Controversial franchisor and CEO of eBay drop-off franchise iSold It Ken Sully was reportedly killed last night in a motorcycle accident.  Sully was 58.

A friend who was riding with Ken Sully at the time posted an account of the accident on a Ducati rider’s forum:

It is with extreme regret that I break the news that one of our newest members, and a new friend of mine, Ken S. (aka FastlaneKen) was involved within a fatal accident last night.
Last night, following me, Ken was riding his barely 2+ week old 1198. I passed through an intersection, and noticed he wasn’t there. What happened, a women, barely legal to drive, made an illegal left u-turn in front of Ken and essentially hit Ken head on with her car. Police reports is blaming her 100%. He was pronounced dead at the scene, and probably didn’t feel a thing.
He was loved by people of all walks of life, and had finally saved up to buy his dream bike, the Ducati….
Ken leaves behind a beautiful wife of many, many years, and a young daughter of only 17. He was 58 years old.

The San Diego Union-Tribune reported Sully’s fatal accident here.

A well-known figure in franchising, Ken Sully was CEO and of the much-hyped iSold It franchise company.  Entrepreneur magazine named eBay drop-off store franchise iSold It their “Top New Franchise for 2007,” a “Hotter Than Hot” concept and one of the “Hot Franchising Trends for 2007.”

FranchisePick.com and AmITheOnlyOne.org reported that some ex-franchise owners claimed iSold It was a scam, and that Sully was peddling a flawed and failing concept that cost them their life savings.

The FranchisePick.com post Is iSoldit a Great Franchise Opportunity? generated more than 300 comments, many from franchisees upset with Sully and iSold it.

FranchisePick.com published an internal letter sent by Ken Sully to iSold It franchise owners (An Open Letter to iSold It Franchisees from CEO Ken Sully) that revealed that despite the media hype and aggressive franchise sales efforts, the iSold It franchise chain was in a dire situation, that over 60 franchise stores have closed and many more were struggling for their survival. Shortly thereafter the company suspended franchise sales and was stripped of its “Top New Franchise” ranking by Entrepreneur magazine.

Ken Sully joined the iSOLD It in July 2004 from Postal Connections of America. Prior to that, he was Vice President Worldwide Franchise Development of Mail Boxes, Etc., another controversial franchise chain.

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(FranchisePick.com) In 2006, Entrepreneur magazine said that their hot new franchise iSold It had sold more than 800 franchises. 2 years later, iSold It has disappeared from all Entrepreneur lists, and CEO Ken Sully refers to the chain as having 125 retail stores nationwide. Here’s his endorsement from a current Central Desktop software press release.

(March 27, 2008)– Central Desktop, the complete business collaboration platform for business teams today announced the release of the Central Desktop Security Pack to meet the growing needs of business teams… “We have over 10 GB of information stored and shared by over 200 users in our 125 retail stores nation-wide all accessing the Central Desktop platform on a daily basis,” said Ken Sully, CEO, iSold It. “I evaluated a number of different solutions, including Google’s offering, and they lacked the features, flexibility and security we needed. Now with the secure single sign-on features in this release, I’ve been able to integrate even more functionality into my workspaces without forcing users to log-in to a different system. This is just not available anywhere else for the low cost that Central Desktop offers.”

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(FranchisePick.Com)  After three years in business, the iSOLD It franchise owners of the Savannah Centre eBay drop-off store franchiseare calling it quits.  According to iSOLD It franchise owner Gail Eischeid, the eBay drop-off store will remain open through mid April to assist current customers. After the store is closed, the owners will still be available to sell items online for both individuals and businesses by appointment.

iSOLD It franchise owners Brian and Gail Eischeid moved to Savannah from Atlanta about six years ago. In a December, 2007 interview in the Savannah Morning News, the franchise owners explained how they came to join iSold It:

“We were looking for something to do together, something that was a match for both our skills,” Gail said. There was an article in May 2004 in USA Today about the iSold It franchise, and from there Gail and Brian did their research, moved forward with their plans and opened iSold It in Savannah in June 2005.

