BUTTERFLY LIFE FRANCHISE: CEO Claims Fitness Chain’s Still Fluttering Along
October 22, 2008 by Sean Kelly
Filed under Business
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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Good idea to change the concept. Maybe Mr. Golob with man up and pay back all the people he lied too and stole there money when he couldn’t deliver the product that he was supposed to deliver. I really just don’t know how people like him keep up trucking in this world.
This is amazing!!! Does Golob really believe that personal training and live classes are new to the fitness business?……..knowing Mr. Macho I’m sure he thinks he invented them. Maybe he’s bringing back the old Linda Evans type facilities. Can’t imagine he could come up with anything new! I read Goldman’s article Sean, and you neglected to state that Golob declined to say what the reason was for the move. I have a good suspicion that they moved because most of their clubs closed and many stopped paying their royalties. Sounds like they couldn’t afford their rent. Of course that couldn’t be, with their incredible success rate. In an article Golob did in early 2004 he asked for the editor to revisit BFL in several years to see his success rate. After all, there was going to be 1,000 locations opened in 3-5 years. Oops….you fell a little short! Are you going to blame the AAFD for those failures also? Maybe with the word “Fitness” in the title now some people will know what it is. Too bad Golob didn’t listen to “EVERY” franchisee over the years who had the same suggestion!!!!! But of course, it’s his baby and has to be his idea. I guess he thinks he can reinvent the wheel……..we’re watching every move you make Mr. Golob and we’ll make sure any potential franchisees do their due deligence. Don’t forget to name our Butterfly Life Franchise Association in your new FDD!
Sounds like Golub is mounting a legal defense and starting a NEW Franchised business with a NEW Name and a NEW FDD just to prove that he had good intentions in the first place? and that he is in compliance with the FTC Rule? Or, am I misreading this and he will still be the same legal entity that sold all of the franchises that have failed?
If he has a new FDD under a new name, he won’t have to declare the terminations and fire sale transfers of the first concept that failed, and he wil be able to get away with this under the law? If he has to declare the terminations and the fire-sale transfers and the litigation in his expired FDD that will be updated, who would buy this franchise if they understood what Item 20 was indicating?
What is going on here?
Just remembered that there is a lawsuit in the District Court in Denver that BFL franchisees should know about. Janet Sparks of Franchise Times wrote an Article in the Jun – Jul 2008 issue that would be interesting to all BFL ex-franchisees who are now united in a legal action.
I don’t know the current status of this case but it will have serious consequences for franchisees if expert witness, Michael Seid, is able to convince the court —-I quote from the article: –that he knows of “no legal or industry requirement that a franchise opportunity must be tested in any particular manner, or that a franchisor cannot sell a franchise opportunity until it has been proven by prior franchises.” —The Article goes on to say that “He writes that the Federal Trade Commission and state regulators have not established a franchisor “Duty of Competence,” Instead, he states, they require franchisors to disclose accurately their experience and history, whatevever they may be.”
Of course, the Disclosure Document under the provisions of the FTC Rule and the state FD does not clearly or precisely disclose the failure or the lack of profitability of the franchise when there are no earning claims in Item 19 and when Item 20 of the FDD is imprecise and confusing.
GOOGLE in Franchise Times Peaberry Coffee Article and read this entire article.
Michael Seid wrote “Franchising for Dummies” and is the expert witness for the defendant, the Franchisor, and Robert Purvin, who is the expert witness for the plaintiff franchisee wrote “Franchise Fraud.”
Be sure to read Robert Purvins public comments to the FTC in 1997 concerning the FTC Rule wherein he seems to indicate to the FTC that the FTC primarily regulated franchising to protect the franchisors from allegations of common law fraud in the state courts, and that the FTC Rule was flawed because no historical unit performance statistics were required to be made available to new buyers of franchises.
Does Golub know something you don’t know? Think about this.
Where is Gergley??? AND is Golob admitting that it is the concept of his Butterfly Life product that failed, or does he still insist that the failures were franchisor centered?
If the former, then he lied to a lot of people by commission and omission; if it is the latter, then what steps is he going to take to ensure that the new batch of franchisees are competent to perform?
And what about the current Butterfly Life operators? How are they going to be rehabilitated??? And what about all the operators whose businesses failed because of Golob’s & Gergley’s lies. Are they going to be compensated????
This saga is far from over. The egregious acts of Golob & Gergley will not go unpunished.
I am so excited about the prospect of investing with the re-invented Golob!! Imagine this: personal training, live classes, great equipment, & low prices. Wow! A neighborhood woman’s club!!! Where do I sign??? Hurry! Hurry! Hurry! Step right up, Ladies & Gentlemen!! Golee, gee, this sure sounds swell.
