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Name and title: Roger Schmidt, chief general counsel Age: 56 Thinning waists, bulging company: All general counsel should have this problem. While many in-house counsel are struggling with the corporate symptoms of a sluggish economy-layoffs, debt collections, bankruptcies, shareholder suits-Roger Schmidt is racing to keep up with his company’s rapid expansion. Schmidt is GC of Curves International Inc., a franchisor of women’s health clubs. From corporate headquarters in Waco, Texas, Schmidt drafts, tweaks and tracks a torrent of legal paperwork generated by the company’s phenomenal growth. Founded in 1995 by CEO Gary Heavin, an old friend of Schmidt’s, Curves has grown from 2,500 franchises in January 2002 to nearly 7,500 today, with gyms in every state, Canada, Latin America and Europe. In recent months, Schmidt and Associate General Counsel Kevin Ayres have reviewed up to four new franchise agreements daily, he said. Curves owes its huge success both to customer satisfaction and franchisee-friendly factors, said Schmidt. The low-cost, low-stress, female-only health clubs attract droves of women who are put off by the price, glitz and dating-scene aspects of many private gyms. Franchisees are drawn by the modest investment required to join the Curves kingdom-a $25,000 initial charge and $480 monthly licensing and advertising fees-which compares favorably to the six-figure investment required by competing franchises. Unlike most franchisors, said Schmidt, Curves does not require revenue-based royalties, thus eliminating the need to police franchisees’ finances. The company does not compete with its own franchisees with company-owned facilities, and it guarantees all franchisees an exclusive geographical area, clearly delineated in a map appended to the franchise agreement, said Schmidt. According to Schmidt, these practices have allowed Curves to avoid the franchise disputes that plague many large chains. The company has a “negligible” litigation caseload, he said, numbering only seven pending lawsuits-all filed by Curves over alleged violations of franchise agreements. Lean operation: Curves runs this burgeoning empire with a trim staff of 75 employees at its Waco headquarters. The privately held company does not report income or profits, but Heavin has stated that he expects Curves franchisees’ receipts to top $1 billion this year. The company’s 2003 revenue will be in the “$80 million to $100 million range,” predicted Schmidt. No-fat office: Curves’ two-lawyer legal department has seven support staff. Aside from reviewing all franchise agreements, Schmidt and Ayres oversee outside litigation counsel. Schmidt’s staff is also responsible for drafting routine contracts; verifying franchisee’s insurance; enforcing the terms and conditions of franchise agreements; and preparing the paperwork for franchise terminations, reassignments and sales. Curves does not have an annual legal budget. Schmidt said he tries to deal with legal matters as they arise as efficiently as possible. Discrimination? Although it has franchisees of both genders, Curves has a strict “female only” rule for its clientele. Schmidt does not believe that barring men from private health clubs violates federal or state anti-discrimination laws. “We see this as a privacy issue, not a discrimination issue,” he said. A Wisconsin competitor saw it differently. Claiming that state regulators barred him from opening women-only gyms, Charles Swayne sued 173 Curves franchises statewide under a Wisconsin law barring sex discrimination in public accommodations. After an administrative law judge ruled against Curves in the first two cases to go to hearing, the company supported its Wisconsin franchisees in lobbying for legislation to keep men out of Curves. Borrowing from a similar Massachusetts provision, Schmidt helped to draft a bill creating a health club exemption to the state’s anti-discrimination law, which Governor Jim Doyle signed into law on May 19. Heavinly business: Schmidt shares the deep religious convictions of CEO Heavin, a born-again Christian who starts business meetings with prayers and talks openly about his religion to employees and franchisees. “Gary and I believe that without faith there are no absolutes,” said Schmidt. “Absolutes are important in relationships, as they form the foundation, structure and expectations between Curves and its franchisees and our customers.” The faith of the founder has also contributed to the company’s relaxed and respectful working environment, he added. Curves does not discriminate on the basis of religion, said Schmidt, noting that the company has had Jewish and Muslim franchisees. Counseling curves: Schmidt calls on Minneapolis-based Larkin Hoffman, Daly & Lindgren for help on franchise matters and Keeling Hudson of Houston for trademarks, patents and copyrights. Curves litigation counsel are the Waco firms Squires Pitillo & Wren and Dunnam & Dunnam. Learning curves: Schmidt grew up in Crookston, Minn., where his father worked in the lumber industry and his mother was a homemaker. He graduated in 1970 from Bemidji State University in Bemidji, Minn., with a history degree. After serving two years in the U.S. Army, Schmidt received his law degree in 1975 from the South Texas College of Law. Schmidt worked two years at a Houston firm before establishing Schmidt & Reich, a civil litigation partnership. In 1986, he formed his own firm, Roger Schmidt & Associates, which eventually grew to 15 lawyers. His practice focused on personal injury and commercial trial work, but also included transactional, corporate and real estate matters. In 1999, he left private practice to become in-house counsel for the Olajuwon Group, a Texas-based chain- restaurant business headed by Akinola Olajuwon, the brother of former Houston Rockets star Hakeem Olajuwon. Schmidt was hired as general counsel of Curves in August 2001. Personal: Roger and Lana Schmidt are raising Ashley, 10, and three golden retrievers. Schmidt’s pastimes include flying helicopters and hot-air balloons, hunting and target shooting, volleyball, billiards and riding his motorcycle, a 1995 Harley Davidson Heritage Softtail. Last book and movie: Unlocking Your Legacy, by Paul J. Meyer, and Terminator 3. �William C. Smith

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