They enumerated some of the challenges they encountered as iSold It franchise owners:

Staffing can be a challenge, Brian noted, because there’s not any sort of “clockwork” - it’s anyone’s guess as to when the store will be busy and when it’ll be slow. Also, Gail mentioned there’s not always a steady supply of high-priced items to sell, which can make incoming cash flow inconsistent.

“iSold It is still growing; it’s a relatively new business model. You open a Burger King or McDonald’s, and there’s enough history to know what you’ll net in a year. This is a whole new retail concept; there are no hard and fast numbers yet.”

Related Reading:

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(FranchisePick.Com)  The eBay Dropoff Store Franchise was yesteryear’s hot new franchise opportunity.

Unfortunately, it was so hot that it burned up the cold, hard cash of many an iSold It, Snappy Auctions, and AuctionItToday franchise owner.  What happened?  Scott Pooler provides his take in his article eBay Franchise Drop Stores - Why they failed, excerpted below. 

Do you agree with Scott? Disagree?  Leave a message below.

The concept:

eBay drop stores came upon the scene with a great fanfare and promise….

These franchises promised individuals an easy way to be in business for themselves - a way to “have a store without investing in inventory” by offering a simple effective solution to everyone in America’s battle with clutter. People heard the story and they believed; they read about eBay’s fabulous growth and the amount of merchandise sold every moment on eBay and they felt it was a sure thing. If any franchise could work for them, this type would because it was easy and it was new and customers would clamor over themselves to get in the door…

The investment:

Anyone could own a store if they agreed to the franchise terms. Most of these terms included a simple up-front franchise fee of about $25,000, an added expense for signage and fixtures of anywhere from $5,000 to $25,000, plus a continuing monthly national advertising fee and a royalty fee on all sales of about 4% (of Gross Sales), some with a cap at $1,250.00 per month but most with no cap on the royalty fee.

The struggle:

…the store owner is now looking for ways to drive business into his new store. He has more overhead than he initially had envisioned so he must get to work. Staring at a monthly nut to crack of nearly $8,000 on average, most store owners realize fairly quickly that they need items to sell on eBay. Where to get them? …

…Initially the pool of prospective customers was much larger than it is today because more people now have internet access, more people are familiar with eBay and eBay has made it much easier for people to list a single item on their own. eBay classes are taught by certified eBay education specialists at retirement centers nationwide and these classes are sometimes free. People would rather realize 100% of net profit from a sale than 60 or even 50%.

The drop store owner is now on a mission to bring in customers.

He/She must have products to sell. If it become apparent that advertising and location simply do not provide the traffic he needs, the store owner will try different tactics. Sometimes the franchise will offer assistance in the form of “outside sales” seminars, conference calls and the like. These sales ideas are offered as a way to show that the franchise is on the side of the store owner. (To be honest, most employees of franchise operations are honest hard working people who want nothing more than to help the store owners).

In the end these outside sales ideas boil down to selling cars, RV’s and boats - all of which are now precluded by eBay and some States as being illegal or unacceptable without special licenses for each. The franchise failed to mention that a store owner may need a car dealer’s license and a boat broker’s license or an auctioneer’s license to operate a eBay drop off store and sell these types of items. Business-to-Business is another source of income promoted by franchises, but rarely do other businesses wish to split profits in the manner required to make the deal attractive for the drop store owner. This leaves only household merchandise, collectibles and toys, generally creating a garage sale type of atmosphere.

Processing becomes the key - reduce processing time, become more efficient, write shorter descriptions, shoot less photos and speed up the process for each item. This only serves to reduce the final sale price of those items. Store owners soon realize that selling any item worth less than $100 is not worth the expense of processing that item. They react by turning customers away with low value items. This is not always the wisest course of action because that customer will never return and one never knows - they could have been just trying you with a small item before bringing in a diamond ring….

The outcome:

Some eBay drop stores do survive with perseverance, skill and entrepreneurial spirit…

These stores would have survived and possibly thrived without a franchise but going in, the store owner did not know that he would have to find ways to make it work on his own. He purchased a franchise and this usually implies the investment in a proven system which will yield dividends if the system is followed. In most cases, in the eBay drop store business, if the franchise model is followed and the store owner does no more than what the franchise recommends, the store will not be profitable. The overhead, eBay fees, insurance, lease payments, employee costs and advertising costs are a tough enough nut to crack on a net of 30% of the net profit from used merchandise. Adding in a franchise fee, national advertising fee and royalty fee just makes the entire business model collapse upon itself.

