CORK & OLIVE: Michael Probst Forms New Corporation

You can’t keep a good man down. Despite the recent plunge into bankruptcy that left his Cork & Olive wine store franchise chain in turmoil, his newly-launched franchisees stranded without the promised support, and employees without jobs or paychecks, C&O founder Michael Probst is launching his next entrepreneurial venture: Mergers & Acquisition Corp.

Commenter secret posted the link to document P08000107072 (available at www.sunbiz.org) showing that Probst formed a new corporation December 4, 2008. The corporate address of Merger and Acquisition Corp. is a home that sold in 2006 for $399,500  (See listing)… an amount equivalent to 6.6 $60,000 Cork & Olive franchise fees.

Florida Profit Corporation

MERGER AND ACQUISITION CORP.

Document Number:  P08000107072

Date Filed:  12/04/2008

State:  FL

Status:  ACTIVE

Principal Address:  418 CASCADE LANE  PALM HARBOR FL 34684

Registered Agent Name & Address:  PROBST, MICHAEL  418 CASCADE LANE  PALM HARBOR FL 34684 US

Officer/Director Detail

Name & Address  Title PCEO  PROBST, MICHAEL  418 CASCADE LANE  PALM HARBOR FL 34684

Title SCFO  PROBST, MICHAEL  418 CASCADE LANE  PALM HARBOR FL 34684

It’s good to see that someone has weathered the Cork & Olive typhoon without it dampening their entrepreneurial spirit!  No doubt there will be exciting things to come from Merger and Acquisition Corp.!

What do you think?  Share a comment below.

Related posts:  CORK & OLIVE: Ex-Employee Has no Sympathy for Franchisees, CORK & OLIVE: Overview & Blogliography,  CORK & OLIVE: The Probst Method of Guilt Avoidance, Cork & Olive Files Chapter 11 Bankruptcy, What REALLY Uncorked Cork & Olive?

QUIZNOS Franchisee Blasts HQ’s Coupons and Discounts

A Quiznos franchise owner posting as FQuiznos has voiced the frequent complaint of struggling Quizno operators:  That heavy discounting and couponing makes it impossible for Quiznos franchise owners to achieve or maintain profitability.  Quiznos franchise owners complain that this strategy is profitable for the franchisor – which makes money on marking up products sold to franchisees as well as royalties on gross sales – but devastating to its franchise owners.

On a Quiznos discussion post, FQuiznos wrote:

Quiznos wants to “increase franchise owner profitability” yet they keep mandating lower prices and mandating that we accept coupons on top of those prices as well. They lower retail prices and launch coupons at the same time. So a regular size prime rib which should sell at $8.49, now is at a regular price of $5.99. They launch a coupon for two dollars off and now you are selling a regular size prime rib sub for $3.99. Food costs remain the same so how is that going to increase franchise owner profitability. I think Quiznos just wants owners to close their doors, saves them the headache of dealing with failing stores and lawsuits. If they haven’t gotten this right in 27 years who says they will today.

FQuiznos maintains that Quiznos marketing department is so coupon-happy they’ve added coupon books as an actual product.  FQuiznos explains:

Customer Purchases the book for $20, we’re supposed to sell it to them.

Then the coupon contains $50 worth of coupons, $25 worth of $5 off any order of $5 or more. Then the other $25 of coupons are for catering.

Running promotions that raise top-line sales – the amount from which royalty payments are derived – at the expense of franchisee profitability is always a sure way to create franchise owner discontent.  After all, franchisees pay into advertising and marketing funds they expect to be used in their – not solely the franchisor’s – best interest.

What do you think?  Do Quiznos franchisees have a valid complaint?  Or is Quiznos advertising driving customers into their stores?  Share a comment below.

Franchise Owner Claims It’s "Impossible to Make Money" With Quiznos

A Quiznos owner named “Martin Tate” left a comment on a Quiznos franchise post warning would-be franchisees that Quiznos stores are money-pits and almost certain to fail.

The commenter writes:

“…I must say, as a Quiznos owner, to anyone considering this, don’t do it. The business model makes it impossible to make money.