If we don’t all give Golob a whole bunch of money right away, he might finish that “testing” and sell out before we have a chance to be in the vanguard of investing in the first good 5 cent cigar!! This is the opportunity of a life time!! This is akin to building a better mousetrap!! What a genius!! H-m-m … personal trainers & live classes … who woulda thought???
Listen, I know Golob & if we don’t act now, he might be in a position where his integrity and ethical business practice will prevent him from taking our money. He only lets a few special people into the inner-sanctum of his “brain children” and would only take money from those who have the “right stuff.” And you know who you are: anyone who was born before 1990.
And please don’t spread this around; if any of the thousands of independent fitness center operators find about the concepts of personal training, live classes, great equipment, & low prices, they might steal Golob’s idea (what a genius he is; have I said that??)
Golob is one who is always true to his character. Like when you go to the snake hut at the zoo. You know you’re going to see a bunch of snakes there. Same with Golob. He’s a snake. That’s it. Now, Gergley …
Gergley is the most treacherous of them all. Be careful, my friends, where you step.
TO carol cross:
I’ve thought about it. Now, what do you think Golob knows that I don’t know???
Mr. Golob
It sounds as if instead of the 100’s of failed franchisees being at fault in the first Butterfly Life saga you sold a concept that had no basis of success. And there is evidence that you knew of the failure early on yet continued to take money knowing that there was no chance of survival. Your blatant disregard of the past 4+ years indicates a sad pathology. What is your comment to the 100’s of people who have lost significant money on your practice run and to those still out there who bought your first concept. Mr. Golob you are full of it and just as your statements from your 2004 interview are tragically laughable, your comments to Club Industry in 2008 will be the same.
Ms. Cross you are correct who are these people and what is going on? My suggestion is watch “The Grifters” sad, sick movie.
Mark, Tom and all the old saying “be careful who you step on on the way up as you never know who you will meet on the way down” is true. Well all those stepped on people are talking and providing so much information waiting for all of you to make the trek down. You may have blanked out the last four years but the rest of us haven’t.
By the way did anyone note that Mr.(s) Golob and Gergley had no problems selling franchises in the last four years where people would not perform well in fact they profited from those sales quite nicely to the tune of almost $6mil. They do believe ther own BS don’t they. If you think you can resurface reinvented you haven’t heard of the internet, I don’t think there is anyone who will walk across the Grand Canyon with you now….except your same cronies from the many corporate entities you have had in the last 16 years. Shell game is over. By the way where is the new concept being tested…the new corporate downsized offices? Right!
It’s going to be survival of the fittest for fitness independents as well as businesses in this economy – It’ll be interesting to see how this evolves -
Yes, there are hard times ahead for all businesses but remember that in recessions, where jobs are lost, franchising picks up and franchisors do make money selling franchises. All of the franchisees of BFL who are standing and trying to break even, are feeding royalties to BFL on top of the franchisee fee they already paid.
Maybe BFL can “churn” its survival.
When good jobs are scare and Americans have to look to self-employment, a franchise looks like a good safe opportunity for a job and profits as well.
Try to understand that in the reality of the status quo of franchising, and in the regulation of franchising, the franchisors are permitted and allowed to hard sell and hype their franchises to the public without disclosing any actual proof of the viability, or survivability, or profits of the investment of the first owners of franchises to new buyers of the franchise.
If 50% of the franchisees fail and 50% survive, the government just plays deaf, dumb, and blind and the boilerplate, non-negotiable contract the franchisee has signed generally protects the franchisor from any charge of fraudulent inducement to contract in arbitrations and in the courts.
This is the effect and the intent of regulation. The federal regulators help the franchisors to play the game of “survival of the fittest” and rationalize this as serving the greater good.
Did you read the Franchise Times Article ”
Experts weigh in on franchisees’ lawsuit against Peaberry Coffee?” Do you understand the implications of this article? I can’t find this lawsuit and perhaps it has been settled and dismissed out of court. The powers that be wouldn’t want to take the chance that any new case law would be made that would help franchisees in arbitration or the courts.
All I can can about these two is they have yet to see the hell that is about to rain down upon them and their famalies. And by the way the new corporate office is a PO box in a UPS store and the phone numbers are cell phones.
Not to mention that these jokers are not smart enough and to cheap to ever have a mail server or web server. My guess is that did’nt pay someone. I haven’t done the math yet but maybe someone can figure out the perecentage of clubs listed as closed or never opened compared to the advertised “218″ open.