Read the entire article here:  eBay Franchise Drop Stores - Why they failed

Want to submit a Franchise Autopsy on this or other failed concept?  Email us at info[at]ideafarm.net.

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(FranchisePick.Com) Related posts:

Britney Spears’ Smell Auctioned on eBay; reportedly “very nice”

iSold It on eBay Franchise Teams Up With Britney Spears

BID ME BABY, ONE MORE TIME… Britney Spears Selling Her Clothes on eBay

The eBay extravaganza star-powered by the once-hot pop diva Britney Spears and once-hot franchise chain iSold It keeps building in intensity and excitement toward its inevitable climax.

According to our earlier story, the Tarzana, CA franchise drop-off shop “iSold It will continue to auction off an outfit each week building up to the main auction – The Famous Red Dress worn by Britney when she was caught not wearing underwear.”

BRITNEY SPEARS WORN WET SEAL BLACK PIN STRIPE JACKET

Sale Price: $15,100.00 Date: Dec-30-07 Auction details

The sizzling hot promotion started off strong with the Britney’s Wet Seal Black Pin Strip Jacket going for $15,100 to high bidder mimotxo123, an eBayer (pictured right) with 7 feedback comments and listed as “Not a registered user.”***

Congratulations, mimotxo123!

iSold It also auctioned off Britney’s Black Lace See Through Dress, which fetched a still-impressive $899.78 from veteran eBayer turbo331(pictured below)

BRITNEY SPEARS WORN BLACK LACE SEE THROUGH DRESS
Bids: 53 Sale price: $899.78 Date: Dec-23

Congratulations, turbo331!

CURRENT AUCTION IN PROGRESS: LEOPARD TOP W/ BRITNEY SMELL

BRITNEY SPEARS WORN LEOPARD TOP MISS NRG CASUAL WEAR

Bids: 36 Current Price: $610.00 Time left: 3h 21m

UPDATE: SOLD!  Bids: 37  Final Price $650  Winner:  McBob1955

*** According to eBay: “‘Not a registered user’ can refer to members who have cancelled their membership, or whose membership has been suspended by eBay. For example, a member whose correct contact information is no longer on file with us may have their registration suspended until the new contact information is entered. In either case, the member appears as ‘not a registered user’ and is not allowed to buy or sell on eBay.”

WHAT DO YOU THINK? LEAVE A COMMENT; SHARE AN OPINION

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(FranchisePick.com) What do Britney Spears’ old clothes smell like? At this moment, the answer would cost you $610… and climbing.

At the moment of this writing, there have been a total of 36 bids on eBay for Britney Spears’ Miss NRG casual wear leopard print top, pictured at left.

The master writers at iSold It know just the right details to include to send the bidding through the roof.

Note that “This top still has Britney’s pleasant smell in it and smells very nice!”

BRITNEY SPEARS WORN LEOPARD TOP MISS NRG CASUAL WEAR

You are bidding on an absolutely original outfit worn by Britney Spears with COA. Britney wore this Miss NRG casual wear leopard print top. As you can see in the auction pics we have even included a picture of her in this actual top.

This top still has Britney’s pleasant smell in it and smells very nice!

How did we get it?

This outfit comes to our store from her personal assistant and is guaranteed to be the actual outfit Britney wore on that day. We have verified through pictures and videos available online that the same assistant who came to our store has or currently still works for Britney…

We are letting all of Britney’s fans around the world decide what this outfit is worth. In order to do so we are launching this auction traditional eBay style and starting at just 1 cent.

Good luck and happy bidding on this one of a kind outfit actually worn by Britney herself!

AUCTION INCLUDES FREE SHIPPING TO ANYWHERE IN THE WORLD.

If you missed this auction, don’t worry. According to our earlier story, “iSold It will continue to auction off an outfit each week building up to the main auction – The Famous Red Dress worn by Britney when she was caught not wearing underwear.”

