Cuts Fitness Franchisees "Bought Their Way Out," Ex-Owner Claims
October 11, 2007 by Sean Kelly
Filed under Business
(FranchisePick.Com) Part 3 in the Mysterious Disappearance of Hot New Franchise Cuts Fitness for Men series. See related articles at Blogliography: 30 Minute Fitness Franchises.
In Part 2 we asked: “A little more than a year ago, Cuts Fitness for Men was a “hot new franchise,” and one of the “fastest growing fitness franchises in the world.” Today, they’re missing in action. What happened?”
An ex-Cuts Fitness franchise owner (who prefers to remain anonymous) may have provided the answer. While this information has neither been denied nor confirmed by the Cuts for Fitness corporate office, the ex-owners account would explain a lot.
According to the unnamed source, by May, 2007 most Cuts Fitness for Men locations were closed, closing 
or struggling. One of the reasons, the ex-owner alleges, was that Cuts corporate had decided to write a “Cuts book” and “all of the advertising money everyone was sending them every month went into writing the book. As soon as the book came out and bombed, corp. pretty much cut us loose.”
According to the source, around mid-May, 2007, Cuts Fitness for Men corporate offered their franchisees a chance to buy their way out of the franchise agreements for $2000 each. With this option, owners would be allowed to operate their clubs as independents. They could continue to use the Cuts Fitness for Men name for the current club, but not open a new one with that name. Under the buyout option, franchisees would no longer pay royalties or ad contributions, but they’d receive no more corporate support.
If Cuts Fitness franchise owners declined the buyout option, they would be required to invest $20,000 in mandatory upgrades by July, 2007. According to the source, every franchise owner jumped on the chance to get out of their franchise agreements for $2000 each.
According to FranchisePick.com’s source, there are still about 40 non-franchised Cuts Fitness clubs that are open and trying to make it work. Some of the clubs have gone to a 24 hour/7 day a week format, while others have gone co-ed.
Does this mean that the 30-minute fitness concept is not viable? Like others I’ve spoken to, this ex-owner still believes in the concept but believes that Curves for Women gained a powerful advantage through early market domination and effective branding and marketing. Many of the Curves knock-offs are not able to compete with the better-known, better-marketed Curves… and the jury is still out as to whether anyone can make it work targeting men.
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Blogliography: 30 Minute Fitness Franchises.
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Although I am not happy with some of the decisions made by corporate, the franchisees must take some of the responsibility. People with little experience in business or sales were opening franchises believing Cuts to be a turn key operation riding on the coat tails of the Curves success. Cuts started with the same concept and style equipment as Curves, it wasn’t working! Cuts realized that men needed more weight equipment. Corporate decided to upgrade our equipment to attrack a broader market for our benefit. The franchisees refused to spend anymore money waiting for the “curves success” and blamed corporate for mishandling our advertising dollars. There were only a few clubs contributing to this fund, how much advertising could they have possibly done. Curves has over 10,000 locations contributing to their advertising efforts, do the math! Cuts Clubs started closing which inevitably hurt new franchise sales. That’s what happened! I understand many people lost alot of money in the process. This is business! The concept works! Those remaining clubs who took advantage of the upgraded equipment are still in operation and would have liked to have corporate support, and continued to grow our businesses to the success of Curves. An expensive lesson for some, for those remaining clubs, I wish you continued success helping men live longer and healthier lives!
Laurie said:The concept works! Those remaining clubs who took advantage of the upgraded equipment are still in operation…
Laurie: Thanks for your contribution and insight. I agree that franchisees of new concepts should recognize that they traded some of the security of a proven system for the excitement, potential and risk of pioneering something altogether new. What was the lesson of the first version of Cuts (that did not work)? Was it the 30-minute format, the all-do-it-together nature, and/or lack of challenging enough equipment that made it not workeable without additional equipment? Marketing studies suggest that women are much more communal, more likely to do things together, than men, who are more independent of each other. Does this make the Curves model unworkeable for men? Are the successful clubs co-ed?
Hey Laurie, didn’t the UFOC call this a “turn key operation”, sounds to me like misrepresentation and that the company failed the franchisees. Perhaps corporate lacked the business experience you speak of! Or maybe its some of the same fellows who were involved with Mailboxes etc, UPS, Isoldit, Snappy, Quikdrop, Numarkets, or any other franchisor with unproven, misrepresented turnkey systems.
Hi Chance,
I don’t doubt that everyone thought it was a “turn key operation” but the UFOC is not GOD! If it was I’d be looking there for the next winning lottery numbers! I don’t know enough about the other franchises you mentioned to comment on them. This is what I do know, if comparing ourselves to Curves, Curves did not explode on the scene over night. If I remember correctly the first franchise opened in 1992. It wasn’t til the late 90’s that Curves exploded. Didn’t anyone do their homework? New concepts take time to brand. A very successful business associate of mine said I shouldn’t even exhale for at least the first 5-6 years-wow! So that means I have to be able to financally handle the ups and downs until then. If people want a 100% sure thing, open a food chain like McDonald’s.
Cuts Corporate recognized that changes needed to be made and the effort was made, isn’t that what you want in a company you’ve invested in? Again I think people were not financially able to wait it out and therefore got out. For those clubs still in operation I’d love to hear from you.
Sean, in response to your comments I think what makes co-ed clubs successful is women. Like you said women are communal, you can get 3 or 4 memberships out of one women. Women are also very vanity driven..and of course last but not least, for health reasons. What about men. Why do men join the gym?….1)because women are there? probably, OK-YES! 2) Vanity, maybe? for some. 3) Health reasons.
The reality is you can get great results at any gym if you actually show up. Today both men and women work full time, have many responsibilities and little time for themselves.
