SPORT CLIPS Franchisee: Failed Owners Have Themselves to Blame

Not ALL the recent comments about the Sport Clips franchise have been negative.

One commenter, who claims to be an experienced franchise owner with three decades of experience, claims that Sport Clips is a great business model and that every one of the franchisee’s stores has been profitable.

According to the Worksforus, “operated PROPERLY, this concept is an easy winner.”  He/She states “Most people that fail need to look in the mirror and stop blaming others for their lack of business success.”

SportClipsThu 11/12/2009 11:17 AM  Worksforus wrote:

We are happy with our Sport Clips stores and wish we had gotten into the business sooner. We don’t agree with everything that happens at Corporate but it’s unrealistic to expect otherwise. No one gets along or agrees 100% of the time.

We’ve been involved with different franchises for nearly 30 years and find Sport Clips to be a great business model. We have yet to have a store not make money. Nothing is fool proof but operated PROPERLY, this concept is an easy winner.

Most people that fail need to look in the mirror and stop blaming others for their lack of business success. The tone of some of these commentors gives great insight into why they may have failed.

Of course, the lone positive comment of the month prompted a quick rebuttal.  Sat 11/14/2009 10:23 AM  Doesn’t Work for LOTS of people wrote:

You write: “We have yet to have a store not make money.”

What state are you in?

Have you talked to franchisees in Calif or any of the states in the south, whether it be Louisiana, Georgia, Florida?  The store average for the 140+ states in the southeast is barely $4,000 a week, for both service and retail.  These people are not making money.

You write: “Nothing is fool proof but operated PROPERLY, this concept is an easy winner.”

Are you aware of the corporate store in Jacksonville, Fla?  I have informatrion from a franchisee down there that this store has been opertaing as a corporate store for two years.  Surely SC is operating their own store properly?  After two years that store is averaging $3,300 and 230 customers?  Do you consider that a winner?

You write:  “The tone of some of these commentors gives great insight into why they may have failed.”

I followed the advice of some of these commentors and called lots and lots of former owners.  What I heard makes me think that you have it backwards.  The tone reflects not why they failed, but the fact that they were bullied by the franchisor, that they lost their life savings, and that the system fails many times in spite of how hard they worked.

ARE YOU FAMILIAR WITH THE SPORT CLIPS FRANCHISE? SHARE A COMMENT OR INSIGHT BELOW.

Contact UnhappyFranchisee.com

READ MORE ON SPORT CLIPS:

SPORT CLIPS Boasts Strong Franchise Rankings

SPORTS CLIPS: A Great Franchise? Read Recent Comments.

64 thoughts on “SPORT CLIPS Franchisee: Failed Owners Have Themselves to Blame

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  • November 19, 2009 at 7:37 am
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    I didn’t realize that the ostrich was a native animal in the Land of Lincoln.

    You have more than one store at $4,000 a week and you think you’re making money?

    Based on the information in the latest UFOC, for company stores at the low end (and none that they disclose are at 4K a week; they are higher), here are the expected expenses:
    Payroll at 50% is $2,000
    Rent at 21% is $840 (and rent and CAM is probably higher than that in IL) Advertising Fund is $300 (this is 7.5%. yikes!!) Royalty at 6% is 240 Training is $60.

    That’s total expenses of $3,440. Add in 10% expense for utilities, insurance, supplies, setting money aside for the annual convention, and you end up with a weekly operating profit of $160.

    Factor in that it costs you $200,000 to get the salon open and this is a financial disaster. Then factor in what you can sell this salon for when you get ready to exit. If revenues are $4,000 you will be very lucky to get $20,000 when you sell. That’s before you shell out for retrofit at transfer and the transfer fee of $5,000 in the UFOC.

    In short, operating stores at weekly sales of $4,000 and feeling good about it is burtying your head in the sand. “Very successful” at $4,000 a week? ROFLMAO.

    Regarding the Jacksonville store, the company knew the location and the history before they took it over. My source says it had higher weekly sales with the original owner, than after two years of corporate ownership. Maybe your area developer can shed some light on the situation?

    I called and listened to lots of former and current owners. It was an even split between those still in the system, and those who left. It is hard to speak with current owners though, since the UFOC gives out store numbers for them.

    People who ignore econmic reality and wear rose-colored glasses are destined to fail. Eespecially when they have their head buried in the sand.

  • November 19, 2009 at 7:39 am
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    You write: “The system works if you work the system. The team leaders didn’t excute the system.”

