A note to listeners. The material in this episode covers the weight loss, industry and diet culture, which could be upsetting for some people episode also contains adult language. This originally aired exclusively on wondering, plus in twenty twenty two, the January. Nineteen. Eighty three in a large hotel conference room in philadelphia, neutral systems. Annual party is under way a degree and of a lower sweatsuit spends the record as go light swirl around the room, these working, but no one's dancing. Instead, neutral systems, executives and franchisees stand on separate sides of the deserted dance at the bar

a neutral system executive rages at a franchise e who just ordered to cocktails you son of a if you're trying to record company, you are the ones killing the business, your overpriced food is driving customers away. Why should I get gown by you when I can buy the same food at half the price I didn't hear you complaining when the money was just rolling in the now. That you actually gotta get off your ass to get customers all you franchisees or whining like little babies. Its nine months since neutral system bought the Gloria Marshall figures salon chain from jenny, craig back then for system and its six hundred weight loss centres were flying high. Now it's a this in crisis to protect its profits neutral system here, the price of the diet food itself to its franchisees, pushing to the brink of collapse. So

Franchisees now want to buy the food from other cheaper suppliers, but that would they state neutral systems, profit Zack you'd of arguing with the e at the bar clinches his fist The two men are now almost knows too knows, but before either can throw a patch another franchisees steps in pay are those are cocktails, turn back the angry franchising breaks, eye contact with the executive picks up a cocktail, who franchisees walk away as they do. for system founder. Harold cats entered the room puffing on a cigar, disgust at the empty dance floor in march toward the dj. Stop them using star the room. Go silent. cats, grabs the dj microphone and turns to the fore, Josie's nutrisystem is a family, my family,

as some of you were trying to break up the family. That's not happening. if you don't want to be in my family than I will buy you, the fuck out, all of you, it neutral system, we are family, system executives, applaud the franchisees frown the battle lines or now drawn that is going to war against his own franchisees. And, while this civil war rages neutral system, competitors wheel, flowering ahead, you don't audible, offers an incredible selection of audio books across every genre plus. The newly included selection of titles gives all members a chance to discover new thing: it's a new format like the exclusive words and music series or podcast attack.

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all the cash back from that trip. Were you sort of learned, snowboard also doubled and the best part you don't have to do anything ridiculous to get it now discovered? Does it automatically seriously see terms and check it out for yourself at discovered dot com, slash, match From wondering I'm David brown- and this is business wars- The on the last episode. Wait: watchers went from being housewives hobby too. Multi million dollar division of heinz and neutral. system, ceo, harold cat aids,

engendered craig millions for her figure salon chain. As part of the deal. The craigs agreed to a two year not compete clause that prevent From working for a rival anywhere in the world except australian so the craigs hatched a plan to start a new diet business down under during that time, and then what turn to america, to battle numerous system and wait. What this is episode to up from down. May nineteen eighty three melbourne, australia side of suburban office building sit and jenny. Craig are waiting to see if the biggest bed of their lives will pay off. They get three million dollars of their own money and move to australia in the hope of breaking back into the diet, business and now the moment of truth has come,

the first nine jenny, craig weight loss centres open for business across the city. This week, Jenny. At her desk on the phone with a manager of a centre located in melbourne eastern suburbs, customer inquiries. Did you get this morning. Jenny, fiddles anxiously with her pearl necklace, The news isn't good. Just just one com all morning. She hangs disheartened. This isn't what the craigs expected They imagined overweight. Australian women would be banging on their doors by now. Until the end craig centres open straight had never had access to american style diet centres that sell you everything you need to lose weight under one roof the only serious rival in australia was whitewashed, but whitewash

