CHAMPION CLEAN Using Bogus Franchise Statistics

Today’s award for bogus franchise survival statistics goes to… Champion Clean!

Sean Kelly wrote an article on bogus franchise survival rates (Lies, Damn Lies & Franchise Statistics) that said to beware of franchise companies using claims like this one (from the Champion Clean franchise website):

According to a Departement of Commerce study, most new independent businesses fail. The data indicates that only 43% of newly started businesses survive until their second anniversary and only 33% are still operating after 3 years. That means almost 70% of new businesses don’t make it through 3 years!

To minimize their risks, many consider purchasing a franchise opportunity – and the reasons are obvious. The same Commerce Department study showed 94% of franchise businesses were open after 2 years and 93% after 3 years.*

These franchise survival statistics are fraudulent and franchise marketers know it (or should).  These stats were publicly discredited in Congressional sub-committee hearings back in the late 1990s.  In 2005, International Franchise Association President Matt Shay issued a warning via a widely circulated letter and email to members which said:

…It has come to our attention that some IFA-member companies may be providing information about franchising that is long out of date and no longer presents an accurate picture of the sector.

Of particular concern is information claiming that the success rate of franchised establishments is much greater than that of independent small businesses.

Many years ago, the U.S. Department of Commerce conducted studies about franchising which presented such statistics. That information is no longer valid. The agency stopped conducting such studies in 1987.

We strongly urge you to remove any information from your Web site and published materials that make such a claim. The use of such data, in the absence of current research, could mislead prospective franchisees who are attempting to conduct responsible investigations….

Yet franchisors, brokers, franchise websites and other cloud merchants continue to sell the illusion of  franchising being a virtually risk-free way of being in business for yourself, but not by yourself.

How many life savings and homes are put at risk each year by trusting franchise owners who think they have all but eliminated the risk of business ownership by buying a franchise – any franchise?

How many franchise prospects also believe in the illusion that franchising is somehow regulated, and that some law enforcement agency, the FTC, or someone is preventing franchise sales creeps from telling blatant and public lies in order to part newbies from their hard-earned money?

How many millions of your tax dollars are repaying banks for the SBA-guaranteed loans the proceeds of which were paid to franchise charlatans who misdirected qualified prospects from legitimate franchise opportunities?

Maybe Champion Clean didn’t get the memo.

Maybe Champion Clean didn’t get the IFA memo.  Maybe they did and don’t care. Or maybe they hired a clueless and/or sleazy franchise marketing or web company.

Either way, I’d be real wary of franchise companies that want you to think you can’t fail… especially when so many others say they already have.  (See CHAMPION CLEAN: Is This Franchise a Rip-Off?)

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

If you represent a company discussed on Unhappy Franchisee and would like to provide a clarification or rebuttal, please contact us in confidence at unhappyfranchisee[at]gmail.com.

* Text & Chart: Champion Clean web site.

Anthony Reza Solhi: Predatory Scammer or Innocent Victim?

The company was still a good investment. If it had survived, it would have prospered.  Anthony Reza Solhi

According to numerous press reports and dozens of alleged victims, Anthony Reza Solhi is a predatory con man who preyed on the hopes and dreams of recent immigrants, drove a Porsche and bought a mansion with an indoor pool with their life savings.  According to the 2007 CTV.ca article Taking Your Dough:

According to dozens of families – mostly newcomers to Canada — Solhi took their life savings and left them with nothing but untold debt and empty bank accounts…

…Dozens of cases revealed he had been at this scheme for years – first as 3-for-1 Pizza and Wings, followed by Pizza One, Pizza Uno and Anthony’s Kitchen. It appears Solhi has been up to no-franchise good for nearly 10 years.

After police charged Solhi, in 2004, with 25 counts of fraud involving 3-for-1 Pizza, victims thought they would recover their losses. A year later, the government dropped the charges against Solhi in exchange for paying $500,000 to some of the franchisees… But many of Solhi’s victims haven’t seen a penny.

…After close to twenty unpaid civil judgments against Solhi, totaling more than $1 million, Solhi is still trying to sell franchises.

