a circuit in which he was there for a short time. By the way we opened our club on April 20th, 2007. Ray was gone since 2005. At our opening corporate and the area directors mentioned Ray’s name alot. Ray put the circuit together with physiologist and cardiologist. They even said the equipment was made in Hungary. I say they were hungry for our money. Why was Ray mentioned so much during our opening? He was gone a long time.
I could write a book.
Lets agree to the following issues:
1. You and other closed clubs harbor tons of resentment towards corporate office and feel you were lied to.
2. Some clubs which are still open like their business and are profitable and others are on their way to profitablility and have no problems with corporate office.
3. Some franchisors are bad and some are good, but that the franchise laws favor the franchisor in not having to disclose unit sales/statistics, which helps selling more franchises.
4. Ray Wilson endorsed the product and helped to design and implement the basics which became 1-2-3 Fit. His endorsement in the fitnesss world is huge and important, whether or not he was with the company when you opened your store.
5. Not every 1-2-3 Fit owner will have the same negative experience as you did, nor will they have the same positive experience I am having.
6. Anybody considering a franchise needs to perform investigation and hire a good franchise attorney before engaging in any contractual agreement.
7. Regardless of your beliefs, Obama is leading in every national poll thus far, however, McCain continues to say the battle is not over yet.
8. 2012 election could have the first women running for president (Clinton v Palin)
9. Sacramento, Silverdale, Moses Lake, Cantonment, Pensacola, Oro Valley and Spokane all rock and serve as a beacon to us all of what is good about 1-2-3 Fit.
Best of luck!!!
Good zors insist on killer due diligence. The tide in many of the lawsuits for zees seem to be changing. Haven’t you read how many judges have allowed the Quinos, UPS cases reversed. They will have their day in court. Lady of America lost in a jury trial. There is so many franchise complaints across our country I believe our government will do something to change the one sided agreements. Time will tell.
Correction Lady of America zees won in a jury trial. With all the complaints about fitness centers I am sure this will have an impact in court cases. When all the complaints are consistant from all former zees about misrepresentations and puffing material facts the courts cannot ignore it.
As I have stated many times, I am all for changing the laws in franchising to better protect the franchisees and forcing the franchisors to be more transparent with their numbers.
I never questioned your hurt and that you were mislead. In fact you were mislead, there should be consequences.
The issues I have with your statements revolve around your thoughts that any and all franchisees with 1-2-3 Fit were screwed royally. This simply is not true. There are franchisees who are happy with 1-2-3 Fit and you just cant seem to acknowledge that.
We acknowledge you were hurt emotionally, financially and possibly legally and support your efforts to right the wrongs.
Best of luck!!!
The zees’s you say are happy are only a handful. Interesting most of them are area directors and one is now Vice President. Silverdale is very tight with corporate. He was our area director. Contonement is a a area director. Moses Lake is now Vice President of 123 Fit and an area director. Pete (Anon) sounds happy. I never said all were unhappy. Heck if our rent was $1200 we would still be in business. It seems the one’s or the majority of the clubs doing well have low rent and low build out. If our build out was $50,000 we would of been able to hire employees and not go out so soon. I know a lady in Mass. whose area director set up on a 10 year personal guarantee lease for $6800 a month. A club that closed after we signed the agreement has a club for $9,000 a month. (There were 2 partners.) $4,000 a month is too month for a business like 123 Fit. The lower the rent and build out the better a chance of breaking even.
The biggest challenge is to get people to committ to a exercise program.
There you have it. A few are completely happy with their businesses. If 123 Fit was great why did the 11 Ray Wilson Exercise Clubs not want to go with 123 Fit?
I did some research to verify what 123 Fit disclosed to us verbally. Exclusive equipment, Rick Schaden and Ray Wilson was suppose to be a part of the company. There are newspaper articles verifying their comments. We did take our UFOC to a lawyer. Not all lawyers and some franchise lawyers know about vetting franchise systems. Not all lawyers know how to spot the misleading statements. People need to do their due diligence on the lawyers.
Someone mentioned about buying a house and if buyers buy a house and sign off on the inspection it is the buyer’s fault. I am a realtor. Seller’s have disclosure laws that if not met they could and their realtor could be sued. In real estate it is disclose, disclose and disclose. When in doubt disclose. Here in Wa. there are disclosure documents that seller’s have to fill out. Anything visible that is wrong with the house or anything known about the house has to be disclosed. Even before the inspection. I have a liscence in Ca. The same laws in Calif. apply there when you sale a house.Realtors also have to take an Ethics test. There is a Code of Ethics we have to follow or we can be fined.