“I have been at it for 3 and 1/2 years. I am a successful multi unit manage in the retail finance busness, have turnaround managment experience and banking experience. I have analysed this thing upside down, sideways etc. It won’t make money unless you buy for cash and work 80+ hours 7 days a week yourself. Then you might make a small salary.

“The franchisees are closing everywhere and I have even challenged Mr. Deno and Mr. Brenneman to come and ride stores with me to talk to actual owners. No response to that one. I was very impressed when Mr. Brenneman took over. I thought there were changes coming. They sure did. Sales are down with no profits ever.

“I know how to run a business. That is always the Quiznos excuse. The franchisee screwed up, buy delivery, (I did, what a waste) or do local store marketing. (We did, and still do). I look forward this year to financial disaster, bankruptcy, losing my home and retirement and probably my wife due to Quiznos. Let me tell you. THEY DON’T CARE. There is a reason they are all closing and so many don’t make money.

“One last point. I have a CBD store. Up until the holidays when people aren’t working in the downtown area as much, my store LED the region is sales and customer service. If we were the only ones struggling or one of a few I would say it is us. When over half the chain is “financially distressed” maybe it is them.”

What do you think?  Are you familiar with the Quiznos franchise?  Is it truly that bad of an investment?  Share a comment below.

Geeks On Call Franchisees Allege Their Franchisor is Breaking Law

United We Geek filed a complaint with Virginia’s Division of Securities and Retail Franchising regarding Geeks on Call America, Inc.
Reston, VA December 23 2008.  They issued this press release:
United We Geek, the Independent Owners Association of Geeks on Call America, Inc. franchisees is pleased to announce that more than 30% of all franchise owners have joined the Association representing roughly 50% of the active territories. United We Geek was incorporated in September 2008 to provide Association members with a voice and to address Geeks on Call America, Inc.’s ineffective advertising, inadequate systems, deteriorating business processes, and also a distinct lack of urgency in addressing the franchisee’s needs.
Patrick Blasz, general counsel for United We Geek, learned that in 2008, Geeks on Call America, Inc. abandoned efforts to renew its franchise registration with the State of Virginia. Concerned that Virginia Geeks On Call franchises would no longer be salable, Mr. Blasz filed a formal complaint with the Virginia Division of Securities and Retail Franchising alleging Geeks On Call America, Inc. was entering into new franchise agreements while failing to comply with the registration requirement imposed on all franchisors by the Virginia State Corporation Commission. Mr. Blasz further drew the agency’s attention to the faltering financial condition of Geeks on Call America Inc.
Geeks on Call America, Inc. is a wholly owned subsidiary of Geeks on Call Holdings (Ticker: GOCH), Inc. United We Geek, the Independent Franchise Owners Association is the first such association in the company’s 10 year history.

Curves Franchisee Blames Economy for Closing

Curves on Fourth St. in Albany, MN has shut its doors for good, and franchise owner Carol Smith blames the recession. 

Carol Smith a pastor at Place of Hope in St. Cloud, and also owns another Curves in nearby Sauk Centre.  According to the SC Times,  Albany Curves had been open for six years; Smith had owned it for two years.  According to the article, Smith contends “the economy forced women to decide between putting food on the table and working out. They chose to let their memberships lapse as memberships decreased from more than 100 two years ago to about 45.  It wasn’t enough to keep the business running, she said.”

Local residents left comments ranging from understanding to not-so-understanding.  GoGophers wrote:

I have no doubt that the economy has played a role in this closing, but a community the size of Albany has only so many potential members. Even 100 members would make it difficult to stay alfoat, even if the owner was the full time employee. Curves owners have to be a special kind of person. As the membership declined, bills would go unpaid, members would see the deterioration, and more members would quit….and so on. Probably should not have gotten this far before closing, but worse things have been done by better people. I am sure the owner will discover new found peace.

tastefullysimple wrote:

It closed cause she is a poor business leader…………doesn;t pay her bills either!

Was the recession really to blame?  Or was the market too small?

