Is Curves for Women a Good Franchise Investment?
March 7, 2007 by Sean Kelly
Filed under Business
Do you own a Curves for Women franchise? Have you owned one, or know anyone who has? What are your thoughts on this franchise?
Curves For Women is one of the fastest growing franchise companies of the decade, having now topped 10,000 locations. I know in our area the concept seems to have passed the test of time. However, according to Franchise Pundit, 8% of the current Curves franchise locations are for sale.
What’s the inside scoop on the Curves for Women franchise opportunity?
SHARE YOUR INSIGHT. LEAVE A COMMENT.
Jose:
Did you actually add up 6,530 locations one at a time?
It is not enough for the franchisor to make a few hundred thousand dollars yearly, they must make millions. Its the American dream to be wealthy no matter who you have to step on to get there.
I don’t see a problem with businesspeople wanting to make millions as long as they play fair. I doubt you were attempting to franchise your business without some dream of cashing out for seven figures plus, right.
The thing I can’t understand is why so much of the health and fitness industry is geared toward tricking others rather than providing actual education, instruction and support to the millions of couch potatoes who will keep spending if they get actual results, feel better, look better and have more energy. Isn’t there any money in real health?
The new phone books come out this month. Compare the number of Curves in this year’s phone book to clubs listed in last year’s directory. It might make you think twice about buying a resale.
I agree with you Sean. I educate inform and attempt to help people live a healthy lifestyle but in the franchise world we are told by corporate giants and consultants that helping people is just not good enough and no one every got rich by helping people. Consultants paint a picture of wealth and fame, power and influence and the first thing they say is ” At what price are you willing to sell your franchise” they plant the seed of deception by making you think that some large corporation will want to buy your business for hundreds of millions once you get so many franchises open. In fact they BANK on it and they hope you do sell alot because in there contract it is clearly indicate that they receive a 30-50% interest in all future royalties up to 3-7 years and a lump if you sell the company. Today americans and others fall for the same lie they have always done. You can take a pill and lose weight or count points whatever they need to sell. I know it is everones dream to make millions I would love too but not if if means selling territories and saturating the market to the point that the franchisees lose all of there money. I believe in the american dream but I value Family and strongly want to see todays families financially able to provide for there childrens future. The saddest thing is seeing how the Curves and other franchise sales models has taken advantage to ignorant people who want to live the American dream, not get rich. I also believe that many who owned several locations just got greedy, but not without prompting from the franchisor who told them that if they did not buy the territiry would be sold to someone else and they would lose money. A wise man told me that ” the fear on loss is greater than the fear of success” this sometimes paralyzes people to make wrong choices for fear they might lose out on something. Commercials sell us on fear of loss all the time. The term, DO IT NOW, or DON’T WAIT! or Sale ends TODAY all drive us to react to the fear of losing something. This drives the stock market, housing market, this is why the country is in such turmoil. My advise to my kids is “nothing is to great that it can’t wait!” Take time to analyze, educate yourself and seek experieced advisors that have nothing to gain by your decision in buying a franchise and it may be the best decision you could ever make.
If you need to know how many curves are still in existance go on the curves web site and click on your state. The web site tells you how many per state. I did check and notice that the Curves in my area that just went out of business was not on the web site so I believe they keep it current somewhat. As I said before, Several years ago all territories in the US were sold out and now there are 4772 territories available and counting.
I appreciate the intelligent conversation with You Sean, it is refreshing.
Yes I went on the Curves web site and counted every state in the United States and the numbers you see are correct according to curves. I included the 2 in Guam but not the 19 in Puerto rico. Total is more like 6548 franchises to be exact.
As a franchisor I fully understand the concern of all the ex and actual franchisee of Curves and the thing is that Curves literaly exploded and oppend to many franchises too fast
Curves is the inventor of the 30 minutes fitness mania and got copied by many ( I feel that they got robed out of a great idea) As an actual competitor of curves with only 60 franchises in Canada in 4 years there is one thing I made shure of and that was not to copy the original
SWANN fitness reinvented the whole concept and we are very close to all our franchisees they are our bread and butter and we love them all
I have a controled growth policy so does my wife
and the most important thing for us is that all of our franchisee make money and that all their costumers get results this way if we see that some of our franchisee dont make the money they should we will reduce the sales and focus on helping them get back on track. Last year at our annual meeting My wife and I got an standing ovation and I wish that in 10 years from now we get the same. So it is up to us to make their dreams come true. I think that the trick will be to keep listening to them as they are on the feild and are our eyes and ears We will be oppening some centers in the USA in the next few years. However we will first make sure that
the market permits. As a manufacturer of fitness equipment we sell exclusevly to our franchisee
SWANN For Women and GYMM for men this way the franchisee are protected and we do not use Hydraulics only Pneumatics that offers Positive and negative motions.. http://www.swann.ca http://www.gymm.ca Even if Here in Quebec there has been quite a few Curves closings we are still hoping that Curves will still be standing in the years to come I feel the anyone clubs that have copied the Curves systems will not be there in the long run . P.S we lost the bid to Curves for the Mytrack smart systems while we where studing it with our franchisees .. Ironicly we are glad we did and our franchisee are too since we have 30 stations in our centers it would have cost 20,000 $ per location to much$$ for our franchisees and since 90% of all centers have more than 480 members the time to instal the systems would have been costly and frustrating
for members. I wish the best to Curves..
I just HAD TO comment on the couple of people who wrote that the “nay-sayers” here are so negative, emotional, attacking, etc. As a reader, it comes off the exact opposite. Those cautioning against Curves ownership are citing facts, stats, etc. The majority of comments in support of curves consist mainly of emotion-filled cheerleading-like comments: “Have faith! Work hard! We can do it! Yipppe! Curves is an institution! The BEST!” (Jeeez, where are your pom-poms??)
I’m thrilled I found this site. Much good info to add to my research. Thanks!
