Mobile Tool Franchise Guide: List of Calls (LOC)

Mobile Tool franchises typically provide franchisees with a “List of Calls.”

[Note:  This page is a work in progress.  Please feel free to suggest additions/corrections below.]

Matco Tools franchise FAQ states:  “Matco Tools gives new franchise owners a “List of Calls,” which contains at least 325 potential customer names and contact information. Each territory is identified by the District Business Manager through surveys and customer interviews. This helps eliminate time-consuming cold calls, while increasing productivity and sales… Each Matco Tools Franchise has their own territory and “List of Calls,” so you never have to worry about overlapping or competing with other franchise owners.”

Snap-on franchise website states:  “The very first day you start your new business, you will have an established list of calls with plenty of professional tool users within it. The list of calls each franchisee is assigned is an established, protected list that the franchisee visits each week. A solid foundation of existing and potential customers means you don’t have to wait for customers to come to you; they are expecting you to call on them.”

Mac Tools states:  “One of the best things about Mac Tools is that franchisees are given a ‘List of Calls’ containing at least 325 potential customer names and contact information. Each territory is identified by the Business Development Manager through surveys and customer interviews. This helps eliminate time-consuming cold calls, while increasing productivity and sales.”

Cornwell Tools website doesn’t mention a LOC, but states:  “…you will receive an area of responsibility with achievable sales potential that correlates to success… Geographic routes are assigned and surveyed by your District Manager for solid potential for new and repeat sales… Daily computerized printouts of customers at specific locations, their buying history, their potential needs, and their outstanding balances due are generated by special software available for Cornwell Dealers from an outside vendor.”

Here are some of the complaints alleged by Matco distributors and ex-distributors related to franchisees’ List of Calls (LOC).  The allegations are not necessarily true, but worthy of investigation for prospective franchisees:

- Some List of Calls do not provide enough sales potential for dbrs to be successful or even sustain the minimum purchase requirement

- Some LOCs contain outdated, inflated customer counts, closed shops & shops counted multiple times

- Some LOCs contain high percentages of lower-potential customers (lube shops, road techs, tire techs, older techs, students who can buy through corporate program, etc.)

- The number of potential customers in a LOC (325) is only guaranteed at signing.  That number will dwindle via attrition (shops closing, downsizing, etc.) and Matco is under no obligation to replace them.

- Some LOCs are geographically dispersed with unmanageable driving time and fuel costs.

- Distributors are forbidden to call on or sell to customers not on their LOC, even if customer requests them or is not being serviced

- Preferential treatment given to some distributors who are given leeway in calling on shops not on their LOC, others aren’t.

- Some claim Matco often prefers to put new or available customers on a LOC they can sell to a new franchisee rather than an existing distributor even if it is on their route or they are struggling

- Successful distributors had shops removed from their LOC to give to others, then were terminated when their sales declined below the minimum.

UnhappyFranchisee.com commenters provide this information and advice regarding Mobile Tool Franchise List of Calls (LOC) (If you have comments or corrections, leave them below):

Former Distr wrote:

Matco places emphasis on the List of Calls of at least 325 potential customers. One thing that may not be discussed or considered is ‘Quality’ of that list.

I have many customers that are in their 50′s and 60′s and their tool buying days are coming to a close. On the other end how many on the list are tire techs or lube techs that may never progress in the business?

Be aware of your potential customer base and their tool purchasing power, their income level, their desire to be a automotive or truck technician, many just need a job and have no desire to pursue a career in the industry. Others are truly pursuing a career.

Economic conditions vary across the country. Not sure how you can investigate it but are your customers credit worthy?

Analyze the shop on your list of calls in which these people work.

Is it just a small mom and pop shop, minimum wage/no benefits shop with a high turnover, or is it a High end progressive business, focused on quality, education and providing for future growth for their employees. These facts will help determine the quality and stability of your potential customer.

Be honest with yourself, out of the 325 potential customers, how many can afford to pay you to the terms necessary for you to survive the business. You need quality businesses with a low turnover rate.

Tommy Cheung wrote:

Signs to look out for:

-  overinflated head count, go to the shops listed and count the techs for yourself, do not include road techs that are never there, for example.

-  ask when you are given a shop in between distributors, and neither want goes to that shop, ask why?

-  check to see if you are going all over town, because the d.m. will try to find failed shops , just for headcount.

-  the d.m dosen’t visit every shop when doing a head count, some he will call and some he just copies from previous records.

Todd Allen Peterson:

Your Head Count will have close to the min. of 325 customers on your “List of Calls” Matco knows this is a low number because they want you to go out and establish more customers so they can start another guy on a route when they take them away from you. 325 customers in a none established route is a joke. I promise you will not be in the top of Matco Distributors unless you have around 500 min. to call on because the top guys every year have that many. If they say they only have 350 on their list of calls they are paper trailing some of their other accounts…

 

richard on November 27th, 2011 8:28 pm wrote:

i have seen…  other distributors were allowed to have customers, big spenders, in my area but we were told that we had an assigned area but i was told that we didnt have specific ares just a list of calls but i couldnt go in another distributors area to solicit from someone that he did not go to… there is too much greed and corruption going on here to even imagine for most people to comprehend… i have reported other distrubutors selling out from under me but it was okay because they were one of the good ol boys. you complain .they tell you to grow up. you try to play the way they play and its against the rules. its all bs…

 

Debbie*Lady Matco on November 30th, 2011 5:25 pm wrote:

Matco promised 325 potential customers.  NOT delivered – my List of Calls – is supposed to be certified mechanics that must purchase tools to do their jobs.  MY list is HIGHLY inflated and I have IN WRITING the proof to back it

guest2 on December 1st, 2011 2:18 am wrote:

I… drove my list of calls and reviewed all documents before signing and knew what I was getting onto. You still have to treat this as YOUR business and those distributors that do that do fine.