This requires dieters two way: everything they eat. The craigs believed their diet The light line of pre packaged portion, controlled meals, be a slam dunk for people who don't want the hassle of weighing every meal and there's more bad news said Craig answers his phone australia's department health is on the line, MR crank. We need to discuss the vitamins you're importing. Is it correct that you are planning to sell packets of mixed vitamins and minerals, including selenium jenny, craig centers aren't just selling food also selling supplements to ensure customers get the nutrients they need when dieting, yes, that's right, then I must inform you that you cannot sell those packets. What why felling vitamins and mixed packets is prohibitive,

as ridiculous. They all end up in the same place. When swallow. This isn't a debate to Mister Craig. I felt you can't fell threeam. Only pharmacists can do that. If you distribute those package, I would shut your centres down. Why are you only telling us this now this Bringing our vitamins from the u s is almost here: where are we have told you? Instead, we only learned about your plans from your advertisement. You failed to check that what you were doing was okay. This is the consequence of that failure unable to sell their packets of vitamins and minerals and australia. The craigs Look into sending them back to america, but battle Asked another seventeen hundred dollars so The crags tell the ship carrying the pills to dump them into the sea. In the months that follow jenny, craig

situation, does not improve much customer it's trickle in, but nowhere near expectations, but rather than cut back operations, they press ahead faster I believe the problem is that australians are unfamiliar with the diet centre concept They get a one point: five million dollar line of credit from a bank; instead, opening jenny craig centres nationwide. by going national quit the craig hope to overcome the unfamiliarity while raising the bar for entry for any future competitors. Soon, jenny Craig centres are springing up across australia back tv adds filled with before and after photos of people who lost big with Jenny craig, but jenny, craig weight loss revolution rolls on to celebrate the opening of our three new centres, jennings offering use

the daughters of the program at all centers and here's proof that Jenny's concept really works, because I look like a little darryl with legs. I think it's made me a better person, a happier person We set a section as on: u s coming down in interest saws, jenny, craig clean becomes a household name in Australia and customer numbers start taking up but while Craig finally catches on in australia back in america way, Watchers is evolving. its january nineteen. Eighty four and peak season for the weight loss businesses under way. The first eggs of the year or make or break for the diet companies as they fight to win over the new year's resolution crowd and this year wait watch, enters the fray with the biggest overhaul of its diet. Since its power

Jeanne night, ich invited six pounds over for coffee and module on twenty one years ago, because way rogers It was the hardest thing about losing weight is waiting. We created a quick start. It's a brand new weight, watchers plan to safely help you lose weight quicker than before in the very first weeks with you easier than ever menu plans. Why wait start on quick start now? You won't get discouraged because we'll have to get the result at quickstart. Designed to give customers noticeable results in the first two weeks making more likely that they'll keep attending whitewash your meetings. It also gives dieters more choice, now Instead of having to have an apple with lunch, die can swap it for half a banana, more peaches and quick start Helps wait, watchers, expand globally by adapting. The

to local food preferences, but wait washers, isn't just fixing the it. It also wants to claw back the market share. It lost a lean cuisine so launched a line of frozen dessert and high english actress in weight, watchers member lynn red grave to be there. Said the brand. When I was very little, it was now eat your veggies, or you can have that when I got crafty it was only just finished. If I can have, then then after eighteen indulgent years, I had to say a sad goodbye to desserts some diet. Now I can eat weight, watchers cheesecakes with bright red strawberries, moist weight, watchers carrot, cake, jammed with raisins and all the other define weightwatchers to touch without having to make a deal about veggies and without the fat The red grave adds low calorie desserts and new diet options. Reignite in

Kristen wait, watchers and you revenue smash through the half a billion dollar barrier, but as Wait: watchers prospers, neutral system, withers may nineteen eighty four philadelphia in his lavish office, neutral systems, war, weary, ceo, Harold cats, lights, lee charm cigar. Charm is an investor specializes in buying and fixing ailing franchise businesses and cats once him to buy neutral system cats who spent eight months said war with his own franchisees. Every attempt to broker peace has failed now the franchisees or suing neutral system, so they can be diet, food from cheaper suppliers. The info having his killed, neutral systems, growth,

