FORT LAUDERDALE, FL -- Diversified Health & Fitness Inc., recently purchased the assets of San Ramon, CA-based Butterfly Fitness Inc., the franchisor of Butterfly Life women-only health clubs, for an undisclosed amount.

Included in the acquisition deal are Butterfly’s franchise agreements, FDD registrations, area developer agreements, manuals, trade names and other intellectual property.

“This is a great step forward for Diversified and for Butterfly,” said Roger Wittenberns, Diversified CEO, in a statement from the Fort Lauderdale, FL-based company. “We welcome our new franchise partners to our family, and we are excited to bring our experience and knowledge to such a promising organization.”

Diversified said the acquisition will allow it to enter the Japanese market with six locations. The company’s franchise portfolio currently consists of 150 fitness clubs in 40 states and three countries, as well as more than 500 active licenses to build new clubs. The Butterfly acquisition will push Diversified’s holdings to nearly 200 clubs, the company said.

Diversified now owns Liberty Fitness, Fit For Her, ShapeXpress, Access Fitness, Fit Zone, The Blitz, The Zoo, Sedona and others.

Early last year, 10 Butterfly franchisees, mostly in California, filed a class-action lawsuit against Butterfly Fitness, claiming the company allegedly misrepresented itself by orally providing false earnings claims. The arbitration ended when the franchisees did not pay arbitration fees, according to posts from Scott Hammel, attorney for Butterfly Fitness, on the Web site www.unhappyfranchisee.com.

However, a Butterfly Life franchisee stated on the same Web site that the franchisees did not pay the arbitration money because Butterfly Fitness' own arbitration filing fee check bounced.

"Why would the franchisees put any more of their hard-earned money into the arbitration if BFL can’t even make good on their filing fee?" the franchisee said on the site. "I’m surprised that Diversified would purchase BFL without doing their 'due diligence.' Not only did they buy the name, they bought all the trouble that goes with it."

Mario L. Herman, a Washington, DC-based class arbitration attorney who represented Butterfly Life franchisees in the case, said both sides failed to pay arbitration fees.

"The case was dropped because arbitration proved to be too costly for my clients," Herman says. "Butterfly filed against several of my clients in one proceeding, and they didn't make good on the filing fee. So there's no arbitration that's viable now."

Last fall, rumors circulated that Butterfly Life had ceased operations after its corporate Web site and phone lines were shut down. Mark Golob, Butterfly president and CEO, told Club Industry’s Fitness Business Pro that the company had simply moved offices and was being rebranded.

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