According to the Unhappy Franchisee post CHRYSLER: Dealers to Fight Back, the Chrysler National Dealer Council has said that Chrysler dealers will soon launch their legal opposition to the company’s plan to revoke 789 franchise agreements.

Chrysler dealers to fight back

Chrysler is seeking the court’s permission to revoke 789 dealers’ franchises as part of its Chapter 11 restructuring. Chrysler is seeking to revoke dealer agreements on June 9, and to emerge within 6 weeks as a “new” Chrysler alliance with Italy’s Fiat.

According  CHRYSLER: Dealers to Fight Back, “Car dealers have long assumed that they are protected by the state franchise laws, many drawn up with the help of the dealers themselves… But Chrysler has asked the court to rule that the US bankruptcy code takes precedence over the state laws.”

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Photo credit:  Larry He’s So Fine License:  Creative Commons

According to a new post on Unhappy Franchisee (CHILDREN’S ORCHARD: Unhappy Franchisees Launch Site), the Children’s Orchard franchise owners association thinks it’s got a bad apple in its midst, and they’re afraid he will ruin the whole barrel.

They’ve launched a new website with the intent of warning prospective franchisees about what they describe as an “unconscionable” new Children’s Orchard franchise agreement, as well as the downward spiral they claim the chain has experienced since CEO Taylor Bond and his investor group acquired the franchised resale shop chain in 2004.

According to the overview of The Orchard Cooperative’s complaints:  “Since 2004 when Mr. Bond took charge, 23 new stores have opened, more than twice that number, 49, have closed… Each… lost hundreds of thousands of dollars in the process. As if that’s not enough, the franchise invariably and aggressively pursues these owners demanding that they pay them royalties and ad fees for the balance of the ten year franchise period.”

Read more:

CHILDREN’S ORCHARD: Overview & Links

CHILDREN’S ORCHARD: Unhappy Franchisees Launch Site

Children’s Orchard: Hyped to the Core?

ARE YOU FAMILIAR WITH THE CHILDREN’S ORCHARD?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

While Rapper 50 Cent was promoting his new video game at a Play N Trade store in Manhattan last week, PlayNTrade Franchise Inc. Founder Ron Simpson and President and CEO Larry Plotnick were appearing at franchise discussion site Unhappy Franchisee, defending their company and brand.

In reporting on the suspension of the CA franchise registration of Play N Trade (See PLAY N TRADE: CA Suspends PnT Franchise Registration), website Unhappy Franchisee set off a lively debate about the video game retail concept and its franchisor.

Some commenters  allege that Play N Trade used deceptive tactics to achieve its rapid growth, and was not forthcoming about early franchise failures, necessary capitalization and flaws in the business model.

Defenders of the Play N Trade franchisor and concept claim that the franchise registration will be restored and PnT exonerated on appeal, that the concept is sound and marketing and support to franchisees is exceptional.

Play N Trade President and CEO objected to the implication that Play N Trade had been found guilty of any wrongdoing:

As the President and CEO of Play N Trade I feel it…  is very unfortunate that http://www.unhappyfranchisee.com would state that Play N Trade has been found guilty of anything, when nothing could be further from the truth.

Play N Trade has not been found guilty of any wrong doing, and that the citation highlighted is a preliminary order that is not final. We are working closely with our Attorneys and the California Department of Corporations to clarify and settle this matter quickly and with the least amount of impact to our franchisees.

This preliminary order only impacts the state of California, and will not be finalized until the completion of a negotiation or appeals process.

Play N Trade Corporation takes this and all legal matters very seriously, and are and will cooperate fully with all state agencies.

We will be communicating with our current and future franchisees appropriately as facts become available.

Sincerely,

Larry Plotnick
President and CEO
Play N Trade, Inc.

Larry Plotnick, who joined Play N Trade in January of this year, cautioned readers from taking the often emotional criticisms of his company at face value:

I would like to caution anyone reading this website and the comments being made; that much of what has been said is incorrect, misleading and/or opinion only. If you have concerns with Play N Trade I would suggest that you call or contact our Corporate office and we can answer your questions appropriately and directly. Yes there are a few upset individuals, mostly ex-employees that have attempted to compete with Play N Trade unsuccessfully (Like Gamer Doc and others) that have reason to create problems. We will not use a public forum, such as this for discussions back and forth.

We continue to work very hard for our franchisees, not only in clearing up this current situation and working with the state of California but in completing for rollout this summer our new POS system, the new unified buying program and a new national marketing campaign all to support our franchisees.

I hope that our franchise community can see through these “rants” and understand that their partners at Play N Trade are doing everything possible to create a world class brand and to create a continually improving model in an exciting and growing industry.

