The current laws excuse the Franchisors from any obligation to disclose MATERIAL unit performance statistics in any manner, let alone in a timely manner, to new buyers of franchises.

How did Quiznos use the $250 mil(?) they borrowed in a securitization deal in 2006 when they transferred ownership of the Quiznos Franchise Agreements and Royalty Flow to a Special Vehicle Entity so that they could borrow more cheaply under our laws to expand their operations, etc…

If Quiznos hadn’t been permitted to disguise the actual failure rate and churning they indulged in through their UFOC’s, would they have been able to accomplish a securitization?

Obviously, Quiznos learned from Burger King who successfully securitized their franchise portfolio of franchise agreements.

This is all part of the big Bubble that has exploded in the faces of the franchisors, the special vehicle entities, the banks and lenders, the rating agencies, and the insurance companies and that started with the rip-off of those little people who were tricked into buying the hard assets and making the promises at the bottom of the pyramid — in the scenario of both the real estate bubble and the franchise bubble.

As Warren Buffet said, he determined not to buy into anything he couldn’t fully understand, but apparently he did understand the “RISK” and avoided it for himself and his investors.

One wonders why the head of the SEC and the Secretary of the Treasury and the Secretary of Commerce, and the Department of Justice didn’t understand the risk to the health and welfare of the American people.

Its the American people who will now wade in the BS of the coverup of this betrayal of the people by our institutions and our Congress.

My sincere sympathies for anyone who has lost, closed or left their business in a negative way, whether 1-2-3 Fit or otherwise.

Remember that your experience is not inclusive of EVERYONE else! Please don’t discount others who are successful, whether or not they are the majority of owners or not.

The fitness business is and always will be a tough one. People will continue to search for the perfect body and nutrition, diet and exercise will not go away.

1-2-3 Fit, Curves and Butterfly Life did not invent or create the circuit concept. In fact, circuit workouts have been around before gyms came into being. Most schools with athletic programs (football, baseball, volleyball, track, swimming etc…) have used circuit training for years. The U.S. military has done it since WWI. It is not new and it is not going away. A fad it is not. It is proven to be effective time and time again.

Why do some fail and some succeed? There are as many answers to this as there are franchise owners. One cannot use blanket statements to the entire system for an individual failure/closure.

Some of the orginal clubs who closed were charging significantly less per month than current clubs do. This is one explanation why a club, such as Palm Springs, can close with over 600 members and not make it.

Another reason is that original clubs were designed with a larger footprint and higher rents. This can effect profitability as well.

A third effect on profitablilty is having multiple profit centers available. Originally, 1-2-3 Fit had only a workout available. Now they have added personal training and nutrition programs as well as vitamins. These can easily add revenue to the bottom line each month. In fact, personal training is constantly one of the biggest revenue producers in gyms today. Overtime, it will surely benefit 1-2-3 Fit owners.

If you are/were a 1-2-3 Fit owner from the start, it was definitely harder on us than those who follow. I know this first hand. I can also tell you that our club has implemented price increases, personal training and the nutritional program and revenues continue to grow each month.

It is always a tragedy when somebody fails and I do not wish ill will on anybody. It is also important to not drag down others after you have failed. Some of us are making it and while I understand the need to vent, it is not a fair shake to scare others off of what could be a profitable business venture if properly executed.

One must consider all facets when deciding to spend your hard earned $$$ on a business. I wish everyone well on your endeavors.

Overhead should run $11K – $12K per month. Here is a breakdown. Rent $4K. Labor (to cover 77 hours – total coverage) $4K. Marketing $1000 – $1500. Royalities $600. Credit card fees and memeber service fees $600. Utilities/insurance $500. this does not include any debt service. Someone had posted they spent $300,000 in 9 months – so they probably paid cash for equipment. If not, add $600 – $1000 for equipment. Either way, this is a good baseline of monthly spending. My experience is that this is accurate month after month after month.

For the revenue. I will use 250 members with an average of $33 dollars per member. The avg per member will vary by club. Rough formula for why I am experiencing that. 125 members at full price of $44 and 125 members at $22. The ones at $22 are add ons or members we signed up on special deals whe we first started. So here is the math – $8250 in monthly dues. 12 new members per month. 10 pay enrollment fee of $100 plus first months dues. That is $1440. $2000 – $3000 in personal training. 2-3 of the new members prepay $1100 – $1700. So you get to $13K – $15K per month this has been my experience. I know the math is rough. This is where we are but adding the 10 – 12 new members per month. Even if we loose 6 members per month and add 12 we have a net gain of 6 members per month. In 12 months we go from 250 members to 322 members and you can redo the math from there. More monthly dues and more members to sell Personal Training to. So there is the revenue.

Here is where we have found success.

Price. We strictly adhere to the corporate sales tour. It is incredibly effective in showing the value of what we offer. Price is not the issue when the tour is done. So we get full enrollment and $39 plus $5 towel for all new members. The towel program is not optional. We just include it and quote $44. When the towel program was rolled out I can recall several clubs on the call resisted charging for towel service. Most if not all of the big gyms do – the YMCA near us charges $1 per towel. So unlimited for $5 is a good deal.

Advertising. We focus on “weight loss” rather than exercise in our advertising. We do this at the suggestion of corporate. Last spring they launched the weight loss marketing. Once again many clubs resisted it. We embraced it. The respones we get from weight loss ads VS exercise ads is in the multiples.

Employees. Our employees are such a big part of whether we sell things or not. We hire people that are passionate about helping people. They are paid on production. They know they are valued and they belive in our exercise/weight loss programs. Not only does this help us get new members but it helps us sell personal training. People get results, have a positive experience in our club so they spend money with us.

Capital. Fortunately we had the the capital to get through the normal start up and operating period. It took us longer than 9 months to reach where we are. So when I read that someone only gave it 9 months it is important to understand that it somethimes takes a bit to build a business and to get to a tipping point. So I don’t mean berate those that did not have the capital to get to the tipping point – I just assumed people knew it can take some time.

So with all that said I now want to offer a sincere apology to Barb and any Sean and any others I offended. Just as you are passionate about your experiences, I am too. And memebers and potential members do read these blogs. When a potential member came in recently and told me that 123 Fit was being trashed on some sites and that caused them to decide not to join I became engaged in this and other sites. I just want to get the word out that many 123 Fits are experiencing what I am. That the future for 123 Fit may very well be better than the experience Barb had with them.

I can understand the bitterness and hurt from folks that were first in with 123 Fit or many other concepts. Certainly there is a learning curve for any business. Even with experienced and long standing businesses mistakes are made – New Coke? But I am sorry people get hurt in the process.

But several of us are making it. I am just here to protect my business – not hurt or berate others. So you have my sincere apology.

Barb for you a special note. You are obviously passionate about the experience you had with 123 Fit. I know you want to do good with it. Don’t write a book -you should consider starting a website. Not just about 123 Fit or even franchising. Use your passion to educate people about business. You have been through the school of hard knocks – as most business owners have. Put that education to good use. I will bet Sean would allow you some publicity on his site and you would be doing a good service. Whatever you do, please know that success or failure with 123 Fit does not make you OR 123 Fit bad people. You mentioned I may be Brooksy Smith. Well I am not. I have no love lost for him just an arms length relationship. Trust but verify. But I have come to learn that he is not evil. He did not start 123 Fit so that he could oversee failure. I believe he is doing his best. And based on recent changes and the profitability of many clubs – they may have actually figured it out.

So that is my 2 cents worth and more. Good day to you all.