CHILDREN’S ORCHARD Suing Failed Franchise Owner

According to a story in the Detroit Free Press, Children’s Orchard is suing one of its Oklahoma franchisees for allegedly closing her store and reopening in a new location under a new name.

According to the Free Press article, the lawsuit, filed by Children’s Orchard in U.S. District Court in Detroit, alleges that franchisee Tiffany Thomas (formerly Tiffany Jaecke) and her then-husband Kent Jaecke, signed a  10-year franchise agreement in 2005 to operate a Children’s Orchard store in Oklahoma City.

The lawsuit claims that on July 14, 2010, just halfway through the agreement, the couple closed the Children’s Orchard store, moved to another location, and “clandestinely began operating the store under the name Upsy Daizy, in violation of a noncompete agreement.”

The Free Press states that Tiffany’s father also got dragged into this:  “Upsy Daisy [sic] is owned by Thomas’ father, Paul Overton Thomas, who was unavailable for comment. The lawsuit claims that Paul Thomas knew of the franchise agreement between his daughter and Children’s Orchard and intentionally interfered with that relationship by setting up a competing business.”  Paul Thomas is also named in the suit.

Happy Father’s Day, Paul.

Children’s Orchard alleges that the Oklahoma City franchisees failed to return confidential operating manuals, customer lists, records, files.  They claim that in opening Upsy Daizy, their franchisees violated their franchise agreement and a noncompete agreement, and stole trade secrets.  The lawsuit states:  “Defendants are using the Children’s Orchard Business System and Trade Secrets and are directly competing with the Children’s Orchard franchise system.”

Is Children’s Orchard Pushing Daizies?

Children’s Orchard is legally represented by COI CEO’s brother, Adam (Shaken, Not Stirred) Bond.

It will be interesting to see if Attorney Bond can keep a straight face as he explains the powerful, even magical, success secrets entrusted to Children’s Orchard franchisees upon their acceptance into the franchise’s elite ranks.  When Adam’s brother, Taylor Bond, took over, he proclaimed that he would grow the chain to 300 stores.

In the years that followed, Taylor Bond grew the chain from nearly 100 stores to just over 40 stores.

The brilliance of growing a chain by closing stores is a well-guarded trade secret to be sure.

A Blight in the Orchard.

As their comrades fell around them, disgruntled and failing franchisees formed an independent franchise association called The Orchard Cooperative.  Unable to get their concerns taken seriously by Taylor Bond and COI management, the Orchard Cooperative published a website detailing its complaints.  Chief among those complaints was the onerous Children’s Orchard franchise agreement that made it nearly impossible for franchisees to sell their stores.

In the Free Press article, Tiffany Thomas is quoted as saying “I tried to sell [her Children’s Orchard franchise] several times, but I couldn’t get anyone to sign the franchise agreement.”

According to Orchard Cooperative members, their concerns regarding the agreement, as well as operational and financial issues, fell on deaf ears.

And the stores kept closing…

Whoopsy Daizy!  Everybody Loses.

Of course, it’s likely the defendants will lose (or settle).  That inch-and-a-half thick franchise document Thomas and Jaecke signed 5 years ago was not drafted to allow franchisees to bail on their agreements and open under another name – no matter how bad the franchisor sucks.

And while putting the new company in a family member’s name may have seemed clever at the time, it just served to make  Dad – and his assets – an additional, brightly colored legal target.

But while the franchisees will likely lose, so will the franchisor.

Abraham Lincoln may have come up with the line “A house divided against itself cannot stand,” but Children’s Orchard deserves credit for providing living proof in the contemporary business world.

The irony is, it appears to be a great market for consignment and resales.  Children’s Orchard’s competitors (Once Upon a Child, especially) seem to be thriving while CO’s stores are slowly expiring.  Yet it seems that because the Children’s Orchard franchisor has failed to build a rapport, camaraderie and team approach to building the chain, its desperate franchisees are looking for ideas outside the organization – and their agreements – to get back in the game.

