BeBalanced has 27 hormone and weight loss centers in 12 states.
After years of litigation, sibling owners Dawn and David Cutillo of BeBalanced Hormone Weight Loss Centers have settled their differences. The two fired what Dawn Cutillo called their “inflammatory lawyers,” and settled privately after agreeing to make a few changes to the brand.
“We realized that we had a lot more in common, a lot more that we agreed on than what we didn’t agree on,” said David Cutillo, CEO of Lancaster, Pennsylvania-based BeBalanced.
Dawn Cutillo, now chief of science and program development, sued her brother in 2021, alleging he breached his fiduciary duty as the majority member and manager of the franchise and was icing her out of the business she founded in 2014. The two got together with a mutual friend and lawyer to agree on a settlement earlier this year.
David Cutillo is the CEO of BeBalanced.
One condition of the settlement was the establishment of an advisory board made up of five people, including the Cutillos. Former CEO and wife of David Cutillo, Jennifer Cutillo, is no longer with the company, so the siblings are searching for three neutral people to join the board.
“We haven’t formed the board yet, but we’re going to work on doing that,” said David Cutillo. “So, on higher-level things, we’ll bring it before the board.”
The board will focus on what’s best for the company, he continued, and not be involved in the personal relationship between the siblings. As Dawn Cutillo put it, “With family, you’re a little more loose with things. You might yell at your brother. I would never yell at a business colleague.” The board will also serve to keep Dawn Cutillo informed of corporate decisions; among her previous complaints was being excluded from the business.
The Cutillos are also re-establishing BeBalanced’s franchise advisory committee as part of the settlement.
In a 2023 article, Franchise Times reported on financial concerns in the brand, including a note from management in its 2022 franchise disclosure document the said several factors “raise substantial doubt about the company’s ability to continue as a going concern.” A similar note appears in the company’s 2023 FDD.
Dawn Cutillo is now BeBalanced’s chief of science and program development.
The company had $56,482 in cash in 2022, as reported in the latest available FDD. Total revenue was $934,130 and assets were $454,476. Liabilities totaled $636,456 and an audit reported a net loss of $244,920. “The Company generated losses of approximately $200,000 and $212,000 during 2021 and 2020, respectively. Working capital deficits of approximately $410,000 and $416,000 exist at December 31, 2021 and 2020, respectively,” read the note, which also referenced impacts from the coronavirus pandemic.
When asked about the financials of BeBalanced, David Cutillo blamed the back-and-forth legal issues. “The biggest thing was the ending of the lawsuit,” he said. “Even when there was a lawsuit, we were able to continue as a going concern.”
“The money was always coming in, it just lulled. Suits are expensive,” said Dawn Cutillo. “It ended up being a lot of money, and that was money going all the time.”
At press time, the brand hadn’t filed a new FDD for 2024.
BeBalanced’s focus now is on growth with new franchisees, David Cutillo said. A handful of prospects are looking at development, in Atlanta, Chicago and Utah, but are awaiting review of the updated FDD, he said. The brand’s website lists 27 BeBalanced units open in 12 states.
BeBalanced is also going through a rebrand to market itself as a lifestyle concept. The word “hormone” will make a return to branding and marketing after a couple years of public hesitancy regarding its use, Cutillo said.
“The agreement wasn’t about every little thing,” said David Cutillo. “It was about just a couple core points like this to just let us move forward.”