FranchisePick.Com reported on the Solhi controversy (The Latest U.S. Import: Franchise Fraud, Another Pizza Franchise Scam Victim comes Forward), as did Michael Webster’s THE BIZOP NEWS.  In fact, alleged victims of Reza Solhi maintain an entire website, Anthony’s Franchise Information, dedicated to negative news stories about the man they say scammed them.

But now Anthony Reza Solhi is fighting back.  Solhi has launched an aggressive blogging campaign to tell his side of the story:  That he is himself a victim of a predatory news media and misguided, unscrupulous franchisees.

Is Anthony Reza Solhi the REAL victim?

Solhi’s personal website, titled Ideas by Anthony Reza Solhi, begins with the statement that Solhi is owed a debt of gratitude for inventing the concept of delivering chicken wings with pizza:

Next time you enjoy a pizza and wings combo from the local delivery service, thank me! Anthony Solhi.

In 1989, I started a small pizza company in Toronto, Canada, called 3 for 1 Pizza and Wings, the first chain to offer both pizza and wings for home delivery. Within 14 years, that little company grew to a nation-wide franchise with outlets from coast to coast. Its growth rate was unprecedented in the pizza home delivery industry. Many of its menu innovations would be copied by competitors, both in Canada and in the U.S., altering the way we eat in North America. These are minor achievments but I remain proud of the innovations I’ve left to the pizza home delivery industry and even of my small contribution to America’s fast-food palette.

This is a personal Web site I maintain. It tells a little of my story and contains information about the history of 3 for 1 Pizza and Wings. I periodically update it with commentary on business and franchising issues and responses to specific claims made with respect to 3 for 1 Pizza and Wings.

Reza Solhi’s blog contains his autobiographical account of how he, through hard work and innovation, built the fastest growing pizza chain in North America. 

It also tells how the rapid collapse of his enterprise, as well as criminal and civil charges, were the result of many factors, none of them directly attributable to him.

In his section The Fall of 3 for 1 Pizza & Wings, Solhi blames his franchise department for picking bad franchisees:

With the company growing so fast, I was unable to remain involved in selecting franchises. That critical task was left in the hands of our franchising department. Unfortunately, with this change, the company started bringing in, not pizza-makers, but trouble makers.

The foolish franchisees went to the press with their complaints, a decision which eventually toppled the company.  Writes Solhi:

As our company’s first decade in business came to a close, we found ourselves embroiled in an internal dispute sparked by company efforts to reduce employee theft (the food industry’s biggest cause of lost revenue). The disgruntled franchisees took their complaints to the press, and this became our first encounter with bad publicity. The Toronto Sun featured the dispute in a series of articles that were sympathetic to the franchisee cause, and which portrayed the company’s executive branch as being of questionable character. ..

Bad press hurts not just home office but every single hard-working franchisee affiliated with the company.

These first stories put an end to our efforts to expand into the U.S. and dried up much of the interest we had from prospective buyers in Canada…

As short-sighted franchisees began demanding their money back, Anthony Reza Solhi likened himself to George Bailey in It’s a Wonderful Life.

Anyone who has ever watched George Baily defend the New Bedford Building & Loan Association knows what happens when investors suddenly get it in their heads to demand their money back.

On a separate blog (Anthony Reza Solhi’s WordPress Blog) Solhi claims he is also being victimized by vindictive, extortionist franchisees who threatened to ruin him if he did not pay them off.  Writes Solhi:

For two years or more, I have been the victim of an Internet-based effort intended to ruin my reputation and destroy my capacity to earn a living. One man, Gautam Malik (together with his wife, Nidhi Malik) has been the principle force behind this relentless attack… Sitting in my office, they told me in the most serious tone, that I would either refund their money or they would see to it that I was financially ruined. I remember their words to this day; “You better pay back our money or we will ruin your life and your business.”

…It is not enough for them that the company I loved and nurtured was destroyed and that I lost my fortune, my home, and my family; the Maliks are still unsatisfied. Four years after the Maliks came to see me that day, Gautam Malik and Nidhi Malik continue to pursue their personal vendetta against me.