Following up on GoGopher’s point, a quick search reveals that the population of Albany, MN in July 2007 was 2,095 with a median resident age of 35.8 years and estimated median household income of $38,448.

The female population of Albany, MN is 1,124  (53.6%)

If you subtract 25% for those under 18 or too old to join, you get a 843 total potential members.

Is this really enough population to support not one – but two – Curves clubs?  Was this market really doomed from the start?

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Geeks on Call Franchisees Sue Struggling Franchisor

A total of 10 Geeks on Call franchisee groups filed lawsuits in federal court in Norfolk, alleging that the Geeks On Call America Inc. company breached its contracts and engaged in fraud.

According to a news report by The Virginian-Pilot, each of the suits contends that “Geeks On Call took business away from franchisees by operating a competing online repair service. Meanwhile, the installation of a new system for routing customers to specific franchisees has hampered their customer service and ability to communicate with Geeks On Call, the plaintiffs said.”

The franchisees also contend that the company abandoned its Geeks On Call trademark for the brand 1 800 905 GEEK, creating brand confusion and deflating the value of their franchises.

Seven of the plaintiffs are seeking $1 million for damages that they said they suffered; the other three plaintiffs are asking for damages of $1.4 million, $4 million and $5 million.

The franchisee lawsuits hit at the worst possible time.  Earlier this month, Geeks On Call Holdings Inc. reported a net loss of $4.96 million on revenue of $5.24 million for the fiscal year ended Aug. 31.

What do you think about the Revenge of the Geeks? Share a comment below.

Hollywood Tans Franchise Lawsuit Documents

Four operators of Hollywood Tans franchises located in three states allege that Hollywood Tans and its leasing company induced them into “entering into unconscionable franchise agreements, defrauded them by sending them deceptive and inflated invoices, and violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”).”  They have sued the franchisor company, Hollywood Tanning Systems, Inc. (“HTS”); two of its officers, Ralph Venuto, Sr., (now deceased) and Ralph Venuto, Jr., the company to which HTS assigned its interest in the franchise contracts, HT Franchising, LLC; and Highline Capital Corporation, which provided three of the franchisees with equipment leasing and financing services in connection with the operation of their Hollywood Tans franchises.

The Hollywood Tans franchisee lawsuit suit makes 10 allegations:

1. Plaintiffs made substantial investments of time, money and effort into the franchise opportunities marketed by Hollywood Tans.
2. As described more fully below, Plaintiffs were sold their respective Hollywood Tans franchises through false and misleading representations.
3. Hollywood Tans also omitted from their representations numerous material facts that were necessary in order to make its other representations not misleading.
4. In order to induce Plaintiffs to sign their respective franchise agreements, Hollywood Tans made a host of unlawful “earnings claims”, verbally, in writing, and by video presentation, and made false promises regarding training, support, advertising assistance, equipment and supplies.
5. Plaintiffs reasonably relied on the representations by Hollywood Tans and, accordingly, made substantial monetary investments in their respective Hollywood Tans franchises.
6. However, Plaintiffs did not receive the promised financial returns on their Hollywood Tans franchises.
7. Hollywood Tans also failed to deliver on the promised training, equipment and on-going support.
8. Upon information and belief, Hollywood Tans also unlawfully accepted undisclosed benefits from the Plaintiffs’ purchases and financing arrangements.
9. Hollywood Tans also conspired with Highline Capital to fraudulently take money that they were not entitled to receive from improperly disclosed and fraudulent leasing transactions.
10. Hollywood Tans fraudulently concealed its wrongdoing and Plaintiffs did not, and could not have been expected to discover the existence of the majority of their claims until recently.
11. Plaintiffs bring this action to recover from Hollywood Tans the actual damages suffered as a result of the wrongful and fraudulent conduct of Hollywood Tans, including the money that Plaintiffs invested in their Hollywood Tans franchises.
12. Plaintiffs also seek to recover their damages from Hollywood Tans’ executive officers, Ralph Venuto, Sr. and Ralph Venuto, Jr., who, upon information and belief, knowingly and willfully directed the unlawful conduct of Hollywood Tans’ sales team.

