Franchise Dreams Becoming Nightmares for Many Fitness Club Owners

60+ Contours Express Franchise Owners Allege Fraud, Breach of Contract by Franchisor

(FranchisePick.Com) Curves for Women can be credited for setting off the fitness franchise gold rush.

In a little over ten years from the launch of their franchise program in 1995, express fitness franchise Curves for Women grew to over 10,000 locations. The consumer concept was simple: A women-only 30-minute circuit training exercise program geared for non-supermodels at a flat monthly fee. The franchise concept was also simple: Low investment. Low space requirements. Minimal payroll & inventory. No real experience necessary. In short, a big room with fitness equipment and a boom box.

Predictably, dozens of Curves knock-offs and variations began to pop up, each hawking their “unique,” low-investment franchise opportunities. Overnight there were not only dozens of new express fitness club franchises for women, there were men-only 30-minute club franchises, senior citizen club franchises, 24-hour fitness club franchises, retro-themed club franchises… even an exercise club specifically for golfers. Experienced franchise salesmen and brokers found themselves surrounded by inexperienced individuals eager to get in on the latest hot new concept and to be in business for themselves but not by themselves for less than $50K. The rush was on.

Contours Express: The Great Pretender to the Curves Throne
Curves challenger Contours Express launched in 1998. The Contours Express website states: “leveraging the success of Curves® while upgrading the product offering and member experiences, Contours Express has created The ‘Better Idea In Women’s Gyms.’ The company is now the #2 Women’s circuit training gym behind Curves. We are the second fastest growing with over 600 locations worldwide in 20 countries, and rated among the most affordable.”

However, more than 60 Contours Express franchise owners have filed a petition for damages in the Circuit Court of St. Louis County against AABB FITNESS HOLDINGS, INC. (formerly known as CONTOURS EXPRESS, INC.), CONTOURS EXPRESS, LLC, and franchise broker JAMES E. HOGG (dba Franchise Visions), alleging fraud and breach of contract. Among the numerous complaints, each of the plaintiffs allege:

• “The Contours Express UFOC dramatically understated the cost of building out and operating a location.”
• “The owners of Contours Express and their representatives also made “earnings claims” or verbal pitches regarding profitability, which are prohibited by the Federal Trade Commission, to entice the Plaintiffs to purchase franchises and their lenders to finance them.”
• “Once hooked, the franchisee had no way out. The typical franchisee’s working capital was exhausted soon after they opened their location and most could not service a debt load of 50 to 100 percent greater than they had been led to believe.”
• “… the franchisor provided little or no support to the franchisees as it agreed to do under the franchise agreements signed by the parties. In fact, once the stores were opened, very few of the franchisees were ever visited by representatives of the franchisor.”
• The franchisor failed to assist any of the franchisees in selling their locations because they would receive a higher franchise fee if the franchisee closed without selling their location and the franchisor could then sell the territory to a new franchisee.
• The franchisor covered up the many franchise failures by not disclosing all of the franchisees who had left the system, as required by law.

Many of the complaints are being echoed by franchise owners of other chains, especially those alleging vastly understated start-up costs and necessary working capital and overly optimistic and illegal earnings claims and profit projections. Recent FranchisePick.Com posts on fitness franchise Butterfly Life has prompted fiery comments and debate between current and former Butterfly Life franchise owners (See links below)

We’ll be continuing to follow the Contours Express legal dispute and other fitness franchise program controversies, and the lessons these disputes hold for those wanting to go into franchising with both eyes wide open.

Related reading:
Is Contours Express a Great Fitness Franchise?
Is Curves for Women a Good Franchise Investment?
IS BUTTERFLY LIFE A GREAT FITNESS FRANCHISE?
Will the REAL Butterfly Life Franchise Please Wave Its Wings?
The Contours Express Second Amended Complaint for Damages document, Uniform Franchise Offering Circular (UFOC) and other documents are available in the FranBest.Com franchise document library.

ARE YOU FAMILIAR WITH THE CURVES FRANCHISE, THE CONTOURS EXPRESS FRANCHISE, THE BUTTERFLY LIFE FRANCHISE, OR SIMILAR FITNESS FRANCHISE OPPORTUNITIES? SHARE YOUR INSIGHT. LEAVE A COMMENT.

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