Sure enough, our phone books came out today and there are three fewer Curves listed, a 35 percent drop in one year.
Two more years like that and it’s bye-bye Curves in our county.
Oops, my calculator says its nearly a 17 percent drop. My bad.
Still, only one club I know of in this county has more than 500 members. The rest are struggling to stay open.
A nearby Express Fitness and a Contours just closed their doors. The downturn is taking its toll.
Just a note for all those out there who say things are getting worse. I just compared my numbers from March of 07 to March of 08; my membership is up over 50% in one year. In February 06 I had 229 members today I have 472. My business has more than doubled in two years. The difference is me. I made the decision to get busy and find ways to make my business more profitable. I work at my club. I find the clubs that are struggling the most are the clubs that have absentee’s owners.
I think I said this before and I will repeat – that Curves had a very low buy in and that afforded many of us that had no business sense to get in. With that said I was one of them. I am learning through the school of hard knocks. Curves has given me many tools, recourses and support. I could blame them and I’m sure that they deserve some but making my business successful falls on my shoulders.
If you are looking to buy a Curves, there is no doubt that you should do so with caution. That is so for every business.
I love my Curves.
Sadderbutwiser: a 17-% drop means your area went from 18 Curves to 15. Then you say, “Two more years like that and it’s bye-bye Curves in our county.” Bad math.
There are strong clubs and weak clubs, for a variety of reasons. Small business is inherently risky; only 20% survive 5 years.
You want to see nothing but bad in Curves. That is as wrong as seeing nothing but good.
Good for you, pjk. To be able to increase membership while the country sinks into the worst recession since WWII is an amazing feat.
I have a feeling that you’re one of the lucky ones. For every success, I bet there are 3-4 failures.
Enjoy your hard-earned success it while it lasts.
Comment to Marc. and others!
You have a good business mind, keep your customers happy. That is what people want, do not over saturate your market and make sure all franchisees make money by taking the time to listen to them. As far as those who think Curves will have a long run. I believe it is wishful thinking. I believe many companies like marc’s who focus more on owner success then numbers will win out in the long run and many more curves will fail because of lack of business sense form its owners. Just because you do everything the franchise wants you to do does not Garauntee success. The fact that curves is now trying to push the Mytrack system during a downturn is in my opinion a good idea, BUT can they really expect the franchisees to take the risk when they have such a high attrition rate?
If you owned a curves and were just on the brink of losing your home would you take that risk?
I myself would not. Now I on the other hand believe that a club should offer more for less during this down turn. The owners must spend more time in the Club then at the bowling alley or on the couch. Look at your books and intelligently see if it is worth the extra money for 50 new members or so , call other clubs that have the system and ask for the darn truth not a wish and see if they are really making more money. Rule : If it does not pay 3 time more than it cost you, then it is not worth buying for your business. So if you pay $10K then you should make $30K the first year not 2 or 3 years later. Those of you wanting to buy Curve’s must use some common sense and quit defending the franchisor, let them defend themselves. In time you will see the truth. I know for fact that every curves in my area is in survival mode. I also know of a Dance Studio that made thousands month years ago, and are barely hanging on here. I spoke to the owner who has been in business for 25 years with a business degree, so it is wishfull thinking that anyone would open a new Curves at this time, it would be foolish.
And PJK you have to count paying members not members in the past, I can tell you that you are fudging the numbers a little to make your point and that is wrong. I would believe you if your club was a full service club Like power house but it is not and I know for fact that Curves around the country is having a hard time with people losing there jobs. NO WAY JOSE!!!!!
To the considering buyer, her is what you have to contend with, IF YOU BUY A CURVES YOU WILL BE GIVEN AN AREA THAT HAS ALREADY BEEN PROVEN BAD. THAT IS A FACT! CURVE SOLD OUT IN THE US YEARS AGO, SO IF YOU BUY A LOCATION YOUR ODDS ARE SLIM THAT YOU WILL SUCCEED WITH THE CURRENT TERRRITORIES. Remember once a territory has been established it cannot be easily changed and that is the problem with curves. They have not done the demographic studies necessary to justify the investment. People do not care anymore that there are thousands around they just want to know that it is affordable and will not go out of business.
The Curves Smart equipment was installed in the Sacramento area last week. I have previously posted the economic numbers on buying/leasing the equipment. It seems to be a great success. Members are signing up for it and liking it. Only two clubs out of 35 did not install it.
Jose does not know Curves. Most of what Jose says about Curves is untrue.
I must refute the kunst statement. I only provide information I believe will help others make there own decision, I provide facts NOT emotional blib blab like many do. I am in the industry and know more about this that does Kunst. I have been in the industry for years and I know the hard facts. I think anyone reading this blog should consider the source as well as doing an investigation. If this blog causes you buy or not buy a Curves , you are foolish, this is an open forum for those attempting to get a curves. It is always smart to proceed with caution when buying any business. Past sales do not reflect future profit, it is only and indicator or market conditions. This statement fairs well at this time. Market low, less expendable income= more cost to advertise and higher overhead. The fact is buying now will cost you more. Maybe $30K but do not forget utilities rent TAXES, payroll, Repairs toiletries, accountant and cancellations.
Notice Kunst knows too much about what and where curves is doing business, the fact is he works for Curves and is probable on all the blogs helping hide what the downfall of curves is. Do your own work and make up your own mind. Whatever you do it will not effect me. I am having fun on this blog.
Arguing with Jose is like wrestling with a pig. You get muddy; the pig is happy.
I have said several times that my wife and I own 4 Curves in the Sacramento area, since 2001. I do not work for Curves and do not post anywhere else about Curves.
I repeat, most of what Jose says is garbage. Judge for yourself.
pkj wrote …my membership is up over 50% in one year. In February 06 I had 229 members today I have 472. My business has more than doubled in two years. The difference is me. I made the decision to get busy and find ways to make my business more profitable. I work at my club…. I am learning through the school of hard knocks. Curves has given me many tools, recourses and support…
Congratulations pkj! It is great to hear some good news!