Here are the public legal documents:

Hollywood Tans amended_complaint1

Hollywood Tans_opinion

Over at the Hollywood Tans debate at Franchise Pick, current Hollywood Tans franchisee Jamie contends:

I will point out that the lawsuit that was cited is a year old, and refers to events that happened over 3 years ago, and for what it’s worth EVERY HT employee named in it no longer work for the company (at least one of them is actually deceased). I don’t know the validity of the lawsuit nor do I personally know of any of the former franchisees who filed it, but as to former owners being named in it, HT has been under new ownership since long before the lawsuit was filed, so I don’t see how it all pertains to Hollywood Tans as a franchisor today…

What do you think?  Are these alleged misdeeds relevant to Hollywood Tans franchise today?  Share a comment below.

Make & Take Gourmet, Michele Bellso Accused of Franchise Fraud (AG)

On the heels of a multi franchisee lawsuit and stores defecting and/or closing, Michele Bellso and her ill-fated Make and Take Gourmet meal assembly kitchen franchise chain have taken yet another hit – this time from the Maryland Attorney General.

After conducting a thorough investigation, the Securities Division of the Office of the Attorney General of Maryland “finds grounds  to allege that Respondents Make and Take Holding, LLC and Michele Bellso violated the registration, disclosure, and antifraud provisions of the Maryland Franchise Law, in relation to the offer and sale of a Make and Take Gourmet franchise in Maryland.”  The Maryland AG has issued an Order to Show Cause, giving Bellso and Make & Take Gourmet an opportunity to “show cause” why a final order should not be entered against them.

Make & Take Gourmet Sold Unregistered Franchises

…section 14-228 of the Maryland Franchise Law makes it unlawful for any person to offer or sell a franchise in Maryland or to a Maryland resident unless the offering has been registered with the Commissioner before the person offers to sell, through advertisement or otherwise, or sells the franchise in Maryland…

The Maryland AG alleges that Terri Morgan, a Maryland resident, visited the Take & Bake Gourmet website in January 2007 and requested franchise information.  She was then contacted by Jim Bellso, Michele Bellso’s brother-in-law and a Make and Take employee, and discussed the Make and Take Gourmet franchise opportunity.

Despite the fact that the Make & Take Gourmet franchise was not registered either in Maryland or New York, as required, Dave Menapace, Make and Take’s Franchise Sales Manager, conducted meetings and store tours with Morgan.  Michele and David Bellso also met with Morgan despite not being registered to offer franchises.

Make & Take Gourmet Violated Franchise Disclosure Laws

…section 14-223 of the Maryland Franchise Law makes it unlawful for any person to offer or sell a franchise in Maryland or to a Maryland resident without first giving a prospective franchisee a copy of the offering prospectus and a copy of each proposed agreement that relates to the sale of the franchise at the earlier of: (1) the first personal meeting of the franchisor and the prospective franchisee to discuss the possible sale of the franchise; or (2) 10 business days before the execution of a contract or payment of any consideration that relates to the franchise relationship…

Even though they had not provided the required disclosure documentation and offering prospectus, Make & Take Gourmet personnel aggressively recruited franchisee Terri Morgan;  Michele Bellso discussed with her various details of the Make and Take franchise opportunity, including the business concept, the costs to open a franchise, build-out expenses, using contractors to construct the space, and finding an appropriate location…

On July 7, 2007, Terri Morgan signed a Franchise Agreement to operate a Make and Take Gourmet franchise in Pasadena, Maryland.  The document allegedly left out mandatory language regarding the requirement that Make and Take Gourmet defer receipt of all initial fees and payments from franchisees until Make and Take completed its material pre-opening obligations to the Maryland franchisees.

