Contours 'zees want support
When he bought into the Contours Express franchise in early 2006, Norman Lindley was convinced it would be successful. How convinced? The retired airline pilot didn't just open a single location that spring. He opened three of them. "I bought them hoping that I would make some money," said Lindley, who opened his units near Eugene, Oregon. "I'm old. And I could get out of it quicker."
Lindley did get out of the business quickly, but he didn't make money. The units he opened operated in the red and he found himself spending more than he anticipated opening and running the units. Within five months he was down at least $136,000.
He sold two of his locations for a "miniscule amount" to a person willing to take over the leases—the new owner subsequently re-branded the locations. He kept his third location but changed its name and is looking to sell. "I'm done with Contours Express," he said.
Lindley is not alone. While every franchise system watches owners come and go regularly, for numerous reasons, the exodus from the once high-flying, 30-minute women's fitness chain has been striking.
Contours has 248 units in the United States, according to the company's Web site. Yet from 2004 to 2006, 148 Contours Express franchisees left the system, according to the company's UFOC, while another 96 units were transferred to new owners. Combined, that's 244 franchises that either closed or were transferred.
There is anecdotal evidence that the exodus continued in 2007—the 248 units noted above was roughly 40 fewer than a previous count in December. The chain has been able to maintain a consistent number of units over these years largely through aggressive franchise sales.
Perhaps not surprisingly, the chain is facing lawsuits. A large group of mostly former franchisees sued the company in Missouri last year. Some other franchisees, meanwhile, have hired Minneapolis attorney Michael Garner of Dady & Garner, though as of press time he has yet to file any action.
The Missouri lawsuit claims, among other things, that franchisees were lured into the system with promises of a low-cost investment, promises that ultimately did not come true. Contours is challenging the suit and has filed a counterclaim demanding unpaid royalties from the franchisees.
José Perez, the company's chief executive officer, denied the lawsuit's claims in an interview over e-mail—the only interview he would agree to—calling them "unfounded and without merit." "We intend to continue to vigorously defend this lawsuit and fully prosecute our counterclaims for past royalties," he said. "We fully expect to prevail."
Critics' main contention against Contours is a familiar one in the franchise industry: The chain focused too much on fast growth and not enough on building the brand or on supporting franchisees.
The company started franchising in 1998 and is one of several 30-minute fitness chains that emerged in the wake of the success of Curves. Contour Express make no bones about comparing itself to the 10,000-unit, Texas-based giant—its Web site has a page devoted entirely to that comparison.
The chains have to promote themselves heavily to maintain a healthy dose of customers, and that's where Contours' critics say the chain falls short. "I can tell you that every franchisee I've talked to thought it was a good concept," said Jonathan Fortman, an attorney for franchisees in the Missouri lawsuit. "It focuses on expansion and didn't support franchisees. When existing franchises ran into trouble, they didn't support them."
Franchisees interviewed for the story say they get little ad support to attract members. So they have to market themselves heavily, spending more than they anticipated, and many among them had little capital to begin with. High turnover among members exacerbates that challenge, making it difficult to break even, let along make a profit. "They were sold a name, which nobody knew about, and the franchisor didn't take any steps to assist them with it," Fortman said. "They were left to brand the franchise on their own."
Perez disagrees, saying the chain has several programs in place to help franchisees market their centers.
Franchisee Lindley noted that Curves focuses heavily on marketing its brand, including placing its name on a brand of cereal. "Who has ever heard of Contours Express? Not many people," he said. "That's the biggest difference between the two franchises."