I think it’s important to share the specifics of successes along with failures. As competitors close, some marginal clubs could become viable in some markets. Was this a factor in yours?
pkj, it would be extremely valuable if you could share some of your marketing and sales conversion numbers.
To have a net gain of 243 customers, how many NEW customers did you have to sign? What was your retention rate previously?
How many leads did you need to generate to sign that many new customers? How much did you spend to generate those leads?
Can you share your lead sources? How many were referral? Print ads? Radio/TV?
As you know, marketing is a numbers game. In considering the viability of a club in a specific market, owners have to be in tune with their numbers, conversion and retention rates, ad budget, etc. Any of the specifics you can share in this regard, pkj, would be very helpful.
And did nearby Curves fold and send you their members, pkj?
There are a LOT of Curves owners who would like to hear in detail how you added 243 members.
Sadderbutwiser wrote There are a LOT of Curves owners who would like to hear in detail how you added 243 members.
Kunst says that the average Curves franchise loses 30% – 50% of its members each year. If pkj’s Curves lost 40% through attrition, they would also need to replace 91 lost members to achieve a net gain of 243.
Correct me if my math is wrong, but that means an impressive conversion of 334 new members signed in one year. pkj, how’d you do it? Can you sustain that growth through this year?
This could be a very informative and useful discussion if the experienced among you could share insights into the unit economics and the specifics that struggling club owners need to determine whether their club could be viable and if so, what investment they need to make in time & money to turn it around. The same info would be helpful for those considering purchasing one or more distressed clubs.
The numbers I asked pkj for would be helpful, such as:
Number of members needed to reach break even for typical city/suburban/rural clubs.
Number of leads needed to sign a new member (range).
Number of leads needed to replace lost members.
Cost per lead by media/source.
Cost per sale by media/source.
There are a lot of struggling club owners who could really benefit from a dispassionate discussion that can get them focused on the specific numbers they’ve got to hit, what it will cost to hit them, and which methods work for recruiting and retaining new members.
I don’t find Kunst, as Jose claims, to be a corporate shill and I don’t find Jose’s diatribes, as Kunst claims, without some valid points. You guys – and many others who have contributed – have valuable experience and insights. Can you address some of these specifics, which get lost or obscured by the personal attacks?
Sean ,
There is only one truth about all the closings
The Amazing numbers of Curves per Area and all the copy’s of Curves , Buterfly life, Lady express, ect.. Too much of a good thing that’s the bottom line..No one reinvented the 30 minutes concept . Except for us but we are not in the USA yet!!! People here are paying 50,000 more for a SWANN center than a Curves just because of the actual reputation we have .. it is very simple, RESULTS !! Members get RESULTS and never Plateau.. No electronic voice that say’s Change stations. No Hydraulics , more equipment and a Owner opperator in place 50 hours a week , More services 1 price 39,99 per month and 99,00 initiaton fees.. Most of our franchisee break even after 2 months, We had 1 in Cap Rouge that broke even after 5 day’s only yes 5 day’s 275 members.. after 1 year 620 members
there is a Curves right on the next corner that is doing just fine!!! also 3 more Gym’s in a 2 mile radius.
We have worked 5 years prior to open our own franchise so that our futur franchisee would make money. If they dont, we dont.. as simple as 1-2-3.. I find that the Franchise industry is an easy model for franchisor to make a lot of $$
And for franchisee to have the same opportunity but if they are not prepared to work the minimum 50 hours a week they should have never puchase a franchise, I can garanty you that Gary Heavins and his wife worked a lot more than 50 hours a week to get where they are as we did and still doing here at SWANN 40 hours a week is a part time job !!! I you own a fitness franchise and are overwieght how can you immagine that people will be interested in becomming members.. wake up we are in the fitness business.. If you see a shoe salesman with holes in his shoe will you want to buy from him?? if you go to a dentist with crooked theeth
i am sure that you will run.. same rule should be applied and I see to many Curves Owner here that are overweight.. and or other concept..
I alway’s say to my futur franchisee to take a mirror and look at themself and ask if this person would convince them to join the club as a member , you get the picture!! for me it is my duty to refuse any franchisee that do not live by the fitness rule , be in good health , and be passionate about the people that you will help.
The succes will happen if you apply this.
Beeing on this blog is only getting you confused and frustrated with dark ideas .,. If you still have a center take care of it like it was your own baby it need’s you, focus.. on the good , Fight
with a possitive attitude not with negative tools
get away from negative people, Call owners that are doing good and ask around fill youself with good emotions go to bed at night thinking of all the new members that you will get tomorow and before you get out of bed visualize the people getting in you business.. money comming in
Marc
Marc wrote: …I alway’s say to my futur franchisee to take a mirror and look at themself… Beeing on this blog is only getting you confused and frustrated with dark ideas .,. If you still have a center take care of it like it was your own baby get away from negative people, Call owners that are doing good and ask around fill youself with good emotions go to bed at night thinking of all the new members that you will get tomorow and before you get out of bed visualize the people getting in you business.. money comming in…
This is the language of the “Cloud Merchant.” Appeal to ego: Believe in yourself. Believe that because you’re fit, you can run a fitness business. Stay away from naysayers. Talk only to successful people. Block out negative thoughts, because when you think bad thoughts you kill the success fairy and you won’t get your wish. Visualize all the members who will descend from the clouds and shower you with money and loyalty.
This is called “magical thinking.”
Marc, if this is what you tell prospective franchisees, I will venture a guess that “no experience is necessary” for your franchise, and that the most important criteria is a will to succeed. Correct?
Experienced people know business ownership is not a fairy tale, and that you can’t believe yourself to success. You need to know the numbers of your business like the back of your hand. You need to know all those things that I asked for: What does it cost to get a new customer? How many will I need? What will happen when I’m faced with 4 knock-offs copying your concept for less?
