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During his years as a litigator with a firm and then as a general counsel for a business with financial woes, Roger Schmidt’s career has always been about battles. Now it’s about the battle of the bulge. As chief general counsel for Curves International, Schmidt battles to keep up with the country’s most successful franchise in the fitness world. Entrepreneur Magazine in January 2004 ranked Curves as the second leading franchise company behind Subway restaurants. “Every day here is a new day,” Schmidt, 56, says. “I have a calendar that I try to follow, but it always gets disrupted. It’s a lot of fun, though.” Founded in 1995 by Schmidt’s long-time friend Gary Heavin, Curves caters its 30-minute workout program to women only. The privately held company has grown from 2,200 centers in December 2001 to more than 8,500 today. There are Curves franchises throughout North America, South America, Latin America, Europe and Australia. The company plans to open its first Curves in the Middle East by the end of the year. With such growth, Schmidt says he and his legal staff review as many as 10 to 15 new franchise agreements each day. In late 2002 and into 2003, a new Curves opened somewhere around the world every four hours, Schmidt says. Observers of Schmidt’s early legal career may be surprised that the man who felt at home in a courtroom would be satisfied as a corporate attorney. Schmidt admits that he chose to pursue legal work as a trial attorney because he “liked combat.” What they probably didn’t realize was that his father — who owned a retail lumber business in Minnesota — passed on to him an entrepreneurial spirit. But Schmidt’s father wasn’t keen on his son entering into the family business. His father encouraged Schmidt to go to law or medical school. “I chose the better of the two,” Schmidt jokes. Schmidt received an undergraduate degree in history in 1970 from Bemidji State University in Minnesota then spent two years in the U.S. Army, where he trained to be a helicopter pilot. Schmidt then enrolled at South Texas College of Law, where he earned his JD in 1975. Schmidt says he attended South Texas because he knew he wanted to be a litigator, and it was one of the few schools at the time with a strong program in trial work. While in law school, Schmidt says he dabbled in business by importing onyx and figurines from Mexico. “I always had outside businesses along the way,” he says. Once out of law school, Schmidt began a civil litigation practice with Houston attorney Earl Lilly; then he co-founded a firm, Schmidt & Reich, a civil litigation partnership in 1977. In 1986, he formed his own firm, Roger Schmidt & Associates, which eventually grew to 15 lawyers. The new firm primarily focused on civil litigation, but Schmidt found himself handling more and more business transactions and corporate work. Although he cannot discuss specifics due to confidentiality agreements, Schmidt says that one suit he worked on during much of 1987 was similar to the unwinding of Enron Corp. “I handled a lot of borderline white-collar crime cases,” he says. “I handled a lot of messes.” It was burdensome enough to make Schmidt seek new challenges. “I was ready to get away from the courtroom,” he says. In 1999, a client — Akinola Olajuwon — wooed Schmidt away from private practice. Olajuwon, brother of former Houston Rockets star Hakeem Olajuwon, owned The Olajuwon Group, which, in turn, owned more than 200 Denny’s, as well as Kentucky Fried Chicken, Taco Bell and Burger King franchises. In the late ’90s, Schmidt says the Denny’s franchises faced financial problems. Schmidt was brought in for crisis management. Olajuwon could not be located for comment. His first act as the new GC was to seek bankruptcy protection for The Olajuwon Group’s Denny’s franchises. “It was a mess,” Schmidt says. “It was a situation where the company was over-loaned and under-funded. “Being the GC for The Olajuwon Group gave Schmidt the opportunity to gain experience in the franchise world and to become a company shareholder. (He sold his shares in 2002 to Olajuwon.) “I wanted to move away from pure law and toward corporate representation,” Schmidt says. “I had always wanted to get into the franchise businesses and thought that turning my career into this direction was the way to go.” Ken Kosut, a partner in Houston’s Evans & Kosut, has known Schmidt since law school. The two also have worked on similar legal matters, though never together. Kosut says that Schmidt’s business mind coupled with his legal mind make him an effective general counsel. “The breadth of his business experience overlaid with his legal training is invaluable,” Kosut says. “He’s a smart attorney, and the courtroom doesn’t scare or intimidate him. If you know how trials work and how juries think, then you’re able to resolve issues much easier. He’s great in negotiation.” CATCHY IDEA Having his fill of crisis situations, Schmidt jumped at the opportunity in 2001 to work with long-time friend Heavin, who six years earlier had created the concept of a 30-minute, women-only workout facility — an idea that was catching on like wildfire. Schmidt, his wife and 11-year-old daughter moved from Houston to Waco, where Curves International is based. By the time Schmidt arrived, Curves had between 1,200 and 1,300 franchises. Soon, 200 to 250 new franchise agreements began rolling in each month. The concept of a 30-minute, women-only