Perhaps less people will misrepresent people in franchising if the same laws applied. Even when there are regulations there will always be the bad that will work in the gray areas and rationalize right and wrong. I am so cautious of what I say and how I say it and I make sure my clients understand the contracts. Maybe franchising since many cost as much as a house or even more should have that law that zors have to go over their disclosures. People also need to know the franchise agreement and FDD is negotiable. Most do not know. I understand people are suppose to understand the franchise agreement and the FDD. 123 Fit just mailed our UFOC to us. I do know how to spot the misleading statements now after extensive studying. Estimate, may, shall, projected should are words in the UFOC that are often times over looked by future zees.
Also a $150,000 estimate investment could turn out to be a million dollar investment if projected out after 10 years. I assure many people do not think like this. Why would they?
Update on 123 Fit.
1. Another club bit the dust. (That makes 2.)
2 A club opened in the south. A former zee talked to her. She is so excited because she has been told that she will be making $10,000 a month. (How did she get those numbers?)
3. Former zees getting sued by Landmark for up to $88,000 for the lease of the equipment. They are charging for storage, transporting of equipment and getting charged up to 24% interest. When will the bleeding stop?
4. I got information about Swamscott. He is the area director who set the lady in Mass. up on a 10 year personel guarantee lease for $6800. When she went out of business they offered her a dollar for her club. He opened another club down the street. I understand he is sueing her for $54,000. More bleeding.
Lady in Florida should be lady in Mass. Sorry.
Yes a club closed. Are you aware of the circumstances of the club closure? Because if you were, you would not be so smug about it. It is always tragic when one has to close a club.
In these troubling economic times, people are cutting out their expendable income items and this is effecting everybody, not just gyms.
The people who just closed owned another business, construction, which as you know being in real estate, has been brutal. With their construction business struggling, they had no choice but to look to close their club.
Perhaps now that Obama is president-elect, he can “spread the wealth” to all those who have had to close the doors or continue to struggle.
Best of luck to all in their continued success and to those yearning for success.
I heard Obama is going to choose Palin to replace Biden as his vice president. This is only second hand like your info Barb, so it might not be true. That is the problem with second hand information!
Best of luck!
If I was smug about it I would mention the name of the club. I do not wish ill will on anyone. My information I get some is second hand. Some isn’t. When one opens a business and has to close it is a lost. You go through the stages of grief.
Remember businesses close even when we are not in a recession.
Update on 123 Fit:
1. We know of at least 5 clubs struggling.
2. The club that closed would of blown away the viability of 123 Fit debate. One of the clubs that a 123 Fit owner claims is a beacon to that 123 Fit’s new system is making a difference went out.
3. First hand information claims that they do not sell many vitamins and they do not make that much for a session with personal training.
4. 2 new clubs in Florida and 1 in Mississippi. When will they acknowledge that the new system is not working except for a very few. Pete Anon I do not believe your numbers.
5. Future 123 Fit owners need to get a killer Franchise lawyer to explain the misleading things stated in the FDD. Remember may, shall, estimate, projected, intend are not words that are concrete. The FDD is to their disclosures to protect themselves. There is nothing there to protect you. Remember the FDD is negotiable and find the things you want to negotiate in the FDD and agreement. If they do not want to negotiate things that will protect you or put things in writing say bye-bye.
6. If they have your best interest at hand they will insist on killer due diligence and insist you do it. They will respect the fact you worked hard for your money and help you reach success.
7. They will not gouge you knowing you need the money to reach success.
8. Go by your gut feelings. If your gut feelings tell you, you are dealing with a rat, listen. You will sense you are danger. If you sense it, you are.
9. If they rush you to sign or tell you need to sign the agreement right away tell them stop. Do not act like an employee. First rule in business is to protect yourself and your family.
10 If your area director says you are on your own after a month in business- get out as soon as possible. They will not be there for you.
11. If your area director says he’ll do everything for you. Do not go with it. Take everything in your own hands.
12. Look for a lease for 2 years. Negotiate an agreement for as long as the lease. If they say no, run away as fast as possible.