Former Distr on December 7th, 2011 10:17 am wrote:

I have my list of calls in front of me, the one that Matco will probably give to any prospective franchisee that is interested in my old route. The one that I provided to my Lawyer.

How can I service 80% of my route when

-3 shops, totaling 47 prospective customers are listed THREE times

-6 shops closed totaling 18 prospective customers

-employee counts are off by more than 20 people

- 6 shops were given to another distributor to call on – 26 prospective customers

PROSPECTIVE FRANCHISEE’s – DO NOT Trust the ‘List of Calls’. I don’t remember how much time you are given the list in advance of signing papers, but VISIT EACH AND EVERY SHOP ON THAT LIST PRIOR TO SIGNING!

In addition to the problems above, I had 3 shops on one road that REFUSED to allow Matco Tools in because of the previous Distributor.

Make sure you know how many in each shop actually buy tools. There is a difference between a ‘mechanic’ and a ‘tire tech’. Check for the number of ‘students’ working, they will not buy from you, they will buy through the Matco Tech Ed Program, that goes for Instructors too, I have three of those in my area, they also buy direct from the Tech Ed Program.

Relentless on December 8th, 2011 10:45 am

Wow! These statements imply that we have territories with our “List of Calls”. So we don’t have to Overlap. Very Interesting. Kind of implies you can call on shops as long as their in your territory.

Why would Matco tell you this to get you to sign and go to training, then when your successful come to you and make you give up the shops you established with your DM. My RM told me they were unsecured and I didn’t have a territory I had a “List of Calls” and if I didn’t comply “Yes” I could be terminated.

By the way this Distributors route was laid right over the top of me since I had established the shops and not gone off my route. Kind of contradicts the above statement. Don’t you think?

Former Distr on December 14th, 2011 11:47 am

The whole basis of your potential business is that List of Calls, and they neglect to even know if it is valid. I have written proof that it is a ‘fabricated’ list, and that no one ever personally visited the ‘calls’ to verify they were in fact even a business at that location.  This is fraud that goes all the way to the top.

Bob Tremblay on December 16th, 2011 7:40 pm

I became a Matco distributor in 2007. when seeding my route with my DM I found shops that were not on my list of calls a couple were not being serviced and he stated I could service them and he would add them to my list of calls. several other ones belonged to another Distributor.

when I finally got into my route I found out several of my shops here taken away from a couple other distributors. This did not make them happy and made it difficult for me to do business with them.  I also found out that my route was made up from a distributor that matco had terminated. he had 3 routes then downsized and went back to 1 route keeping the best shops. The portion of the route I received was the portion that he found to be unprofitable and wouldn’t service any more. Thats why Matco terminated him.

Debbie Solko on 2011/12/30 at 3:02 pm wrote:

Economic conditions of a area MUST be considered! Regardless of the stories otherwise, one MUST consider the reality of the buying ability of their potential customers. Research the average income of your prospective techs. As simple as a phone call or looking in the Want Ads If the local shop is only offering $10 – $12 hour and it I’d FLAT rate- How much will REALLY be left for these guys to buy tools ?? I know guys that simply can’t afford a $25 weekly payment Hell that is $100 bucks a month! Then there are the techs on a LOC that are seasoned veterans, they have a lot and NEED LITTLE! Ask yourself can you really get 200 of the guys that make so little to spend $25 week, every week?

Former WI Distributor on 2012/01/01 at 4:07 pm wrote:

I was with Matco for over 8 years and forced out due to low purchase average. After losing 15 – 20 shops in my territory I could not keep up with the economic downturn. After asking multiple times for an expansion to my route since the one next to me was vacant…I was shot down. My customer count (True) was in the area of 200-225. The new distributor now has both routes. I had to call on vacant areas 20 miles way to keep my TP going. My first 5 years were the best but when I started losing shops and asked for help I was thrown to the curb. Now after losing over $150k, Im determined to follow through with this lawsuit.

Matco has many fraudulent ways of doing business with all the risk on the Distributor…

[Note: This page is a work in progress. Please feel free to suggest additions/corrections below.]

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JAN-PRO: Is JAN-PRO Franchise a Scam?

Have you had any experience with the Jan-Pro franchise (or similar company)?  Please share a comment below.

 
Jan-Pro is a commercial cleaning company that claims to be Entrepreneur magazine’s #1 Fastest Growing Franchise in 2008 & 2009. According to Entrepreneur, there are currently more than 8100 Jan-Pro franchises in the U.S.  The franchise investment ranges from $3,300 to $54,300.

 
According to the Jan-Pro website, “The JAN-PRO® Franchise System is structured around the Master Franchise Concept. This concept takes advantage of a decentralized structure where each Master Franchise Owner acts as the Regional Franchisor in their exclusive market.”

 
So, Jan-Pro “Master” franchisees sell “Unit” franchises and support the “Unit” franchisees in their territories.  “Unit Franchisees” do the actual cleaning of buildings, and are supplied with cleaning jobs from their Master.  According to JAN-PRO “Unit franchisees are assigned their first customers once they have completed training. JAN-PRO® staff will be there to provide assistance every step of the way, designing a complete work schedule and teaching how to complete each task in a proper and timely manner.”

 
According to the JAN-PRO® website:

 

When you become a Unit Franchisee with JAN-PRO, you will enjoy:

-  Support from your regional master franchise office.

-  A steady income stream. You’ll receive monthly income from the customers provided to you by your master franchise owner, without the expense of an accounting system and the worry of collecting the receivables.