Don’t even say it…

WHAT DO YOU THINK? LEAVE A COMMENT; SHARE AN OPINION

iSold It took #2 in FranchisePick’s most volatile posts of 2007. Check it out.

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Top New Franchise: Who’s hot. Who’s not.

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(FranchisePick.Com)  2007 was a pretty devastating year for both pop’s once-hottest star Britney Spears and franchising’s once-hottest concept, iSold It on eBay.

It appears that these two trainwrecks hope that they can help each other get back on track:  by allowing the iSold It drop-off store’s Tarzana, CA franchise to sell Britney’s iSold old outfits on eBay.

Here’s the press release posted by William Fikham (?) on ecommwire.  It’s titled:

iSold It Continues to Auction Outfits Worn by Britney Spears
BRITNEY SPEAR’S ASSISTANT CASHING IN ON OLD OUTFITS WORN BY BRITNEY BY SELLING THEM AT ISOLD IT – AN EBAY DROP OFF STORE

The headline seems to imply that it is the assistant - not the performer formerly known as “Hi, my name is Britney S. and I’m an…”  Not too plausible sinces she’s STILL BS’s assistant.

 In December, they auctioned off a pair of BS’s jeans and a tank top which fetched $700.

The “black lace see through dress,” pictured here, recently sold for $899.78.

According to the press release, “iSold It will continue to auction off an outfit each week building up to the main auction – The Famous Red Dress worn by Britney when she was caught not wearing underwear.”

And you thought 2008 couldn’t possibly get more exciting than 2007!

Worried about authenticity?  Don’t be.  iSold It promises:  “The items come to iSold It from Britney’s personal assistant and are absolutely original.”  Plus, they supply 34 photos of the outfit in the wild, in its natural habitat!

WHAT DO YOU THINK?  IS BRITNEY SPEARS A GREAT MATCH-UP FOR iSOLD IT ON eBAY… AND VICE-VERSA?

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Visit FRANBEST: Unbiased franchise information, franchise interviews and detailed, searchable information on 400 franchise and and business opportunities.

Top New Franchise: Who’s hot. Who’s not.

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(FranchisePick.Com) As we begin to wrap up the first year of blogging at FranchisePick.com, I’ve made a list of the companies and posts that prompted the most comments from FranchisePick.Com readers.

#1 Snappy Auctions Franchise: 600+ Reader Comments
Most-commented Post:

Is Snappy Auctions a Great Franchise Opportunity? April 20th, 2007 - 601 Comments

#2 iSOLD IT Franchise: 590 + Reader Comments
Most-commented Post:

Is iSoldit a Great Franchise Opportunity? April 3rd, 2007 - 346 Comments

#3 Contours Express Franchise: 380+ Reader Comments
Most-commented Post:

Is Contours Express a Great Fitness Franchise? May 10th, 2007 - 334 Comments

#4 Butterfly Life Franchise: 300+ Reader Comments:
Most-commented Post:

IS BUTTERFLY LIFE A GREAT FITNESS FRANCHISE? May 10th, 2007 - 193 Comments

#5 Mary Kay Cosmetics: 170+ Reader Comments
Most-commented Post:

Does Pink Stink or is Mary Kay O.K.? February 7th, 2007 - 95 Comments

#6 AUCTIONING4u Franchise: 160+ Readers Comments
Most-commented Post:

Will Auctioning4U Save the eBay Drop Off Franchise?  May 26th, 2007 - 129 Comments

#7 The UPS Store Franchise: 90+ Reader Comments
Most-commented Post:

Is The UPS Store a Good Franchise Opportunity? February 2nd, 2007 - 46 Comments

#8 The It’ Just Lunch! Franchise: 55+ Reader Comments
Most-commented Post:

It’s Just More Allegations Against It’s Just Lunch October 25th, 2007 - 56 Comments

#9 The Curves For Women Franchise: 35+ Reader Comments
Most-commented Post:

Is Curves for Women a Good Franchise Investment? March 7th, 2007 - 35 Comments

#10 Tie: McDonald’s & Cuppy’s Coffee Franchises (tie): 20+ Reader Comments
Most-commented Posts:

No Shoes. No Hands. No Service… At McDonald’s July 4th, 2007 - 24 Comments

The Death of the Blogosphere OR Who’s Killing the Cuppy’s Java Jo’z Blog Dialogue? January 26th, 2007 - 22 Comments

See other b5 Business Channel 2007 wrap-up posts at Home Biz Notes.