facility that is franchise-friendly is part of Curves’ success. Facilities are attractive to women who are put off by the singles-club atmosphere at most gyms, Schmidt says. For franchisees, the modest investment required — $25,000 initial charge and $480 monthly licensing and advertising fees — is much easier to handle than the six-figure investment required by competing workout facility franchises, Schmidt says. Such success keeps Schmidt and his legal department — one in-house lawyer and 15 support staffers — as well as outside counsel hired to handle trademark issues, busy. Schmidt uses Houston-based Keeling Hudson to handle trademark issues in North America, Latin America and South America. The United Kingdom firm of Fisher Fieldhouse handles issues involving Europe and the Middle East. James Hudson, a partner in Keeling Hudson, says trademark prosecution and enforcement is a big job. “They’re the big dog on the block, so everyone tries to see how they can replicate their success,” Hudson says. “There is always someone trying to get a piece of the pie by referencing, copying or misusing the company’s trademark.” Hudson says violators try to pass off the Curves name on equipment through eBay, the online auction site. Most of the violations are resolved simply by sending notices saying the person or company is in violation, he says. “Roger is an ideal client,” Hudson says. “Once he tells us to go on something, we’re given a lot of rope. He stays actively informed but doesn’t micromanage.” One of the obvious legal issues Schmidt says he must deal with involves the claim that Curves’ women-only concept is discriminatory. “We see it as a privacy issue,” he says. “It’s a place where women can go into a workout situation and not be intimidated.” However, a Wisconsin competitor who operated co-ed fitness clubs in northern Wisconsin, challenged the privacy issue. The competitor began filing administrative complaints in late 2001 and by 2002 he was on his way to filing dozens — there are about 173 Curves in that state — based on Wisconsin’s accommodations statutes. An administrative law judge ruled against Curves in the first two complaints, so Curves worked with legislators to change the law. Schmidt helped draft a bill creating a health club exemption to the state’s anti-discrimination law, similar to one on the books in Massachusetts. Wisconsin Gov. Jim Doyle signed the legislation into law on May 19, 2003. “Our entire concept is to give women a place where they can work out without intimidation,” he says. “It’s a way for women to gain control of their health and, in turn, gain confidence in themselves.” With the discrimination issue behind them, the biggest issue now facing Schmidt is international expansion. There is franchisee interest in expanding into China, and Schmidt says Curves hopes to have a franchise open in the Middle East by the end of the year. On the horizon are Curves franchises in Iceland, Holland and France. They already have more than 100 throughout the United Kingdom and more than 100 throughout Mexico, South America and Central America. There are 30 clubs in Australia and last year the first club opened in New Zealand. “We’re trying to do a controlled expansion,” Schmidt says. “No other franchise has grown as fast as we have, and we had a chaotic explosion of development. We’re plotting the development carefully. We also don’t want to tip our competitors off to where we are going.” Aside from the international law involved, Schmidt says Curves must be aware of cultural differences. “We’re looking to put [facilities] in countries where women have very few rights,” he says. “We need to make sure our franchisees are mindful of the cultural differences there.” For example, women in some Middle Eastern countries don’t have the right to drive and must be mindful of how they’re dressed in public. Schmidt says there is no need to police franchisees’ finances because Curves does not require revenue-based royalties like most franchisers. In addition, the company does not compete with its own franchisees with company-owned facilities and franchisees are guaranteed an exclusive geographical area. All of these conditions are outlined in the franchise agreement Schmidt helped write in 2001. “That is something I learned from working with [The Olajuwon Group],” Schmidt says of the no-compete policy. “I saw problems with the food industry where a franchisee would have a thriving business and the company, with more resources, would open a store down the block. This way we have a clean relationship. We do one side of the fence and our franchisees do another. We try hard to make them successful as a stand-alone business.” As with most general counsel, Schmidt also is charged with handling all in-house issues involving employees, creditors and vendors. “I’m never at a loss for work,” he says. If staying on top of a fast-growing company wasn’t enough to keep him busy, Schmidt teaches franchise law to second- and third-year students at Baylor University School of Law. “I really enjoy teaching,” Schmidt says. “It keeps me current on the law as well.” And, to keep up with the hectic pace, it’s important he stay in shape. Curves’ policy of “no men allowed” includes Schmidt, but he is able to work out at their training facility, where franchisees learn about the fitness equipment, that’s on the international headquarters’ campus in Waco.

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