Thousands of Franchisees Fail but Franchisor Curves Remains Profitable
Since 2007, the Curves women's fitness chain has lost about a third of its franchises. While some excuse the decline as due to "cheaper competitors with more amenities and options," the president of the company, Mike Raymond, explains it differently:
The company disagrees with its critics, contending that much of the club closings were intended as part of a plan to "prune the system,". . .Some owners had bought into Curves for the wrong reasons, he says, "they were motivated primarily as investors rather than owners." The Wall Street Journal
While Mr. Raymond argues against Curves' critics who claim the companies inflexibility to move with the times has anything to do with the franchise's decline, one could argue that Curves' clients are voting with their feet.
Apparently, regardless that thousands of franchisees have closed their businesses and were financially hurt (perhaps bankruptcies?), Curves itself seems to be doing well:
Financial statements filed by the closely held company show it to be profitable. For the year ended Dec. 31, Curves earned $16.4 million on revenue of $84.1 million, compared with earnings of $17.2 million on revenue of $128.7 million the prior year. The revenue falloff reflects lower franchising royalties and equipment sales. Franchisees pay the company 5% of their monthly gross plus another 3% for advertising.