-  The benefits of a recognized name. According to 2008 Entrepreneur Magazine, the #1 Fastest Growing Franchise overall.  Most building owners and managers prefer working with a larger company that has a good reputation, excellent references, and professional customer support and service.

-  Professional relations. Quality control, customer account inspections and customer support are provided by our specially trained technicians.

-  Unlimited growth potential. Additional customer accounts will be provided to build your business at a pace that meets your need

However, messages left by commenters alleging to be JAN-PRO unit franchisees claim that JAN-PRO Master Franchisees failed to provide the required cleaning jobs, and then refused to honor their guarantees.

 
Recently, Tryingtomake it wrote on ComplaintsBoard.com:

I purchased a franchise with Jan Pro in Northern New Jersey. I’ve been with them for almost a year. My husband had to go there and threaten them to get the first account. I had to hound them for months to get the second one. They keep giving me accounts where the people are pissed off and it takes us months to get them where we want them. They still have to give me one more account and I will hound them until they do.

 
By the way did I mention that even after you get all your account you will sill not make enough money because you WILL have to pay someone to help with the cleaning since they seem to bid extremely low so by the time you finish paying the royalty fees and your employees, you don’t have any money left to even buy yourself a soda. Personally I think its a scam. They most probably charge more to the client that what they led us to believe.

 
I have no one to blame but myself for not fully researching this before buying into it. Oh well live and learn. For anyone out there thinking on doing business with the Jan Pro in Northern New Jersey. Think twice. One lady took the manager and pinned him to the wall (she got her money back)

krussi wrote:

we purchased a franchise a little over one year ago. We received accounts from another franchisee as you state for people who are not happy. They are suppose to fill the franchise within 120 days according to our franchise agreement or return the franchise fee. After one year we only were half full.

We decided to enforce the 120 days and gave them notice, they say they offered us enough to fill the franchise, it our word against theirs, they will not return our franchise fee. As you stated the only way to make any money is to clean them all yourself. I too think this is a scam. They did not fill our accounts but we find out that the guy taking our accounts just bought his franchise two months ago; they cannot fill ours but take someone elses money.

Has anyone else out there taken them to Court and won? There was a case in 2004 Guzman vs. Jan Pro. I spoke with Guzman’s lawyer, I wish I would have researched more fully as well because Mr. Guzman had the same issues and he won. His lawyer told me to get out as fast as you can… I will pursue getting my money back, this is fraud.

WHAT DO YOU THINK? IS JAN-PRO A SCAM? DO EXPERIENCES VARY BY MASTER FRANCHISE TERRITORY? SHARE A COMMENT BELOW.

This post was originally published April 19, 2009.  Some comments were lossed due to computer error.  If you with to contact site admin, email UnhappyFranchisee[at]gmail.com.

N LYNN on April 26th, 2009 5:09 pm wrote:

We have an account we no longer wish to service – it doesn’t pay enough for all the work required.

We gave them notice that we would no longer be working that account, but they say we can’t quit it until they find someone to fill it. I don’t think they are trying very hard.

I don’t see anything about timeframes on our paperwork – how long do you think we are obligated to work this account?

guest on April 28th, 2009 11:20 am wrote:

I’m thinking about getting into this business. Can anyone comment on how well they are doing?

michael on April 29th, 2009 11:12 pm wrote:

if you need help let me know i can help i was hands on for so called jan pro

READ MORE ON JAN_PRO:

JAN-PRO Franchise Complaints  August 11, 2009

JAN-PRO: Janitorial Franchise Warning  October 14, 2009

JAN-PRO UnhappyFranchisee.com Responds to Jan-Pro Threat  December 27, 2011

JAN-PRO Threatens UnhappyFranchisee.com  December 27, 2011

Commercial Cleaning Franchises: 10 Reasons to NOT Buy One  February 25, 2010

FTC’s Janitorial Franchise Buyer’s Guide  October 14, 2009

MAC TOOLS Franchise Disclosure Document (FDD) 2011

MAC TOOLS FDD Franchise Disclosure Document (see downloadable FDD below) states that the division of Stanley Black & Decker has discontinued its tool distributorship program and is now offering the Mac Tools franchise opportunity instead.

This is notable, as a number of lawsuits have alleged that the Mac Tools distributorship was, in essence, technically a franchise all along, and that Mac Tools was violating state and federal laws by selling it as a distributorship.

According to the 2011 Mac Tools FDD (Franchise Disclosure Document):

“Mac Tools has manufactured products and offered distributorships for the mobile distribution of professional hand tools and equipment to professional mechanics for over 70 years. Until March 2007, Mac Tools offered its traditional tool distributorship in all states. The traditional Mac Tools distributorship is not a franchise, in that no franchise fee is required to be paid to Mac Tools. In March 2007, Mac Tools began offering franchises for Mac Tools Businesses within Kentucky, while continuing to offer its traditional distributorship in other states. In November 2011, Mac Tools began offering franchises for its Mac Tool Businesses in all states and ceased offering new non-franchised traditional distributorships. While Mac Tools no longer offers its traditional tool distributorship, niany existing distributors continue in operation.”
 Mac Tools FDD (pdf format):

 MAC TOOLS 2011 Franchise Disclosure Document

 

ARE YOU FAMILIAR WITH THE MAC TOOLS DISTRIBUTORSHIP OPPORTUNITY?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

To contact the author or site admin, email UnhappyFranchisee[at]gmail.com.
More on Mac Tools:

MAC TOOLS Lawsuit Documents: DEE C. WALTER v. MAC TOOLS, INC.  December 28, 2011

MAC TOOLS Lawsuit Alleges Fraud, Labor Violations  December 24, 2011

Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?  December 23, 2011

MAC TOOLS Guilty of Franchise Fraud?  November 7, 2011

MAC TOOLS Lawsuit Documents: DEE C. WALTER v. MAC TOOLS, INC.

