A Slim Gym's Fat Success

You

hear that marketers are learning to portray aging baby boomers more realistically. But how often do you see an ad that features thickening middle-age Americans? Hardly ever — and that's why you will probably notice the new $16 million TV ad campaign by Curves Intl., the franchising phenomenon that has opened more than 5,400 gyms for women in the 50 states, Canada and six other countries. Commercials for Curves show real women — think "before" not "after"--slogging through their workouts. What's also different about Curves — and why its business model is even more intriguing — is that it ignores the received wisdom about luxury-obsessed boomers. Curves' gyms are small, simple workout joints, often in strip malls, that cater to overweight women who have never worked out. They offer only one service: a tightly structured, 30-min. circuit-training workout on eight to 12 exercise machines. A recorded voice tells you when to move to the next machine. Most locations are open just seven hours a day, and there are no showers, massages or fruit smoothies. You walk in, follow the drill and leave.

Women — mostly 30 and up — love it. Without much fanfare, the 10-year-old, privately owned Curves has become the world's largest fitness franchise, measured by locations. It accounts for a quarter of U.S. gyms and pulls in about $750 million a year from almost 2 million members, according to founder and CEO Gary Heavin, 48, of Gatesville, Texas. Franchises are launching at a rate of nearly 200 a month.

Heavin spent nothing on advertising until this year, another way he has bucked the fitness industry's model. And even his franchisees have not spent much — a few hundred dollars a month typically — touting their locations. That's because Curves customers, generally ignored by the 1990s fitness frenzy that raced to reel in the prized 18-to-34 demographic, have spread the word almost evangelically. "What Curves has done is broken through the perception that you have to be fit, coordinated and thin to go to a gym," says Bill Howland, director of research for the International Health, Racquet and Sports Association, the industry's largest trade organization. "They've carved out a niche within the population that had never been served."

Heavin also made it convenient and cheap to set up and run a franchise, which has inspired thousands of first-time entrepreneurs, many of them women. Angie Holding, 56, of Wichita, Kans., had fought a lifelong battle with fat and watched her three daughters and granddaughter do the same. In 2000 a fit-looking friend pointed her to Curves. "I'd never exercised in my life," Holding says, but she found Curves' atmosphere — women in sweat pants rather than Spandex — appealing. She joined after her first visit. And at $29 a month (fees range from $29 to $49, based on location), it didn't crunch her finances.

Because muscle weighs more than fat, Curves measures success in inches, not pounds, lost. In a month of thrice-weekly visits, Holding shed 8 1/2 in. total from her arms, legs, hips, waist and bust. She decided to buy a franchise while continuing to work as a real estate agent, spending $65,000 to set it up in a shopping center, and enlisted daughter Diana, 36, to manage it. Within three months, Holding's Curves had 400 members. As Diana rapidly shrank from a size 22 to a 12, shedding 48 in. from her figure, she decided to open her own Curves on the other side of town. Holding's youngest daughter Danielle, a recent college grad, got help from Mom in opening the first Curves in Austin, Texas, in 2001.

The Holdings are the kind of owners Heavin hoped for when he set the monthly franchise fee at a low $395 in 1995. His success took the franchise industry by surprise. "A few years ago, this company called Curves started showing up on our lists," says Maria Anton, executive editor of Entrepreneur magazine, which recently ranked Curves the fastest-growing franchise in the world. "We said, 'Whoa, where did this company come from?'"

Heavin and his wife Diane, 41, had managed and owned traditional gyms in Houston. Heavin had made his first million by the age of 26, then lost it all by 30 after trying to expand too quickly and broadly. In setting up the Curves chain, he avoided debt for himself and his franchisees by keeping down costs and growing at a rate he could afford. The typical Curves inhabits just 1,200 sq. ft. to 1,500 sq. ft. and can be profitable with as few as 200 members. Those low numbers let owners focus on service rather than member recruitment.

Liz Naughton, of Kodiak, Alaska, opened her franchise five months ago after being taken to a Curves by her daughter in Palmer, Alaska. When Naughton, 47, cracked her nest egg for the initial $19,900 investment, her husband thought she was nuts, she says. She has already made half the money back (and dropped from a size 18 to a 12). "I never pictured myself in this profession," says Naughton, a former Teamster driver on the TransAlaska pipeline. What got her interested, she says, is that Curves customers seemed to be having fun — a word not often associated with lifting weights.