    As detailed in my previous posts, please explain why the store that Sports Clips has owned in Jacksonville, Fla for two years is only averaging $3,300 a week and 220 customers? Surely the corporation is working the system? Why would they not execute the system in a store they have owned for two years?

    There are 140+ stores in the southeast averaging barely $4,000 in sales a week. Are all of these owners not working the system?

    You write that you have pru\\urchased underperfroming stores and turned them around. Congratulations.

    You have a huge opportunity to purchase many stores in the southeast and California. I bet if you told your Area Developer to put the word out that you are in the market to buy stores for $20,000, take over the debt, and take over the lease, that you would be able to quickly acquire at least 50 more salons.

  • November 19, 2009 at 7:41 am
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    You are seriously not worth my efforts. Think what you will, say what you will, attack who you will. We are happy and successful and you are a miserable person with a horrible attitude. People like you fail throughout life and blame others. Good luck! I mean that because you NEED it!
    Sport Clips “works for us” and not for you. Fine, go away. Don’t attack me for being a success. Go and try to succeed somewhere else. Please.

  • November 19, 2009 at 7:59 am
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    So you invest 200K into a salon. You gross 4K a week. If you’re lucky you net 200 a week. After 5 years you have to spend 20K to retrofit the salon. After 10 years you can sell it for 20K: if you are lucky.

    Nobody in his right mind would invest in a CD with that return. At least with a CD you’d get your money back at the end.

    You may be happy.

    But you are not even remotely successful.

    Keep that head buried in the sand. From everything I have learned, being an ostrich with poor financial skills is what Sport Clips is looking for in their franchisees.

  • November 19, 2009 at 8:02 am
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    Is Sport Clips a Great Franchise? In my opinion, Yes!
    Sport Clips is no guarantee, but there are many successes to point to. As a multi-unit Team Leader I am happy to share the fact that my experience over the past 7 years with Sport Clips has been a blessing. After years of working for corporate America and never feeling like I was getting ahead, my wife and I were able to grow our Sport Clips business to a size that allowed me to leave that world. Together, we now oversee 10+ locations and employ over 100 team members across two states, all while raising 3 young boys.
    Easy? No. Rewarding- Absolutely!

    Is it always a bed of roses? Absolutely not. We have had dark days when payroll was tough to make, and the agony of losing what we considered to be key employees. There have even been days when I questioned whether we were making the right decision to even try and be in business for ourselves, versus the security of my “day job” as we referred to it.
    After seven years of working in,on, and at this thing called Sport Clips, I believe there are a few tangible characteristics, and equally a few “in-tangibles” required to give you a chance at success. Location, Manager, and Team are the key drivers to your success or demise in this business. I believe the biggest “in-tangible” is the culture that you ultimately create with your team based on trust and commitment to one another. And let us not forget the element of luck, albeit good or bad, which I believe exists in all we do.
    If you’re unfortunate and you end up with a bad location, often times a great manager and team can fix this, but again no guarantee. Equally if you have a great location, but a bad manager who can’t attract, train, and retain talented team members, then a struggle may be in your future. On top of all of this, if you as the Team Leader get into this business and think that all you have to do is open the store, then you are more than likely destined to fail.
    While I genuinely sympathize with those who have not found success as Sport Clips franchisees, I find it equally absurd that anyone would attempt to lay this at the feet of Gordon, Clete, or anyone else who works for the franchisor. The last time I checked, we as “franchisee’s” came looking for the business opportunity, did our due diligence, and ultimately decided whether we felt this was the right opportunity for us or not. At that point, Sport Clips then decided whether they felt we were equally a good fit for them as well. While I may not always agree with the decisions that are made by the Franchisor, I do respect the fact that they make those decisions with a goal towards making and retaining our brand as the best in the industry. Are they perfect? No, nor are we. Just men and women like you and I.
    A final thought to all that would consider Sport Clips as a business venture: When you’re evaluating various business models and industries to get into, the first thing you have to know going in, is that your odds of success are statistically stacked against you. Not my theory, the facts. With that notion in mind, many will turn towards “franchised” business models because the thinking here is that the Franchisor has already figured out all the difficult tasks and decisions that need to be made. In the Hair Care industry, what has impressed me the most is the level of detail that Sport Clips has gone to, to try and provide me as the franchisee with the blueprint for success. Is it fool proof? No. Can it fail? Yes. However, here are some cold hard facts that even the most disrespectful critics on this post cant challenge- On a report this past week, only 26% of the total stores opened for more than 1 full year were operating below $4500.00 in weekly sales. The other
    74% are not only operating at levels that meet or exceed break even, but in 2009 are averaging 7% year over year growth. I know, its only one week in the middle of November, however can that be said of anyone else in this industry or any other similar industry in these times? Additionally;
    – the avg. weekly sales for all stores opened 1 year or more is $5487 per week.
    – The avg. weekly sales of all stores opened more than 2 years is $5743 per week, and this number gets better with every year of operation
    – Over 150 individual franchisee’s own and operate 2+ Sport Clips locations. Fool me once…

