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Club Pilates, Pure Barre owners say Xponential left them bankrupt

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Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#31

Post by bdcravens »

sema4hacker wrote: post #5

The article is mostly about franchisees getting ripped off, but I think an important theme is that any business focused on physical fitness often is the fad of the moment, and can be difficult to sustain itself for long because of the need to have customers paying memberships forever. Customers start out thinking they'll always go to the gym or dance studio or whatever, but most inevitably drop out. My advice: stay a…

My sister-in-law owns a Pilates studio in an affluent area north of Houston, but she has kept it small, approaching it more from the hair salon model: 3-4 instructors, each with their own book of clients they do one-on-one sessions with. As for her clientele, almost all of them have been with her long-term. I don't even think she does any marketing, other than minimal social media.

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#32

Post by wharvle »

ryandrake wrote: post #6

My parents got suckered into Amway back in the 80s and a lot of their generation repeatedly fell for other "run your own business" scams. I always hoped future generations would prove to be more cynical and less gullible and these kinds of things would die. But the next generations seem to be falling for them too, in even greater numbers, plus the modern versions like leadgen and dropshipping "businesses," NFTs, and…

I'm currently watching a friend's wife get scammed for large amounts (well into the five figures at this point, maybe pushing six) of money in the self-employed "coaching" (life coach, business coach, that kind of thing) field, and now she's finally—evidently desperate for her "business" (sigh, if only she'd accept business advice from people she actually knows who aren't randos promising her easy money) to finally start making any money—joined them, as part of what appears to be an obfuscated affiliate program for some minor player in that world—you pretend you're selling "how to start making money coaching" content that's part yours and in part belongs to your "partner" and that you're involved, but really it's 99% their content (which they may well themselves have bought...) and you're just selling it and serving as customer support so they don't have to work, for a little cut of the action. At a subdomain on "your site" but it clearly redirects to their CMS with a custom landing page.

It's been a wild ride watching this happen. A whole world I didn't know existed, and lots and lots of people getting scammed out of tons of money (there's a whole Reddit ecosystem discussing this stuff, it's both fascinating and horrifying)

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#33

Post by t_mann »

hash872 wrote: post #4
hn_throwaway_99 wrote: post #3

As sure as the sun rises in the East, "Suburban Moms (and Dads) Get Suckered By Over-Promised Sales Projections" is the headline that will never go away (see LulaRoe, MonaVie, just about any other MLM scam, not to mention other over-hyped franchises like Quiznos). At the same time, though, the franchisees had plenty of greed of their own. The article states "They also say it promised them the ability to run businesse…

>If your only contribution to a business is giving it money, you are essentially always better sticking that money in the stock market.... the idea that you can beat the market with no special benefit that you bring to the table is a fantasy as old as capitalism I feel like EMH is increasingly becoming a strange & unfalsifiable quasi-religion for some people. I believe even the strongest forms of EMH cover publicly t…

Not defending EMH in any way, but there's a logical flaw in your argument: your wording implicitly pits a cherry-picked example against a broad average: "it's literally impossible [to invest in a small business and beat the market]" - that's not the point. There will exist examples where that worked, but there will also exist some where it failed (like in the article). You have to consider all those cases to compute an average return. And even if you do come up with a higher expected return for a private investment (I don't have the data), you also have to consider the variance/risk: a bad outcome for the S&P500 is maybe minus 20-40% in a year [0]; a bad outcome for a franchise can look like bankruptcy and/or eviction, like in the article.

I'm with the GP poster: if you're thinking about running a business in passive mode as an investment, as it seems it was pitched to those franchisees, you're highly likely better off keeping it in boring investment products. That's not even saying that sane (ie positive risk-adjusted return) passive income opportunities don't exist, but they almost certainly won't look like what's described in the article, with no strategic freedom (you're not allowed to close an unprofitable shop, wth?); apparently coupled with personal liability and massive fixed and upfront costs, that's an absolutely deadly mix. More generally, they will almost never come to you as a pitch, which should be self-evident.