It turns out that Tiffany Thomas has extensive franchise development experience – she was a VP for Glamour Shots.  It’s unfortunate that Children’s Orchard wasn’t able to channel her experience, as well as the energy, creativity and finances she put into developing Upsy Daizy, into their chain or at least her own store.  But when a franchisor is inflexible, autocratic, dictatorial and/or nonresponsive, franchisees will seek other outlets for their entrepreneurial energy and drive.

And it’s unfortunate that Children’s Orchard will now devote time, energy and financial resources toward suing – rather than supporting – their desperate franchisees.

Related reading:

CHILDREN’S ORCHARD: Overview & Links

CHILDREN’S ORCHARD: CEO Taylor Bond Claims Franchisees Giving “Rave Reviews”

CHILDREN’S ORCHARD: May 2010 Press Release

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

CHILDREN’S ORCHARD: May 2010 Press Release

Children’s resale franchise Children’s Orchard is distributing the following press release. 

Reactions and comments regarding the release are invited here:

CHILDREN’S ORCHARD: CEO Taylor Bond Claims Franchisees Giving “Rave Reviews”

Read more about the (previously?) troubled franchise chain here:

CHILDREN’S ORCHARD: Overview & Links

“Nation’s First Children’s Resale Franchise Reveals Business Model for Future

“May 10, 2010 // Franchising.com // Ann Arbor, MI – The Children’s Orchard "store of the future" and refined franchise model has arrived, racking up increased sales and high marks from its core customer base of spending-conscious, Internet-savvy moms and their kids.

“As it celebrates its 30th anniversary, the children’s upscale-resale concept isn’t standing still. Larger stores, a reconfigured layout, and an emphasis on convenience and shopability are just part of Children’s Orchard’s commitment to meeting the needs of moms and their kids. On the heels of introducing no-appointment-needed Walk-In Buying (with the industry’s only 20 minute guarantee) and seasonal Tent Sales, in March 2010 Children’s Orchard rolled out its online store at www.childorchstore.com. The addition of these new elements to its business model, first tested at the company’s flagship location in Ann Arbor, Michigan, have helped to increase store inventories, boosted customer traffic and satisfaction, and resulted in an overall increase in store sales.

"’At 30 years of age, we are still the trailblazers of the upscale resale franchise concept,’ said Children’s Orchard CEO Taylor Bond. ‘We were the first franchise to offer quality, higher-end, gently-used clothing and other items for children, and we continue to lead the way. We’ve rolled out online programs that meet the needs of today’s techno moms, we’ve enhanced the process by which we buy clothes from customers, and we’ve improved efficiency of back-end operations. Customers and franchise owners alike are giving us rave reviews.’"

“As part of the evolution to a more sophisticated business model, Children’s Orchard has elevated the capital criteria for new franchise owners. ’We’ve raised the required net worth to reflect a new mindset: it’s not just about operating a store, but about building a business,’ Bond added.

“To meet the needs of today’s busy mom, Children’s Orchard’s new online store gives moms access to a variety of brand-new products, ranging from eco-friendly handbags to kids toys to software that helps parents monitor their children’s Internet usage. Unlike any other children’s resale store, each Children’s Orchard store’s website offers its customers the chance to preview items that have just arrived at their nearest location. They’re called ‘Just In! Listings’ and customers love them. The franchise has also secured marketing partnerships with such well-known ebrands as Net Nanny® and JumpStart®. In addition, Children’s Orchard has launched a Social Media campaign on Facebook, engaging its customers through a series of contests and giveaways, and also launched a recipe exchange website designed for today’s busy moms.

"’Over the last 30 years, we’ve grown a loyal, nationwide following of Children’s Orchard brand advocates. Most of our franchise owners came from this pool of devoted customers,’ Bond said. ‘And as Children’s Orchard® brings resale shopping into the next century, we’re attracting a greater number of business owners who see us not just for the quality products and services we provide, but for the sophisticated business model we offer.’

“About Children’s Orchard®
“Founded in 1980, Children’s Orchard is the nation’s first franchise of gently used and new name-brand children’s items. With over 50 franchise locations, each Children’s Orchard store buys and sells quality used and new brand name clothing, toys and accessories in an upscale retail environment. Children’s Orchard stores are designed to emphasize quality, value, comfort and commitment to the local community.