Larry Plotnick
President and CEO
Play N Trade

Play N Trade Founder Ron Simpson stated that franchisees are always taking a risk and that failed stores are “a fact of business and our economy”:

It hurts me to see what is being said about such a great brand… For the people thinking about buying any franchise, there is very real risk and take all the information you can gather before buying one. The allure of running your own business can cloud your judgment. I set out to compete against a true giant in Gamestop, and have always said the franchisees will decide the outcome. I truly believe the our franchisees are given as much as can be given to compete from PNT, and it is up to them from there. I have never promised anything I couldn’t deliver and never asked anything from franchisees that I haven’t accomplished myself. As for the State of California, I know PNT will prevail and a lot of what this blog is based on will cease. As for closed stores, that happens to all franchises, even coporation like Gamestop…it’s a fact of business and our economy. God bless everyone on this blog (negative and positive) and all of our franchisees, I hope nothing but the best for all of you.
Ron Simpson
Founder
PlayNTrade Franchise Inc.

Read or join the discussion here:  PLAY N TRADE: CA Suspends PnT Franchise Registration

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Photo:  FranBest.com

Related reading: PLAY N TRADE: Video Game Franchise Played Out?

PLAY N TRADE Franchise Registration Revoked

PLAY N TRADE: Franchisee Shares Secrets of Success; Blasts “Whiners”

IS PLAY N TRADE A GREAT FRANCHISE OPPORTUNITY?

When FranchisePick.com asked IS PLAY N TRADE A GREAT FRANCHISE OPPORTUNITY?, we got an earful… and 100+ comments.

According to Unhappy Franchisee, the California Department of Corporations has issued their opinion of the video game retail franchisor Play N Trade, and it ain’t good.

In fact, California is revoked the unit registration, denied the master franchise registration renewal and is recommending  heavy fines and penalties for alleged deceptive practices and violations of CA franchise law.

Play N Trade Franchise, Inc. has 60 days to respond to the complaint.

Read the legal document and penalties here: PLAY N TRADE: CA Revokes PnT Franchise Registration

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Graphic:  FranBest Franchise Information

Also read:

PLAY N TRADE: Franchisee Shares Secrets of Success; Blasts “Whiners”

PLAY N TRADE: CA Revokes PnT Franchise Registration

PLAY N TRADE: Video Game Franchise Played Out?

Yesterday’s post (BARBIZON: Dateline NBC’s Scathing Expose) about the Dateline NBC undercover expose on the franchised Barbizon Modeling & Acting Centers provoked some strong reactions from FranchisePick.com readers.

One woman claims that footage of her daughter was shown on the Dateline NBC spot without her or her daughter’s permission.  She claims that Barbizon and IMTA are making her daughter’s dreams of being a model come true.  Fran Private writes:

Our daughter was shown several times on a Dateline episode on Sunday, 4-12-09, which featured a negative story against Barbizon and the IMTA convention. Contrary to the story line of disappointment and scams, our daughter was discovered through a local Barbizon and did very well at IMTA (last IMTA attended in July 2008). Barbizon of Ardmore, Pennsylvania is the modeling school where she attended her classes.

Since attending IMTA, she has been signed in 4 countries. Has been modeling full time, signed in New York with a top 10 modeling agency, and has traveled to and modeled in Tokyo (4 separate trips to Tokyo), Paris, and currently in Singapore. She has done work for international and national magazines, advertising and has been on famous designer runways. All of this, by the age of 16.

Barbizon of Ardmore, Pennsylvania, has always treated our daughter and managed her career with the utmost level of professionalism that has always gone above and beyond expectations…Our daughter would not be doing what she is doing today if it not for Barbizon of Ardmore and IMTA! She had a terrific time attending IMTA… It was at IMTA that Elite saw her and signed her along with many other top ten agencies that are still currently interested.

I have to keep our name anonymous for many reasons but can assure that our decision to use Barbizon and attend IMTA was very positive. There truly are success stories that exist, as we are one of those stories. It is very sad that our daughter had to be shown on national television in such a negative story, as we 100% disagree with the broadcasted show. While perhaps it is a fact there is a small percentage that will get signed or work as models, it can and does happen, we are proof that it really can!