It sales and profits to slide cats sits down behind his gigantic desk and levels of charm. I've had enough its clear to me that I can't you pass this fight without giving the franchisees more control over my business, and I can't live with that by me out. charm knowledge is already and his homework. He thought neutral systems, cord diet, business is solid. The problem as he sees it, is its wasteful spending and site businesses like the money losing Gloria Marshall figure salons. I approve your candour and I want to buy willing to pay nine dollars a share evaluation of eighty seven million dollars. It's a big discount on them

five hundred million dollars neutral system was worth two years ago. Charm waits for the push back, but cats doesn't blink dan. charm sinks back into his chair, but one thing I need from you first and what's that settle with the franchisees. I can't neutral system if the head office and the franchise easier at each other's throats. So that's what cats does? He agrees to cut price of the food neutral system cells to franchises ngo them more say in the business. In return The franchisees drop their anti trust suit. brief moment theirs peace in the neutral system, kingdom, but then the companies latest quarterly results arrive. The company

spacing an annual loss of seventeen million dollars it stock dives below the eight dollar more choice. Immediately downsizes is offer cats. allows to shovel and vows to fix the business himself like cats, is about to discover there's another challenge headed his way from down under Jenny Craig is coming to america. The first time in net sweets. Twenty two years as the number one cloud financial system, you can defer payments of a full sweet implementation for six months? That's no pay And no interest for six months, not sweet is number one, because they give your is everything you need in real time. I'm all in one place to reduce.

Manual processes, boost efficiency, build forecasts and increase productivity across every day, I, if you ve, been sizing up net sweet to make the switch Then you know this deal is unprecedented. No interest, no payment take advantage special financing offer it net sweet dot com, slash, be w, that's net sweet dot com, slash, be w EL technologies, semi annual sales, starts now with limited cos, deals on select performance, pcs powered by twelve Jen intel core processors, save on select bostra laptops with built in security. cheers and select latitude laptops with enhanced privacy, collaboration and connectivity, say bonds lecter, essential accessories, plus free shipping in special financing with del business credit call adele technologies, adviser at eight seven, seven, ask dal. That's eight seven, seven ask del

The. January nineteen, eighty five jenkins town pennsylvania. Neutral system founder, Harold cats, sit sit, is enormous, desk a smouldering cigar planet in his mouth. He stares at the battle plan in front of him, it's a plan to reshape neutral system and its scope, hold onto an amtrak, napkin cats, looks the man behind the plan. Donald Mccullough thirty nine year old, former pizza hut exec with crows feed around his eyes, management you, a fire. My people These guys are your friends and family, but but they're, not professionals. They help me build my company.

no doubt and what you ve done is impressive. You had the vision and drive to build this business. I dont have very few businessmen do but we business hits a crisis at some point when happened a neutral system. Your managers word equipped to deal with it. Cats checks the next bullet point on a napkin. financial control, is non negotiable. These office are beautiful and all but wasteful same As for the corporate jet cat scan since at the model of neutral systems, corporate jet on his desk that jets guy from status symbol to millstone. But the thought of using. It still hurt cats moves on. innovative marketing new products, the cuts in I want to change of the advertising. I'm unthinking. We pay radio dj to join the neutral system, diet and share their experience with listeners cats.

this forward in nods from a color to go on on the product side. We need to refresh the program. You saw how quick start people excited about way. Watches again, will the same thing. happen when we introduce pan peter Peter new, exciting products can work wonders who cats grants and checks? final bullet points on the napkin franchising relations see. You made peace with a franchisees, but the bitterness remains. beyond a relationship is just you sending them invoices neutral. system needs to show them. Some love in better training for their instructors, inspections of their centres, inspections at like a way to start another fight. It doesn't have to be constructively. They can improve relations. That's also why you can't led this turnaround. Cats looks up

his back in his chair and puffs his cigar, he knows, mccall is right, is too much bad blood between cats in the franchisees. It's why care, since now looking for someone to replace him as ceo, he blows cloud of smoke into the air and nods yeah. I get it so you want to be sea or this place or what mccullough smiled. I do but on one condition. If I fixes business, I want the She knew by the company cats row his cigar between his fingers. He didn't expect that demand cats, almost soul, neutral system a few months ago. So he figures wine on ok, you got your action. Welcome to the neutral system family.

