Women's fitness chain sued in St. Louis County Circuit Court by

Daily Record and the Kansas City Daily News-Press, Oct 24, 2007 by Kelly Wiese

Dozens of people across the country who bought franchises in a women's fitness chain are suing the company, claiming it understated the costs to operate a gym and did not help franchisees as promised.

The suit was filed in St. Louis County Circuit Court, and a scheduling hearing is set there on Wednesday. The lead plaintiff, Kathy Handing, bought gyms under the Contours Express system in St. Charles and O'Fallon but ran into financial trouble and closed.

The lawsuit filed by attorney Jonathan Fortman, of Jonathan Fortman Law Office in Ferguson, claims Kentucky-based Contours Express misrepresented how much money it would take to get a gym up and running before agreements were signed, did not provide support or visit gym owners as required in the franchise agreement and made earnings claims in pitching the franchise opportunity, in violation of Federal Trade Commission rules.

For example, the suit claims Contours did not help in choosing and developing a site for a new gym, required franchisees to buy equipment from it at an inflated price and often did not return calls to company headquarters seeking help.

"Franchisees were led to believe that stores could be opened and operated on a fraction of the actual cost," the lawsuit states.

Contours Express generally does not comment on pending litigation, said its attorney, Ed Spalty, part of the Armstrong Teasdale law firm in Kansas City.

"Contours Express takes any concerns or issues raised by its franchisees extremely seriously. Based upon what we've seen in this matter, we believe the charges are without merit," he said.

A message left at Contours Express' headquarters in Nicholasville, Ky., was not returned by press time.

Contours Express was created in 1998, a few years after the popular women's fitness chain Curves got established. Contours' Web site says it is an improvement on the Curves concept and claims its equipment provides better results, leading many Curves members to switch to its gyms instead.

Its Web site lists nine Contours Express gyms in Missouri, ranging from St. Louis County and Cape Girardeau to Lee's Summit and Springfield. The Kansas City-area gyms are not part of the suit.

Entrepreneur magazine ranks the top 500 franchise opportunities each year. In 2007, Curves ranked 15th best overall, while Contours Express came in at 141, down from 116 the previous year, when Curves was third.

Entrepreneur estimated Contours' startup costs as roughly $56,000 to $95,000. According to the lawsuit, some people were told they would need only about $15,000 in capital until their gym was breaking even financially. The suit said the company raised the expected initial investment in its 2006 disclosure form to about $44,000 to $75,000, but said that number still fell short of actual costs to keep the fitness center running at the outset.

"While Contours Express LLC has continued to prosper, the franchises have not," according to the lawsuit, filed in May.

The suit is not a class-action case, as some of the claims and amounts among plaintiffs differ and such a case was barred by the franchise agreement, according to Fortman. However, it still includes more than 60 individuals or companies from at least 16 states. Most are former franchise owners, but several are still open but struggling, their attorney said.

The group's claims range from a loss of $14,000, basically the amount of the franchise fee, to $250,000. Collectively, Fortman said his clients seek damages of more than $7 million.

"They were advising people they would be at the break-even point in four to six months," Fortman said Tuesday. "Once [franchisees] got into it, the costs to get it open were a lot higher and they weren't getting the membership numbers they were led to believe they would get."

The suit makes various federal claims and also alleges some violations under particular state laws. But all plaintiffs claim Contours Express committed fraud in the inducement, by making false representations of what the business would involve before people bought in, and later breach of contract for not living up to the support called for in the franchise agreements.