Woodhouse Spa, a day spa franchise in central Durango, is no more after the owner exited her lease over a disagreement with the building’s new owners.
The sudden closure has left hundreds of area residents wondering what is to become of their gift certificates, totaling an estimated $400,000.
The Woodhouse Spa building, which overlooks the Animas River near downtown Durango at 1521 Main Ave., was officially purchased for $1.95 million by JD and Ashley Sutton. The Suttons said the purchase began as a real estate investment but turned into a new business venture.
Ashley Sutton is the owner of Mountain Beauty MedSpa, which she operates out of the couple’s guest home in southwest La Plata County.
In coming months, the Suttons will be opening a new wellness center called The River’s Edge Durango at the former Woodhouse Spa location. It will offer similar luxuries to Woodhouse and feature an upstairs bar.
On June 11, Woodhouse Spa Owner Heidi Balcombe met with the Suttons, who had not yet closed on the building. Both parties discussed the lease.
Woodhouse Spa had another year left on its five-year lease before having to renew. The lease also had a clause that allowed the Woodhouse to renew for another 10 years with the same rent. And if rent was increased it could be by only 10%.
However, after doing an appraisal on the building, it was determined Balcombe was paying 20% to 30% below market value for rent, JD Sutton said. He said he wanted to honor Balcombe’s lease for the remainder of the year but needed to increase the rent to market value.
“Our (monthly) expenses were going to be $11,000, but the rent payout was going to be $12,000,” Sutton said.
In other words, the Suttons would have been left with a $1,000 monthly profit on the building. JD Sutton said monthly rent should have been set at $15,000 to $18,000, based on the appraisal.
In an interview with The Durango Herald, Balcombe said the Suttons told her she would have to sign a new lease within 45 days, which included doubling her monthly rent. She was frustrated that a new lease was being implemented before the existing one expired.
Sutton and Balcombe had a back-and-forth over whether the 10-year lease extension was an automatic opt-in. Sutton said he was not required to honor the 10-year extension based on the “Surrender and Hold Over” clause of the lease.
It says that “the tenancy-at-will may be terminated by either party hereto upon 30 days’ prior written notice given by the terminating party to the non-terminating party.”
Balcombe purchased the spa in 2020 from Arnold Terhune who previously owned the building and ran the spa since 2015.
Balcombe said part of the Woodhouse franchise agreement was to sign on to a 10-year lease, but the previous lease had been abbreviated because Balcombe took over the business to prevent it from shutting down in 2020.
Balcombe said she had been struggling with the cost of running the business as it was, and a rent increase would have hurt her even further.
JD Sutton pitched the idea of allowing his wife to conduct her medspa business at the Woodhouse location while Woodhouse still operated. JD Sutton said he would have knocked $1,000 off the rent if his wife was able to have a space, which included two rooms.
Sutton said it would have been a perfect collaboration between the two businesses because Mountain Beauty MedSpa offers services like microneedling.
Balcombe said allowing Ashley Sutton space on-sight to operate her business would have been a direct violation of the noncompete clause in her franchise agreement and a liability issue for her insurance company.
“My malpractice insurance alone is ridiculous,” she said.
Discussions regarding the lease stalled until July 29 when Balcombe sent an email to Terhune and real estate broker Christina Rinderle notifying them that she was terminating her lease. That was three days before the Suttons closed on the building.
Balcombe requested that the Suttons allow her to pay month-to-month. She said she was uncomfortable operating her business under the new landlords and wanted to test the waters on a month-to-month basis.
Sutton denied the request to go month-to-month, and the two parties held a final meeting Aug. 2 where after animated discussion, Balcombe said she would move out by Aug. 5.
Balcombe notified her employees that day the business would be shutting its doors.
The termination of the business’ lease has left customers and the new owners with a new debacle. Woodhouse had about $400,000 worth of gift cards that have not yet been redeemed, Sutton said.
Former customer Wendy Rice, who visits the spa about twice a year, has about $800 to $900 in unclaimed gift cards, she said.
Rice visited the spa last week to schedule a day with her daughter. On Tuesday, she was notified that her appointment had been canceled and Woodhouse had been closed permanently.
“I'm a little surprised at the ethics and the quality,” she said.
Sutton said he would like to try to help everyone with a gift card and intends to offer discounts to residents in the area once the River’s Edge opens.
Rice hopes the new owners can find some way to compensate customers who were not able to use their gift cards. She said it does not have to be full compensation, but it should be something to show compassion for the customer base.
Rice said the way Woodhouse Spa shutdown left a “bad taste in her mouth.”
In response to the customer frustrations over the spa’s abrupt closure, Balcombe said she would have never done that to guests unless it were dire circumstances.
In a Facebook post Tuesday, the spa announced it was closing and that gift cards were nonrefundable but could be redeemed at any Woodhouse location.
However, that directly contrasts a disclaimer on the Woodhouse Spa’s website that says each gift card is valid and redeemable at Woodhouse Spa franchises nationwide so long as the spa that issued the gift card is not permanently closed for business at the time of redemption.
tbrown@durangoherald.com
