When Dennis and Mary Beth Kotnour started looking at opening a weight-loss business in Madison four years ago, the field looked pretty open. Generally, their competitors were Weight Watchers and Jenny Craig.


But the Kotnours had barely opened their doors in August 2002 when others spotted the opportunity. Healthy Inspirations, the women-only business the Kotnours licensed, was quickly followed by LA Weight Loss, Thin & Healthy Total Solutions and Slender Lady, among others.
Some have since disappeared. At least one - Thin & Healthy - has been sold to a new owner, former Marshall public schools band director Linda Jackson.

But demand for weight-loss assistance remains.


Market is real


A majority of adults in the United States are overweight or obese, according to the Centers for Disease Control and Prevention. They invest more than $30 billion a year in weight-loss products and services, according to the Federal Trade Commission, which regulates weight-loss advertising.

"Considering that 66 percent of the national population is overweight, there is definitely a market,"

Jackson said.

Follow up:

Many of the owners hold franchises or licenses from a parent company. Jackson, for example, has a license to operate two Madison offices, but the parent office is in Lima, Ohio.
By contrast, the Weight Watchers that has been in Madison for at least 30 years, is company owned - not a franchise, said Weight Watchers International spokeswoman Kristi Widmar.

Others, like hypnotist Donna Varen, who opened an office of Absolute Hypnosis in Madison three years ago and also works at her home in Mineral Point, are independent.
Based on Web sites from several weight-loss franchisers, it appears that no background in health or nutrition education is needed.

"The need is there," Jackson said, "and different people are going to be attracted to different programs for different reasons."

How programs work


Generally, programs like Thin & Health and Healthy Inspirations have a one-time-only initiation fee. At Healthy Inspirations, it varies depending on how much weight a client wants to lose.


For example, Kotnour said a woman who wants to lose 40 pounds would pay a startup fee of $368, then a monthly fee of $59 for the complete program, including circuit training, or $39 for weight-loss only.
Jackson said the Thin & Healthy enrollment fee is a flat $299, plus a monthly fee of $49, but she has limited exercise equipment.

Kotnour said his average member comes to Healthy Inspirations to lose about 50 pounds.

"It's a relationship business," Kotnour said. "Our average member loses 8 pounds a month. We don't have to fudge anything. We can look them in the eye confidently and say this is what happens here."

Jewelry saleswoman Stacy Gilliom, 32, lost 60 pounds at Healthy Inspirations, meeting with staff three times a week for six months. She had tried two other programs without success.

"Here, I learned why I was eating what I was eating," Gilliom said. "The portions I was eating were just way too much."

Regulators cautious


What makes one program different from another may be elusive, but what concerns the FTC and other regulators is what they promise.


In September 2002, the Federal Trade Commission staff released a report, "Weight Loss Advertising: An Analysis of Current Trends," that found as much as 55 percent of advertising for weight-loss products and services contained false or unsupported claims.


A follow-up in 2003 reported that, despite unprecedented levels of FTC law enforcement and substantial consumer education efforts, false and deceptive weight-loss advertising was widespread.


In Wisconsin, the state Department of Agriculture, Trade and Consumer Protection received 23 complaints about weight-loss centers and 28 about diet products and plans in 2005. "We get a similar number of complaints about astrology and psychics," agency spokesman Glen Loyd said.
That compares with almost 800 home-improvement complaints and 2,010 complaints about telemarketing last year.

The consumer protection agency said weight-reduction centers that collect up-front fees and then go out of business have been a big problem in Wisconsin.

"Hundreds of consumers have filed complaints about weight-reduction centers," the agency said. "Many of these complaints involve people who paid up to $2,000 each in advance membership fees, only to have the centers go out of business."

From a business standpoint, weight-loss entrepreneurs take the same risks as other small- business people.

Kotnour and his wife, a cardiac nurse at St. Mary's Hospital, put up the $40,000 equity in their house and obtained a $20,000 loan to open the business.

"It was kind of a leap of faith," he said. "We saw what the business model was and it just made sense."

They opened in August 2002.

"We had immediate moderate success," he said, but business slowed through December. "In March, we had this spark. Then, in our 12th month, I knew we were going to make it because we had shown a net profit of $5,000 (that month).
"That whole first year, you're really unsure, trying to figure out if you're doing the right thing. But we were doing the right thing all along."

Kotnour said Healthy Inspirations sees an average of 125 women a week, with about 275 members in the system and a staff of seven. About 25 percent sign up, but drop out, he said.
Kotnour sold radio advertising for 10 years, then worked as a financial adviser before opening Healthy Inspirations.

Jackson was a business consultant for entrepreneurs when she heard the two Thin & Healthy Total Solutions in Madison were on the market.

"It looked like an interesting step for me to explore," she said. "The value system and all those parts of it really lined up for me. It's a more holistic approach."

Jackson took over 11 months ago. Thin & Healthy in Madison has 90 to 100 members, she said, with three full-time and two part-time employees.


"We are at the point of expansion right now," Jackson said.


Source: Wisconsin State Journal