13. Rent should not exceed $1200 and no more than $1500.
14. Look for a place where you have little or no build out cost. If you can’t find one don’t go forward.
15. Put enough money away for a back out plan. A year at least. Check out legal fees.
16. Do not quit your job. Do not let your husband quit his job. Unless you have money for your living expenses to cover two to three years. Remember your family expenses come first. If you don’t have money to cover your family business forget about opening a business.
17. If the marketing isn’t working the first month what makes think it will work ever? It is pure insanity to continue marketing when you have proven over over it is not working for you. All wasted money.
Truth is, nobody has profited from this anywhere. Zees or Zor. Nor should they be, they are about 2 years old…a baby in business terms. I will bet any amount of money most new franchises are not profitable in two years. If anyone is thinking of investing in one…go work in one for a week.
Case closed.
Lawyers say to work in your choice of business for 6 months. I know of a zor that insist on his future zee wannabees work in their club for a year.
Another important point is good zors battle test their system for years. (On their buck not yours.) I have read you should not get into a frachise system unless they have 10-15 successful units. Good zors will allow you to be in a franchise association. Make sure there is a franchise association seal of approval. 123 Fit has neither. Do not be their guinea pig to get to a proven system. You will end up getting robbed of your good credit, life style, loose your home and end up in bankruptcy court. Remember there is such a thing of staying in too long. Smart business people know when to close. Dreams are fun but there is a time to face reality. The time to close is when you have a year of money to reorganize and legal fees. I know it sucks when you see the truth. Keep your ears open and when you hear contradictions and read consistant stories of people getting hurt it is time to focus on facts. The dream is an illusion. The dream is only true when you see the money coming in and making a living. Business decisions are based on facts NOT hope.
To be clear, I know the top grossing club owners. Best of my knowledge , no profit, no net upside after 2 years.
Update on 123 Fit:
l. Grand Juction, Co. closed their club. Now everyone in our training has gone out of business. One never opened his doors. (He was the lucky one.)
2. Clubs losing members.
3. Talked to existing club that really wants to close. I will not say which club this is because I promised not to say anything.
4. News article about Oro Valley, Arizona. claims the enocomy is not hurting them. Reminds me of fomer articles that made it sound so easy. You need to look at the whole picture, only 25 clubs left. 40 have gone out of business. All financially and emotionally hurt
Barb:
Is there a list somewhere of all the 1-2-3 FIT clubs that have closed?
In the UFOC (2007) plus more went out in 2007. Would you like me to make a list of all that went out of business since 2005? I will do it if you want me to.
Barb! Just wanted to tell you that another 1,2,3 Fit closed in KC and the irate customers of the poor franchisee were complaining on television news a few days ago. They, and not corporate, of course, are responsible to the end consumer. Last time one closed in Kansas, they reported that Corporate was going to refund the membership money to the irate customers, but under law it is the franchisee who is liable.
Wanted to tell you also that the reason that the FTC Rule doesn’t require the franchisors to disclose the risk, as known to them, in terms of profitability and failure of other owners is because under law, if you are incorporated, you are considered a “sophisticated” buyer who doesn’t have to be provided full disclosure as provided to unsophisticated buyers under SEC law.
Were you incorporated? Maybe, if you weren’t incorporated the State Consumer Protection Laws and Franchise Statute will protect you.
We were incorporated but I understand that coporate was suppose to disclose we were to be bonded. Many of the clubs never were told this.
Here is the list from our 2006 UFOC. I have to look for the 2007 UFOC which I have read 2005, 2006, 2007 UFOC’s.