I don’t know Marc or the Swann’s franchise. He may have the greatest concept ever, and my reaction is to this brief statement only. But I would say that the truly successful franchisors – and franchisees – did not think they could dream themselves to success. They stressed having a strong understanding of the economics of the business, having a clear, realistic marketing plan, operational plan and systematized customer service procedures. When times get tough, friends, you can’t run back to your pillow and dream up some new customers. You better know how to make the phone ring, and what it’s gonna cost.
Marc, I’m not questioning your integrity but if that’s what you’re emphasizing to new franchisees, you’ll probably be getting some of your own discussions here in the future.
I agree with you Sean. I have been on this blog for months and have read every persons comments. Some I agree with and some I do not. Much of the time I am open to hearing what people think, it tells me several things, 1: They are dreamers, 2: They are thinkers. 3: They are winers. 4: They are pessimistic. and 5: They are Reality.
I am the last. No one likes to take facts into consideration but you must in order to be successful. I recently hired an Honest consultant who told me like it was. There is no manna from Heaven here. You must work hard and $Market, $market , market. $$$. You must drive your business like an indy race car, as soon as you take your foot off the gas, it comes to a complete stop.
With this said, I want to let everyone know this costs MONEY. To get new members cost money. You must advertise, people will not run into your club. you cannot wish or dream you must work and have a way of measuring your success. You must count how many people join from an ad or you will never know if it worked. We need the facts if we are to believe that a small Curves in california can exceed 90% growth when all others are not, it just makes no sense, not with the lack of equipment and surely not enough space to accommidate the members. If you saturate your club, people quit, you cannot overcrowd and keep members happy. This is one of the biggest compliants with Curves. Women have to wait, and do not tell me that when 1 gets off 1 gets on, because 5 wait while one gets on at a time. Limited hours is another problem. You cannot accomidate all members before and after work, no club can, so you must take that into consideration. The fact is you may be able to handle 650 women but you cannot keep them all happy. 30% will quit the facts prove this to be true in both coed and womens only. In fact the studies posted in Club industry show an attrition rate of 40%-50% for womens only clubs and up to 60% for co-ed clubs. I find these numbers excessive but probable. Now those of you who have clubs, calculate your attrition rate and post it! This will help many understand why you cannot make a blanket statement for one location for all locations. I have found that the 50% attrition rate is about right for womens clubs, especially during a bad economy. To keep your business open you must increase cash flow. Here’s how, you will thank me> Get teens into your club by offering low prices and no contract, they have no money so they bring Cash. They must pay 3 months up front and every 3 months to stay current. Waive the enrollment fee. This creates cash flow. You will make an extra 500-over $1000 month at first and then it will be a constant several hudred each month to help you pay you. Next get police officers and public officials in you city Cheap memberships. They know people and they talk, offer anyone thy know a cheaper rate. Sign them up for 1 year. Get the word out that you like to help people and the moneyh will roll in, this is how you make money, be the nice guy and smart guy smile and work 10-11 daily and greet everyone and hire certified personal trainers. Become a professional club and members will stay. Start there and you will survive and membership will increase slow and steady. Its like a large ship you must build momentum and keep it there, do not wait on the franchisor doit now if you are failing, if they do not let you document it.
Start Now.
I wanted to help sean with facts that work, I know it works i have done it! Proven:
As a person who is currently considering purchasing 2 Curves I have a ? for Jose.
Jose, how many Curves do you currently own & are your suggestions in compliance with the franchise agreement or would those have to be back doored? If so, what fallout would the owner sustain for violating their agreement?
btw thanks all for the info, this site has proven to be the best reality check.
Dear Sean ,
You are in the wrong , but correct at the same time , I can understand that some franchisor out there might be cloud merchants like you say
but not here it is part as a whole package for franchisee to have with us But on is of course management skills is a priority with SWANN
otherwise they will fail, Mcdonalds where exactly selling clouds to professionels with management skills in the beginning and look where it took them
You are right !! to focus in all the positive way is perfect but to know where , why and when to act is also essencials.
http://www.slimandtoneofcoopercity.com/Why.html
This is waht I was talking about when I say how important to choose a franchisee!! She seems nice but not in her place.
To Buddy, I had considered Curve 6 years ago and decided not to because I felt when I spoke with the franchise that they were over saturating the market. In my area there ( were ) past tense: a curves every mile and a half. I felt stongly in having a market share and they put pressure on me to buy several locations at one time when they found out my wife and I were serious. I do not own nor so have I ever owned a Curves. I do own 2 health clubs currently and they are doing very well. I have been in business for 6 years and it has not always been easy, I have had to spend more money each year to get new members to replace the cancelled ones. many of my members are former Curves contours lady workout express and other clubs which have failed. (I also have male members too.) I ask them why they left Curves so many of my responses come directly from former members. Just yesterday one of my young members Rachel who is 20 years old wore a purple Curves Trainer shirt to my club. I asked her if she had worked for curves, she said she had. I asked her why she is at my Club working out? her answer was ” Curves is boring and there equipement just does not work for me” I asked her if she was certified, ” NO” I asked her who trained her ” anothergirl” I then asked her why she liked my club. ” Great equipment, Training, Open longer, larger faciliy so she did not have to wait on equipment”
I asked her what type of people she worked with at Curves. She said and this did not surprize me.
” Overweight women who really did not want to work out but talk talk talk. primarily OLDER women, it was a social club not a fitness center and thats why she did not like it also” Well enough said about that. These are the real reasons opening a curves may not be the best idea, regardless of what the salesman tells you. Women have all experienced Curves and really do not want to go back to it.
