October 6, 2012
Tradebank franchise complaints include the company’s alleged failure to provide marketing and operational support, and alleged pre-sale misrepresentations about the size, strength, profitability and success of the Tradebank franchise system.
(UnhappyFranchisee.Com) Tradebank is a franchised barter brokerage business. Tradebank franchisees offer individual businesses the opportunity to convert their goods or services into “barter credits” or “trade dollars” recognized as currency within the Tradebank system. Tradebank members can then use those trade dollars to purchase good and services offered by other Tradebank members.
As an intermediary, Tradebank franchisees receive a commission on each trade transaction.
Tradebank claims it offers franchisees limitless financial potential.
Tradebank franchisee recruitment materials claim that the barter industry is exhibiting phenomenal growth, and its franchisees enjoy limitless financial potential:
Tradebank is your chance to be involved in a dynamic industry that is projected to grow at a phenomenal rate – over 500% in the next decade. This exponential growth is easy to understand. Barter is a business tool that can be used by virtually every business owner or professional – anyone who wants to conserve cash and increase profits. The market is basically limitless – and the same can be said for your financial potential.
However, a lawsuit filed by a Tradebank franchisee in July, 2012 (FLORIDA BARTER EXCHANGE, LLC, vs. TRADEBANK INTERNATIONAL, INC., and TRADEBANK INTERNATIONAL FRANCHISING CORPORATION) enumerate a number of serious allegations about the Tradebank franchise opportunity and its principals.
According to the lawsuit, Tradebank International, Inc. and Tradebank International Franchising Corporation made a number of representations and omissions to Florida Barter Exchange, Inc. which were materially false.
In the lawsuit (excerpts are in quotes), Florida Barter Exchange, Inc. alleges:
Tradebank has failed to provide a state-of-the-art online barter system
“TIFC [claimed it] would, throughout the duration of the agreements, maintain and upgrade a state-of-the-art, online 24/7 barter system for use by Plaintiff and others which would meet industry standards and be competitive with those systems used by Tradebank’s competitors- in fact, TIFC has not done so;”
Tradebank has failed to provide a four-color, monthly newsletter
“TIFC [claimed it] would, throughout the duration of the agreements, provide to Plaintiff and its customers a four-color monthly newsletter for their use – in fact, TIFC has not done so;”
Tradebank has failed to provide phone consultation as promised
“TIFC [claimed it] would, throughout the duration of the agreements, provide telephone service consultation during normal business hours- in fact, TIFC has not done so;”
Tradebank misrepresented the size and success of its brokerages
“TIFC [claimed it] had at least 70 full-time, successful, uniform Tradebank brokerage businesses located throughout the United States – in fact, there is little uniformity among the Tradebank brokerage businesses, and only a few are full-time, successful operations;”
Tradebank has failed to provide continuous, effective franchisee training
“TIFC [claimed it] would, throughout the duration of the agreements, provide continuous, effective training for franchisees and their brokers – in fact, TIFC has not done so;”
Tradebank has failed to provide promised marketing programs and materials
“TIFC [claimed it] would, throughout the duration of the agreements, provide updated, state-of-the-art website, technology, Mastercard partnership and marketing materials – in fact, TIFC has not done so;”
Tradebank has opened competing barter franchises within existing franchisee’s territories
“[Tradebank claimed it] would not sell other barter systems to customers within the franchise territories purchased by Plaintiff from Defendants – in fact, Defendants have sold other competing barter franchises and systems to others within the franchise territories acquired by Plaintiff from Defendants;”
Tradebank misrepresented the strength of the barter industry
“[Tradebank claimed franchisees] would be part one of the fastest growing, most dynamic industries in the world–the barter industry – in fact, the barter industry experiences very little growth and loses so many customers from year to year that it is difficult for the Tradebank brokerage businesses to increase sales and earn profits;
Tradebank lied about the ability to use trade dollars in Canada and Europe
“Tradebank [claimed] customers can easily use their trade dollars in Canada and Europe – in fact, such trade with Canada is prohibited, and conducting such trade in Europe is extremely difficult;
Tradebank lied about the size of its customer base
“[Tradebank claimed] Tradebank system has at least 12,000 customers – in fact, the actual number of active customers is far less than the number represented by Defendants;”
Tradebank lied about the success rate of franchises
“[Tradebank claimed] over 90% of franchised businesses in America are successful – in fact, the number of franchised businesses that succeed in America is much less than the number represented by Defendants;”
Tradebank is a stagnant or declining system
“[Tradebank claimed that] Tradebank is a financially sound, dynamic system with substantial growth; in fact, Tradebank is a stagnant or declining system; most of the money received by TIFC is siphoned off by Til and spent on numerous projects which are unsuccessful and have no value for Plaintiff and other Tradebank brokerage businesses – Defendants spend almost nothing on marketing the Tradebank system;”
Most Tradebank franchisees never achieve profitability
“Tradebank [represented that its] franchisees will begin earning money immediately from their franchise investment… – in fact, most Tradebank franchisees never even reach the breakeven point;”
Tradebank misrepresents working capital needed
Tradebank claimed that new franchisees “should not need more than $18,600 working capital to support the franchise until reaching the breakeven point… and substantially more working capital is required to support the Tradebank franchise business”
Tradebank fails to disclose legally required information to franchisees
“[Tradebank claimed that] the FTC did not require disclosure of any litigation or additional information regarding Defendants or their officers – in fact, Defendants failed to disclose that they have been involved in litigation over their franchises and trademarks and that the CFO of TIFC owned a Tradebank franchise which failed;”
Tradebank misrepresents the value of its franchises and average revenue per customer
“[Tradebank claimed that] Tradebank franchises are very valuable; each customer of the franchisee represents at least $1,000 of value of the franchised business – in fact, the Tradebank franchised businesses have much less value than represented…”
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