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Tuesday
Jul302013

Before! and After!

Virtually since its appearance, the company that is now Curves International, Inc., has been seen as a symbol of transformation: for its female clientele; for would-be entrepreneurs; for its franchisees; and for the health and fitness club industry.

And, virtually since the beginning, the company has prompted countless questions—now, perhaps, more than ever before.

In 1992, when the husband-and-wife team of Gary and Diane Heavin launched the business in Harlingen, Texas, their goal was to create an affordable and effective fitness option for women who had little experience with exercise or clubs. To say the Heavins succeeded would, possibly, be one of the understatements of the century.

Their concept inspired millions of women, worldwide, to pursue a more active lifestyle. And it made Curves the largest fitness franchise in history.

In the process, it also revolutionized the women-only sector, circuit training, the budget-club market, and the expectations—of the public and both the franchise and fitness industries—of how dramatic an impact franchising could have.

By 2005, the IHRSA Global 25 reported that, based on figures for the end of 2004, Curves was the world’s largest club company, with some 8,500 unites and more than 4 million members. It was No. 1 in terms of number of franchises, annual unit growth (a 26% increase), and five-year unit growth (+576%). And the company was still growing. By the end of ’05, it surpassed 10,000 units and had over 4.5 million members.

But it was inevitable, perhaps, that the skyrocketing growth curve would eventually settle down. The metrics flattened, began to fall, and, eventually, it became clear that a fresh vision, a new approach, and additional resources would be required to restore the brand to its former prominence.

Recognizing riches

On August 1, 2012, the Heavins sold a substantial interest in Curves, headquartered in Waco, Texas, to North Castle Partners, a private-equity firm based in Greenwich, Connecticut, for an undisclosed sum. The Heavins remain on the board of directors, serving as advisors to the management team. North Castle invests in businesses that promote health, wellness, and active living, and its portfolio reflects its philosophy. Its holdings include such brands as Octane Fitness, Red Door Spas, Performance Bicycles,

Palladio Beauty Group, and Ibex Outdoor Clothing. John McCarthy, IHRSA’s director emeritus, and Augie Nieto, the cofounder of Life Fitness, serve on North Castle’s board of advisors; Nieto is also the chairman of Octane Fitness.

Despite the challenges involved, North Castle recognized Curves’ persistent glow and its strong future promise. “Curves is the No. 1 brand in the world in women’s fitness,” explains Jon Canarick, the managing director of North Castle. “The concept of a safe, women- only environment where members could work out in comfort was a true breakthrough, and, in part, that’s why Curves grew so rapidly. That sort of service is one many people still want.

“We believe Curves can evolve to better address the needs of today’s consumer by offering a more complete solution to help women achieve their all-around wellness goals,” he continues. “Curves also has a strong, growing business in many international markets where there’s considerable white space for expansion.”

Leaner and meaner

To rekindle excitement about the brand and jump-start its growth, North Castle has had to tackle a number of immediate, pressing problems. Nearly all of them have to do with its franchisees—who they are; how well they’re being served; how profitable their businesses are; and what new things can be done to make them more successful.

According to Curves’ franchise disclosure document filings, by 2005, it had grown to a record 7,877 locations in the U.S. alone; however, six years later, there were just 3,523 domestic clubs. Essentially, its U.S. component had shrunk by more than 50%. (Curves currently has some 3,000 units in the U.S., and a total of 7,000 in 88 countries, worldwide.)

While Curves has made it clear that the rationalization was a conscious choice, some of the drop in numbers was clearly the result of dissatisfaction or failings on the part of franchisees.

“Curves has had to allow the number of franchisees to shrink over the past five years, and we know that more will exit the system,” Canarick acknowledges. “In many ways, Curves has been a victim of its own success.” One of the reasons, he suggests, is that, in some cases, successful franchises, developed by committed, independent, hands-on owners, were sold to hands-off investors. “Still,” he observes, “Curves’ mission of strengthening women has attracted a lot of great individuals who’ll continue to be owners for many years to come. In time, we’ll prove-out a more profitable club model, and at that point, we’ll likely restart franchise growth.”

The option of Curves units inside traditional health clubs is one that, while broached, hasn’t yet been pursued. “I’d say that it’s possible, but I’m not sure if it’s likely,” says Canarick. “We, as the franchisor, would never compete with non-Curves entities that would compete with our own locations. So, if anything were done, it would have to be in partnerships with the local Curves clubs.”

Courting confidence

One of the first steps that North Castle took was to install Monty Sharma as the president and CEO of Curves. Sharma’s broad background includes C-level stints at Roadmaster Brunswick, and at North Castle portfolio companies EAS, Naked Juice, and Atkins Nutritionals, Inc., firms that he helped turn around. “Curves offered a new challenge in franchise and retail,” he says. “And I was ready to get my hands dirty again in a turnaround, which is something I love.”

The Curves “reboot” would begin, Sharma decided, by reestablishing the credibility of the corporate team with the franchisees. “In a franchise system, the best-laid plans will fail if you don’t have the respect and enthusiasm of your franchisees—the people who actually have to implement the plans,” he counsels. “Before the October 2012 franchisee convention, we worked very hard to develop a fact base and a preliminary plan to win franchisee support.”

The company took a two-pronged approach: first, bolster support by being more visible; and, second, offer the opportunity to increase profitability.

Apparently, the franchisees have taken notice.

