Gary Heavin, co-founder and CEO of Curves International, Waco, TX, informed franchisees that the company has completed an equity deal with North Castle Partners.
In an announcement Heavin sent to franchisees on Tuesday, Heavin wrote that he and his wife, Diane, will play a role in the company as members of the board of directors and that North Castle Partners, a Greenwich, CT-based private-equity firm, will hire a new CEO.
Chip Baird, founder and managing partner of North Castle, and Jon Canarick, also a managing director of North Castle, will be on the board of directors with the Heavins. Canarick told Club Industry today that the firm is in the final stages of its search process for a new CEO.
Last month, Heavin acknowledged that Curves was close to finalizing a deal with North Castle. At the time, Curves said that the Heavins had not been asked to step down as CEOs of the company. Today, Canarick confirmed that the Heavins will be moving out of a day-to-day management role.
“They’ll be on the board of directors for the full length of North Castle’s involvement, which will be a long time,” Canarick said. “We consider Gary and Diane to be incredibly valuable partners. They have a tremendous amount of knowledge and experience to offer, to help set strategy, to help advise the CEO and help the outlook for the business.”
Canarick did not disclose the amount of North Castle’s investment in Curves, and he would not go into details of North Castle’s plans for the company, other than putting a greater emphasis on a more holistic approach to women’s health. Those plans will be discussed with franchisees at the Curves convention, which will take place Oct. 19-20 at Caesars Palace in Las Vegas.
“We certainly acknowledge that we’re investing in a business that in North America is obviously in decline in terms of the number of units,” Canarick said. “I think that’s pretty well understood. We believe we can reinvent and rejuvenate the brand and the operations.”
Baird serves on the board of directors of companies such as Octane Fitness. He had served on the board of Equinox, New York, during North Castle’s investment in that company from 1999 until 2005. Canarick sits on the board of companies that include International Fitness, for which Baird serves as chairman of the board.
In his letter, Heavin said that Curves and North Castle Partners have been building a partnership over the past seven months.
“We recognize turning around the performance of Curves in North America begins with a more profitable franchise,” Heavin wrote to franchisees in an email obtained by Club Industry. “In order to meaningfully increase franchise profits, we anticipate that the new leadership team will enact a number of changes and they will need your patience and cooperation in helping the entire system reach its potential. While we have a lot of ideas as to what will change, the turnaround and operating plan will be developed by the newly hired CEO in partnership with the existing team, other new hires and the board of directors.”
Heavin added that moving to one Curves brand will be critical to the company’s success, and he encouraged full participation in Curves products and programs that include Curves OS, a computer software program, and Curves Complete, a 90-day weight-loss program.
“We appreciate your patience as we work through this transition,” Heavin wrote to franchisees. “We are very excited to provide you with an experienced, talented new leadership team that will take you and the Curves brand to its full potential.”