WACO, TX — Seven individuals have filed a $20 million lawsuit against Gary Heavin, owner of Curves International, and Roger Schmidt, the company attorney, accusing the pair of defrauding them. Curves is calling the lawsuit baseless and frivolous.
The plaintiffs say they sold franchises for the chain, quit their jobs and mortgaged their homes to help launch the company when Heavin started it in the early 1990s. They claim that Heavin promised them large financial rewards for their work.
The plaintiffs say that they worked 20-hour days traveling around the country charging expenses to their personal credit cards while selling franchises for Curves. For taking a risk and investing, they claim they were promised a share in the profits once the chain became a success.
The plaintiffs say that Heavin promised them a return on investment in the franchise fees of 20 percent and on top of that, 20 percent of the monthly fees paid by each franchise they sold. The lawsuit contends that Heavin further promised that they would receive the residuals for the remainder of their lives and those residuals would pass on to their heirs.
The suit claims that in February 2002 after Curves had grown to 2,000 franchises, Heavin told the plaintiffs that they would earn too much money from the original agreement so he forced them to sign a new agreement that gave them a 5 percent residual with a buyout option at a fraction of their present value. The plaintiffs state that Heavin threatened to fire them if they did not sign it. Each plaintiff signed the agreement, and Heavin then bought them out in November 2002.
Due to the pending litigation, Heavin would not comment about whether there were two contracts, and if so, why a change was made.
However, he did say, “Most of the plaintiffs were hired as independent sales reps after Curves had hundreds of locations. They were highly paid for the work that they did. Their lawsuit fails to state that they were paid more than $26 million for their efforts.”