    Bottom Line:
    This business is not rocket-science. Men and boys are getting their haircut on average about every 3-5 weeks, somewhere. The Sport Clips model is built around providing an environment that clients will enjoy, and a service that makes them want to come back. We personally have the great blessing and fortune of serving over 4,000 of them weekly.

    Is it a guarantee? Absolutely not. But give me an opportunity where almost 75% of the time I can be successful, and as my history has shown, I’ll do this time and time again. Thank you for the opportunity Sport Clips!

  • November 19, 2009 at 8:25 am
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    for any prospective owners out there. do not do this. you will loose everything. it is a scam and you will loose everything you put in / your sanity / and probably your marriage or relationship. you will be nothing but a patsy helping these scums build a brand and make royalties while you continue to borrow money to hold on. out of 650 stores i would wager that only 10% of them actually turn a profit and could prove it. this is wrong …these people need to be stopped. I am in my 3rd year of ownership and have lost everything.

  • November 19, 2009 at 2:24 pm
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    Isn’t it a shame that franchisors are NOT MANDATED by government to disclose the success/profitability of the franchise before they sell it to the public — in terms of unit performance of the system– that would then disclose the odds of profitability or lack of profitability to the prospective buyer of a franchise.

    Why should new buyers have to do their due diligence with other buyers, past and present, of the franchise system? Why is franchising treated uniquely under the law and the SELLER, the FRANCHISOR, who profits, is not required to disclose this material information, i.e. profitability and failure of founding franchisees to the prospective BUYER?

    Read about this flaw in government regulation that sets up marks for the franchisors in the Article “Franchise Regulation Realities — Deception or Patriotism” and look at http://thegreatfranchisingrobbery.blogspot.com.

  • November 19, 2009 at 3:17 pm
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    Here’s the real shame: People who want to go into business for themselves but won’t accept responsibility for their own decisions. Nobody put a gun to your head and made you go looking for a business. Nobody forced you to buy a franchise. I bet none of the whiners here even READ the agreements they were signing.

    Why are you whiners here instead of in court winning a big judgement? Because you signed franchise agreements you probably didn’t read, hoped for the best and now don’t want to abide by them.

    I bet if you were successful you’d be taking all the credit but since you failed and bought a loser franchise it’s all someone else’s fault. Maybe the government regulation should be not letting people start a business unless the agree not to whine when they go broke.

  • November 19, 2009 at 3:57 pm
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    Guest is partly right, but misses the point that it is impossible to perform adequate and effective due diligence on what is mandated to be disclosed under the FTC Rule and the State FDD’s. The disclosure document together with the “boilerplate” signed franchise contract does generally protect the franchisor from charges of fraudulent inducement/omission in the sale of the franchise.

    Robert Purvin indicated to the FTC in public comments ten years ago that the purpose of the regulation of franchising by the FTC was to protect the franchisors from fraud. (Available on this site under L&W franchise comments)

    Obviously, as Robert Purvin of the AAFD and Susan Kezios, and many other franchisee advocates have indicated to the FTC and to the Congress, the failure of the FTC to require that the franchisor, himself, disclose ANY unit historical financial performance statistics to new buyers is misleading by omission and constitutes a flaw in government regulation that hurts prospective franchisee who haven’t been provided material information on which to assess the risk of the investment.

    What, then, is the purpose of regulation? Apparently, the purpose of regulation is to protect franchisors and their franchisees who do thrive, like “guest,” from those who don’t thrive and believe that they were fraudulently induced to contract because the “material” risk in terms of unit historical performance of the system was not disclosed to them by the franchisor, who always profits, before they purchased the franchise.