I believe the franchise agreement you speak of go 2 ways. The franchisor must provide support in order for the franchisee to succeed. Now curves is so busy promoting food, the franchise is on the back burner cooling off. Corporate greed! I also believe that if you are failing and following the agreement to the dot, you should consider getting out of that franchise before your personal finances are gone. Curves will release you if you want out bad enough. You may have to pay for the remainder of the future royalty but it is worth it in the long run. If you document your complaints and they are ligitamate you can hire an attorney that will advise you. Franchise agreements are broken each day and it is impossible to inforce them unless the company is willing to pay tens of thousands to do so and they are not! They will let you go. That is a fact! Violating a franchise agrement has specific obligations for both parties and holds the frachisor harder to the agreement then the franchisee. many states such as New York, Michigna Florida and other allow franchise agreement Non binding in many cases, Financial hardship. You can contact your local state gov and get a copy of the statute in that state regardless if arbitration is in Texas, state law takes precidence over franchise agreements. If you are having problems further you may contact the Federal Trade Commission which regulates interstate commerce and render a complaint. You might say I have a degree in this stuff.
I hope I have helped you BUDDY!
Marc what do you mean ‘NOT IN HER PLACE” do you know her?
i am curious
Looks like Butterfly Life and Contours Express will both be recruiting new franchisees at the International Franchise Expo in Washington D.C. this weekend.
http://www.ifeinfo.com/exhibitorlist.cfm
No Curves, except maybe through brokers
No I dont know her… She is overweight so not exactly the best franchisee to help people loose weight!! so how can a franchisor that respect his franchisee sell to someone that has many chances to fail.. Is it still the FITNESS INDUSTRY? or a social club. I think that as important as Sean mention about the Management skills, even if it is sad , the apperance factor in this business is very important. I say sad because in this business you dont see people for wath they are but how they look.. But again if this person Buy a club and then looses her extra weight she will be succesfull and even more credible since she lost all that weight!!
We are in the wellness industry and there to help people to get in shape we need to look as if we know wath we are talking about.
Marc says Dear Sean ,
You are in the wrong , but correct
Marc is, of course, half-right. :)
… at the same time , I can understand that some franchisor out there might be cloud merchants like you say… Mcdonalds where exactly selling clouds to professionels with management skills in the beginning and look where it took them…
There’s a world of difference between McDonald’s signing up experienced, well-capitalized businesspeople and fitness franchises that actually want inexperienced people who do not understand the economics of either business ownership or the industry they are entering. Selling an ambitious venture to experienced people is not selling clouds.
And anyone who has spent time in the restaurant industry knows that successful operators know their food, labor and other costs down to the penny.
Marc:
On your website you state:
“The benefits of purchasing a franchise have been well established. Most new independent business ventures fail within the first two years of operation. New franchise businesses have over a 90% success rate.”
Can you cite the original source of these two statistics? Which study stated that more than 50% of new business ventures failed in the first two years?
Which study are you quoting that states new franchise businesses have more than a 90% success rate.
Can you link to them, or send me a copy at info[at]ideafarm.net? Thanks.
Oh Sean, I hope and pray people will go online and check out all the blogs concerning BFL, Contours, etc. after attending this event!!! I feel for anyone if they give their hard earned money to any of these vultures!!!
Sean , could I ask of you what exactly do you do in life, you must be an expert in franchises
or did you ever start a franchise of any kind or owned a franchise, could you tell me from your point of view exactly what you would do if you where a franchisor it would be nice to hear from an expert.
Sean, We took these numbers on the IHRSA International Health, Racquet and Sportsclub Association web site 5 years ago , you make me think that maby these numbers might have dropped from 2003 I will immediately check and if needed correct them.
Thank you
To ex Ms Contour,
Can you give me a site where I can see those blog for BFL and Contour
Thank you
P.S we are not all vulture, here we have a family business wich is doing amazingly well and we just love our franchisee they are the best extention of our family,
Did your franchisor tell you about the actual risk of owning your own business before you signed your agreement?
marc- I’m too exhausted to reply so you can go to “franchise dreams becoming nightmares for many fitness club owners” and “is butterfly life a great fitness franchise” (among the others) and read your heart out. You’ll find the answer to your question(s). Maybe you are not a vulture. I was not refering you.
Did your franchisor tell you about the actual risk of owning your own business before you signed your agreement?
Marc, by risks do you mean telling people that new franchises have a 90% success rate vs. more than 50% failure rate of independent businesses? Please give me a copy of ANY study from ANY year that supports those numbers you cited. Not another website or article, but a source of the information.
I’m sure you have them on file, as you wouldn’t give people bogus cloud statistics for such an important decision, would you?
Sean ,
I will give me a few day’s I will find it for you
but by the way this was a real number but it is never used in any of our sales picth since we make sure that our potential franchisee know exactly what they are getting into.
In the letter of intent we Outline the clause stating that the fact of oppening any kind of business is a risk and they should ask arround
(call existing franchisee) to have the exact picture , then we insist that they go out and try a SWANN first if they did not do it already ,
then if they are entirely satisfied we begin to talk about them becomming franchisees.
I think that we are very picky about who we want for franchisee as they should be about choosing their franchise.
Marc said: give me a few day’s I will find it for you but by the way this was a real number…
Search as long as you want, Marc. Because you saw it somewhere doesn’t make it a real number. Why not think about it when you go to bed tonight and visualize all the nonexistent statistics that are going to appear tomorrow?
…it is never used in any of our sales picth since we make sure that our potential franchisee know exactly what they are getting into.
The franchise section of your website isn’t part of your pitch?
In the letter of intent we Outline the clause stating that the fact of oppening any kind of business is a risk
Yes, you make it clear that their risk of failure is 10% with a new franchise, greater than 50% on their own. Is lying about the risk better than not mentioning it at all?
…and they should ask arround (call existing franchisee)
Specifically, successful positive franchisees. Stay away from the negative ones.
Marc, I’m sure you believe this or else you wouldn’t stay and debate it out here in the open. But you’re deluding yourself. Those statistics are a lie that some brokers and franchisors pass around to perpetuate the illusion that franchising is nearly risk-free. Take a step back and think about it. You are feeding people bogus statistics that they are using to make the biggest investment of their lives. And you don’t have the statistics on file?