YOUR COMMENTS, AS ALWAYS, ARE APPRECIATED.
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Another casualty from the eBay drop-off store gold rush is featured in the Press Enterprise today, excerpted below.  This one didn’t even need the help of a franchise company like iSold It or Snappy Auctions, they were able to fail in less than ten months all on their own.

“The worst idea I ever had.”

When they launched The eBay Store last September in downtown Riverside, owners Ollin Martinez and Belinda Correa had high hopes.

“You’d be amazed,” Martinez said in a November interview. “There’s a buyer for everything.”

But there wasn’t. Within three months after opening on University Avenue, the partners were amazed to find heaps of unsold and unclaimed junk had turned their shop into a dump.

And so, hemorrhaging money, stuck with more trash than treasures and faced with street people demanding instant cash, they closed shop in May.

Correa said she lost $120,000 and her faith in sellers who had “unrealistic expectations” about the value of their merchandise.

“It was the worst idea I ever had,” Correa, 40, said. “It’s still haunting me.”

“Exciting at First.”

Eager to join 1.3 million sellers around the world who use eBay as their primary or secondary source of income, Correa believed the enterprise would be fun.

It seemed a no-brainer for clients. Clean out your closet. Cart in cast-off collectibles. The staff would research, authenticate, photograph, describe and post your items on eBay. Within seven days of purchase, you’d receive your money minus eBay’s fees, a listing fee, local pickup and delivery charges and the storeowners’ 10 percent to 20 percent commission, depending on the price of the sale.

“The first two weeks were exciting,” Correa said. “We got really neat stuff.”

Deluge of Junk

…”I got every broken chair. I was overwhelmed with plates.”

The 3,600 square-foot store metamorphosed into a landfill. People would call to unload old furniture after a home remodel.

“They’d say, ‘I don’t care what you sell it for,’ ” said Correa. “Just take it away.”

* * * * * * *

In the end, she made six or seven trips with piles of clothing, furniture, dishes and books to The Salvation Army.

“I waited, I went out of my way to return things,” Correa said. “I wasn’t going to baby-sit the junk. There was nothing of value.”

* * * * * * *

Despite $50,000 in listings, “in a good month, we sold $6,000,” Correa said.

Another miscalculation was the clientele. Correa had counted on the downtown professionals. Instead, she figures 40 percent of her customers were street people, many on drugs. Some were abusive; some tried to sell stolen goods.

* * * * * * *

“Not a Proven Concept”

“I don’t see how they ever expected to make money,” said Kevin Murphy, a lawyer and author who owns the San Francisco-based Franchise Foundations. “These are one-time eBay sales with big hassles involved. Sending, packing, shipping. And you’re dealing with people who are very picky.”

He said many eBay franchise stores have failed or are struggling and profits have plunged since 2004. “The concept was never proven in the marketplace before franchising started in 2002,” Murphy said.

The two Inland Empire eBay franchise stores, one in Rancho Cucamonga, the other in Palm Springs, are out of business. Just before Correa closed her place, another independent, eFront, opened on May 1 on Indiana Avenue in Riverside.

“We’re doing OK,” said co-owner Cliff Woolls. “We’re not getting rich.”

Read the full story.

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(FranchisePick.Com) FranchisePick.com and other blogs have been reporting the story of the troubled eBay dropoff franchise segment in general and segment leader iSold It in particular since early this year. So far the mainstream media and business press, including many that eagerly hyped the flawed concept, have been slow to to cover the story or to warn prospective franchisees of the risks associated with this controversial venture. That could, however, be changing.

Earlier this week I was interviewed by BusinessWeek reporter Douglas MacMillan for the story (Can You Profit as a Franchise Pioneer?) that appeared online today.

