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The Turnaround
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Healthy franchise
Curves International, the fastest growing U.S. franchise, is casting its net toward Asia.
May 16, 2005: 2:02 PM EDT
By Les Christie, CNN/Money staff writer
Heavin and wife Diane
Heavin and wife Diane
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NEW YORK (CNN/Money) - From humble beginnings barely a decade ago, fitness center Curves International has expanded to nearly 9,000 locations.

Today, it's the fastest growing franchise chain in the United States, according to Entrepreneur magazine. It has locations in Europe, thoughout the Americas, and even Down Under in Australia and New Zealand.

To put that growth into context, consider that it took McDonald's and Subway 25 years to open 6,000 franchise locations. Curves needed just seven.

CEO Gary Heavin and wife Diane founded the company in 1992 and began franchising three years later. Earlier, beginning when he was age 20, Heavin had owned a string of seven conventional gyms in Texas. But he expanded too quickly, eventually lost the chain and was forced to declare bankruptcy. "I was a millionaire at 26 and broke at 30," Heavin, now 50, says.

He went through a divorce and served six months jailtime for failing to pay child support.

Lessons of hard knocks

Curves fitness centers differ greatly from Heavin's earlier gyms. Instead of 50,000 square feet of saunas, pools and fancy equipment, a typical Curves occupies 1,200 square feet and has 10 to 12 machines.

Heavin wanted to keep it simple and affordable, and appeal to an older, female demographic. Curves targets the soccer mom.

Plus, Heavin had personal reasons for wanting to help bolster women's health. When he was 13, his 40-year-old mother, overweight and suffering from high blood pressure, died after a stroke. Had she been in better physical condition, she might have lived much longer.

"When I was 40," he says, "I was teaching a women's fitness class and I found myself scanning faces. I realized I was looking for my mother."

First mover

Several factors have keyed expansion. Steve Hockett, president of FranChoice, a franchise referral consultant, says Curves "was first to market with the 30-minute circuit workout and it had a strategy of market dominance; they went all over the country getting the word out."

The company touts its main offering as a 90-minute workout you can do in 30 minutes. The circuit consists of a short warm-up, then, cued by a soundtrack, members move from machine to machine.

According to Hockett, the decision to open the gyms to females only tapped into a big middle market (no pun intended). Older, less-fit woman feel comfortable with their peers.

"These women don't want to work out with men," he says. "They don't even want to work out with some other women -- the hardbody, size twos who exercise eight days a week."

Low overhead keeps costs modest; in midtown Manhattan, for example, a month's membership costs $59. Just across the river in New Jersey, that drops to $29.

Curves keeps ownership costs down as well. The franchise fee is a modest $29,900 and monthly fees are 5 percent of gross with a cap of $795 a month.

Manageable startup costs

Omar Kasi of Bay Ridge, Brooklyn, who owns a Manhattan Curves, stressed, "the minimal investment needed, compared with other franchises," as a primary reason for choosing Curves.

Hockett says startup costs are also manageable. "The buildout is simple: Paint the walls, add lighting, and put in the machines. You don't need an incredible top line to profit."

Curves does not publish any earnings estimates, but Heavin says that the gross of the company and its franchises topped $2 billion last year. Spread over 9,000 franchises, that comes to an average gross of more than $200,000 per location.

The biggest factor in the company's success, according to Heavin, is its culture. A committed Christian, he "takes the golden rule to heart." Curves stresses integrity, honesty, and fairness in its business dealings, he insists.

(Heavin's Christianity has a political dimension as well: He has contributed to pro-life causes.)

The U.S market is now saturated, according to Frusher, with only another 1,000 locations or so available. To fill those, the company gets an enormous number of applicants.

Soaring resale value of some locations hasn't hurt demand. Angie McKnight, one of the contestants on "The Apprentice," has owned two locations in Los Angeles for a little over three years. In that time, their value has balloooned from the $40,000 to about $1.5 million, according to Frusher.


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