Tell you what. Meet me back here tomorrow with your 90% success rate of new franchises study.
I will bring you a study that shows 75% of new Franchisors don’t make it 10 years, much less their franchisees.
I’ll bring you a study that shows the failure rate of franchises is HIGHER than non-franchised start-ups – in part because of the franchisor failure rate just cited.
If your study’s more credible than my studies, I’ll do a post on how wonderful the Swann franchise is. But if you lose… you need to let yourself go and eat junk food until you gain ten lbs., send us a picture, and issue an apology to the lady you said was fat.
Incidentally, you’re wrong about that, too, but I’ll save that for another rant.
Jose, your post and my due diligence seem to be in sync. Thanks for replying & no, we’re not investing in Curves at this time. I called the sellers broker yesterday and advised we weren’t going any further and thanked him for his time.
What I can’t figure out is how the seller & broker arrived at the asking prices for these 2 franchises. Seriously, this had to be drafted after a few drinks then added to a Christmas wish list. One location has 3 Curves in a 6 mile span. With a population of 16,000, I would love to know who thought this was a good idea. Both locations have dropped 1/2 their members in 12 months. Putting all that aside, my CPA took a look at the books and found substantial deposits from another source after all the clubs money in, money out was accounted for. I really didn’t have to go much further to realize this franchise may have jumped the shark. Again, thank you for replying, I appreciate your candor.
Well I appreciate you investingating the facts Buddy and not making an emotional decision. What your CPA say was called ” Cooking the Books” The owner of the Curves deposits his own money into the company account to make the Gross reciepts look good for the new buyer. The sale price of any business is dictated by the Gross reciepts. You my friend have a good accountant! Having 3 Curves in a 6 mile Radias is crazy. Only 16000 people! No way you can survive. You would be out of business in the 1st month of opening and have to pay 10 years of royalties to the franchisor.
Marc I do know that Sean is a very experienced expert in the franchising business. He only tells you like it is on this site, no blib blab from him, only facts. Sean is correct. Saleman of franchises always post these stats to incourage individuals to buy or take a look at there franchise. It is deceiving because the real fact is many more franchisee fail thatn indicated. The facts that sean stated are correct.
“I will bring you a study that shows 75% of new Franchisors don’t make it 10 years, much less their franchisees.
“”"”I’ll bring you a study that shows the failure rate of franchises is HIGHER than non-franchised start-ups – in part because of the franchisor failure rate just cited.”"”"
A good way to gage if a franchisor is ligitimate is to see how many clubs the company owns itself. If a franchisor does not own more thatn one club , they probably are more interested in making money than having a successful model for testing future ventures and successes. I know that Curves and many others do not even own one location corporated. If they are a ggod company they should operate several.. McDonalds Corp ownes 80% of all restaurants in the world. Maybe that is why they are so successful. So do your homework and post how many loctions the franchisor owns, if they only have one I would be conserned, if they have none I would run far away from the idea. It is very difficult for a frachisor to realize how hard it is to get members and keep them when they do not own a club.
I also agree with the franchisor fail rate cited by sean. here is why franchisors fail: Currupt and wrongful lawsuits. Many attorney firms today thrive on failing loctions and franchisees by incourageing them to sue. They play on the emotions of the franchisee who lsot their franchise for every reason but there’s. many time a franchisee goes out of business has nothing to do with the franchisor but lack of experience on the franchisees part. I do blame the franchisor in part for not discourging some from buying but this is no reason to create false suits against the franchisor.
There is alot of money to be made by these firms and in all cases the franchisee loses! When a franchisor goes out of business there is no longer a source of guidance so the franchisee is left to fail and they all do. I discourage franchisees from getting involved with these shady law firms and incourgae them to cooperate with the franchisor for a win wind situation. When you get a lawyer involved it makes nogociation impossible and tensions high. Many time the franshisee’s are stuck with tens fo thousands fof dollars in legal fees when bankrupcy id filed on behalf of the franchisor. The Franchisor may stays open but the franchisee loses everything including there franchise operating trademark..
So when you look at buying a franchise find a company who owns several locations if they do not. RUN!
Jose while I appreciate your expertise on this subject of lawsuits vs franchisors and zees, I must tell you that our lawyer did not pursue all 60+ club owners and ex-club owners to get us to file a false suit against Contours. To the contrary, we pursued him (among others). When he heard how all of us had the same stories concerning fraudulent actions on Contours part it was a no-brainer to represent us. So not all is true about what you are stating.
Marc has not returned with his survival studies.
And he won’t, because they don’t exist.
Back in the late 80s, no less, I took over the marketing dept. of a large franchise consulting company. Every brochure & video we produced had similar statistics, cited from the U.S. Dept. of Commerce. But no one could produce the study.
At an International franchise conference I actually met the head of franchising for the Dept. of Commerce and he told me there was no such study. For 20 years, the industry keeps quoting them, knowing it’s BS.
I wrote this a while back:
Lies, Damn Lies & Franchise Statistics
The point’s not the statistics. The point is that it’s unconscionable to tell people that there’s little-to-no risk in starting a business. There’s always a risk. Secondly, it’s bad for a franchisor to have franchisees who don’t go into it with a fear of failure. The “believe in yourself and you’ll succeed” fairy tale just sets me off some days.