    Perspective is everything! huh! http://thegreatfranchisingrobbery.blogspot.com

  • November 22, 2009 at 12:54 am
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    For a very few, this franchise works. For the majority of astute business leaders that look at it as an investment and a way out of the Corporate rat race, it is waste of money. Why? Because once your sucked in, your prior skills in marketing and operations will be thrown away by Gordo and his rules and idiot staff of minions.

    As someone who suffered in this system for years, lost $500K and is now back to running a Fortune 500 company, this is the worst investment in the history of franchises. The business model is adequate, the problem is the owner, the trained monkey staff and there is NO SUPPORT. Oh, and the pool of hairstylists that will work in these sweatshops. Talented stylists who are succesful would be absolutely dumber than dirt to work in a Sport Clips. Leave these places to the dope heads, crack whores and morons who will settle for $10 an hour.

  • November 22, 2009 at 12:56 pm
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    Updabutt states that “this franchise works for a very few.” But, of course, the franchise can be sold to new prospects without disclosing these odds to new buyers, and this is the “original sin” of Franchise Regulation by the FTC that misleads the new buyers of franchises. The original sin allows the franchisors to perpetuate themselves in the economy and to hide the failures from the new buyers of the franchise.

    The historical performance statistics available (not gathered by government itself since 1988) indicate that ANY small business, franchised or independent, has a 50% chance of failing sometime in the first five years, and only 29% survive as long as ten years. The franchisor, of course, has a better chance of beating these odds because he doesn’t bear the cost of the failure of the physical units in his system and can make it to “big business” status if he can churn some of the failures to new owners out the backdoor and always sell new franchises out the front door.

    There is cooperation between government and the special interests to hide the failure statistics from the Public because all involved, except the founding franchisees, have something to gain. It is really only the franchisee who is the resource of the franchisor who takes the hard fall, and all of the time the founding franchisee is trying to make it to break even, he is feeding the franchisor and the economy with cheap labor and providing cheap venture capital for his franchisor to grow the system into a really big business.

    Read “Franchise Regulation Realities — Deception or Patriotism” in a Google Search.

    http://thegreatfranchisingrobbery.blogspot.com/

  • December 9, 2009 at 1:38 pm
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    Apparently Logan has increased the costs to stay in his system by requiring owners to invest more in their stores. Any prospective owner should be sure to ask current owners about the return on investment from these additional costs.

    Logan also keeps touting store openings and tossing out projected store counts. It appears that he never learned to subtract.

    The abysmal renewal rate will only get worse based on the additional costs to renew and the additional costs that he imposes after renewal.

    My screen name says it all. Do LOTS of homework before sinking your life’s savings into this endeavor.

  • December 11, 2009 at 10:38 am
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    it speaks for itself when “area directors” are leaving the system and can’t even make their own stores work. Some of them apparently have a conscience and can no longer look people in the eye and lie to them about how this business will work and be something they can “build” for the “future”….it is all hogwash……It is absolutely wrong that Logan and his corporate robots lure good people into a system they know full well will not work ……people are losing hundreds of thousands of dollars on each store….this is madness…….and to the writer that asks why don’t we get a big judgement…….as more and more owners and former owners unite that may be possible with class action. You just can’t steal money from hundreds of people each year and get away with it long term

  • December 11, 2009 at 10:44 am
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    Jay…you are out of your mind and shame of you for trying to explain this madness away. Your numbers are from one week….give me a break…….how do you explain literally hundreds and hundreds of stores below break even….poor owners putting money back in month after month……owners NOT renewing licenses………..selling stores for pennies on the dollar…….or just walking away completely from the disaster…….shame on you for spewing your lies

  • December 12, 2009 at 3:36 pm
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    Clete Brewer is leaving Sports Clip. He invested over 2 million dollars in the company, but he’d rather lose that than have to keep bowing to the clown with the big hat, the bigger ego and not heart of a felon.

    The number of Presidents and Veeps who can’t work for the thief and liar Gordon Logan just keeps growing.

    It appears that Logan has in place the weakest “management” team in the history of the company, and that’s saying something.

    They have the core competencies that he craves: not an idea of their own, and they worship/fear him.

    Gordon Logan is the devil.

  • December 29, 2009 at 1:10 am
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    Interesting points from both sides. Unfortunately Jay is correct. He’s had a successful store or two. Every bad concept has a success or two or else it would be impossible to get the ball rolling and the franchise to grow.