1. Rocklin, Ca.
2. La Mesa, Ca.
3. Arvada, Co.
4. La Quinta, Ca.
5. Carlsbad, Ca.
6. Davie, Fl
7. Rocky River, Oh
8. San Diego, Ca.
9. Spokane, Wa.
10. Redmond, Wa.
11. North Carolina (C)
12 North Carolina (W)
13. Cornado, Ca.
14 Lake Elsinore, Ca.
15. Poway, Ca.
16. Columbia Mo.
17. Temecula, Ca.
18. Grand Juction, Co.
19. Murrieta, Ca.
20. Rancho Bernardo, Ca.
21. Vista/ Oceanside, Ca.
22. Miami, Florida
23. Fair Oaks, Ca.
24. El Paso Texas.
23. Austin, Tx.
24. Murfreesboro, Tn.
25. Maieta, Ga
26. Auroa, Co
27. Spring, Texas (CEO’ father)
28. Parna, Ohio
29. Kansas City
30. Draper, Utah
31. Austin, Texas
32. Mass. (C. Ferra.)
33. Mo. (Elaine)
34. Atascocita, Tx
35. Greenwood Village, Co.
36. Kingwood, Texas
37. Parma, Oh (Doesn’t answer as 123 Fit)
38. Another one in Kansas City (From Carol’s blog.
39. Las Vegas, Nevada (This is not on our UFOC. )
I am missing one. The new UFOC hasn’t come out yet. The last time we counted it was 40. As soon as get the last two I will post it.
Billings is still open. It should be replaced with
Las Vegas, Nevada. (That should be #39.)
[Ed. Note: Change made]
Another question zee wannabee’s should asked is SNO. (Sold but not opened.) I know of a few and talked to couple of people who never opened. Kent, Wa., one in Colorado and another in Southern Ca. One was from Florida which I am thankful he did not open because he had a bunch of little children.
I know when we opened our club there was 39 clubs. If everyone opened another at a discounted price of $1000 that would be 78 clubs. We all had a number. We were #77. What happened to all the clubs since the numbers were over 140? This I believe should be disclosed.
The list above came from all three UFOC’s. Not only 2006. It will be interesting to see their 2008 UFOC which should come out soon. Thank God for Cal-easi.
I think you are right, Barbara! Obviously, it is fraud, if not “legally defined fraud” when franchisors fail to tell new buyers about other first-owners who have failed and are failing when they have these numbers in their possession.
They do this all under cover of the FTC Rule that permits them NOT to update this information, even in the transfer and termination columns of the FDD’s, until much too late for the newest buyers of the franchise. If they can CHURN enough visibility in the national market, they perhaps can stay alive.
The founders of this chain were the same as Quiznos and Quiznos grew its chain on churning and encroachment with full approval of the courts in Colorado, it appears. Maybe failed owners of 1,2,3 Fitness can move to Colorado and take up residence in the Homless Shelter that the Schadens have built or are building in Colorado.
I only know of two they churned in Co. Because of Quiznos many of the former zee owners of 123 Fit learned how Quiznos built their empire on the backs of the hard working people of our country.
I think people are educated about churning because of sites like this.
I could not get on the Cal-easi site to get 2008 FDD and 2009 should be coming out soon. I did read 3 of their disclosure documents. They are all different. 2007 seemed more direct especially about territories. They even said if they wanted to they could open a club right next to yours. Now who would sign a document that states something like that? I brought up the fact our’s said no territories but the rep kept reasuring me there would be a 3 to 5 mile territory. I kept saying but the UFOC says no territories. I was very concerned about that. The truth is it doesn’t matter what the rep says it is what is written on their disclosures.
I believe the 40th store is Pheonix, Arizona. I am waiting for verification on this club.
In many states now they are suppose to disclose the clubs that closed if it is a significant. I know 12 closed in 2006. How many closed before we signed? We signed in May of 2006.
There were many inconsistances while we were in business and many after we closed.
Before you open they will tell you that 11 were 123 Fit Clubs. I know Joe Ocoha a business partner of Ray Wilson’s was the first to close and was a 123 Fit club. After you are in the club they say they were always Healthy Exercise. Before we signed I tried to get a hold of Joe but there was no current phone number. When the 2007 UFOC came out I did get a hold of him. He was a 123 Fit owner. I understand that zors have to now put current numbers for future zee wannabees. A franchise attorney from the securities department verified this is a new law that the zor put reachable phone numbers of past zees. Confirming why I could not get a hold of many of these zees when we signed the agreement in May 2006.
Many of the Quiznos lawsuits were not posted on the internet when we signed. Remember Bob Baber did not kill himself until Nov. 2006. My daughter is a business major and did an investigation on 123 Fit. She could not find anything wrong. The conclusion to all this is future zee wannabee’s do not sign a franchise agreement until there is transparentcy in a system. Many signed because Quiznos was successful. If we would of waited for six month to a year the transparentcy would be there and I know we would of never done the franchise.