Sean,
I did not get back to you because I did my research , and I have to admit that you are right on the numbers ,even if I saw that a lot of franchisor are making claims with these numbers
I did not find any backing of any sort anywhere
I made a change on my web site immediately
Please dont turn this as a way for me to get out of anything since I have told you I dont use it as a pitch but I understand that people are reading the articles on my web site and it could be interpreted as a way of persuing potential franchisee, So I ow you a great deal, since you brought it to my attention. you helped me and my company to improove, But as for me calling anyone fat !! i did no such thing I simply pointed out the truth and why is it bad on this point to say the truth?? I dont understand since it is better to tell upfront prior to have a franchisee fail.. I think that if all is said upfront prior for anyone to purchase a franchise the better of every one will be. I can admit to a mistake but not to a conviction of mine based on personal experience. The only reason that I am in this business is because I was way overweight 15 years ago, 325 pounds 53% body fat and sick!!
but someone told me the shocking thruth, I was fat !! and after that I started training and loosing weight (took me 5 years) my life changed compleately from that point 255 lbs at 6′5 all is great but I will be strugling with weight all my life
so I decided with my wife to start helping others
as personal trainers so we got our courses and certifications but espesialy did most of the testing on myself and it worked, then 5 years ago We decided to open our own 30 minutes centers and my wife did all the work in the center and for me I was by then a Fitness equipment manufacturer (AIR EQUIPMENT), after a year of testing someone asked us if we would consider to franchise a center to her, and we did
the rest is pretty like any othe franchisor out there, we oppend a few , made mistakes , chose the wrong franchisee as they chose the wrong franchise (I think it is a two way street)we closed down 5 centers including 2 of our own and then decided to change the way we sold
so anyone not having passion and the right profile was decline, Please find me numbers on franchisors refusing money !! I know only 2 Ourselfs and a breakfast place with 70 location here in Canada, It is not an easy place to be as a franchisor , but it has it’s rewards, yes money, but also having the chances to touch the lifes on thousands of women, So please induldge me If I am not perfect, rather than being tough on me point me the thing you think could help the franchise industry,
Thank you
Ex Ms. Contours,
Your posts & others like it shed light on the realities of 30 minute salon ownership. I recently looked into buying 2 Curves but decided not to. Among other things, I saw an immediate flaw in the 30 minute salon sales pitch, (no business experience, own your own, not alone) that seems to be across the board. I believe the intent is to draw 1st time inexperienced business owners in with little down. That said, it’s up to the purchaser to do their research prior to sale.
I don’t mean to sound uncaring but not all franchises have a sound plan or are profitable – short or long term. My concern is this may be a long drawn out lawsuit if all parties didn’t do their due diligence prior to signing the franchise agreement. Contigency lawsuits – the longer it takes the less $ is dispursed to the affected parties. Please take a close unbiased look at the motivation and a second look at your legal agreement to ensure the lawyer % is before fees, not after. I sincerely wish you the best of luck; your success may very well change franchising. Buddy
Marc said: Please find me numbers on franchisors refusing money !! I know only 2 Ourselfs and a breakfast place with 70 location here in Canada, It is not an easy place to be as a franchisor , but it has it’s rewards, yes money, but also having the chances to touch the lifes on thousands of women, So please induldge me If I am not perfect, rather than being tough on me point me the thing you think could help the franchise industry
Marc: I give you a lot of credit for coming back, posting your last comment and removing the bogus statistic. Admitting the past closings and admitting your mistakes indicates to me that you want to do it right. If you imitate the others in the industry, say what they say, use their statistics and copy their Master Franchise/ area rep strategies, you will certainly end up doing the wrong thing. You’ve got to set your own course. Challenge every assumption.
Every franchisor with long-term success turns down money from franchisees they’re not sure about. Only true scammers – the psychopaths who can justify anything to themselves and still sleep at night – get away with using the mirror test and the check clearance test for franchisee selection.
I joined a startup franchise company with a $250K – 350K investment. We opened 80 new franchise stores per year primarily through single unit to a few unit operators during a down economy. While we were aggressive with PR, local and in-store marketing, we did next to no franchisee recruitment advertising. We made our franchisees’ success our highest priority. We didn’t say it, we did it. In turn, we received over 6000 franchise leads through our stores, press and referrals every year. When a location became available, we went to the file and had to choose from the waiting list of approved franchisees.
We all knew that if the quality started slipping at store #11, there would be no store #12. The same was true at store #299 and #599.
One of the most common fatal flaws of young (or old) franchisors is they paint themselves into a corner and have to act like they know everything. That’s one of the problems with Curves and the 30 Min. Clubs.
Imagine what would have happened had they all recruited differently. Instead of just saying: “Follow our brand new, untested system, believe in yourself, and you’ll succeed,” they had recruited people by saying: “Look, this is a brand new idea. We think it’s cool, but we don’t know WHAT will happen in the next few years. We WILL promise that we’re in this together. If we have to adjust, test, fine tune, we will. But whatever we do, you can be sure that our priority is the best interest of the brand and our mutual success, not simply our own.”
Even franchisees who didn’t make it would have felt that they were part of one of the most exciting business ventures of the time – not the Scam of the Century.
Buddy said: Among other things, I saw an immediate flaw in the 30 minute salon sales pitch, (no business experience, own your own, not alone) that seems to be across the board. I believe the intent is to draw 1st time inexperienced business owners in with little down.
Well put, Buddy. Where else is inexperience considered a virtue? In franchise sales mythology, experience = “bad habits to unlearn.”
In truth, experience = “tough questions to answer.”
Buddy said: Please take a close …look at your legal agreement to ensure the lawyer % is before fees, not after
This is even better advice BEFORE you buy a franchise. Pay an experienced franchise lawyer to review your agreement before you sign, invest, open and get in trouble. It will cost you a lot less before you sign.
Franchisor attorneys do not draft those big fat agreements you sign to make it a fair fight if things go wrong.
Hi Sean and all the others, Finaly I found those numbers on this web site see adress below..
[Editor's note: I rarely add to comments but don't want someone coming across this and believing it. Bold comments mine.]
I understand that they are a consulting firm for franchisor but again .. I am sure that they did their research.. [Then you would sure be wrong. They know the statistics are fraudulent and they use them anyway. What does that tell you about them?] I hope..