The traditional gym can be very intimidating for non-exercisers. Unless you pay for a personal trainer, who’s watching you? How long should you be on a machine? How much weight should you be lifting? You could get hurt? Oh, and why do all those people look like models?
Cuts Fitness, like Curves provides a non-intimidating supervised fun atmosphere for people to get healthy in a 30min. routine. A no-brainer-YES!
I think the equipment had something to do with it. We now offer the same type of workout a traditional gym offers in a fraction of the time with our new equipment. Men are visual. When a guy walks into a gym he wants to get the masculine feel of a mens gym even if he has no intension of using all of the equipment…is it a macho thing, probably.
An image of masculinity, a perception of being healthy and fit.
Starting a new business is not easy. New concepts take time, dedication and hard work. If you believe in your product it will show and they will come!
Laurie:
Check out the latest post:
http://www.franchisepick.com/cuts-exec-male-only-fitness-club-idea-bombed/
Cuts Haas admits the male-only model didn’t work, at least with the 30 minute club concept. It’s clear that this concept is still being tinkered with – some going co-ed, some going 24-hours, some adding personal trainers. Just plowing money into the original flawed or unrefined concept for 5-6 years won’t assure the success Curves had. Also, remember Curves had no direct 30 minute fitness competition, and became the prime mover. Everyone else was playing catch-up.
The concept of franchising is that franchisees pay a premium and give up autonomy in order to get the benefits of a proven concept and an established system. It doesn’t work if the franchisees are paying the premium and giving up the freedom, but the concept is still in the experimental stage, still being refined.
Chance:To the franchisor’s credit, it seems that they were pretty honest about what they were attempting: to pioneer a male version of Curves. Franchisees knew this hadn’t been done before. As far as I can tell, they pulled the plug relatively quickly when they realized it wasn’t working, and let franchisees compete on their own. Compare that to the eBay drop-off franchisors who kept selling franchises despite widespread franchise failures and Cuts looks pretty noble. They reached the same number of franchisees as iSold It, but the ISI ex-franchisees have been much more vocal, outraged and litigious.
Does any body know a guy named Cristian that owned a Cutts in California?
New post about a similar situation:
IS SHAPEXPRESS A GREAT FITNESS FRANCHISE OPPORTUNITY?
For related posts on 1-2-3 FIT FRANCHISE, BUTTERFLY LIFE FRANCHISE, CONTOURS EXPRESS FRANCHISE & CUTS FITNESS FOR MEN FRANCHISE, VISIT: Blogliography: 30 Minute Fitness Franchises
Cuts was a fundamentally flawed concept from the beginning. All John Gennaro did was mindlessly copy the Curves model, right down to the book and “Cuts University”. There was one in my town, and I predicted almost immediately that it would go out of business. It lasted about a year.
The problem is that Curves is designed for WOMEN, and women are not the same as men. Curves is all about support, atmosphere, a simple workout for new exercisers, and a women-only environment. Men don’t want that. We don’t want to chit-chat on the circuit. When I work out, I come in, say hi, do my workout, say bye, and I’m out the door.
John Gennaro “thought” he could just clone an original concept into a different environment and it would automatically work. I think he has Walter Mitty dreams of being Gary Heavin. Not an original idea in his head. I hope he enjoyed all the free press while it lasted.
Well Laurie I have to disagree with most of what you wrote.
We spent 10’s of thousands of dollars on advertising and even had every CUTS in the state jointly advertising in print, radio and sponsoring major fundraiser events to help spread the word.
When the Founder stated in the owners meeting… Corporate will no longer spend the advertising money to help “brand the name” and corporate would not spend any more of its money advertising… That is when I figured the founder gave up on the Franchise. The Founder may have been able to sell millions of dollars worth of “the ab machine” but when it came to running a franchise he and the rest of the staff fell way to short of the league they wanted to be in. Not one of them had any business sense and they didn’t try to hide that fact either.
As a Franchisor they had a commitment and an obligation to provide branding and advertising and they failed to have the knowledge or the budget do either to survive. Although, Corporate fired one or two VP’s and/or directors they did it late and they refused to replace the worthless VP’s with the talent they needed to survive.
We had nearly 100 members and all of them brought in friends because the concept worked…. We had several members lose over 50 pounds and everyone saw the system worked. One mistake Cuts made was not allowing co-ed facilities. We had many members who wanted their wives to join because they had “plateaud” at curves and needed the bigger stronger equipment… we also lost several members because theirs wives wanted to work out and couldn’t at our gym so they left our gym and joined a co-ed one.
The Founder and his staff sold every owner a bill of sale that corporate could not fulfill. They sold the owners on numbers that they could not back up, but sure used them to prove that we all were making a good investment. In the end the Founder even screwed a couple of the Master Franchisors out of hundreds of thousands of dollars by pulling their Master Franchise Agreements without compensation. So I don’t think any of the owners truly had a fighting chance from the beginning.
There may be a few owners who out survived the Franchisor but I am one and know at least 6 others who tried and tried with everything they had including their homes and family’s only to find out that the Founder didn’t even believe in what he was selling. I knew when I went out of business our “states” advertising funds we paid to corporate had never been touched for any advertising purposes. Because I asked if I could have that money back to help local advertising and was told no…. then when it all disappeared we figured Corporate had spent it on something stupid and in fact I believe they did use it to fund the writing of the book and probably for legal fees against the franchisee’s who filed suit against them.
I end by saying I commend any and all of the Franchisee’s who gave Cuts Fitness for Men a chance and whether we survived or folded it was not all our fault. If we only had a Founder who truly believed in what he sold and truly supported what he sold… we would still be in business and be 10,000 locations strong and growing! But I also truly hope that the Founder ended up just as financially broke as the rest of us did.