Another FranchisePick.com reader claims that the Dateline NBC expose was deliberately run in order to damage Barbizon and advance a competitive school’s program.  Conspiract theorist Vee writes:

open your eyes…this was a slander againt Barbizon (founded in 1939) a 70 year old company that belives in young women…The director (Neal Hamil) of Elite agency never mentioned that Elite agency was founded by John Casablanca who also founded John Casablanca modeling and acting centers this school patterend their business plan after Barbizon in 1979. Barbizon is John Cassablanca’s biggest competitor. Barbizon is up 70% in a bad economy not only in enrollment , but with success storys of many models and actors that have graduated from barbizon. This was delibrately aired to hurt Barbizon for the benifit of another training center. Dateline did not reserch this story or maybe they were paid to do this because Neal Hamil is also involved with NBC reality TV! Not one other traing center was mentioned and their are many accros the country that charge money for training. A matter of fact look up Neal Hamil he also owned a traing center himself that he chared aspiring models to attend.

FranchisePick.com reader becky claims that the story of the father who dropped $30K to make his cute but chubby little daughters supermodels omitted a significant fact:  that the daughters were not admitted to the modeling program, just the acting program.  becky writes:

THis story also focused on high fashion models. they guy with the 2 girls neglected to mention that they did not go for modeling only acting and did not participate in any modeling competitions at imta!! Obviously those girls are not high fashion material and were directed by Barbizon to compete in acting. Barbizon has a foundation with confidence building and professional skills as well as modeling and acting. All barbizons are independently owned and operated. With any franchise you get the good and the bad. this show was misleading and no regard for the truth. shame on you chris hansen!!! go back to catching real predators.

There’s always a highly sensitive and articulate intellectual in the crowd to add the sophisticated analysis.  Writes anonymuz:

its the parents fault, the truth is if your kids are ugly, deal with it

IS BARBIZON MAKING DREAMS COME TRUE… OR IS IT A SCAM?  WHAT DO YOU THINK?

logo:  Barbizon

Dateline NBC aired a scathing undercover report on Barbizon Modeling and Acting Centers and paid modeling talent showcases like the IMTA’s New York convention.

View Matt Lauer’s interview with Chris Hanson, which includes excerpts from the Dateline NBC report, complete with undercover camera footage.

The show features an interview with a father who spent more than $30,000 with Barbizon and the International Modeling & Talent Association, which holds a convention that helps young would-be models, actors, and actresses become discovered by top talent scouts.

The father recounts how he was paid Barbizon more than $3000 per girl for modeling lessons, $4700 per girl for them to attend the “exclusive” IMTA convention, and $2800 for his wife to accompany them to New York (among other expenses).   Throughout the process, Barbizon allegedly pumped up the egos and hopes of the children and parents with fake praise and the promise of lucrative modeling, recording and acting contracts.

The most interesting - and damning - parts of the Dateline NBC report are the undercover segments featuring their planted participant being praised for her mediocre (at best) performance, and the Barbizon employee explaining how they accept and advance everyone, no matter how little potential, as long as they pay.

The head of the Elite modeling agency emphasizes that legitimate agencies do not charge or require a fee to review potential models.  In fact, all one has to do is email them pictures to be reviewed.  And they won’t charge them a cent;  but of course they won’t tell children or their parents what they want to hear.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

LOGO:  Barbizon

When you’re considering a particular franchise opportunity, most franchisors will provide you with a wealth of sales literature, marketing brochures, videos, and legal documents (FDD), as well as an ample supply of timeworn cliches (”You’ll be in business FOR yourself, but not BY yourself”).

Franchisors should provide you with one more thing: The email or certified letter they’ll send you if you fail.

Ask for it. Get it. Read it. Think about it.

Don’t listen to the franchise salesperson when he tells you If you think negative thoughts you will kill the success fairy!

Realistic ain’t negative.  And this letter contains an important message:  As a franchisee, you are under a legal, contractual obligation to succeed.

Curves Email to Closed Club Owners

A reader at Unhappy Franchisee posted the email that Curves International (The AAFD “Franchisor of the Year“) allegedly now sends to Curves franchise owners who are in distress, have run out of money and closed their struggling clubs:

From: Wendy Law

I have received notification that you have closed your club. I have attached the closing requirements if indeed you have in fact closed. Please contact me and let me know the reason of the closure.

The resale department has received information to indicate that you abandoned (closed) your facility. You realize, of course, that closing your facility is a breach of the terms of your franchise agreement with Curves International, Inc. (“Curves). You place yourself in default of the terms of your franchise agreement and you not only remain responsible for all delinquent fees (including monthly royalties/advertising fees), but also all future fees due and owing to Curves (including maximum monthly royalties/advertising fees) for the remaining Term of your franchise agreement. If you fully comply with all Curves’ requirements, including the procedures listed in the attached Closing Procedures document, Curves will allow you the opportunity to pay a settlement fee and execute a Mutual Release with regard to said franchise.