But, as my colleague takes the helmet neutral system in the east, jenny craig bringing a taste of australia to the west coast its february nineteen, eighty five, and in los angeles, daily antennas champion John newcomers introducing tv viewers to the newest diet on the block get. I I'd like to introduce america to the guinea. Craig white lost method that has met with incredible success down under I've. Seen the results for myself and believe me, it really work is what are my fellow austrian have to say about it and cook until a tiger. I couldn't think anything in tat idea. It's two years since jenny, craig open for business in Australia, she's. now got one hundred centres there and they are making millions of dollars, millions that

shield used to bulldoze her way into the american market, for starters, he's opened thirteen weight loss centres in los angeles, but Just as in australia craigs debut, is met with indifference. This It's not because people are unfamiliar with diet centres. It's because there too familiar with them There are thousands of diet, centres, nationwide and Craig is up again entrenched, rivals like physicians, weight, loss, diet centred, and neutral system to stand apart. Jenny cry build itself as the strategy and weight loss revolution, but few organs are swayed by that granting any fewer recognise the aussie tennis pro in the company's ads. So Sid and jenny, Craig look for a fresh angle,

bring in. U s. Surgeon general doctors see every coop as a consultant to give diet more legitimacy. They offer customers, free gifts and pay hollywood actor elliot gould to endorse the diet none of it works. But then said craig has an idea Instead of selling customers diet food in cannes in pouches, jenny, craig centres will sell frozen meals, they can microwave summer nineteen. Eighty six jenny, frozen cuisine line, goes on sale. The promises better tasting, more convenient meals with actually zero prep time give. Craig powerful edge over its rivals, as dieters flock to Jenny Craig? The company opens more and more centres, but less. The craig spend a lot of money up broad it'll. Take you.

Here's to go nash. Toby nineteen, eighty, seven orange county, California. In a meeting room and marrow lynch west coast office and exhaust Jenny and said craig take their seats, they ve. I spent a week on the east coast on a relentless road, showed a drum up interest in the company's ip yo on the new york stock exchange and next week they'll do the same again for the west coast investors, but before they said, the western leg of their tour their under writer at mirror. Lynch has summoned them for an emergency meeting. Jenny said thanks for coming in I wanted us to talk in person because I have news, for you said things forward in nervously, rubs his beard, bad news, as you know, investors are nervous after the stock market crash earlier this month. Interest

ip owes generally is fallen off a cliff, a paint, look flashes, And since face he's long dreamed of running a company listed on the new york stock exchange and now. feelers chance slipping away. What are you saying that it's over there that the ideal can go ahead? Now? I am suggesting we lower the asking price for your stock. I'm thinking ten dollars a share, the craigs look at each other ten dollars a share means the ip will raise fifty eight million dollars. That's twenty nine million dollars less than the craigs hope to raise jenny. Craig pipes up that feels LAO said I don't like the idea was worth it at that price. Sid knowledge three I'd rather wait until the markets more receptive, the under or not

I understand so to confirm you only Actually, I appeal yes, cancel the appeal. The failed ip o is a blow to jenny, craigs rapid growth plan, but they dont abandon it. Instead, company bank rosy expansion itself, its slower. but with diet mania at an all time, high. The companies short on cash, jenny. Craig is less than five years old. And zooming towards annual revenues of half a billion dollars still way behind neutral system lucy oh don, Juan, but colleagues back of the napkin turnaround plan, pull the company out of its downward spiral, colored fixes the fundamentals and then buys out founder, Harold cats in us

sixty nine million dollar leverage to take over now, neutral system, generates more than seven hundred sixty million dollars in sales every year, but that still far behind market leader way, watchers with its refreshed, diet programme and low calorie frozen dessert waned It is now the third fastest growing unit of heinz generating sales of more than a billion dollars a year. But the diet rush of the nineteen eighties Bout to derail june Nineteen eighty eight mobile alabama an ambulance races towards the hospital. We are its lesson, half an hour since patty Alan collapsed in a movie theater, The battle to save her life is on