40. Austin Texas- I believe it was sold to another owner.
I haven’t heard about Pheinox, Arizona yet. Again I still haven’t got a hold of the 2008 FDD. When I do I will post the clubs that closed. I know the original owner name for Austin was Shanti. She closed before we did. I called there and another owner answered.
Only 21 clubs left. 44 have gone out of business.
Am shocked, that 123 Fit are going out of business – The concept was given to them by the most genius fitness person I know – (Ray Wilson) he built an empire with Family Fitness Centers in the 80’s, I know I worked for him – and before him I worked for Jack La Lanne, The Father of all Fitness Centers.
I worked for 123 Fit in Parker – it was the first to go out of business, why?
the owner new nothing of Fitness. I was so excited to bring to the table my 30 year experience but he was more interested in money.
If there is one thing I learned from Jack, and Ray is give the customers what they want – THE PERSONAL TOUCH, low initiation FEE and low dues. It’s worked for years I’ve seen it. To many clubs out there are getting greedy –
123 Fit concept is one of the best I’ve seen in a long time for a small club.
Lets face it there will always be big clubs offering the stars and the moon – but what about mom and pop, or Mr. & Mrs Smith who want just a quick place to work out before they go to work or after, without having to wait for machines or people grunting or music blairing in their ears. Trust me folks – 123 Fit
is the perfect club of the future – Hire me and I prove it.
This is the little club that could… Don’t give up, lets just regroup and hire the right people, I know everything there is to know about building a club from the ground up.. I can teach your team to get referrals without even trying … I don’t know who is behind the 123 Fit concept right now – but you need me on your team, I believe in this little club and it’s concept don’t let them dissappear, its not about the money, it’s about people – and the sooner you realize that the soone you can start making money.
Ray Wilson was there and gone real fast. Why are you bringing his name up now? You have to be a shill.
Many lives have been devasted.
Sorry Barb, didn’t mean to upset you in anyway, not defending him in anyway -
I was there when 123 Fit was growing – I suggested a concept that was from the old Jack La Lanne days – and they basically brushed me off. It seem to me that money was more important up front for 123 Fit. After all, Jack La Lanne and Ray Wilson didn’t become sucessful by being money mongers, they became successful by giving people what they needed, low prices and lots of personal one -on-one customer attention. Lets not be ignorant here – Ray gave 123 a concept, and the owners of 123 Fit did what they wanted – that’s why they failed. Ray, Jack are still in business and where is 123 Fit.
Don’t kid yourself, it’s easier to point the finger at someone else when things fail. but the truth of the manner is, 123 Fit owners miss the boat on their target democragphics, and their marketing had a lot to be desire.
Don’t get me wrong, I love the 123 Fit concept, they had a gold mind but no sense of business when it came to Fitness. So if you want to be angry at someone, as yourself this question – what would you have done different?
A loser cries over spill milk, a winner regroups and goes back to the drawing board, the concept is great – but what will everyone on this board do to make it better, instaed of being negative.
Than’s all I have to say, after all what do i know I only learned from the Best – …..
What I would do different is not listen to any of the people who set us up. I would of taken everything in my own hands told them to stay out of any of our plans. When we found something than we would contact them. After what we went through I would not listen to any of the 123 Fit people. They are not knowlegable in setting up a business.
We thought since Ray Wilson was indeed a part of the corporation and they mentioned his name all the time that we needed to do what they said. It was Ray Wilson this and Ray Wilson that giving us the impression he was helping run the show. “It is the Ray Wilson Way of marketing, Ray Wilson set up the circuit with help from cardioloigist and physioloigist.”
Unfortunately it is positive thinking that hurts many zees. You have to be cautious. Too many inconsistances especially after we opened the club.
First of all they gave us the demographics of the area. Which didn’t mean much. I believe I should not of gone to CA. on real estate business because my husband never had any business experience and believed everything they said. I would of moved slow as slow as a snail. 123 Fit is about hype and that is all. They will rush you and I know if I was there I would look at many more sites.
The area director said not to make any cold calls. There is a list of names that you can call. Later to find out many clubs cold call. Very short and inviting them for a week to work out.