[0] https://www.macrotrends.net/2526/sp-500-historical-annual-re...

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#34

Post by hash872 »

t_mann wrote: post #33
hash872 wrote: post #4

Earlier quoted context omitted.

>If your only contribution to a business is giving it money, you are essentially always better sticking that money in the stock market.... the idea that you can beat the market with no special benefit that you bring to the table is a fantasy as old as capitalism I feel like EMH is increasingly becoming a strange & unfalsifiable quasi-religion for some people. I believe even the strongest forms of EMH cover publicly t…

Not defending EMH in any way, but there's a logical flaw in your argument: your wording implicitly pits a cherry-picked example against a broad average: "it's literally impossible [to invest in a small business and beat the market]" - that's not the point. There will exist examples where that worked, but there will also exist some where it failed (like in the article). You have to consider all those cases to compute…

If you don't have data on private investments, how can you say anything about how they compare with an index fund? As a passive investor in a local business, my losses are pretty limited by their corporate structure.

I've been self-employed for about 6 years now, and my return on my original invested capital is hundreds of % a year. My potential losses are highly limited by being incorporated- I can always just close the business and walk away. I think it's ridiculous to compare my little company with an index fund, but I also think it's pretty silly to make sweeping statements comparing public stock markets with private investments. It's OK to say that 2 completely different things are apples & oranges

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#35

Post by t_mann »

hash872 wrote: post #34
t_mann wrote: post #33

Earlier quoted context omitted.

Not defending EMH in any way, but there's a logical flaw in your argument: your wording implicitly pits a cherry-picked example against a broad average: "it's literally impossible [to invest in a small business and beat the market]" - that's not the point. There will exist examples where that worked, but there will also exist some where it failed (like in the article). You have to consider all those cases to compute…

If you don't have data on private investments, how can you say anything about how they compare with an index fund? As a passive investor in a local business, my losses are pretty limited by their corporate structure. I've been self-employed for about 6 years now, and my return on my original invested capital is hundreds of % a year. My potential losses are highly limited by being incorporated- I can always just close…

I'm saying what data you should be looking at when you're comparing investment opportunities, not doing the work of assessing specific investments for you.

Being self-employed isn't a financial investment, it's a form of labor and most certainly not passive, hence why the comparison fails.

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#36

Post by lotsofpulp »

hash872 wrote: post #29
lotsofpulp wrote: post #26

Earlier quoted context omitted.

> Are you saying that it's literally impossible for me to invest in a local gym, real estate development, plumbing company, landscaper etc. and not beat the US equity market's average return of 9% a year? Yes, without taking additional risk. SP500 is risk free, everything else, you need to be pricing in additional risk OR you need to have an edge other than providing money (which you can do buy buying VOO). hn_throwa…

>SP500 is risk free I'm sorry, what?

Compared to an equity investment in a local business, sure. On a 5 or even 3 year timeline, the federal US government is not going to let the broad market indices fall. And if they do, Americans have bigger problems to worry about.

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#37

Post by 0xcde4c3db »

nradov wrote: post #23
gnicholas wrote: post #9

Earlier quoted context omitted.

I guess this is why it’s so hard to cancel gym memberships. I wonder how these places will be affected by ozempic/etc. On the one hand, people won’t have to exercise to lose weight at much as before. On the other hand, perhaps there will be a cultural change that emphasizes muscle mass/tone more than now. That is, being not-overweight will be the default, and the way people will stand out will be muscle tone, perfect…

Gold's Gym and CrossFit already exist to target consumers who want a more toned, muscular appearance. They have been around for a while and should be sustainable as long as they don't do something stupid like take on huge debts to fuel rapid expansion. Any new market entrants will have to come up with a unique angle to compete against those established players. Tonal also appears to be getting some traction in the ho…

A couple more things to consider:

1) I'm having trouble finding a good citation, but I remember it being a minor scandal at some point that statistically, the real-world weight loss from semaglutide was found to be roughly half what it was in the trials, probably because the trial populations were unrepresentative (younger and fewer comorbidities than the real-world population, IIRC).

