Gary Heavin Is On a Mission From God

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The early days of Curves were far from glamorous. Using Heavin's pickup truck and an open-bed trailer, the two Garys would bring equipment to franchisees. They'd scrape bugs off the machines before delivering them, and always carried white spray paint to cover up the dings and scratches that cropped up during transport. Diane created marketing and training materials. She also began developing merchandise, including T-shirts and water bottles with the company's logo. When the company decided to create a glossy magazine for members, Heavin named it Diane.

From the outset, Heavin was looking for a different kind of franchisee--someone who was looking less for a business opportunity than for a mission. The typical franchiser, he says, "looks for people who want to run a business and tries to teach them passion. We're looking for people with passion, and we'll teach them how to run a business." So rather than plastering the franchise trades with ads like most franchisers, Curves has found nearly all of its franchisees through word of mouth--as often as not from its own membership base. Many share Heavin's Christian faith. Franchisees are not required to have any background in entrepreneurship or experience in the fitness industry, but Heavin says that the company is selective: Applicants must display a willingness to work hard and, more important, have a passion to serve.

Amy and Randy Sims, for example, had owned two Subway locations. Amy joined a Curves gym and now the couple, who are married, own one in Batesville, Arkansas. "We like Gary's philosophy," says Randy, "and we like the idea that it's for women's health." Adds Amy: "With Curves, you're one-on-one with people. At Subway, you do have your regular people that come in and out, but you're not affecting their health, and that's really motivating to me, to be able to help other ladies like that."

The Simses also like the way Curves handles financial matters. In most franchising arrangements, franchisees pay the franchiser a franchise fee at the outset (at Curves, the current fee is $39,900; opening a Subway franchise, by comparison, can cost more than double that amount), plus a percentage of sales, on a weekly or monthly basis. That's how it worked at the Simses' Subway franchises. "The more you make, the more you pay," says Amy. "It's very, very frustrating. Your hard work is paying off and you're making money, but you're also giving a lot of it to them." To Heavin, this made no sense. Not only does it serve as a kind of tax on successful franchisees, it creates bad blood between the franchisee and franchiser. "You tend to become adversaries over the issue," Heavin says. He decided to cap the monthly 5 percent royalty--it's currently $795 in the United States. "If they do fantastic, bless 'em," Heavin says.

Of course, the cap limits the income that Curves International stands to get from franchisees. On the other hand, clubs that outgrow the royalty cap still provide additional revenue to Curves through product sales. Franchisees are required to purchase all of their Curves T-shirts, water bottles, vitamin supplements, and so on from Curves; such products currently are a $25 million-a-year business. (That business, a separate company called Ideas in Action, is run by David Heavin.) What's more, the royalty cap made it a cinch to attract new franchisees. "The more money our franchisees would make, the happier they were, and they'd shout about it," Heavin says.

And shout they did. In 1996, there were 44 Curves gyms. In 1997, there were 247. The Heavins decided to move their headquarters from their home to a proper office. They rented two offices and soon added a third. The next year, the number of Curves franchises doubled again, to 537, and the Heavins moved Curves headquarters from Harlingen to Waco, to a low-slung building across the street from a waste-treatment facility. They had five employees and never thought they'd outgrow that building. In 2000, there were more than 1,200 franchises. In 2001, Curves doubled in size again. By 2004, the company had more than 8,000 franchises, and Curves moved again, to its current capacious headquarters: a rustic, ranchlike building in Woodway, with working fireplaces and hallways lined with prints of ducks in flight and cowboys taking aim at Indians.

Heavin credits Curves' rapid growth to the low-overhead business model, which allows the company to open profitably in towns too small for other gyms. "We created an efficient business model that could go where no one else could," he says. Indeed, the average Curves club today has only 400 members--which, according to a formula the company has developed, is what a town with a population of about 10,000 can sustain.

Targeting smaller towns and cities had several strategic advantages. For one thing, it made it easier to attract members, because Curves often was the only fitness option in town. It also made it easier to attract new franchisees: The territories were small enough that an enthusiastic Curves member could open a gym one or two towns over without poaching business. The low-overhead model also meant that the buy-in for a franchisee wasn't steep--a little under $20,000 in those days, including the equipment. And franchising in out-of-the-way places gave Curves at least one more edge: The gyms were largely hidden from rivals, which allowed the company to sell hundreds of franchises without arousing competition.

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