H&R Retail is a commercial brokerage firm that provides real estate services for such franchise clients as McDonalds, Whole Foods, Sports Authority, Staples, Target, Ross Dress for Less and even Chuck E. Cheese. We asked H&R Retail partners to clarify the company’s policies, professional ethics, and relationship with the controversial NY Bagel Café franchise.
(UnhappyFranchisee.Com) Last week, we asked H&R Retail about suspicions that the commercial real estate broker was (either intentionally or inadvertently) helping its controversial franchise client NY Bagel Cafe misrepresent the size, strength and success of its company to prospective franchisees and landlords.
When multiple requests for clarification were ignored by Brian Mitchell, the H&R Associate who represents NY Bagel Café and (we assume) its franchisees, we proceeded to publish our concerns without the benefit of their input:
H&R Retail partner, Geoffrey L. Mackler, Esq. then emailed us that “The facts in your blog post are inaccurate,” but said he did not have time to specify what those inaccuracies are.
So we have simplified our questions and invite H&R Retail to clarify its company’s policies, professional ethics, and relationship with the controversial NY Bagel Café franchise.
For an overview of NY Bagel Café issues, see: NY Bagel Café Franchise Scam Overview
5 Questions Regarding H&R Retail Ethics & Client Relationship Policies
1) If an H&R Retail leasing client has an 80% – 90% failure rate, would you recommend a change in leasing strategy?
Your client NY Bagel Café has had an estimated 30 retail franchise locations open and close in recent years.
Of the 9 locations still in operation, several have had multiple owners fail in those spots, and many current owners are struggling.
It appears that H&R Retail continues to recommend the same types of upscale strip center locations and unsustainable rents that have resulted in significant losses for prior franchise owners.
Isn’t H&R Retail helping to put NY Bagel Café franchise owners into spaces with a high likelihood of failure? (See NY BAGEL CAFÉ Franchise: How Many Have Closed? [UPDATED] and NY BAGEL CAFÉ Franchise Graveyard)
2) Is H&R truthful in its representations to leasing agents, associates and landlords about the size, strength and track record of its retail clients?
Your website states that NY Bagel Café has 30 locations open and 50 under development.
Yet the NY Bagel Café website lists only 9 locations open and 3 “coming soon.” NY Bagel Café CEO Joe Smith says they’ve never had that many stores open.
Your website uses the upscale Wesley Chapel, NC location to represent the NY Bagel Café concept.
Shouldn’t you show one of the 9 surviving stores, not one of the failed locations that ended in foreclosure?
3) Does H&R Retail represent clients who are violating state and federal laws?
A recent investigation by the Maryland Attorney General determined that the franchise disclosure document NY Bagel Café provides to prospective franchisees contains material misrepresentations and omissions, and does meet the requirements to offer or sell franchises under the FTC Franchise Rule. (See NY BAGEL CAFÉ Franchise Fraud Investigation by MD Attorney General)
Additionally, the investigation determined that NY Bagel Café violated the Maryland state registration and disclosure laws. Like Maryland, Virginia also requires registration and approval before a franchisor can legally offer and sell franchises there. As NY Bagel Café is not registered in Virginia (or any other state), the Commonwealth of Virginia State Corporation Commission is looking into suspected franchise locations H&R Retail sourced for NY Bagel Café, including space in Alexandria, VA and Vienna, VA.
4) Would H&R Retail allow a retail client to misrepresent H&R’s business relationship if it would help them sell more franchises?
We have received copies of emails from NY Bagel Café franchisees in which franchise salesman Dennis Mason repeatedly misrepresented H&R Associate Brian Mitchell as the company’s “Director of Real Estate” and the head of the NYB real estate department. NY Bagel Café not only doesn’t have a real estate department, they don’t appear to have a corporate office or staff.
5) Does H&R Retail represent retail concept that have a low likelihood of surviving the term of an average lease?
With a track record of failure in the same types of locations you are sourcing, no home office to support franchisees, potentially invalid franchise agreements with franchisees, and multiple legal investigations, is H&R Retail confident that the majority of deals it facilitates for NY Bagel Café franchisees won’t end in default, foreclosure or franchisee failures?
We have extended an invitation to H&R Retail to provide specific corrections, rebuttals, clarifications or updates, which we publish in conjunction with these blog posts.
ARE YOU FAMILIAR WITH H&R RETAIL, BRIAN MITCHELL, GEOFF MACKLER OR THE NY BAGEL CAFÉ FRANCHISE?
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