Complaint & Jury Demand in the lawsuit DEE C. WALTER v. MAC TOOLS, INC., a Division of STANLEY : BLACK & DECKER, INC., Case 3:11-cv-01997, filed December 23, 2011 in Connecticut District Court, is posted in its entirety, including exhibits, below:

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF CONNECTICUT

__________________________________________

DEE C. WALTER

Plaintiff,

v.

MAC TOOLS, INC., a Division of STANLEY : BLACK & DECKER, INC.,

Defendant

__________________________________________

COMPLAINT AND JURY DEMAND

Plaintiff Dee C. Walter (“Plaintiff”), by and through his attorneys, Marks & Klein, LLP, for his Complaint as against Defendant Mac Tools, Inc., (“Mac” or “Mac Tools”), a division of Stanley Black & Decker, Inc., (“Stanley Black & Decker”) (collectively “Defendant”), allege and aver as follows:
NATURE OF THIS ACTION

1. This lawsuit arises from Defendant‟s willful failure to properly compensate Plaintiff, who is a former Mac Tools distributor, for certain warranty and repair work that Defendant requires all Mac Tools distributors to perform, in violation of the Fair Labor Standards Act 29 U.S.C. § 201 et. seq. (“FLSA”).

2. While Defendants have historically purported to sell “distributorships”, not franchises, Plaintiff did indeed purchase a franchise as defined by state and federal law.

3. Defendants have violated Federal Trade Commission (FTC) Rule 436, which requires a franchisor, such as Defendant, to provide a prospective investor/franchisee with 23

2. Items of information that is critically necessary for Plaintiff, or other potential franchisees, to fully evaluate the nature of the business investment being contemplated.

4. With regard to state-specific laws, Defendant violated Connecticut law, particularly the Connecticut Unfair Trade Practices Act (“CUTPA”), by, among other things, failing to provide Plaintiff the necessary Uniform Franchise Offering Circular (“UFOC”), before Plaintiff purchased his Mac Tool Distributorship, which in reality is a franchise.

Furthermore, since Plaintiff purchased a Mac Tools franchise, as opposed to a distributorship, Defendants also violated the Minnesota Franchise Act, by improperly terminating Plaintiff‟s franchise and not allowing him the necessary time to cure any alleged “defaults” Defendants allege Plaintiff had pursuant to his franchise agreement with Defendant.

5. As a result of Defendants‟ foregoing violations of state and federal law, Plaintiff seeks compensatory, punitive, statutory, and treble damages, as well as attorneys‟ fees and costs from Defendant.

Complaint & Jury Demand [pdf format]:
DEE C. WALTER v. MAC TOOLS, INC., Complaint

Exhibits:
DEE C. WALTER v. MAC TOOLS, INC., Complaint Exhibits

ARE YOU FAMILIAR WITH THE MAC TOOLS FRANCHISE OPPORTUNITY?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

To contact the author or site admin, email UnhappyFranchisee[at]gmail.com.

More on MAC TOOLS:

MAC TOOLS Lawsuit Alleges Fraud, Labor Violations  December 24, 2011

Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?  December 23, 2011

MAC TOOLS Guilty of Franchise Fraud?  November 7, 2011

JAN-PRO UnhappyFranchisee.com Responds to Jan-Pro Threat

Commercial cleaning franchise company Jan-Pro Franchising International sent a threatening email to UnhappyFranchisee.com.

(See JAN-PRO Threatens UnhappyFranchisee.com)

The letter, sent from Jan-Pro attorney Kathryn B. Shipe, alleged that UnhappyFranchisee.com was infringing of Jan-Pro’s registered trademark.

UnhappyFranchisee.com’s response follows:

12/27/11

Ms. Shipe:

Thanks for your “courtesy letter” regarding the single 240 x 120 pixel Jan-Pro logo that appeared on a single blog post on UnhappyFranchisee.com….

In regard to your objection to the use of the Jan-Pro logo on the UnhappyFranchisee.com website, please be advised that:

1. The right for bloggers and online publishers to use company logos is clearly protected under the Fair Use Doctrine.
2. The logo appeared on a blog post titled “JAN-PRO Franchise Complaints” that was accompanied by 600+ mostly negative comments about the Jan-Pro franchise program. If ever there were ever an “unlikelihood” of confusion, this would be it.
3. This logo was provided by Jan-Pro’s own public relations agency for use in online and print publication. Your client provides this logo publicly in a downloadable format in order to encourage its use by writers, publishers and bloggers.

Even though continued use of the Jan-Pro logo on UnhappyFranchisee.com is fully within our rights under the Fair Use Doctrine, as a courtesy we have taken the following steps:

1. We have replaced the offending logo with a graphic that states “We are NOT JAN-PRO”
2. We have placed the “We are NOT JAN-PRO” graphic in several key places on our website, including our home page.
3. We have published a prominent post that includes both your Cease & Desist Courtesy Letter as well as further clarification that UnhappyFranchisee.com is not affiliated with your client, JAN-PRO.
4. We will publish this response letter as well, to ensure that no likelihood of confusion between UnhappyFranchisee.com and your client could possibly exist.
5. We invite your client, JAN-PRO, to provide a statement, clarification, rebuttal or rebuttals to any and all of the views expressed by individual commenters on UnhappyFranchisee.com. We will publish your client’s rebuttal and clarification with the same or greater prominence as the views of the contains the individual commenters (whose views are not that of UnhappyFranchisee.com). Please extend this offer to your client on our behalf.