The completed Club Worksheet, Intent to Close Facility form, and an active, inactive, and archived member list must be returned to the resale department within two (2) business days of your receipt of this email by facsimile to (254) 751-3035 or by return email.

Carefully review attachments. If you have any questions please feel free to contact me. I hope to assist you through this transition and to make it as smooth as possible.

Sincerely,

Wendy Law

Resale Specialist

Curves International, Inc.

If and when a Curves franchisee closes their club during the term of their franchise agreement, Curves International dispenses with the touchy feely stuff one encounters in Curves franchise marketing.  No, you won’t even get a “We’re sorry to hear…” or “Our condolences…”

In fact, in the closing email CI doesn’t even pretend that they know - or care - whether your club is dying or dead except in regard to what you owe them.

February 1st, 2008 CI began requiring franchise owners who closed clubs prematurely to pay a $10,000 closing fee (”Failure Fee” Our term).  Readers report that Curves often accepts what they can get from the distressed franchisees, and negotiated as low as $2000.

Then there are the “delinquent fees (including monthly royalties/advertising fees), but also all future fees due and owing to Curves (including maximum monthly royalties/advertising fees) for the remaining Term of your franchise agreement.”  Unhappy Franchisee readers have reported Curves demanding amounts averaging from $29,000 to $49,900 in future royalties and fees.

This does not include the outstanding credit card debt, past and future lease payments, and all that is owed to equipment cos. and vendors.

A Contractual Obligation to Succeed

Curves International CEO Gary Heavin recently attributed the high rate of SBA loan defaults to the reselling of Curves franchises at inflated prices by greedy 3rd parties.  Perhaps Curves International, Inc. should require every new franchisee who enters the system to read and digest this farewell email.  There will be less of a backlash for the Franchisor of the Year if it’s clear that franchisees are contractually obligated to succeed.

Franchisees should know coming in that failure is not an option.  At least for Curves International.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Photo:  Unhappy Franchisee

Curves International Inc. chief executive Gary Heavin, recently said that high SBA loan defaults were a result of “the overpriced resales of franchises between third parties.” (See QUIZNOS, COLD STONE, SUBWAY & CURVES TOP FRANCHISE LOAN DEFAULTS)

On the Unhappy Franchisee website (See CURVES: Disturbing Resale Story), a Curves franchise buyer of two existing clubs provides an example of how a resale business can be artificially, even fraudulently, inflated.  The results can be disastrous for the unsuspecting buyer.

The Curves franchise owner writes:

I am a Curves resale. I bought 2 clubs from a friend of the family, who I thought was a good person. She claimed Curves International told her to base the purchase price of her clubs, on the number of “active” members. When I bought my clubs, an active member was any member who had not canceled their membership. Therefore, the previous owner came up with the purchase price this way, (500 members x 12 months x $29 (plus tax) ~ $175,000 x 2 clubs ~ $350,000).

However, the new franchisee claims that a large percentage of the 1000 supposed members had actually cancelled their memberships and didn’t know their bank accounts were still being charged for their monthly fees.

When we bought the clubs, we switched from paper drafts to an electronic drafting system. A month later we started getting calls from women who were threatening to sue us for taking money from them without permission. I explained that I was the new owner, that they were still under contract, and based on my knowledge, the previous owner was drafting them when I bought the clubs. They argued with me and said they had cancelled their contracts, and they had not been getting drafted from Curves until we started drafting them.

How were 600 women billed for a service they had cancelled without them noticing?  Turns out that the previous owners’ charges appeared on their bank statements simply as “merchant.”  When the new owner switched to an electronic system that identified the charges as “Curves,” all hell broke loose.

I asked them to bring in a bank statement from any month prior, and the current months statement. When they brought in their statements, we discovered that the previous owners draft was coming out as “Merchant”. They didn’t realize they were being drafted until they saw our “Curves” draft. Over the next 3 months, we had over 300 women cancel in each club.

The lesson to be learned?  When doing your due diligence, do thorough and rigorous due diligence… hopefully with the help of a professional who knows these kinds of tricks and nuances, and knows the warning signs.

And keep in mind the wise words of my favorite doctor:

I have heard there are troubles of more than one kind.
Some come from ahead and some come from behind.
Dr. Seuss

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Photo: Bobu.  Licensed by Creative Commons.

Less than a year ago, Make & Take Gourmet founder Michele Bellso sent out a blast email announcing the closing of two franchise stores of the chain’s 16 locations. 

Bellso’s nonchalant, cheery tone and characterization of the lost investment of her franchise owners as  business-as-usual prompted the first (Make & Take Gourmet: Meal Prep Franchisor Takes Failures in Stride April 28, 2008) of 20+ posts  I’d write on the ill-conceived and ill-fated meal prep chain.