What about Japan? Ireland & the Bahamas they’ve dropoped off the map.
These 2 sociopaths are the lowest of low and the sad thing is that they dragged their families into it as well, although [del] isn’t bright enough to get a real job anyway, he had no choice. And as far as the “loyal” employess that are still with these dirtbags… get a real job and maybe you’ll get you’re self respect back. As far as I’m concerned your complicit and subject to the same consequences that these jokers will face.
G&G I hope you like institutional food that is if someone doesn’t steal it from you before you can eat it.
Carol – Based on your research, would the same hold true if 75% or more of the franchisees fail?
A P.O. Box?? You’ve got be kidding! I used to think Cathy G. had some integrity but she’s right there with them telling everyone about there move to the new office..never mentioning it was a PO Box. I’d have to agree…they down-sized alright!
The website is back up.
Despite saying they are not selling franchises, the franchise recruitment sections are still up and prominent.
the way the new corporate office is a PO box in a UPS store…
The corporate office resides within a UPS Store?
How’s that for franchise irony?
I want to ask people in Butterfly fitness or former owners if their equipment was Life Fitness? I saw a video of people exercising on You Tube and many of the the equipment that is adjustable to your leval of fitness resembles 123 Fit’s equipment. Is Butterfly Fitness over ten years old? Does Butterfly Fitness still get their equipment from Life Fitness?
to Unbelievable! It is unbelievable! I agree!
Yes! Based on my research, the same would hold true if it was 75% –and probably the SBA would guarantee the loans if the franchise didn’t reflect a very high rate of default in the SBA system. It is my belief that the SBA will guarantee loans as long as the franchisor has an FDD and a signed contract that protects the franchisor from claims of fraudulent inducement in the courts. The SBA is, of course, not away of the failure of franchisees who negotiate other than SBA Loans or who continue to pay on startup debt of loans in order to avoid bankruptcy and the loss of their collateral, usually their home.
Remember that both Robert Purvin (Author of Franchise Fraud) of the AAFD and Susan Kezios of the American Franchisee Assolciation have indicted to the FTC over ten years ago in public statements that the failure to make the franchisor disclose any historical financial performance statistics on a UNIT basis to new buyers of their franchise is, in their opinion, misleading by omission.
Please Read the Franchise Times Article “Experts weigh in on franchisees’ lawsuit against Peaberry Coffee” in a GOOGLE Search. You see that an Expert Witness, Michael Seid, who wrote the book “Franchising for Dummies” defends that franchisors need only to comply with the FTC Rule to legally sell franchises to the public.
How did the FTC come to design a Rule that would permit franchisors to hide/obscure the failure rate and profitability rate of units in their systems from new buyers of the franchise?
Of course, the government didn’t intend that franchisors would use the FTC Rule to sell franchises with 75% or 50% or 30% or 20% failure rates and hoped, I assume, that the failure rates and unprofitability rates of franchises would remain loan enough to fly under the radar —-say 10% or less.
They goverment rationalized, I’m sure, that those 10% who failed shouldn’t be allowed to take down the franchisor and the franchisees who would succeed because, of course, franchising does feed the economy and, therefore, the greater good. If franchisors could be successfully sued in arbitration or the courts for fraudulent inducement to contract and the franchisees were returned to “whole” the cost to the franchisors could threaten their existence.
But, when franchisors are permitted under the FTC Rule and the state FDD’s to sell franchises at any degree of risk of failure and lack of profitability as indicated by unit historical performance of the system, this is WRONG and should be stopped.
The franchisors know that the present status quo of law and regulation together with their signed boilerplate/adhesory/self-serving contracts generally protect them in the courts because the courts are obligated and have the duty to uphold the written words of commercial contracts and to support federal regulatory policy that is driven by the will of The Congress of the United States.
Corrections! Typed too fast! First paragraph should read “Of course, the SBA is not AWARE” instead of not “AWAY.” Fifth paragraph should read “would remain “LOW enough” instead of would remain “LOAN” enough.
Sorry about that!
As did carol cross, I must correct my October 22 post. Third paragraph, last sentence should have read “before” 1990 instead of “after” 1990.
Where is Bob Purvin these days?
BFL annual update……….rumor has it that Diversified Health & Fitness has sent all contracts purchased from Butterly Life to collection agencies and that Mark Golob and Tom Gergley are holed up in their homes to avoid being served by various groups who are going after them. If this is true, I couldn’t be happier for a more deserving group of people!!!!…..and life goes on with a smile on my face……..