Many people think that franchising is a safer business model than starting something from scratch. Not so, reports the Wall Street Journal:
Case in point: Curves International Inc. Once among the fastest-growing franchises in the world, the women’s fitness-club chain now finds itself rapidly shrinking. Last year 833 clubs, or 16% of the chain’s domestic presence, closed across the U.S., turning what many franchisees thought would be comfortable incomes and retirement nest eggs into money pits.
Curves now has about 4,000 U.S. locations—half the number at its zenith in 2005. That dramatic decline, rare in America’s franchising annals, reflects a number of factors coming to a head at the same time.
In the midst of a terrible economy, many customers have decided they simply can’t afford memberships anymore, franchisees say. And competitors are grabbing up market share.
Many Curves franchisees say management has made things harder for them by refusing to change its business model to meet these challenges. One big sticking point, these critics say, is that the company discourages franchisees from adopting a popular tactic at rival chains—letting customers exercise at all hours without supervision.