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There was nothing wrong, back in April 1982, with Fitness Finders Inc. The little consulting firm's Living Well program -- a physical-fitness package it sold to corporations, which in turn offered the program to their employees -- was popular. Founders Charles and Beth Kuntzleman, however, were feeling less than fine. Sitting in adjoining offices at the company's Spring Arbor, Mich. The Kuntzlemans had thought about the offer long and hard. But they had felt some doubts about Campbell's ability to market fitness, and they hesitated to give up their hard-won independence. Ever since, they had been quietly kicking themselves. Then a curious thing happened. The April 1982 issue of INC. In 1975, Fatjo had stepped down as head of BFI to pursue a new passion: the development of a lavish complex known as The Houstonian, a combination hotel, spa, and health-and-fitness center for harried executives. As she read the article, Beth had an idea. Irwin, who asked them to drop by during a convention of the National American Alliance for Health, Physical Education, Recreation and Dance, which they were attending in Houston the following week. They had a friendly dinner with Irwin, were introduced to Fatjo, and finally, at the end of the day, had a chance to show Irwin their program and materials. Twenty minutes into the conversation, he cracked his knuckles, and I thought, 'He's interested. The second was quite different in tone. He was proposing a national distribution system, a program that health professionals could buy into, allowing them to become entrepreneurs. I mean, I'd been thinking nickel and dime, and this guy is talking billions. While waiting for lawyers to work out the final details, Tom and Charles, avid practitioners of what they preach, shared some yogurt beneath a tree, then went for a six-mile run. In a little over two years it has trained 2,900 individuals employed by 25 different companies and institutions. That, however, is considerably less than half the story of this surprising company-in-the-making. Fatjo now has a fourth mission: to build a second national company, this one based on fitness, that could surpass even Browning-Ferris Industries in size. In Fatjo's case, skepticism is allayed by a simple fact: Fatjo is the man responsible for BFI, the IBM of trash. Browning-Ferris Industries's rapid rise to the ranks of giant U. Even more unusual was the fact that Fatjo, in effect, created a brand-new national industry. Most waste-removal companies, he discovered, were small, local operations, typically owned by men in their fifties, without much capital for modernization or expansion. The companies and their owners stood to gain a lot from the money and expertise a buyout by BFI could provide. BFI, for its part, stood to grow by acquiring as many such companies as it possibly could. At one point, Fatjo and his management team were averaging five acquisitions a month. Put together, all these acquisitions made a national company where none had existed before. In 1975, Fatjo left BFI. There was no big need for me. Building up BEI had taken a toll on him -- on his personal life, and on his body -- and he had subsequently become something of a physicalfitness buff. As Fatjo had hoped, The Houstonian resurrected exhausted businesspeople. Its programs began with thorough physicals, moved into exercise classes, and continued with programs on stress, nutrition and smoking. But Fatjo was well aware of the limitations of the approach. Ketelsen, the chairman of Tenneco Inc. But for the most part, The Houstonian's message -- that it was possible to have a healthy and rewarding life as well as a productive and profitable one -- remained a gospel heard by only a few. In January 1982, three months before he met the Kuntzlemans, Fatjo gave Horace Irwin the task of researching the fitness industry, with the intention of eventually marketing The Houstonian's programs nationally. Then Charles and Beth Kuntzleman turned up, at what was possibly the perfect moment. Their fitness program was a sophisticated and appealing product, and they had years of solid experience in implementing such programs for customers like the national Young Men's Christian Association and Phillips Petroleum Co. Initially, Fatjo's aim was simply to market Living Well through corporations, much as the Kuntzlemans had done. Introduced in July 1983, this incarnation of Living Well has made itself welcome in a variety of settings. Its customers range from the Chapelwood United Methodist Church in Houston to Allied Corp. The customers, for the most part, have been satisfied. Lorraine Daigle, corporate manager of occupational nursing and special medical programs at Allied, likes Living Well's emphasis on aerobics and stretching exercises no expensive machines are needed , and its computer-based monitoring system, which allows her to keep track of financial payoffs to Allied as well as individual self-improvement more easily. Daigle herself signed up for the first program, and is now both a convert and an ex-smoker. Although still waiting for the results of an in-house study of Living Well's effects, she is convinced that there are bottom-line benefits. But as Living Well began to make its way into the marketplace, a number of problems surfaced. The national distribution system Fatjo had outlined to the Kuntzlemans depended on signing up fitness professionals who were already active in the field and transforming them into entrepreneurs. But these professionals were not, for the most part, good businesspeople. Fatjo also recognized that the Living Well program could lead to a dead end. Once participants had been through the three courses, they were left on their own, predisposed to backsliding. And Living Well was left with the need to go out and find new customers. Then, one winter day, Fatjo was reading an article in Time magazine on the fitness industry: What he read began to fit together with Irwin's market studies and with his own experiences at BFI and The Houstonian. Health and fitness, Fatjo suddenly realized, had much in common with trash. And it was hamstrung by a lack of capital for expansion. It was bigger than tobacco, and rapidly catching up with alcohol. I related this to the founding of Browning-Ferris. Fitness, he concluded just one year was groping for that same sense of self. But when you think about fitness. We resolved to become that company. Five years ago Control Data Corp. Dubbed StayWell, the program was remarkably successful and generated a lot of outside interest. In 1981, CDC established StayWell as a product, and has so far offered the program to some 55,000 employees of 44 different corporations. StayWell 'resembles Living Well: At the moment, in fact, the principal