The key is when you buy a franchise they imply doing business in good faith with you. It is not negative pointing out what is wrong. In fact it is constructive. I believe 123 Fit led us down the road to fail and was not there for us. They hired a marketer that wasn’t worth a hoot. When did they do this? When they knew were close to closing to make them look like they gave us support. I saw the guy take only 10 flyers and a few free week passes. Their expensive marketing was not worth anything. It needed to be more personal. Not corporate looking. People hate corporate looking marketing materials. First of all we were open, too open with them. I would never be as open because they knew how much we had. I believe with all my heart they were just waiting to take over our club. When the area director came in our club he always said, “I love your club.” Now I know why, because they had every intention of taking it over with two years of them not paying us anything and we paid the equipment and are still paying on the build out. What vulgers. Sorry it is not being negative when it is the truth.
The first thing I would of got rid of is corporate, period.
Sounds like you did not want to follow any of the advice of the franchisor. Why did you franchise then? Did you stop to think that they had a proven system and if you followed it precisely, you may have succeeded? I am a franchise with another company and I follow the operating system to the letter and reap the rewards. Why would you think your “localized/homeade” marketing would pull better than a corporate ad? If you wanted to re-create the wheel, franchising was not a smart business decision on your part.
We did at the beginning. We put out 5,000 door hangers and only got 1 member. It was expensive.
You are probably with a good zor. Good zors are there for you to reach success. Instead this zor gouged us at the beginning. Messing up our numbers from the beginning. They implied good faith in business and what a nightmare. Not only for me but many zees who went in business with them. They sold 128 clubs, many SNO’s and only 21 left. All the zees that went to training are out. Only one SNO. He was the lucky one. Like Sean Kelly says when it is a win, win, win deal you are dealing with a good zor. This zor was not good. If you believe all zors are good than you live in dream world. When we signed the agreement there wasn’t alot of bad things on the internet. To be honest after studying the franchising world there is only a handful that is good. They all have the bomb clauses that allow them to lie and steal and cheat people. Until franchising cleans up their act it isn’t safe. Until lawyers study franchising in law school than people will be safer. Even the FTC warning doesn’t cut it. Franchise lawyers is not considered a speciality therefore what is our chances of getting good advice. The warning from the FTC says “lawyers.” Not all lawyer’s are qualified to give sound advice. Killer franchise lawyers is a small sector.
Franchising is a brilliant concept when done open, honest and ethically.
The problem is we listened to our zor from the beginning. A franchise consultant would be better than 123 Fit. My oldest daughter who is a business major would give us good advice, much better than the way they got us started. When the trust is gone from early in the business I doubt if you would of done any better. They were suppose to be our leaders. They lead us to fail from the beginning. It is obivious after you are out of the middle of the storm.
Obviously, you were not knowledgeable in setting up a business either, or you would be thriving. Your mistake was not following the operating system. Maybe if you would have done the door hanger over and over with frequency, you would have gained momentum. You should have listened to the SOR for advice. I listen to mine and have reaped the rewards. In reviewing all your posts above, it appears you were so worried about who was closing, who was in bad financial shape, and “investigating”, there is no way you could have had a strong hand on the wheel of you own business. As a franchisee, your business is to follow the system, not create your own.
Why do you think people buy franchises? Hoping to get advice. While we were there there was no good sound business advice. If this is the case they need to put on the UFOC, “We do not give you any advice.” They did say “We give you advice when we see it appropriate,” The key word is appropriate.
The problem is Ray Wilson wasn’t there and the leader had no knowledge in building a fitness franchise.
YOu must be one of the area directors or VP. 128 sold, 21 open. Everyone was bad, right?
It was the business people in our club that pointed out was wrong. The door hangers were expensive and it took weeks to put our that many door hangers. There was other door hangers that were from other fitness centers and yoga, jazzercise and other fitness bussinesses. People were not happy us putting something on their door. People were not happy us putting flyers on their cars. We got kicked out of parking lots, businesses, churches would not call us back, schools would not call us back, hospitals would not call or allow us to talk to Human Resources. You know why? Then other fitness businesses would be at their door. It was obvious their marketing strategy was fruitless. Remember we did pre-sales before we opened. Did it their way. It was costly and not many responded.
YOu must be Lisa. You tried to sell your club. You are not always there because I have tried to call you many times while we were in the club. Why don’t you just come out and talk and reveal your identity. Spokane claims your hardly there in Moses Lake. Your husband is either golfing and you are rarely there. Which explains why you were not there when we visited your club. It was on a Sat. afternoon before we signed the agreement.