Franchise Pick

Pure Weight Loss Employees Also Suffering Losses

by Sean Kelly on February 20th, 2008

(FranchisePick.Com) Hundreds, perhaps thousands, of comments have been posted on FranchisePick.Com by victimized Pure Weight Loss (until recently LA Weight Loss) members, some of whom lost several thousand dollars when the 400 unit chain closed abruptly last month with seemingly little regard for its members or employees. While most media attention focuses on the former group, an article posted today in The Times of Northwest Indiana also describes the plight of the Pure Weight Loss employees who were as surprised as their members at their employer’s abrupt closing.

The Times interviewed Ruth Moton, the former assistant regional manager for 11 Chicago-area stores. In September, Moton sold her house and moved to Chicago from Pennsylvania at the company’s request. She signed a lease and incurred thousands of dollars in reimbursable moving and related expenses.

Then, a few weeks before Christmas, Moton and other employees were told the chain would close January 2, 2008, and they would start the new year unemployed. Pure Weight Loss has since filed for bankruptcy protection. The company and its founder Vahan Karian are being sued by the PA Attorney General for fraud.

According to Moton, the company owes many employees. Some final paychecks bounced, and while some employees have been able to roll their 401(k)s into IRAs, “trying to get her 401(k) savings has become a ‘full-time job,’ she said.”

Moton said consumers continue to suffer. Chicago-area stores alone had almost 1,000 active customers who came in every week. Customers who were excited to sign up during promotions in the final months could be out large sums.

“A lot of my centers had open houses in October and November, a time when prices were reduced and a lot of the clients took advantage of that and bought more products that apparently (the company) didn’t even have to get to them,” Moton said.

Last month, Pennsylvania Attorney General Tom Corbett filed a consumer protection lawsuit against Pure Weight Loss and its owner Vahan Karian, also known as Vahan Karabajakian. The lawsuit alleges deceptive marketing and sales of long-term contracts for weight loss supplements, prepackaged food and weight loss counseling services.

In a statement, Corbett said the company owes more than a half-million dollars to Pennsylvania customers alone.

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POSTED IN: LA WEIGHT LOSS, PURE WEIGHT LOSS