    Sadly, many like me thought how great this concept was, how much sense the model made, then just when you’ve written the check, you realize there’s no way you’ll ever hit 350 clients per week by just working 10 hours a week in the 6 months they tell you. Working capital flies out the window and after 6 months you’re left scraping your HELOCs, selling your cars, and mortgaging anything you got left because everyone keeps telling you “after the 1st year, it really takes off”, ‘I mean, after the 2nd year, it just seems to click’ …wait, maybe it’s after the 3rd year, yea, that’s when you hit that next level and the profits really flow”.

    Well, just under 3 years later, I’ve barely hung onto my home, lost my car and came just days from losing my wife…all this while operating a store in the 5th largest economy in the world…and we’re getting no support.

    It was funny, the other day after I had started my 2nd job (3rd if you count Sport Clips) where I make solely commission…my first pay check was more money than I had made working 2 1/2 years at Sport Clips.

    I’ve gotten past anger now…like losing a loved one, eventually, you go through the phases of grief and I’ve now just remember the good moments with some great Team Members and laugh off my life’s savings I lost.

  • December 29, 2009 at 10:12 am
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    “Unfortunately Jay is correct”

    Say what? You’ve barely hung onto your home, lost your car and almost lost your wife, while getting no support…and Jay is correct??!! Seems like you lost your touch on reality.

    There is more than a grain of truth in Jay’s post. There are no guarantees in business. There are many factors that determine success or failure.

    I remember listening to Jay and his manager at the “huddle” when I was still in the system. I always considered Jay relatively “fair and balanced”, but he has a much different frame of reference than a huge portion of the owners because things are VERY different in Texas.
    Regarding laying things at the feet of Logan and Brewer: they have approved many locations that anyone with just a but of knowledge would know have minimal chance of success. This was all in the quest to open stores. At the last convention I attended, Logan predicted 1000 stores by the end of 2010. I understand that the net increase in store count in 2009 is barely forty, and that 700 is still many months away.

    They also much take responsibilty for the caliber of their staff, including keeping people on who provide no benefit, and the revolving door of veeps and presidents who don’t bow to every word from Logan. There is also the question of why there has been such turnover in the Area Developer ranks. And now Clete is walking away too!

    The major problem with your post relates to Jay’s “cold, hard facts.” These facts are for Texas. How about some facts from the southeast or California? Those two regions make up about one-third of the entire system, and the store results there are signifcantly worse than the numbers you post.

    As president of the franchisee advisory council, Jay probbaly has access to the reports for the SE and Calif. Please post those numbers for the same time frame. I can assure you that they will be the mirror image of what you posted. The minority will be over $4,500 a week. The average weekly sales for stores open a year or more will be at least $1,000 a week less. The stores open over 2 years will be significanlty short of $5,743 a week. In Fla, Georgia, and Ala there are very few stores that ever do $5,743 a week, let alone average that much.

    The cold, hard facts need to see the light of day. For the entire system. Not just for Texas.

    The fact that over 150 owners have 2 or more stores misses a signifcant point. Specifically, that until recently owners were required to license at least three stores. In the southeast and Calif, there are very few instances of people opening all the stores for which they bought liceenses. In fact, there are many people who never opened a single store.

    Other factors that point to problems are the number of stores closing: 13 in 2008, and that number will be exceeeded in 2009. Fla and Calif might have more closures than openings in 2009.

    In Texas, and a few other markets, Sport Clips is an opportunity. I am happy for the success of the folks who made it. But in much of the country and in many markets, this is most likely the path to financial ruin. Those are the cold, hard facts.

    “Jay is correct” ???

    Hardly.

  • December 29, 2009 at 5:34 pm
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    Unfortunately! it appears that franchisors can sell their franchises under cover of regulation that doesn’t require them to fully DISCLOSE the risk (the odds) of success or failure of new units that is known to the franchisor!

    This known flaw in Franchise Regulation is destroying many innocents who wouldn’t have invested their life savings and their time in these franchises if they knew the actual odds of survival and the odds of making a return on their investment (ROI).

    Try to understand how Item 20 of the UFOC/FDD is just an artifice to protect the franchisor, himself, from having to make disclosure to the new buyer of historical unit performance statistics. New buyers actually buy franchises from a SELLER (who will profit) who has made NO representations as to performance of the franchise in writing in either the UFOC/FDD or the actual contract.

    Prospective buyers are forced to try to perform due diligence by contacting the references provided in Item 20 and rely on these references when they make their decision to buy the franchise. The franchisor, therefore, is protected because he has made no performance claims in writing that you have relied upon to make the purchase, and because you can’t buy the franchise unless you agree that you are only relying on the written terms of the franchise. Catch 22!