ARE YOU FAMILIAR WITH ANTHONY REZA SOLHI?  WHAT DO YOU THINK?  IS HE A PREDATORY CON MAN OR A VICTIMIZED & MISUNDERSTOOD VISIONARY?

graphics source:  Ideas by Anthony Reza Solhi

RICKY’S CANDY: Message from Donald William Cheng

Donald William Cheng has taken over the role of President of the once-promising & now-troubled Ricky’s Candy Cones and Chaos franchise chain.  Cheng, a real estate broker, left a series of messages (see below) on UnhappyFranchisee.com for his few remaining franchisees and former franchisees (some of whom are suing the franchisor).  In his messages, Cheng announced that founder Rick Barber is no longer involved with day-to-day operations, that he’s temporarily halted franchise sales and has hired a General Counsel to help resolve disputes.

The announcement is a sharp contrast to what was stated in a grammatically challenged press release posted just last month.  In the release, posted on Bison.com, stated Cheng was embarking on a new franchising initiative for the franchised retail candy chain.

Ricky’s Candy, Cones & Chaos press release June 7, 2009:

Rickys Candy Cones and Chaos, the premiere Franchise for bulk candy and Ice Cream has brung on a new president.  Donald William Cheng will be taking the helm of this new and fast growing franchise and moving operations headquarters to New York City.

A new Franchise growth plan as well as a new focus on helping current franchisees will be implemented by Mr. Cheng.  Mr. Cheng is an experienced real estate developer and well known in the retail real estate world and has advised numerous Franchises including Nathan’s Famous, Shiseido, Chock Full of Nuts and was owner of the Shake-a-Paw puppy franchise in New Jersey.

The company is looking to start Franchising in New York City and has selected several locations including Times Square, Port Auhthority Bus Terminal, and other high traffic locations.

Donald William Cheng messages Sunday, July 19th, 2009 on UnhappyFranchisee.com:

Submitted on 2009/07/19 at 6:59am

Rickys Candy Cones and Chaos, including the Princeton Store is now run by Mr. Cheng. Mr. Cheng is an experienced corporate turnaround strategist and experienced in finance, marketing, real estate, and food service. Mr. Cheng came on board in May of 2009 and was appointed by the Board of the holding company to turn the Princeton Store around financially and the Franchise firm. Mr. Cheng’s former and current clients include Nathan’s Famous and large multinationals.

As current operating President, Mr. Cheng regrets to say that there are best of times and there are the worst of times. The current economy has impacted the fortunes of million of lives and the the Rickys chain has not fared well.

However, going going forward, the Ice cream, candy and food service business is still a stable business and I hope to make changes to the firm which will enable the future success of existing stores.

My background in construction and coupled with my mass media and food service skills will enable a faster and less expensive building out while providing a better investment for future franchisees.

In Regards to any questions about Rick Barber, he is out of the picture on day to day operating procedures.

In Regards to current litigation, a chief counsel is being brought on board to handle the complaints in a fair and equitable manner.

*  *  *  *  *

In Regards to the existing stores, we would like to reach out to the existing stores to come forward and talk about issues which may be of mutual benefit. However, I have been unable to get through to the franchisees and the owners are red bank, summit, and Oceanside.

We are planning some regional advertising on TV and would like to get the cooperation of the other existing stores.

*  *  *  *  *

Rickys Candy Cones and Chaos will not be selling any more franchises until current issues , problems and litigation with the holding company and Princeton stores and existing stores are resolved. We will continue to honor current franchise agreements in place. Many apologies to those that have suffered losses .

Regards

Donald William Cheng

This message from Donald William Cheng left the same day on Franchise Pick:

Rickys Candy Cones and Chaos is now run by Mr. Donald William Cheng as of May, 2009. The Princeton store is undergoing a restructuring and is out of bankruptcy. New changes are being effected to combat the changes in the business environment. The current economy has impacted the retail sector much more heavily than others.

The Ricky’s candy, cones and chaos model was heavily dependent on a robust economy where parents splurge on their children and friends. However, as the economy worsened, more people became budget conscious and retailers have to react by providing better value and Rickys did not adjust fast enough.

New management and marketing have been brought in to ensure that future partners and franchisees will be able to sustain a dip in the economy by providing long term financing and stronger financial management and brand management

Relevant Links:

Donald William Cheng – LinkedIn profile

Donald William Cheng bio

Shake-A-Paw trademark dispute

Shake-A-Paw franchise puppymill controversy prior to closing

RICKY’S CANDY, Cones & Chaos Franchise Update

Ricky’s Candy, Cones & Chaos Franchise

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

ACTIONCOACH: Brad Sugars Answers Criticism

He’s the target of much criticism on the web (see 100+ comments on ACTIONCOACH, BRAD SUGARS: Overview & Discussion), so ActionCoach founder & CEO Brad Sugars is promoting his Q&A format blog  “Ask Brad Sugars.”