On a more philosophical note, it seems likely that an experienced attorney such as yourself would know that fair use of the Jan-Pro logo is entirely within our rights. We must assume that either 1) you believed that we are not aware of the legalities regarding freedom of speech on the Internet and thought we could be bullied, or 2) you were making contact as a first step for some further legal purpose.

Please be assured, in either event, that we are knowledgeable, resolute and outspoken when it comes to protecting the right to free speech, open discourse and transparency on the Internet. While we believe it is the right of each franchisee to share their experiences and their opinions, we also believe each franchisor has the right to dispute, rebut or disprove those opinions. We look forward to continuing to provide an open forum for both franchisees and franchisors, and hope your client will take us up on the invitation to participate in our forum.

ADMIN

UnhappyFranchisee.com

Statements or rebuttals are welcome and can be submitted to UnhappyFranchisee[at]gmail.com.

ARE YOU FAMILIAR WITH JAN-PRO FRANCHISING INTERNATIONAL?  FEEL FREE TO SHARE A COMMENT BELOW.

JAN-PRO Threatens UnhappyFranchisee.com

JAN-PRO Threatens UnhappyFranchisee.com

Read more

MAC TOOLS Lawsuit Alleges Fraud, Labor Violations

According to a lawsuit filed by Marks & Klein, LLP, Stanley Black & Decker-owned Mac Tools tricks individuals into becoming Mac Tools distributors/franchisees, then forces them to perform repairs, process returns, and become repo men on a regular basis for no compensation.

In doing so, Mac Tools violates the Fair Labor Standards Act (FLSA) and the Minnesota Fair Labor Standards Act (MFLSA), according to the lawsuit.

The complaint, filed on behalf of Dee C. Walter, a Minnesota Mac Tools distributor of 39 years, also alleges that Mac Tools fails to comply with federal and state franchise laws.

Mac Tools has maintained that its opportunity is a “distributorship” and not a franchise.

[See Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?]

[See  MAC TOOLS Guilty of Franchise Fraud?]

“MAC dictates… with an iron fist.”

Mac Tools markets its mobile tool distributor/franchise opportunity with an emphasis on the freedom and autonomy Mac Tools provides.

But the lawsuit filed by franchise attorney Jerry Marks tells a different story.

“Mac captures its ‘distributors’ with false promises, then dominates, controls, and exploits them,” the suit alleges.

“Mac aggressively dominates and controls the methods, details, and day-to-day business activities of the distributors to the detriment of the distributors and for the sole and exclusive purpose of inflating Mac’s sales and profits….”

In sharp contrast to the freedom promised in Mac Tools franchise ads, the suit states “Mac dictates every minute of a distributor’s day with an “iron fist.”

“…warranty repairman for no compensation”

According to the suit, Plaintiff Dee C. Walter would have never signed up with Mac Tools if they had disclosed that he’d have to do 10-15 hours of work per week without compensation:

This lawsuit arises from Defendant’s willful failure to properly compensate Plaintiff, who is a former Mac Tools distributor, for certain warranty and repair work that Defendant requires all Mac Tools distributors to perform, in violation of the Fair Labor Standards Act 29 U.S.C. § 201 et. seq. (“FLSA”)…

A significant requirement that the Distributor Agreement, as well as the preceding “Disclosure Document” failed to disclose was the fact that distributors would have to perform certain repair and warranty work on broken tools purchased by Mac customers….

Mac and Stanley willfully failed to disclose any of the repair work that a distributor must perform in both the Disclosure Agreement and the Distributor Agreement. Instead of properly disclosing this additional, material and significant obligation to Plaintiff and other distributors prior to their entry into the various agreements, Mac and Stanley instead thrust these obligations on unsuspecting distributors after they have already entered into the system.

Had these burdensome obligations originally been disclosed by Defendants, plaintiff would not have entered into the various agreements and the Mac franchise system….

Mac’s failure to disclose the numerous hours of warranty repair work that a distributor would have to perform each week, and Stanley failure to pay distributors a statutory mandated wage for the services performed constitutes an intentional fraud by omission and a violation of the Fair Labor Standards Act (FLSA).

The suit alleges that Mac Tools put an unfair burden on the longtime distributor:

Specifically, Mac required Plaintiff to repair or replace any broken items a customer may have had that were under warranty…

By way of example, Plaintiff was required to replace “stripped gears” in the heads of ratchet wrenches or replace defective tool chest drawer rails. Mac failed to compensate Plaintiff for the time he spent repairing this equipment…

Furthermore, Mac required Plaintiff to spend countless hours throughout each week packaging and returning broken warranty tools such as air guns, electronic diagnostic equipment, and floor jacks, without compensating Plaintiff for his time.

Additionally, Plaintiff incurred significant expenses in the hundreds of dollars on shipping charges returning warranty items to Mac, without Mac ever reimbursing Plaintiff…

Mac also required Plaintiff to spend countless hours per week repossessing equipment that Mac customers purchased directly from Mac, but could no longer afford to pay for. …

Plaintiff consistently spent between ten (10) and fifteen (15) hours a week performing these unpaid job requirements for Mac.”

For violations of the Fair Labor Standards Act (FSLA) and the Minnesota Fair Labor Standards Act (MFSLA), the Plaintiff is seeking “unpaid wages, liquidated damages, attorneys’ fees and costs of suit, prejudgement interest, and declaratory judgements that Plaintiff was acting as employees of Mac while performing any repair or warranty work entitling them to unpaid wages under the FSLA [and MFSLA].”

ARE YOU FAMILIAR WITH THE MAC TOOLS DISTRIBUTORSHIP OPPORTUNITY?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

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Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?

Law Firm Marks & Klein LLP, of Red Bank, NJ, has fired another salvo at MAC TOOLS, INC., a Division of Stanley: Black & Decker, Inc., with a lawsuit filed today in the United States District Court for the District of Connecticut (Case 3:11-cv-01997 Walter v. Mac Tools, Inc.).

