Spa Lady Corp., which has said it can't pay off its $4 million debt without raising additional cash, is going to sell off its outlets to raise the funds.
The Oakton, Va.-based company said it will auction off 27 of the 34 links in its chain of women's fitness centers Thursday. Seven spas are franchises.
Three groups of employees have formed in an attempt to buy some of the outlets, and at least one Maryland Spa Lady owner also expects to bid on another outlet.
Washington-based Allied Capital, which took over control of Spa Lady earlier this year, has agreed to lend money to some of the employee bidders.
Peter Kasdas, who owns one of the few independent Spa Lady outlets in the region, said he bought the Bel Air Road spa in April and it is "doing really well. I'll participate in the auction."
But Eileen Miller, manager of the Merritt Park Spa Lady, said most employees couldn't afford to bid on the franchises.
Ms. Miller said membership has remained "pretty steady" during the company's financial troubles.
Kristine Schlee, a spokeswoman for Allied, said bidders should expect to bring at least $50,000 for each franchise.
Bids will be taken on each individual spa, with or without the trade name, she said.