In one Q&A, Brad Sugars directly addresses why he thinks he’s the subject of such harsh criticism on the web.  The text below reflects the entire question and excerpts of Brad Sugars answer.

You have some people who really don’t like you. Why do you think people are writing these things online about you? Regardless whether it is true or not, you have to think that there is something about you that really pisses people off.

As you go through life, it is impossible to be liked by everyone. The fact is, whenever you are exposed to a large number of people, there will be those who simply don’t like you…

*   *   *   *   *

There are always those who take shots at those who are getting results or who are achieving some sort of success… there are those who like to go after those who are higher profile or who are doing things that are being written or talked about… some simply would rather tear down others. After all, tearing down is a lot easier than building up.

*   *   *   *   *

My focus is to positively affect the lives and companies of those owners – some of whom are facing financial difficulties, marital problems, team issues or burn out simply because they don’t have good information or the right information to turn their companies around and build more profitable businesses and lives.

I’d rather focus on the positive of reversing the failure rates of businesses over the next ten years and putting a coach in every business. Those are the things that matter to me – no matter what other people say.

*   *   *   *   *

I know who I am and what I want to do in the business world, and if you don’t like it, then it is really your problem.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Related posts: 

ACTIONCOACH, BRAD SUGARS: Overview & Discussion

ACTIONCOACH: Franchise Unit Breakdown

ACTIONCOACH: CEO Vic Ciuffetelli Steps Down

CEREALITY: Do Some Franchisees DESERVE Unhappiness?

I love this.  This is genius. said Donny Deutsch, host of CNBC’s “The Big Idea”

The latest fast-food concept is so simple… how can it fail?  said Jerry Shriver of USA Today

…the silliest, most self-indulgently bad idea to have ever graced the Franchise Graveyard… Even college kids who’ve spent the last five years in a haze of beer, smoke and liberal arts could see what a truly stupid idea Cereality is. said Sean Kelly, author of FranchisePick.com

Cereality franchise owner Laila Fields went with the first two experts in this one. 

According to the San Jose Mercury News,

Laila Valdez Fields is so sure her quirky new cereal cafe will be a hit, she bet the house on it.  Literally.  A real estate agent, she persuaded her husband, a chiropractor, to sell their home to invest in the restaurant business.

FranchisePick.com, which has warned potential franchisees about the unviability of the Cereality concept, started a Cereality Franchise Dead Pool to bet on how quickly Fields would close… and lose her and her husband’s life savings.  The winner was Rob, who bet six months.

Cereality: Doomed idea sold to a clueless franchisee by an unscrupulous franchisor?

FranchisePick.com has steadily reported on the closings of Cereality cafe franchises and company stores since mid-2007.  The Evanston, IL Cereality flagship closed in less than 6 months.  A South Carolina franchise beat that with a record-setting failure in less than 3-months.  From locations on the PA Turnpike to JFK and Newark Airports to college locations at Penn State, University of Pennsylvania and Arizona to the Chicago Loop, every stand-alone Cereality location has failed and closed prematurely.

Yet multi-concept franchisor Kahala Cold Stone (also the franchisor of Cold Stone Creamery and others) seemingly had no problem collecting a franchise fee from Laila Valdez Fields and encouraging her to gamble her future on a losing bet.

And some franchise broker or sales person had no problem collecting a commission on what they must have known was going to be a tragic outcome for Fields.

And yet, can you really feel sorry for this franchisee?  Was it laziness that kept her from finding out about these earlier failures?  Was it self-delusion, or arrogance, that made her sure she would succeed where others (including the franchisor) had repeatedly failed?

Let’s face it, in the capitalist society of America, franchisors have the freedom to sell doomed, ill-conceived franchise concepts.

Clueless franchisees like Laila Valdez Fields have the freedom to buy them.

When you consider that bad decisions like this are often backed by taxpayer-funded SBA loans, it’s tough to have sympathy for either side.

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Photo credit:  More Madonna, Less Jesus blog.  Used by permission