The lawsuit was filed by Marks & Klein on behalf of Dee C. Walter, a Mac Tools distributor in Minnesota.

The lawsuit alleges that while the business opportunity is marketed by Mac Tools as a “distributorship,” it meets the state and federal legal definitions of a “franchise.”

In selling a franchise to Mr. Walter without providing the information, disclosures and review time required in the sale of a franchise, the suit contends that Mac Tools violated Federal Trade Commission (FTC) Rule 436.

The suit also contends that the illegal sale of a franchise to Mr. Walter (as well as Mac Tools’ subsequent termination of said franchise) violates state-specific laws, including the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Minnesota Franchise Act.

According to the suit, the lawsuit arose out of Mac Tools “willful failure to properly compensate” Mr. Walters for warranty and repair work required of all Mac Tools distributors.  Requiring services to be performed without compensation, as Mac Tools does, is a violation of the Fair Labor Standards Act 29 U.S.C. § 201 et. seq. (“FLSA”) the suit contends.

“As a result of Defendants ‘foregoing violations of state and federal law, Plaintiff seeks compensatory, punitive, statutory, and treble damages, as well as attorneys’ fees and costs from Defendant.

The Mac Tools Caution Flag is Out

The allegations that Mac Tools and Stanley Black & Decker are selling what amounts to an illegal franchise could have far-reaching consequences.

There are currently Mac Tools distributors in all 50 states.  If the allegations are proved correct, each distributor could claim they were sold an illegal franchise.

In October, 2011, a A federal judge has cleared the way for Marks & Klein, on behalf of the spouse of a former Mac Tools distributor, to proceed with fraud claims against the Mac Tools division of Stanley Black & Decker, Inc. in a New Jersey state court.  (Read MAC TOOLS Guilty of Franchise Fraud?)

In that suit, Marks & Klein contends that Mac Tools violated FTC (Federal Trade Commission) regulations by selling plaintiff Ms. Elba Maria Ceballo  and her husband a tool sales route as a “distributorship” when, in fact, it was an undisclosed “franchise.”

ARE YOU FAMILIAR WITH THE MAC TOOLS DISTRIBUTORSHIP OPPORTUNITY?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

To contact the author or site admin, email UnhappyFranchisee[at]gmail.com.

TRITON STONE GROUP Franchise Lawsuit: Someone’s Lying

Two prominent franchise owners of Triton Stone Group allege they were fraudulently induced into buying unprofitable, debt-ridden franchises, then were bullied by the franchisor to take on unsurmountable debt. 

The franchisor calls the claims “outrageous, ridiculous” and others claim the franchisees are the ones who are unreputable and dishonest.

Who’s lying?  Share your opinion below.

Did Triton Stone “Cook the Books”?

According to a story by David Wren of The Sun News, two prominent South Carolina franchise owners claim they were cheated out of millions of dollars by national granite and stone franchisor Triton Stone. 

Carroll “Tumpy” Campbell III (son of former S.C. Gov. Carroll Campbell Jr.) and John Cattano (former treasurer of the S.C. Republican Party) are accusing the Triton Stone Group officials of “extortion, fraud and ‘strong-arm tactics’”

The franchisees claim that the Triton Stone owners lied about the financial standing of two existing franchises that they sold them in Myrtle Beach and Charlotte, N.C. last year.

According to The Sun News:

The Triton Stone owners… forced Campbell and Cattano to pay millions more in debt that the two franchises had incurred before the sale took place, even though Campbell and Cattano were not obligated to take on any of the franchises’ prior liabilities, according to the lawsuit filed on Nov. 21 in circuit court in Conway.

Triton Stone “aggressively cooked the books” before the sale, the lawsuit states, then “exploited their newfound business leverage over the purchasers [Campbell and Cattano] to force, or try to force, the purchasers to pay millions of dollars in debts the purchasers did not owe.”

Among the allegations against Triton Stone Group:

“During the negotiations, the three Triton Stone representatives presented Campbell and Cattano with financial documents that appeared to show the Myrtle Beach and Charlotte locations ‘were a healthy, profitable business operation,’ according to the lawsuit.

“Campbell and Cattano agreed to purchase the franchises’ assets for $3 million – slightly less than what the financial documents indicated the assets were worth…

“Campbell and Cattano learned that Kessler had written about $600,000 in checks just days before the sale was completed…

“Vendors began depositing the checks written by Kessler on the now-empty [old] account, and the checks began bouncing,” the lawsuit states….

“When Campbell and Cattano confronted Kessler about the checks, Kessler told the two men that they now had to pay the bills or he would put them out of business, according to the lawsuit.

“By late July, Campbell and Cattano said, the forced debt payments were taking a serious toll on their ability to continue to do business. When they missed some of the payments Kessler and others told them to make, the lawsuit states, Triton Stone took control of a shipment of stone that was supposed to go to the Charlotte franchise and kept it sequestered at its Port of New Orleans entry point.

“Campbell and Cattano said they learned the annual profit for the two franchises was about $350,000 per year – less than half the amount Kessler and the others had claimed on financial documents.

“Finally, in late October and into November, the Myrtle Beach and Charlotte franchises could no longer pay its operating costs, debt service and the past-due bills…

“Campbell… and Cattano estimate they were stuck with about $4.4 million in old debt that they should not have had to pay in addition to overpaying for the two franchises by $1.7 million.

“Campbell and Cattano are alleging fraud, negligent misrepresentation, breach of contract, civil conspiracy and unfair trade practices against the Triton Stone defendants. The two men are seeking at least $10 million in actual and triple damages plus unspecified punitive damages. They also want a judge to declare that all the old debt they were saddled with belongs to the previous owners…

Or are the Triton Stone Franchisees’ Claims “Outrageous” & “Ridiculous”?

