International Law

123 Not Fit for Franchising

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Jonathan Maze, writing at the Franchise Times has an excellent story on the downfall of 123 Fit Franchise

"123 Fit was built around a fitness regime designed by Wilson that is more intense than the Curves workout - one that continues to receive raves even from the company's biggest critics.

While other clubs target women, 123 Fit is open to anybody.

Wilson, a longtime fitness industry veteran, had started Ray Wilson's Healthy Exercise and, at one point, vowed to have 10,000 locations nationwide.

Schaden bought the nine-unit chain in 2005 and worked with Wilson to refine the concept."

Maze further claims "The company's closed units outnumber its current units by a nearly 2-to-1 margin.'

Well, this is an appalling ratio - but where can we find objective verification of this number?

Item 20 of the UFOC or FDD will provide us with this information, and I don't get the same numbers as Jonathan.

Reviewing the 2007 UFOC item 20, which lists only information up to and including the end of 2006, 123 Fit had 27 franchisees opened and 16 which had closed, left the system, been terminated.

Perhaps Jonathan is working with more up to date information.

But these are appalling numbers: 16 out of 43 franchises are closed.  So, you had basically 1 out of 3 chances of losing your entire investment, plus operating loses, plus the consequential damages of having to pay off the loans!

No wonder why Robert Purvin continues to write about Franchise Fraud.

Full post as published by Misleading Advertising Law on September 08, 2008 (boomark / email).