2) In the face of shortages of the standard branded Ozempic/Wegovy products, a lot of people are turning to compounding pharmacies. But according to Novo Nordisk, there is no legitimate supply chain of semaglutide for them to use, so these pharmacies are apparently selling people a semaglutide salt that is manufactured as a research chemical rather than a licensed drug [1]. The FDA has also warned of outright counterfeit Ozempic getting into the supply chain, complete with fake serial and lot numbers [2].

[1] https://www.nbcnews.com/health/health-news/ozempic-wegovy-we...

[2] https://www.fda.gov/drugs/drug-safety-and-availability/fda-w...

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#38

Post by hash872 »

t_mann wrote: post #35
hash872 wrote: post #34

Earlier quoted context omitted.

If you don't have data on private investments, how can you say anything about how they compare with an index fund? As a passive investor in a local business, my losses are pretty limited by their corporate structure. I've been self-employed for about 6 years now, and my return on my original invested capital is hundreds of % a year. My potential losses are highly limited by being incorporated- I can always just close…

I'm saying what data you should be looking at when you're comparing investment opportunities, not doing the work of assessing specific investments for you. Being self-employed isn't a financial investment, it's a form of labor and most certainly not passive, hence why the comparison fails.

What is the body of evidence that leads you to think you can't exceed a (totally unrelated) benchmark when investing in privately held companies? Can you cite some studies? The reason we know EMH 'works' for public markets is decades of research. What research lead you to a similar conclusion for private markets, can you link some of it here?

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#39

Post by nradov »

0xcde4c3db wrote: post #37
nradov wrote: post #23

Earlier quoted context omitted.

Gold's Gym and CrossFit already exist to target consumers who want a more toned, muscular appearance. They have been around for a while and should be sustainable as long as they don't do something stupid like take on huge debts to fuel rapid expansion. Any new market entrants will have to come up with a unique angle to compete against those established players. Tonal also appears to be getting some traction in the ho…

A couple more things to consider: 1) I'm having trouble finding a good citation, but I remember it being a minor scandal at some point that statistically, the real-world weight loss from semaglutide was found to be roughly half what it was in the trials, probably because the trial populations were unrepresentative (younger and fewer comorbidities than the real-world population, IIRC). 2) In the face of shortages of t…

Regardless of the exact effect magnitude, the GLP-1 agonists are very effective relative to other bariatric treatments across all patient populations. Tirzepatide appears to be even more effective than semaglutide in that regard. The concern is not so much over the magnitude of weight loss but over unfavorable changes in body composition and serious side effects such as gastroparesis.

https://peterattiamd.com/ama45/

Novo Nordisk appears to be spreading FUD to some extent. While there are scammers selling fake or adulterated semaglutide (same as with any popular prescription drug), legitimate compounding pharmacies are producing the real thing that is medically equivalent to the branded Ozempic/Wegovy products.

https://time.com/6301552/weight-loss-drugs-compounding-pharm...

Re: Club Pilates, Pure Barre owners say Xponential left them bankrupt

#40

Post by tomjen3 »

throwaway66023 wrote: post #17
uoaei wrote: post #11

Earlier quoted context omitted.

The rhetoric aroung gig work routinely repeats this "be your own boss" language, too.

My country has a list of criteria to distinguish self-employment from closeted employment (which is tax evasion where I live): - use your own tools (laptop, phone, vehicle) - set your own schedule (work hours/days) - get paid for tasks, not hourly - have the ability to decline jobs without losing the customer (within reason) To me it seems like gig work is in the clear. Why is it not?

> get paid for tasks, not hourly

That would be a problem for a huge number of lawyers in the US.

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