as the paramedic in the back tries to revive the driver. Radios ahead. We aren't twenty three year old woman with a suspected harder ribby on I will add to your blood will reveal the cause and that irregular heart beat a lack of potassium all attempts to save her fail. Two days after being rushed into the yard. Alan dies the medical examiner tributes her death to a viral infection, but some suspect the culprit may be the rapid weight loss programme. She was put on by the I sent her. She joined six weeks earlier in an attempt to shed de pounds before her wedding day. This is no isolated case across amerika people, dieting themselves into the hospital. Soon these patients

their families and congress will join forces with a common purpose to take down, the weight loss, champions, support for business wars comes from capital, one with spark cash plus card from capital one. You earn unlimited two percent cash back on every purchase and it has no precepts. limit. So your purchasing power can adapt to meet your business needs. Let me give you a great exam. From a real local business. In my back yard. You know I live in austin, Texas or there's a place called antony least she shop. The antenna lays chose the spark cash plus card because it gives them on it had two percent cash back on everything they buy and they use their two percent cash backed help cover their employees. Health care costs have had tat. That's how the antenna take care of their most valuable asset, their people capital, one. What's in your wallet,

find out more capital, one dot com, slash spark cash plus terms and conditions apply. March night Ninety the office civil law firm in miami attorney Bird furies on the phone trying to end car quickly No, no ma am thank you for asking us to represent. You know no you're, not alone in this. Our phones have been jammed all week with people who have bad experiences, just like yours theory glances at the red lights on his office phone, thereby, in urgently reminding him that More colors are waiting to speak with him I'll be in touch yet by now. Yes, yes, yes, ok, Bob! I fear

cut. The call takes a gulf of is now called coffee takes another call Sorry for the delay. I understand you wanna join those seeking justice from neutral system. The oral listens as the collar tells her story. a few days ago, he and another attorney filed nineteen lawsuits against neutral system on behalf dieters, who claimed the company's weight loss programme damage their gall bladders ever since people have been calling in seeking rep contagion. They ve all got similar stories to tell stories about how neutral system helped them shed pounds fast, but then they developed serious gallbladder problems. Many heads, gall bladders removed the system says it's not to blame. It argues overweight. But are at greater risk of gallbladder disease and the cause, isn't it diet.

Customers weight and it's not us neutral system. Wait lost centres, promising fast results are also feeling the heat and the pressure Thirty three billion dollar industry is about to intensify march nineteen, ninety washington, d c, Four congressional subcommittee, the mother of a thirteen year old girl, wipes a tier from awry. The cheerleading coach told my girl. She was too fat for the team. She was devastated, so we took her too. chris quick weight loss. Organ representative run widen interjection, that's weight loss clinic correct. Yes, there clinics nearer and coral gables, we paid them fifteen hundred dollars and their diet. My girl She ended up having gallbladder surgery because of it

had I known. There were risks like that she could have stated happily plump child for the rest of her life, but the man from coral. Gables isn't testifying alone today later A new for system customer shares her story. Ass, twenty eight pounds in two months, just like they promised, but then I felt self doubled over in excruciating pain. I was to the hospital I had to undergo emergency surgery to remove my gallbladder, there was no anything wrong with my gallbladder. Before they need told me there were any risks represent widen shakes his head in disbelief What we are hearing today is that many products peddled in these commercial weight loss clinics aren't I stayed with little or no scientific proof of their safety or effectiveness. Often the so called councillors at these clinics are under trained. Lay people who operate with.

medical supervision, the next day newspapers nationwide run the horror stories heard on capitol hill, fuelling a backlash against the diet. Trade weight loss come these get hit with lawsuits from every direction customers flee, the federal trade commission cracks down on the industry's advertising practices, demanding that before and after claims come with warnings that the result shown aren't typical cons, more affairs investigators posing as customers report that diet centres make false. Health claims refused discuss the dangers of rapid weight loss and lead people into thinking. The lost pounds will stay off, despite the overwhelming evidence that dieters usually regain most of the weight. They lose diet companies

clouding neutral system and jenny, craig form of trade. Sosius to defend themselves, but wait cheers refuses to join instead. Wait watchers publicly slams the association as a lobby group for com it with big problems. wait, watchers turns the controversy into a boom may be in the weight loss business, but it makes most its money from people attending meetings, not from selling food direct to its customers, watchers members, make their own meals, in contrast, weight. Loss centres like jenny, craig and neutral system, make all all their money from selling dieters they're ready to eat meals and as that diet centres take a pounding. The strain starts to show.