Triton Stone Group vehemently denies the allegations.  According to the Sun News:

Joshua Kessler, the managing director of Triton Stone Group, called the accusations “outrageous, ridiculous and unbacked” and said Triton Stone intends to file a countersuit.

“We operate with integrity and we are well respected, unlike some of the plaintiffs,” Kessler said, adding that Campbell and Cattano had “full access to our records, employees, our inventory and software. They did a private audit and they had numerous lenders do physical audits, so I was really floored to see these allegations in this lawsuit.”

Commenters on the original story question the integrity, honesty & motives of Carroll “Tumpy” Campbell III, John Cattano and their attorney.

Nick Borg wrote:

I have worked for Triton Stone and the brand owners for more than 9 years. I worked for both Mr. Kessler and then Mr. Campbell & Mr. Cattano after the sale. I was the General Manager of the store under both ownership groups and can tell you with certainty where the fraud lies. I left the company because I was frequently asked by Cattano to move inventory between stores (without a physical item moving between locations) so that he could borrow more from his lendors. Also redating invoice to make them seem more current to borrow off of them as well. Sounds like cooking the books, and fraud to me, but not on the part of Mr. Kessler, or Mr. Mathis… that was the John and Tumpy show.

TeamSucker wrote:

Maybe a publicity stunt as everyone I spoke to including Triton stone says they never got served. David Wren you should check on the Lawyer that filed the complaint seems to be a local Todd Kincannon and this according to an attorney I spoke with it seems this is a common practice for this amateur.

InvictaStones wrote:

I do not agree with this article AT ALL and I have done business with Triton Stone and Josh Kessler for many years!! They…  have been so nice to work with it is a shame these guys are messing with the name of such nice company I feel bad for all the good people with in the Triton stone organization and I also agree that John Cattano and Tumpy or Carroll Cambel has given us a lot of lies.

ARE YOU FAMILIAR WITH TRITON STONE GROUP & THE TRITON STONE FRANCHISE?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

To contact the author or site admin, email UnhappyFranchisee[at]gmail.com

THE UPS STORE Franchise Owners Lose MBE Lawsuit

In 2006, a group of approximately 200 franchisees of "The UPS Store" franchise, sued franchisor Mail Boxes Etc., Inc. ("MBE"), United Parcel Service (UPS) and other UPS subsidiaries, alleging that (among other things) “MBE and UPS made untrue

statements of material fact and omitted material facts from various communications made in connection with the offer and sale of the franchises and in connection with the conversion from the old franchise model to the new "The UPS Store" franchise model.”

The UPS Store franchisees claimed that after its $190 million acquisition of MBE in 2001, UPS coerced and induced MBE franchisees to re-brand to The UPS Store model through its Gold Shield program.

The district court granted summary judgment in favor of Mail Boxes Etc., Inc. and UPS on all counts

The franchisees appealed the summary judgement.

The US Court of Appeals, 9th Circuit, handed down its decision last week affirming that the UPS Store franchise owners failed to prove their case.

The court decision is posted below.

More on The UPS Store franchise:

THE UPS STORE Franchise Complaints  June 23, 2011

Failure Rates of the 10 Most Popular Franchises  April 26, 2010

UPS STORE, MAIL BOXES ETC. Franchisees File Class Action Suit  November 12, 2009

Are THE UPS STORE / MAIL BOXES ETC. Franchise Owners Happy?  August 10, 2009

THE UPS STORE: Overview  August 10, 2009

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SAMICA ENTERPRISES LLC v. MAIL BOXES ETC., INC.

SAMICA ENTERPRISES LLC, an Illinois Limited Liability Company; et al., Plaintiffs-Appellants,

v.

MAIL BOXES ETC., INC., a Delaware corporation; et al., Defendants-Appellees.

No. 10-55433.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 9, 2011 Pasadena, California.

Filed December 1, 2011.

Before: SCHROEDER, REINHARDT, and MURGUIA, Circuit Judges.

NOT FOR PUBLICATION

MEMORANDUM^*

Appellants, approximately 200 franchisees of "The UPS Store" franchise, sued franchisor Mail Boxes Etc., Inc. ("MBE"), United Parcel Service ("UPS"), and other UPS subsidiaries (collectively "Appellees"), alleging various state law claims. The district court granted summary judgment in favor of Appellees on all of them. Appellants timely appealed. We affirm.

Appellants brought claims under the California Franchise Investment Law ("CFIL") and common law fraud and misrepresentation, alleging that MBE and UPS made untrue statements of material fact and omitted material facts from various communications made in connection with the offer and sale of the franchises and in connection with the conversion from the old franchise model to the new "The UPS Store" franchise model. Reasonable reliance is required under Cal. Corp. Code § 31300, the CFIL section imposing liability for misrepresentations made in franchise documents, as it requires that the damages to the franchisee be "caused []by" the misrepresentations. See Mirkin v. Wasserman, 5 Cal.4th 1082, 1092 (Cal. 1993); Younan v. Equifax Inc., 169 Cal.Rptr. 478, 487 (Cal. Ct. App. 1980). Reasonable reliance is also required under Cal. Corp. Code § 31301, the CFIL section imposing liability for misrepresentations and omissions made in other communications related to the offer or sale of a franchise, as that section requires that the franchisee, "not knowing or having cause to believe that such statement was false or misleading," have "rel[ied] upon such statement." In a well-reasoned, but unpublished, district court opinion, Judge Margaret Morrow summarized the rule: CFIL "incorporate[s] the reasonable reliance requirement of the common law." California Bagel Co. v. American Bagel Co., 2000 WL 35798199, *1, *18-*21 (C.D. Cal. 2000) (unpublished). Finally, it is well established that reasonable reliance is an element of common law fraud and misrepresentation claims. See City of Industry v. City of Fillmore, 129 Cal.Rptr.3d 433, 450 (Cal. Ct. App. 2011); Wells Fargo Bank, N.A. v. FSI, Fin. Solutions, Inc., 127 Cal.Rptr.3d 589, 600 (Cal. Ct. App. 2011). Because Appellants have presented no evidence showing that they reasonably relied on any alleged untrue or misleading statement, Appellants’ CFIL and common law claims fail.¹