“Interest and excitement in the Make and Take Gourmet concept has never been greater!” wrote Bellso in her email last April.  “We anticipated that as this new industry evolved, stores would need to adapt to emerging trends. We expected that this would include some store closures, and unfortunately our Camillus and Baldwinsville stores have closed. However, our Cicero, Fayetteville and Auburn stores will continue to operate 7 days…”

Her email concludes:  “Interest in franchise stores is continuing…I can honestly say that Make and Take Gourmet’s future is looking very bright…”

Do you smell something burning?

The email came on the heels of other franchise failures.  Rather than halt franchise sales and figure out why her stores were failing, Bellso continued to market and open Make & Take Gourmet franchises.  In a July, 2008 interview she blamed the failures on the unrealistic expectations of her franchisees (”Too many people think they’ll make a million in the first year”) and said “The only thing that may have changed for us is to make a better selection of our owners.”

In August, 2008, Bellso closed the corporate-owned (MAKE & TAKE GOURMET: Bellsos Closing Company Store, Blame Economy).

They also were sued for fraud by their early franchise owners (MAKE & TAKE GOURMET: 3 Franchisee Groups Reportedly Suing), and it was announced another franchise was “de-branding” (MAKE & TAKE GOURMET: New Hartford MTG to Defranchise)

In December, 2008, we reported the Securities Division of the Office of the Attorney General of Maryland charged Bellso & Make & Take Gourmet with the registration, disclosure, and antifraud provisions of the Maryland Franchise Law (Make & Take Gourmet, Michele Bellso Accused of Franchise Fraud (AG)).

Corporate stores closing:  Commence grieving.

This month, UnhappyFranchisee.com reported that Bellso has closed the corporate Cicero, NY flagship store, which Bellso had boasted sold as many as 3,000 meals per day and grossed as much as $1.7M yearly (MAKE & TAKE GOURMET: Flagship Cicero Store Closes).

Not surprisingly, Bellso’s email regarding the closing of her own store is “with much sadness,” a sharp contrast to the upbeat tone regarding her franchisee’s losses:

Dear Friends,
It is with much sadness that I announce that the Make and Take Gourmet store in Cicero is closing. We have really enjoyed helping you feed your families.
Unfortunately, tough economic times and rising costs have made it impossible for us to continue doing business. It was a difficult decision and not one that we wanted to have to make.
Saturday, March 28th will be our last day. Stop by and fill up your freezers with our Buy 2 Get 1 Free Blowout Event.
Thank you for all of your support over the last three years. We will miss you!
Michele

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Logo:  Make & Take Gourmet

The press release says ex-con Tristan Dunn has created the first charity franchise.

Or it may be an un-franchise.

Actually, it may just be a press release that says he created the first charity franchise.

Or it may be a con job.

This press release appeared on PR.com:

Ex Con Creates Charity Franchise

Tristan Dunn, a Wisconsin man who spent 7 years in prison, has created the first charity franchise, a fund raising company that benefits schools, churches, and other non profits.

Milwaukee, WI, March 13, 2009 –(PR.com)– Fundraising System Benefits Schools and Non Profits.

Tristan Dunn, a Wisconsin man who spent 7 years in prison, has created the first charity franchise, a fund raising company that benefits schools, churches, and other non profits.
Dunn’s company is called “www.Your Charity Shop.Com.”
“We give 60-85 % of the profits from our sales to the charities,” he said.
“Most companies, if they participate, give an average of 50 %,” he said.
“It’s a way of giving back,” he said.
An internet brokerage firm that leverages with the largest retailers in the country, customers shop through Dunn’s web portal, with the majority of the profits going to the charitable entities.
So far, Dunn said, over 50 schools have signed on board. More are sure to follow, he said.
“The economy is challenging all aspects of our country—particularly for those entities that depend on discretionary dollars.”
“It’s a win-win for everyone,” Dunn said.
For more information contact Dunn @ 1-800-806-6857.
###
Contact: Tristan Dunn @ 262 707 9062

I don’t know what’s more intriguing:  A guy who leads with his unexplained prison record, a franchise that gives money away, or a franchise press release that leads to a website touting the “un-franchise.”  On the website, there’s no mention of a franchise opportunity or information about Mr. Dunn.

At the bottom of Mr. Dunn’s alleged website are tiny letters “Independant [sic] UnFranchise Owner © and Independant [sic] Distributor for Market America.com”

Anyone familiar with Mr. Dunn’s “YourCharityShop” franchise, Market America or MarketAmerica.com?

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.