distinction between the two packages may lie their prices. In April 1983, Bally Manufacturing Corp. HTCA had been built up over a period of 22 years by fitness fanatics Roy Zurkowski and Donahue L. Wildman, who purchased troubled but nonetheless promising athletic clubs. It now encompasses 287 centers in some 21 states, with almost 1. Both CDC and Bally, however, are unaware of the grand scope of Fatjo's vision -- and each, ironically, has confirmed the soundness of his strategy. CDC is doing one-half of his projected business; Bally is doing the other. Living Well, Fatjo explains, has fashioned a seven-point strategy -- and the tone of his voice makes clear that he regards those seven points as carved in stone. It has been more than two years since he and the Kuntzlemans made contact, and Fatjo, his environment, and what he is doing have all changed. He has moved out of his house on the grounds of The Houstonian and into the hotel, in part because of the demands of a hectic travel schedule. He is still tall and lean, an obvious runner, but now he is more tan, with longer hair that curls behind his ears: Less Texan, it might be said, and a bit more Hollywood. The only incongruous detail is the declasse Coke he sips as he enumerates the seven points: 1. To identify 50 major markets that Living Well can operate in later he admits that the number will probably rise to 70. To put two or three salespeople in each market to sell the Living Well program to corporations. To develop an extensive line of products ranging from diet foods to expensive exercise equipment. To initiate a major public-relations effort aimed at making Living Well a household word with the 80 million Americans who exercise regularly. To develop a shareholder base of individuals committed to the goal of personal fitness. It is a demanding agenda, combining CDC's emphasis on fitness programs with Bally's focus on athletic facilities. What makes it credible is Fatjo himself, who brings to the enterprise a breadth of vision and a depth of experience that is hard to match. Tom stakes out the whole goldarn wall. He had done much the same thing with BFI. In that case, Fatjo had folded his own company, American Refuse Systems Inc. This time, Fatjo significantly underestimated the cash requirements of his new mission: Athletic facilities do not come cheap. For nearly a year, Fatjo and another Houston businessman, Dr. Pesch, had wanted to do something together. Pesch, formerly of Chicago, is chairman and chief executive officer of Health Resources Corp. Pesch and Fatjo soon got acquainted, and developed a mutual respect. The needs of their companies, they realized, might easily mesh. HRCA, on the one hand, was determined to move beyond the traditional role of caring for the sick. To Fatjo, on the other hand, HRCA's capital resources and impeccable medical credentials were equally alluring. At last Houstonian seemed solidly positioned to begin acquiring the facilities Fatjo wanted. But then, in August, one of those pitfalls that mark progress along any interesting path caused Houstonian to stumble. HRCA, reconsidering its move away from the hospital-management field it knew so well, decided against the proposed merger, leaving open the possibility, for awhile, of some other, unspecified joint venture. But then, late in the month, both parties broke off conversations. There would be no combined effort. For Houstonian, which had predicated its aggressive acquisitions program on HRCA stock, it was an obvious setback, but far from a dead end. Houstonian, he adds, intends to keep to its acquisitions schedule, making use of other options. I'd be bullheaded, and keep banging away. Fatjo not only developed the program, he donated The Houstonian's facilities, and for the past three years has hosted such stellar Classic contestants as Suzy Chaffee, Roger Staubach, and Rafer Johnson. When Allen envisioned National Fitness Testing Week -- an opportunity for millions of Americans to check their overall condition -- Fatjo helped manage the program and arranged a Houstonian tie-in. Today, the lobby of Living Well headquarters is festooned with flags and huge photos of Allen, Staubach, Fatjo, and President Reagan. It is a patriotic brand of capitalism that sells increasingly well. But if there is an operative directive at Living Well today, it is neither public relations nor business as usual. A peek at Fatjo's schedule illustrates the priorities. July 18, 8 p. July 19, 9 a. The industry the team is exploring also seems strangely familiar. Fragmentation, the need for capital, lack of a national identity -- it's the BFI scenario all over again. We've had our concept confirmed -- there's a genuine feeling out there that there's a need for one or two companies to assume a leadership position. By utilizing a variety of resources and options -- cash, stock, considerations based on the future success of the local operations, ongoing participation of management -- Fatjo hopes that, within five years, Living Well will have established a firm 50-market base, and will have enticed some 5 million Americans to sign up. Initially, the acquirees will change little. Most of the clubs purchased will require no face-lifts or infusions of new people. The centers, for example, will become a significant part of the national marketing effort, with representatives selling Living Well programs to area institutions and signing up Living Well graduates to club memberships. The centers will also market a full line of health and fitness products. Fatjo has signed agreements with some 110 manufacturers, and a catalog is due out shortly. Organizationally, as was the case with BFI, local operations will remain largely autonomous, but with guidelines, systems, materials, and support provided by headquarters. Otherwise, the centers will be on their own. Eventually, Fatjo expects a certain evolution, a synergy of engaging gears, to take place. Clubs may adopt a more uniform appearance and approach to fitness training, and may offer Living Well courses in-house. Living Well preventive-medicine centers, like the one at The Houstonian, may spring up in conjunction with local hospitals. Fatjo is thrilled about all the possibilities. Ruff, national product line manager for CDC's StayWell program. So far as Fatjo knows, however, none of his competitors are undertaking the mission he has set for himself -- a combination of corporate fitness programs, premiere and satellite health facilities, preventivemedicine centers, instructional materials -- everything, right down to the vitamins and the jogging clothes. And he has no doubt whatsoever that he can pull it off, competition or no. The field is more fertile, and it's certainly much larger, than the one we encountered with BFI. You've got to be a believer.