The article includes the story of Karen McGinn and Gene Bowen, failed iSold It franchisees who started the amitheonlyone.org site to warn others:

In 2005, business partners and first-time franchise operators Karen McGinn and Gene Bowen bought an iSold It eBay(EBAY) drop-off franchise and opened it in a storefront on a busy street in Woodstock, Ga., about 30 miles from Atlanta. At the time, the Solana Beach (Calif.)-based franchisor, which also lists items on marketplaces such as uBid (UBHI) and Amazon (AMZN), had a novel concept, but it would soon spawn its share of imitators in pursuit of its promising, untapped market: people who want to sell their stuff but don’t want to go online to do so.

For McGinn and Bowen, starting an iSold It was relatively inexpensive—about $150,000 to get a store up and running, compared with the $500,000 to $1 million price tag of the average McDonald’s (MCD). Plus, the pair says company executives told them in person and in conference calls that their stores would be profitable within three months of opening. ISold It Chief Executive Officer Ken Sully denies that any iSold It representative made earnings estimates.

The pair says it never turned a profit. “The problem is, the whole concept doesn’t work,” says McGinn. Having to auction off a wide variety of items on eBay made it hard to compete with sellers who specialized in one category, she says. To make matters worse, each new drop-off store that opened was a new source of competition, since most buyers shop online, not locally. Instead of earning money, the pair ended up spending $1,500 to $3,000 a month to keep the business going.

Long Odds, Lots of Competition
And finally, when they replaced iSold It’s software system with a new system—citing its unreliability—the franchisor terminated their franchise agreement explaining they had violated its terms. The process took less than seven months, and the pair estimates it spent between $300,000 and $350,000 in total—including fees for legal counsel.

Few franchisees fall as hard or as fast as McGinn and Bowen did, but their story could serve as a warning for prospective franchisees who assume that a new franchise is a sure bet….

Sold in Distress
“These franchisees are basically going into an unproven, high-risk venture, yet they’re also saddled with the fees and loss of autonomy and freedom associated with franchising,” says Sean Kelly, a franchise consultant with Leola (Pa.)-based Idea Farm and operator of the blog Franchise Pick. ISold It, for example, had been in business only a few months before selling its first franchise. For pioneer franchisees, one question looms large: What is the potential for profit? As McGinn and Bowen found out, it’s not an easy question to answer.

To date, nearly 600 iSold It stores have opened—but more than 60 have closed or been sold in distress. The company halted the sale of new franchise units in the U.S. this year, and CEO Sully issued a letter to franchisees stating that the company “has not been profitable since 2004,” and that “We do not feel comfortable selling any new franchises until we get the failure rate lower.”

That caused Entrepreneur magazine, which had bestowed the franchise with the title of “Top New Franchise of 2007,” to remove it from its online list in June. And in July, franchise owners received a revised version of the company’s Uniform Franchise Offering Circular (UFOC)—the central document in a franchise contract. In boldface underlined type on the second page, the document reads: “The iSold It franchise system is still new and unproven…. We cannot and do not guarantee that your store will be profitable.”

FranchisePick.Com contributor Michael Webster offered the moral of the story: Do your homework, and consult a professional before venturing into unknown territory.

For the best advice, consult an attorney who specializes in franchising. These professionals will help translate a prospective franchise’s UFOC and find the red flags often buried in its fine print. “The major problem is that nobody ever reads these,” says attorney Webster. The UFOC contains a list of contacts for existing franchisees and ones who have gone out of business. Webster says it’s worth calling current and former owners to hear their stories, as well as working in an existing store for a few weeks to help evaluate potential (see BusinessWeek.com, 4/12/05, “Extending the Front Lines of Franchising”).

Related Reading:

FRANCHISE GRAVEYARD: EBAY DROPOFF STORES

BLOGLIOGRAPHY: EBAY DROPOFF STORES POSTS

Posts with 200+ Comments:
Is iSoldit a Great Franchise Opportunity?

Is Snappy Auctions a Great Franchise Opportunity?

WHAT’S YOUR TAKE? YOUR COMMENTS ARE INVITED.

Discover the Top New Franchise Opportunities at TopNewFranchises.Com

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