Butterfly Life Franchisees Allege Bait & Switch… of Execs
March 3, 2008 by Sean Kelly
Filed under Business
(FranchisePick.Com) Related Reading:
Butterfly Life’s Golob: Failed Franchise Owners Should Blame Themselves
Fortune Article Spotlights Butterfly Life Franchise Woes
Butterfly Life Franchise Lawsuit in Forbes
24 Hour Fitness Chairman Mastrov Resigns
Will the REAL Butterfly Life Franchise Please Wave Its Wings?
IS BUTTERFLY LIFE A GREAT FITNESS FRANCHISE?
They wanted Mark Mastrov. They got Mark Golob. They are suing.
According to franchisee attorney Mario Herman, who was interviewed for Stuart Goldman’s article Lights Out, many early franchisees joined the Butterfly Life franchise program believed that the respected Mark Mastrov was going to play an active role in the company. Early on, Mastrov was listed as a director and founding shareholder of Butterfly Life, but did not appear in the last two company UFOCs. Butterfly Life has been led by founder and CEO Mark Golob and President Thomas Gergley.
The alleged misrepresentation of Mastrov’s involvement is only one charge made in the franchisee lawsuit against Golob and Butterfly Life, according to Goldman’s article. Mark Mastrov is known for growing the 24 Hour fitness chain from to the highest-revenue producing company in the fitness club industry, with more than 3 million members in more than 400 clubs worldwide. Golob & Gergley founded Butterfly Life after the abrupt closing of the Linda Evans fitness clubs they founded. The ignoble end of the Linda Evans fitness club chain included litigation between Golob & Gergley and the namesake “Dynasty” star and a $110,000 settlement with the Orange County District Attorney over Golub’s refusal to provide cash reimbursements for prepaid memberships.
Here’s an excerpt:
…many franchisees [believed] that Mastrov was going to play a big role in the company, [attorney Mario] Herman says. In the first three Butterfly Life UFOCs, Mastrov was listed as a director and founding shareholder of Butterfly Life, but he was not listed in either of the last two company UFOCs.
“Our understanding is that [Mastrov] may have made a financial contribution to this thing initially but really has nothing to do with it on an on-going basis,” Herman says.
Mastrov could not be reached for comment for this story. Golob refused to answer questions involving Mastrov’s involvement with the company, but he did respond to the counterclaim by Butterfly Life franchisees.
“There is no merit to their answer of the lawsuit,” Golob says. “We plan on fighting this lawsuit to the end, and there is no doubt in my mind we will win.”
In 1991, Golob was 24 Hour’s vice president of marketing. In 1992, he left 24 Hour and along with Gergley started the Linda Evans clubs. In 2003, Golob launched Butterfly Life. In 2004, he sold six Linda Evans clubs to 24 Hour, but kept five Linda Evans clubs, some of which became Butterfly Life clubs.
Tomei purchased one of the former Linda Evans franchises and converted it to a Butterfly Life club, which boasts a 30-minute training circuit along with group exercise classes and a weight-loss program. But Tomei’s club began struggling, and she started receiving e-mails from other Butterfly Life owners who were in the same boat. Tomei began compiling a list of Butterfly Life franchises that were closed, closing, in the process of re-sale or had not yet opened. By Tomei’s count, 88 Butterfly Life clubs in 16 states fit in one of those categories.
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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Here is an interesting blog from India. I hear BFL is trying to sell in India, Japan, Australia and Canada. Sounds like India got an ear full. We need to blog them around the world if necessary. Many franchisors leave the country when things get heated up in the US. Especially when everyone knows their MO. At this moment, they are at the International Franchise Expo in DC. Hope you all will be able to read this.
http://blog.fai.co.in/2007/07/20/before-you-start-franchising/#comment-142
Vice Versa:
Is BL actively looking to expand into India?
Is there a link you can give to a press release or article to that effect?
I am writing some pieces specifically about troubled franchisors exporting their franchises abroad (and specifically India) and am looking for examples. I see that Contours has a franchisee there.
So many different BFL blogs……Sorry Sean, but I just read this. Probably forgot to check the followup comments box when I sent my blog. Nevertheless, months ago BFL had India and Australia posted on their site in addition to Japan and Canada they have posted currently. India and Australia have since been removed. Rumor has it that BFL sold their rights to Japan several years ago for a song and a dance. One of the franchisees in this country supposedly knows the people who bought the rights in Japan. I realize you were working on this in April, but if you are still interested in doing a follow-up, I can put you in touch with the franchise contact who can give you more info. Quick update – The BFL franchise association is hoping to go head to head soon with them in arbitration as soon as they quit stalling and get their act together. The DOC (Dept. of Corp. in CA) will be letting us know this week if they will continue with their investigation based on the allegations we filed. FYI…..13 more locations closed in the last two months. There are approx. 78 operating at this point. All the franchisees (current and/or closing)I have spoken with in the last several months, including those who paid franchise fees and never opened, have not heard a word from BFL after many attempts to contact them……what a surprise!!!
Sean – Forgot one thing….Several of us registered and blogged on the India website several months ago, but it appears our comments were not posted.