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CHILDREN’S ORCHARD: CEO Taylor Bond Claims Franchisees Giving “Rave Reviews”

Children’s Orchard CEO Taylor Bond claims, in a recent press release, that as it celebrates its 30th anniversary, his troubled company continues to be the leader and trailblazer of the “upscale resale franchise concept.”

He claims that his recent operational and franchise innovations “have helped to increase store inventories, boosted customer traffic and satisfaction, and resulted in an overall increase in store sales.”

Bond also claims the changes are attracting savvy prospective franchise owners: “we’re attracting a greater number of business owners who see us…for the sophisticated business model we offer.”

Taylor Bond states:  “Customers and franchise owners alike are giving us rave reviews.”

Are Children’s Orchard Franchise Owners Giving “Rave Reviews”?

If these claims are true, Children’s Orchard CEO Taylor Bond is engineering a turnaround that’s nothing short of amazing.

Just last year, disgruntled Children’s Orchard franchise owners launched the OrchardCooperative.org website to protest Taylor Bond’s management and franchise policies and practices. According to the site,

“Many franchisees—after years in the business—have yet to make a profit, and many are being forced to close shop. Under Mr. Bond’s leadership, the number of stores has declined steadily from 86 in 2004, to 77 in 2007, to 71 in 2008, and to 61 in 2009. A handful of others are expected to close their doors this year.”

Currently, the number of stores listed on the Children’s Orchard site is just 51, down from nearly one hundred at one time.  While Children’s Orchard stores have been closing, competitors seem to be thriving with similar concepts.

The statements and Taylor Bond quotes come from a 30th Anniversary press release (“Nation’s First Children’s Resale Franchise Reveals Business Model for Future”) issued by the company and posted on Franchising.com, Ann Arbor Biz and a handful of franchise blogs.  Here are excerpts from the press release outlining the improvements claimed by Children’s Orchard:

Children’s Orchard Operational Improvements

“Larger stores, a reconfigured layout, and an emphasis on convenience and shopability…”

“…no-appointment-needed Walk-In Buying (with the industry’s only 20 minute guarantee) and seasonal Tent Sales”

“…we’ve enhanced the process by which we buy clothes from customers, and we’ve improved efficiency of back-end operations. Customers and franchise owners alike are giving us rave reviews.”

“The addition of these new elements to its business model, first tested at the company’s flagship location in Ann Arbor, Michigan, have helped to increase store inventories, boosted customer traffic and satisfaction, and resulted in an overall increase in store sales”

Children’s Orchard Online Store

“in March 2010 Children’s Orchard rolled out its online store at www.childorchstore.com”

“Children’s Orchard’s new online store gives moms access to a variety of brand-new products, ranging from eco-friendly handbags to kids toys to software that helps parents monitor their children’s Internet usage.

“Unlike any other children’s resale store, each Children’s Orchard store’s website offers its customers the chance to preview items that have just arrived at their nearest location. They’re called “Just In! Listings” and customers love them.”

“The franchise has also secured marketing partnerships with such well-known ebrands as Net Nanny® and JumpStart®.

“In addition, Children’s Orchard has launched a Social Media campaign on Facebook, engaging its customers through a series of contests and giveaways, and also launched a recipe exchange website designed for today’s busy moms.

Children’s Orchard New Franchise Requirements

“As part of the evolution to a more sophisticated business model, Children’s Orchard has elevated the capital criteria for new franchise owners. ‘We’ve raised the required net worth to reflect a new mindset: it’s not just about operating a store, but about building a business,’ Bond added.”

“’Over the last 30 years, we’ve grown a loyal, nationwide following of Children’s Orchard brand advocates. Most of our franchise owners came from this pool of devoted customers,’ Bond said. ‘And as Children’s Orchard® brings resale shopping into the next century, we’re attracting a greater number of business owners who see us not just for the quality products and services we provide, but for the sophisticated business model we offer.’”

ARE YOU FAMILIAR WITH THE CHILDREN’S ORCHARD FRANCHISE?  WHAT DO YOU THINK?  ARE STORE SALES RISING? HAS TAYLOR BOND TURNED THINGS AROUND?  SHARE A COMMENT BELOW.

CHILDREN’S ORCHARD: Overview & Links

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