“We’re receiving a lot more support from corporate as they work to bring all of the clubs up to Curves’ standards and to mentor new owners,” says Catherine Peterson, a franchisee in Newcastle, Ontario, Canada. “Since the convention, the corporate staff has been active in the field. In November, we held Action Groups nationwide, and Sharma and the operations team attended these meetings—for the first time in the seven years that I’ve owned a club. Our area directors are in the clubs helping to train staff and advise and work one-on-one with owners on club operations. And mentors have been hired to do on-site training for new owners and struggling franchisees.”

“The relationships being developed between the fran- chisees and area directors really ‘puts a face’ on Curves International,” adds Cindi Bentley, a franchisee in Marion, Ohio.

Driving profitability

Canarick notes that, while outreach efforts are resonating with owners, Curves also needs to help them become more profitable. “We believe we can accomplish this,” he says, “with a revamped marketing and advertising pro- gram stressing the benefits of Curves. And we’ll invest to improve upon the core products and services we offer. The product that we think has the greatest potential is Curves Complete, our branded weight-loss program.”

That program, which became available in January, runs for three months, six months, or, if necessary, longer, and includes cardio and strength training and customized meal planning. Members attend weekly one-on-one meetings with a Curves coach certified by the world-renowned Cleveland Clinic.

Curves Complete was designed not only to compete with existing weight-management programs, such as Weight Watchers or Jenny Craig, but also to surpass them in its breadth. “First, it’s the only nationwide, women-only, weight-loss program that involves a gym,” Sharma emphasizes. “In terms of nutrition content, our plan is higher in protein and more moderate with respect to carbohydrates, which helps members maintain meta- bolically active muscle tissue and burn more fat. And no one offers the weekly support that participants receive from our Cleveland Clinic–certified coaches.”

Franchisees seem to concur about the program’s strengths and potential. “Curves Complete has totally changed the way women diet,” enthuses Peterson. “It’s a realistic, sustainable, family-friendly approach to weight loss, focusing on reducing body fat and increasing metabolism. One-on-one coaching, the

backbone of the program, provides members with motivation, guidance, and support.”

The 58 members who’ve taken part at Peterson’s club have collectively lost 1,136 inches, 1,151 pounds, and 57% of their body fat, while five members of the staff have lost 132 inches, 155 pounds, and 21.4% of their body fat. While those results are impressive, the benefits go even further. Peterson notes that some members have been able to reduce their use of medications, and seen improvements in symptoms from stress, diabetes, heart disease, osteoporosis, cancer, and Crohn’s disease.

“Currently, one-third of our membership is participat- ing in Curves Complete,” reports Peterson.

Many of the 87 other countries in which Curves operates are now experiencing obesity epidemics similar to that in the U.S., and, so, it comes as no surprise that Curves intends to roll out its solution globally. “We’d like to be a leader in many of those countries––a true global weight-management company,” says Sharma. “While we’ll tailor our offerings to each market, all of them will utilize the same three-step approach: nutrition, exercise, and coaching.”

“We plan to institute change in partnership with the enhanced management team,” concludes Canarick. “Curves took off like a rocket ship in the 1990s, and, as is typical with companies that grow that quickly, certain operating procedures and standards became difficult to enforce. We believe we can take the best of what Curves has to offer, like Curves Complete, and bring energy, direction, and new leadership to bear on the company to help our dedicated franchisees grow their businesses, and to help women throughout North America—and the world—live longer, healthier lives.”

A one-word way to describe North Castle’s objective is: transformation.  

 

The Growth Curve

1992 First Curves for Women center opens in Harlingen, Texas

1995 First Curves for Women franchise center opens in Paris, Texas

1996 Curves grows to 44 locations

1997 247 Curves are open by year’s end

1998 Curves more than doubles in size, to 537 units 1999 The company hits 860 locations

2001 It nearly triples in size, to 2,221 units

2002 Curves hits the 5,000-club milestone by year’s end

2003 Entrepreneur magazine ranks Curves as the No. 1 franchise, fitness franchise, and low-cost franchise, and the No. 2 franchise overall; the company has 6,733 facilities

2004 Curves founder and CEO Gary Heavin is named the IHRSA Visionary of the Year; the brand boasts more than 8,500 locations by year’s end

2005 The IHRSA Global 25 lists Curves as the world’s largest club company with over 4 million members in

2004; it scores No. 1 in terms of number of franchises, five-year unit growth, and annual unit growth

2006 Curves ranks No. 1 among franchisors for 2005 in the IHRSA Global 25 with 10,038 units and 4.5 million members; Fortune magazine ranks Curves as the top “Up-and-Coming Brand”

2010 Curves remains No. 1 for 2009 among the IHRSA Global 25 franchisors with 8,604 units; it’s No. 2 in the membership category, with 2 million members

2012 Curves completes equity deal with North Castle Partners of Greenwich, Connecticut

2013 Curves has some 3,000 units in the U.S., and a total of 7,000 in 88 countries worldwide 

 

Reader Comments (1)

The article states in two places that there are "some 3000" US clubs, but a count of the clubs on curves.com will show just over 2300 clubs in the United States. Rounding up to 3000 clubs is a pretty far stretch - 30% over actual numbers (which are easily verified by their public locations listing). Perhaps in the future IHRSA should fact check rather than take the information provided by those with a vested interest in portraying a position of strength. There were "about 3000" when NCP bought in last August, so "about 700" clubs have closed since they took the helm, an additional decline of 23% under the new management.
August 1, 2013 | Unregistered CommenterCurves7373

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