Still I decided not to put those Numbers back on my web site since I dont need them at all , I went tru all the pages and even find another place that talked about numbers I will remoove it too, I dont know if the actual job of investigating the numbers has been done , but the 95% seem’s to be everywhere.
[It seems to be everywhere where people are promoting franchising. Where are the studies? They don't exist]
http://www.franchiseyourbusiness.ie/franchising_industry_facts_and_statistics.html
Franchising is big business. (See Franchising Industry facts and statistics.) Studies show that 95 per cent of franchised business are successful, compared to only 55 per cent of non-franchised businesses.
[This is a lie & the people who use them are liars. Or they don't have a clue. In either case, grab your checkbook & run]
Franchised businesses are tried, tested and evolving business concepts. That’s why banks love them. There’s much less of a risk involved in lending money to people to buy into them.
Franchising provides you, the Franchisor, with the ability to expand your business much more speedily and with less of a financial risk than if you were to invest in, or raise the capital, to open new outlets yourself. [Banks LOVE them? Who wrote this? Barney?]
Franchising gives you a brand that will be chosen over other products and services that might have the same function and possibly the same quality. Behind the consumer psychology of it all, people will go for a brand they know and trust when there’s a choice between similar products or services.
Your profits are higher because your costs are substantially lower than they would be if you owned and operated all the outlets. You can use the franchisees’ contributions to a general marketing and advertising fund to promote your business nationwide. You and your franchisees can use your combined muscle to achieve greater purchasing power with key suppliers, enabling franchisees to compete on price with single unit operators. [I bet you franchisees love seeing this. Let the franchisees take the risk while you spend their money to promote YOUR business nationwide. I didn't know Capt. Hook did franchise consulting]
[I did it. I got out of here without violating my no profanity policy. Just barely.]
Sean
Thanks for adding your comments to this franchisor’s blog. See, this is what zees are up against.
And Buddy- maybe we all didn’t do the due diligence as thoroughly as we should have but look at Marc’s comments, and he is suppose to be a zor who is trying to do what’s right!! And I do happen to know what our lawyer will charge when all is said and done. If it takes forever it still is worth it if they don’t sell one more franchise, and hopefully this site is helping us do just that.
Sean ,
I wish to thank you for the comments you made they are eye oppening for me
I just had a meeting with my sales team, and made sure they understood that even if sales drops we have to be able to give more time to our potential franchisee to actualy find if they are right for this business, so we did a actual questionair form them to fill out , I knew that my team would accept this because we already applied it but from now on before signing a franchise agreement they must all call at least 5 centers to have referal , we even gave them a list of questions to help them ask our actual franchisees the major things they should know, as : how many members at the oppening, how many hours did they do first 6 months and after, how is their relation with the franchisor , are their ideas welcome with us , are they making the money they wish they made , if it was all to do over would they ? are the overhall cost of the start up was respected by the franchisor, delays in recieving the equipment , date of oppening , assistance for pre oppening and after the oppening , was all of this respected and enoughf,
the rest should be at their discretion , after that
they will be more aware of the many thing to do
and the actual implication of owning a business,
Sean , my plans are to start selling franchises in the USA very soon we already have our UFOC document and we will register for the state of Texas next month, We have a great product and system to present nothing comparable to the actual 30 minutes centers, Over 70% of our own franchisee here (we have the numbers) where profitable before 1 year the other 30% are open less than 1 year but are all following their projections, as I said we are very close to our franchisee and every 7 +/- locations we oppen we hire a new team member here at the head office to assure the assistance they need,
I am wondering if I should sell to a master franchisee or to individuals, my lawyers are telling me to sell to a master for support to the franchisee, if you have an oppinion it is welcome.
That said
Thank you
Marc
You’re welcome.
My impression is that the Master Franchise (or Area Developer) structure, especially in the fitness industry, is perhaps the franchise fraudster’s finest work – a masterpiece of malevolence and misdirection. But I’m not the expert – the ADs and franchisees here can confirm or dispute my impression.
Here’s an example of how this works:
Fitness Fred decides to buy a franchise with a 30K franchise fee and a flat $1K mo. royalty.
“But wait!” says Salesman Sal to Fred. “I will sell you the right to sell and support 50 units in your territory for $250K. We will split the 50 franchise fees even steven. Fitness Fred, you’ll make $750K on franchise fees alone!”
“Wow,” Thinks Fitness Fred. “I could help a lot of people get fit and build great businesses for $750K.”
“But that’s not all!” says Salesy Sal. “We’ll also split the monthly fee. $500 a month x 12 months x 10 years x 50 franchisees = $3,000,000.”
Wow! Fitness Fred can make $3.75M plus all free protein bars he can eat all for only $250K plus opening his own club. He leverages out to the hilt to come up with it.
Let’s say Fred opens his club and five franchisee clubs in the territory. Things are OK, but they are in startup stage in tough times. Franchisees are needy and complaining. His club is no homerun, and as he’s feeling the economic strain, having a tough time paying his own mortgage. FR hits him up for franchise marketing dollars. His own club becomes a burden, like the whiny franchisees. One of his 5 franchise clubs closes. Where is Fred going to put his focus and energy: supporting needy franchisees or trying to sell more franchises? Is he going to acknowledge the problems, or sing the company song while the franchisees in his territory are more and more angry at him?
Here’s the evil brilliance of it: the franchisor sold 30 of these things for $7.5M upfront and doesn’t have to do a dang thing but wear bulletproof jammies to bed each night. If there’s no franchisee support, it’s the AD or AR’s fault. And the AD can’t speak out or bye bye investment. House. Car.
Marc, ethical franchising involves a win-win arrangement, not a win-lose-lose. Unless there are performance & operational requirements that ensure Masters provide the same or better support no matter what their economic incentive, it’s just, it seems to me, an insidious arrangement.
However, there may be exceptions and I may be wrong. That’s never happened before, but it’s theoretically possible.
Franchisees please share your experience and observations.