Make & Take Gourmet Made Illegal Earnings Claims

…section 14-229 of the Maryland Franchise Law and COMAR 02.02.08.16(D) prohibit any person, in connection with the offer or sale of a franchise, directly or indirectly, to make any oral or written statements concerning the potential earnings from operation of a franchise (“Earnings Claim”) if that Earnings Claim has not been included in the franchise disclosure document required to be filed with the Commissioner…

The Maryland AG alleges that Michele Bellso told Terri Morgan that a franchise owner could earn “$400 – $500 a day” just in sales of pre-packaged meals “grab and go” meals.  On February 21, 2007, salesperson Dave Menapace emailed Morgan a document named One Year Revenue Projections for Make and Take Gourmet that includes a column projecting “gross income” of $1,185,740 in one year and an annual net income of $287,596.  In March 2007, a Make and Take representative directed Morgan to an article that appeared in the Central New York Business Journal that quotes David Bellso as stating that the Make and Take Gourmet store in Cicero, New York expected that year to “generate annual revenue of $1.2 million to $1.5 million.”

After operating a year, Morgan has not begun to approach the revenue figures represented in the Revenue Projection nor earned anything close to $400 – $500 a day in sales of grab and go meals at her Make and Take Gourmet franchise.

What do you think?  Share a comment below.

Petland Chain Sued by Unhappy Franchisees

Over at franchise website FranchisePick.com (PETLAND: Who’s the Sick Puppy Here?), the 200-unit Petland franchised pet chain is under attack both from failed franchisees who allege they were victims of a scam, and animal rights groups claiming Petland is the largest supporter of inhumane puppy mills.  As to the first charge:

According to the Petland franchise website, when you become a Petland franchisee, “The Petland corporate staff has one focus: your success. From the president to the receptionist, everyone’s job is rooted in the support of the strategic partners.”

However, former Petland Inc. franchisees are suing the Ohio-based franchisor for fraud, alleging that the business model doesn’t work, that the stores are doomed from the start, and they sell them anyway.

As to the pet welfare charge:

The Humane Society of the United States tells a different story, claiming that Petland Inc. is “the nation’s largest retail supporter of puppy mills.”  On their website, they provide a video showing puppy mill cruelty and asking supporters to write to Petland to ask them to stop selling puppies altogether.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Slender Lady Founder Bruce Sharpe Has Died

UnhappyFranchisee.com has learned that the controversial founder (and former business partner of Cuppy’s Coffee founder Robert “Morg” Morgan) has died.

An email being circulated to friends, family and former associates reads:

For any of you who don’t yet know, Bruce Sharpe passed away from natural causes on December 1, 2008. He was happily living in Colombia.

He is much loved by many of us and he will be sorely missed by his many friends and family.

There are no plans for his service as of yet, but when we find out, we will pass the information along. If any one of you knows, please let the rest of us know. Thanks.

His son Larry is reportedly en route to Columbia to bring Mr. Sharpe’s body home to California.

*  *  *  *  *  *  *

Bruce Sharpe was a controversial figure in franchising.  He founded the Slender Lady Women’s Fitness chain as a head-to-head franchise competitor to Curves.  According to a 2003 article in the Sacramento Business Journal:

Founder Bruce Sharpe, who used to work for the Gold’s Gym chain, opened his first Slender Lady in California in the mid-’90s and started franchising in 1998. Thirty opened, but then growth stalled. [Robert "Morg"] Morgan and John Verdugo joined Sharpe as partners last year, invested $500,000 and restructured the company.

By 2005, IHRSA reported that Slender Lady had sold 350 franchises and opened 150 units in the U.S. and Canada.

However, the chain was soon beset with failed franchise units, franchisee lawsuits and allegations of fraud and breach of contract by the franchisor.  In April, 2005, The California Dept. of Corporations charged Slender Lady with making misrepresentations and omissions as to the level of training, assistance in marketing and advertising, Web site, and a commercial ad.

Based on the violations of California law, Corporations revoked the franchise registration of Slender Lady, issued a Desist and Refrain Order to CEO and founder Bruce Sharpe and his company to stop the offer and sales of unregistered franchises, and denied its application for renewal of franchise registration dated April 12, 2005.

What was left of Slender Lady was acquired by Healthy Inspirations in 2007.  Jim Rowe, former majority stockholder of Slender Lady, is CEO of Healthy Inspirations.