October, ninety ninety one, the new york stock exchange, jenny, Craig walks through the trading floor, dressed head to toe black chanel, it's four years later than planned, but today jenny, craig in court, raided, will debut on the stock market jenny and her husband, said pass traders who stack piles of gin Craig meals on their counters One shouts at the couple yo jenny, alas, fourteen Thanks to you, a couple stare up at the electorate stock tickers. Circling the trading floor there in lights is aim of their company said, looks dewey. I'd It's actually happening is in it. going to own a public company opening bell, rings: jenny. Stock opens at twenty two dollars value

the business at five hundred million dollars. It rises to twenty six than twenty nine. King devaluation beyond six hundred fifty million. In the first hand, our of trading. jenny and Sid's network has increased Thirty nine million dollars the high times, don't last jenny, eggs, doc peaks in january nineteen money too and thence to slide tighter rules on weight, loss ads and worry about the safety of diet programmes, frightened investors, october, nineteen ninety two a year on from its stock market, debut Jenny Craig Doc is worth half of what it was at the idea and the company revenue in profits are tanking, but wild.

any craig shrinks neutral system comes. Undone may ninety. Ninety three people, pennsylvania, numerous systems modest headquarters, there's panic a few hours ago. The banks for close and froze the company's asset sums damn of already left the building. Others sit at their deaths. reeling from the news. A law a few or fielding the dilution of calls from frantic neutral system franchisees you, don't understand, we can't send you any more food. The bank shutting down, but I only have or five days of building stock. What what happens when that runs out? If I have no food I've, no customers are out. We are we finish I don't know what to say we're.

To find a way out of this. All you, and I can do is hang tie. the employer, looks at the boardroom, see o donnell mccullough and his top executives are in there with the blinds drawn trying secure a last minute rescue package, but time is not on their side tomorrow. The bank see. Court will decide the company spade true systems fall has been rapid. Four years ago, the company was on fire with evans racing towards one billion dollars a year. The scrap between founder Harold cats and the franchisees is distant memory. Now neutral system is dying, its being Ok, bye, hundreds of gallbladder law suits and federal, add rules at the same time.

Consumers are shifting away from a narrow focus on diet towards the boy. Our concept of health. and neutral systems rivals are all eddie circling like vultures way. Watchers is wrapped up its at jenny, craig and its neutral system customers to switch for free. other weight. Loss centres are also crumbling. There. Scares and recession of frightened customers away. The future for the diet. Business seems bleak, but then the industry hears about a new miracle weight loss pill. It sounds like the perfect way to get customers back through the doors and it'll have People coming in droves trouble is this pill. turn out to be a killer. The next episode neutral

system gets resurrected, wait block scores with points jenny, craig endless america's sweetheart from wondering this is episode to diet, wars for business ward, a quick note about recreations you ve been hearing. In most cases we can't know exactly what was said: those scenes of drama decisions, but their based on historical research. If you'd like to read more about Jenny craig, we recommend the jinni craig story by any craig. I'm your david ground, Tristan Donovan wrote this story. Voice acting by Michel, filippi and nickel. A barber Karen low is our senior producer and editor edited and produce by Emily frost. Sound designed by kyle randal are produced.

his dave shilling. Our executive producers are jenny, lauer beckman and martial louis for wondering I am lindsey, graham hostile, wonder show business boomers in our latest series. American business tightened sam walden, comes out a semi retirement determined to take back control of his company and move walmart to the next level, listen to business, First on amazon, music or wherever you get. Your pont