Appellants brought an additional CFIL claim under Cal. Corp. Code § 31125 for failure to register the amendment to the franchise agreement in connection with the California franchisees’ conversion from the old franchise model to the new "The UPS Store" franchise model. Appellees argued before the district court that the registration claim was barred by the one-year statute of limitations pursuant to Cal. Corp. Code § 31303. Appellants failed to address the statute of limitations bar before the district court and, specifically, failed to oppose Appellees’ motion for summary judgment that was based on the one-year provision. Moreover, Appellants did not address this argument in their opening brief before this court. Arguments not raised in opposition to summary judgment or in the opening brief before this court are waived. See One Indus., LLC v. Jim O’Neal Distrib., Inc., 578 F.3d 1154, 1158 (9th Cir. 2009) ("A party normally may not press an argument on appeal that it failed to raise in the district court."); Dream Games of Arizona, Inc. v. PC Onsite, 561 F.3d 983, 994-95 (9th Cir. 2009) ("We will not ordinarily consider matters on appeal that are not specifically and distinctly argued in appellant’s opening brief.") (internal quotation marks and citation omitted). Appellants therefore have waived any argument that their failure to register claim is not barred by the statute of limitations.

Appellants alleged that MBE breached its duty of "best efforts" under the franchise agreement to obtain incentives for franchisees. The undisputed facts establish that MBE engaged in several efforts to obtain improvements to incentives to franchisees but did so by means of oral persuasion. Appellants’ contention that attempting to obtain these same improvements by means of written requests was necessary to meet the best efforts requirement is without authority or merit. Therefore, summary judgment on this claim was proper.

Appellants alleged that UPS breached the implied covenant of good faith and fair dealing in failing to increase the prices set under the carrier agreement with the franchisees. The district court found that the implied covenant claim was preempted by the Federal Aviation Administration Authorization Act of 1994, which prohibits states from enacting or enforcing "a law, regulation, or other provision having the force and effect of law related to a price, route, or service of" carriers such as UPS. 49 U.S.C. § 14501(c)(1). Even if this claim was not preempted, however, it fails under state law. The implied covenant of good faith and fair dealing cannot be used to impose an affirmative duty to forbear enforcing the terms of the contract or to limit the ability of a party to do what is expressly authorized in the contract. See Storek & Storek, Inc. v. Citicorp Real Estate, Inc., 122 Cal.Rptr.2d 267, 277 (Cal. Ct. App. 2002). That is what Appellants wished to do here-to impose on UPS a duty to offer better prices and incentives than those dictated by the agreement. Therefore, even if not preempted, summary judgment on the duty of good faith and fair dealing claim was proper.

Appellants brought claims under the California Unfair Competition Law ("UCL"), alleging that MBE and UPS engaged in fraudulent, unfair and unlawful business practices. "Appellants’ claims under [the UCL] are governed by the `reasonable consumer’ test …. Under the reasonable consumer standard, Appellants must show that members of the public are likely to be deceived." Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008) (internal quotation marks omitted). Here, Appellants presented no evidence that a reasonable consumer would be deceived by the alleged fraudulent, unfair and unlawful business practices of MBE and UPS. Summary judgment on Appellants’ UCL claims was therefore proper.

Appellants argue that the district court erred in failing to apply other states’ "unwaivable" statutes, and in failing to apply Illinois law for franchisees with Illinois choice-of-law provisions in their franchise agreements. In addition, Appellants argue that the California choice-of-law provision, found in the majority of the franchise agreements, does not apply to pre-contract wrongs and that therefore the other states’ statutes applied. As to the first argument, the district court found that Appellants’ claims would fail even if the other states’ statutes applied. Appellants have failed to show why this conclusion was erroneous. As to the second argument, the franchise agreements with California choice-of-law provisions provided that the agreements would be "governed and construed under and in accordance with" California law, which covers all contract claims, including pre-contract wrongs. See Nedlloyd Lines B.V. v. Superior Court, 834 P.2d 1148, 1151-54 (Cal. 1992) (holding that the phrase "governed by" in a choice of law clause compels the "logical conclusion" that the parties "intended that law to apply to all disputes arising out of the transaction or relationship"). Therefore, the district court did not err in applying the law of California to all of franchisees’ claims.

The district court did not abuse its discretion in refusing to unseal the record. The district court found good cause to seal the record on Appellants’ initial motion. Appellants then failed to provide adequate justification for unsealing the record, and failed to follow Central District of California Local Rule 79-5:3 regarding motions to unseal. The refusal to grant the motion to unseal the record was not an abuse of discretion.

The district court considered all of Appellants’ arguments in opposition to Appellees’ motion for summary judgment at the time of the first and second order, and was not required to restate its findings in rejecting Appellants’ request for reconsideration of prior rulings.

The district court’s grant of summary judgment in favor of Appellees on all claims is therefore AFFIRMED.

Footnotes

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* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.

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1. Because we find that Appellants’ common law fraud and misrepresentation claims fail for lack of a showing of reasonable reliance, we need not decide whether the CFIL preempts these claims.

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