Insider Advice for Curves Resale Franchise Buyers
(FranchisePick Franchise Blog) Thanks to the readers and contributors of FranchisePick.com, our pages contain a wealth of great franchise buying advice from insiders and franchise owners you’ll find nowhere else. If you’ve got a question, post it and you might get a thorough and insightful answer, such as this one regarding the purchase of an existing Curve fitness franchise. Thanks to Kunst for his/her response.
RMZ asked:
“I am considering purchasing an existing 2.5 year old franchise in a community of 4200 (2500 women with the median age being 45.5) that has one other full-service gym.
The current owner is absentee and has actually moved to another state. Current membership is 223 with 07 gross sales of around $80K, expenses of $55 and cash flow of $22K. The owner has not advertised at all in 07, but spent about $2,000 in advertising in 06. 07 gross sales are about 25% less than 06.
“The asking price is $30K. What do you think?”
Curves for Women franchise owner Kunst replied:
“One of our clubs is similar to this. About 10,000 population and 231 members. One full-service independent gym. Our revenue and expenses are higher (your club must be at $29/month; ours is at $39). P&L profit about $16,000 last year. The problem with this situation is the population. As with all gyms, 1/3 to 1/2 of your members are going to leave each year. That means you’re keeping them on average 2-3 years, which is good, reasonable, and normal. The problem is replacing them. It is true in general that Curves membership levels are down significantly over the last several years, and the main reason is that it’s hard to replace the members you lose. In a larger community, there are fresh faces all the time, but in a smaller community like the one you’re talking about, this is probably not the case. One reason the owner hasn’t advertised is probably because everyone knows Curves is there and either is a member, was a member, or knows people who are members. The best marketing for that kind of community tends to be people-gathering events, which is more demanding of time than money.
“Here’s what I recommend to anyone considering buying a resale club:
1. Get a 2007 P&L from the owner, preferably with each month in a separate column. Analyze that puppy until you fully understand it.
2. Make sure you understand the membership numbers and how they relate to revenue. Look at product sales. If this area has been neglected, it may be an improvement opportunity for you.
3. Ask for the membership numbers by month since the club opened. You will probably see an initial spike that reached a peak and has been dropping for some time. It may or may not have leveled out.
4. Marginal (i.e., new and cancels) membership changes pretty much go straight to the bottom line. If membership drops, revenue drops with it.
5. Sometimes a new owner can energize a club and raise it to a higher level. Sometimes not. Do some due diligence and make the case both for and against this.
6. Talk to everyone you can about the club. If possible, talk to the employees. Talk to members. Have your wife join if that is feasible, or work out there on a travel pass if she is a member at another club. Most important of all, talk to every Curves owner in the area. Most will be very willing to take the time to answer your questions and give honest advice.
“Is $22,000 an adequate return for you? Make sure that number is real. If you don’t have to spend a lot of time, that’s a pretty good return on $30,000 but it’s not enough to live on. Because we have four clubs, we do just fine on per-club profits that would not be sufficient for most people if they have only one club. Are you going to maintain the same staffing structure? How do you intend to run the club? It usually doesn’t work well when the female owner isn’t engaged enough. Our comparable club has 3 employees and my wife manages it by phone and by being in there 1-2 times a week. Our other clubs have managers and she spends about the same time on each of them. She does not work in any of the clubs on a regular basis. She is an absolute expert on every aspect of Curves operations, which gives a solid foundation you won’t have at first.
“We have really good employees who have been with us (4 clubs) on average nearly 3 years. Employee turnover is no fun, so make sure you have a handle on this and a plan for how you would handle someone leaving.”
WHAT DO YOU THINK? COMMENTS WELCOME.
Tags: Curves, Curves For Women, Curves franchise, Curves resale, fitness franchise, franchise, franchise resale, franchisesRelated Stories
POSTED IN: Curves For Women
8 opinions for Insider Advice for Curves Resale Franchise Buyers
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Mar 1, 2008 at 7:28 am
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Kim
Apr 19, 2008 at 5:04 am
Bravo, Owner Kunst. Excellent advice. I am a woman who just purchased a Curves in a populated and still growing area. It is a resale club, and the owner had been absent for a while.
When I stepped in, membership was plummeting, members were discouraged about employees, activities, and general decor. Mr. Kunst is absolutely right about owner involvement. I knew next to nothing about the operations but had worked out there for a month or so before purchasing; I was very impressed by the program. In fact, after two months of working out, I lost 20 pounds, gained muscle mass which raised metabolism to help me lose weight, and lowered my body fat percentage considerably. I’m in the best shape of my life!
My first priority in the club was to make myself visible and available to members, so they could get to know me and vice versa. This has worked wonders. I did have to hire all new staff, so that was quite a challenge; however, this was one way that I could be assured my team would be doing things the “Curves” way which is proven to be successful.
Now two months into operations, having attended Club Camp early on, and participating in the Mentor program, I feel that I am on the path to success. It is a lot of hard work. What I really like is that there is tremendous support and resources from Curves International. I read the comments by Graeme T. and vehemently disagree with his assessment that there is no franchise support. It is the complete opposite. Granted, I am a self-starter and go-getter and highly motivated to make my club successful, so that might make the difference.
Curves is a facility specially designed for women featuring a complete 30-minute workout and weight management program that’s fun, fast, and safe. What has been most impressive to me is the success stories I hear of women who have reversed health conditions utilizing our program which combines cardio and strength training. No other program out there can claim that. I firmly believe that it is not a “fad” fitness center. In fact, our facility will be receiving the new CurvesSmart technology within the next couple of weeks, and from what I know so far, it will be a boon to our franchise.
In closing, I would like to say that my decision to purchase a Curves facility was the best one yet. I know that I am “strengthening women” and helping to improve the health and quality of life of the ladies in my community. I highly recommend the purchase of a Curves facility. It’s not for the lazy, though. Through hard work and by following the system, it can be a very rewarding and enriching experience. Good luck, all!
Susie Q
Apr 19, 2008 at 9:35 am
You’ve only started. Let’s tune in later say in 3 or 4 months and see how you are doing!
Sadderbutwiser
Apr 19, 2008 at 10:28 pm
Good luck, Kim. We felt the same way you did four years and $270,000 ago.
Susie Q
Apr 19, 2008 at 11:34 pm
Kim- it sounds like you are doing a commercial for Curves corporate. You are fooling yourself if you think just because you are a go-getter and highly motivated that that is what makes the difference between a failed club and a successful one. Boy do you have a lot to learn- and probably will the hard way like me and numerous others.
Kim
Apr 20, 2008 at 6:53 am
Did I mention that you have to have a POSITIVE attitude? If you THINK you can, you CAN DO ANYTHING you set your mind to. Think positive, and positive things happen to you. We all have our own opinions. Signing off from this BLOG… God bless!
Susie Q
Apr 20, 2008 at 8:52 am
If positive attitude were all I needed then I would have forty 30 minute women’s fitness clubs. It takes more than that dear!
Martica
Jul 17, 2008 at 1:17 pm
Ok so for those of you with bad experience…pls give some details. Did your memberships decline? Were your members unhappy and quit? Why? With any business you have difficult times its what you do to lift it up that counts.
Are you bitter about Curves just because your business failed? I would love more details because I have to agree with Kim.
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