    The lack of transparency of UNIT historical financial performance statistics of systems means that prospective franchisees invest without any idea of the odds of success or failure of the “founding” franchisees, and with no picture of how regional demographics, etc.. may impact the unit performance as to profitability and survivability of the franchise.

    These are the cold, hard, and brutal facts!

    Please read: “Franchise Regulation Realities — Deception or Patriotism” –“Buying a Franchise! The Great Franchise Hoax — a Business of Your Own?” and “Disadvantages of Buying a New Franchise” in a Google Search.

    http://thegreatfranchisingrobbery.blogspot.com/

  • December 30, 2009 at 9:29 pm
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    I concur that Sport Clips is a scam for Gordon Logan to build a personal empire on the retirement savings and college education funds of “duped” franchisees. People who invest in a franhise concept only do so with the expectation that they will be profitable because the concept has been market tested in their area. This is simply NOT the case with Sport Clips.

    Here are the hard, unembellished facts:

    1. Gordon Logan (Sport Clips CEO) is delusional and will not deal with the fact that the vast majority of stores are unprofitable.
    2. Sport Clips is in the business of selling franchises, NOT in the business of operating stores successfully. Their only marketing strategy is “give away a lot of free haircuts and maybe they’ll come back”.
    3. Sport Clips targets the least profitable half o the population – “males”. This is why all of the old style barber shops have been disappearing for the last 10 years. A male-only salon generally cannot turn a profit without the more expensive services purchased by women.
    4. Sport Clips blames franchisees who do not turn a profit for “not following their syste,”. This is complete B.S. The fact is that success is mostly determined by location, competition, and demographics. Haircutting is a commodity business with very low barriers to entry.
    5. In my humble opinion, if a franchise can’t demonstrate at least an 80% success rate and TEST each market they enter, they have no business soliciting their concept to the general public. Gordon Logan absolutely KNOWS that this is generally NOT a viable business model. Pointing to the few stores that turn a profit is not evidence of success if 90% or more are losing money. Sport Clips will not disclose financials for their portfolio of stores. Selling franchise licences is NOT a measure of success, profitability of individual units is!

    If you are thinking about investing in a Sport Clips, my advice is put your money back in your pocket, turn around, and RUN as fast as you can!

  • December 31, 2009 at 1:33 pm
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    Bent over says: “Sport Clips will not disclose financials for their portfolio of stores. Selling franchise licences is NOT a measure of success, profitability of individual units is!” Right On! But why did you bend over? Were you tricked by appearances and the constructive fraud of an adhesory sales contract (the franchise agreement) that was packaged with a government mandated disclosure document that didn’t disclose the “known” risk to you?

    But, of course, you now realize that Sport Clips IS LICENSED by the state and federal government to sell franchises without disclosing the “material” historical success/failure, profitability or lack of profitability of units within their system to new buyers of the franchise.

    The criteria for being a franchisor has been set very low by the regulators in order to encourage franchising in the economy. Protection from claims of fraudulent inducement by failed and failing franchisees is an inducement for the franchisors to try to franchise rather than “license” their “proven” business formats. Franchisors can achieve success if only 50% of their franchisees make it to break even (if they sell enough franchises) and they judge themselves, always, on the basis of their successful units, Franchisors can always sell new units because of the lack of transparency and are able to expand based on their ability to use the franchisee contracts (their portfolio) as collateral to borrow money to expand in new markets.

    Notice that government didn’t regulate “licensing” and only especially regulated “franchising” and franchisors in order to protect the franchisors from any claims by franchisees of fraudulent inducement to contract in the sales process. As indicated in the Article “Franchising Fraud – The Continuing Need for Reform” in the American Business Law Journal 01 Jan 2003, how can franchisees sue for fraudulent inducement when neither state nor federal law requires the franchisors to disclose material historical unit performance statistics of their systems to new buyers?

    Notice that under federal law (which is said to preempt state franchise laws) and some State franchise laws there is NO private right of action permitted even when the franchisor fails to disclose in compliance with the law. Apparently, only the State or the Federal government have the standing to sue the errant franchisor and this enables the government to protect the franchisors and their units who are thriving from those franchisees who have failed or who are failing and who believe that the franchise was misrepresented to them in the sales process.

    http://thegreatfranchisingrobbery.blogspot.com/

  • January 8, 2010 at 6:34 pm
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    Gosh I am a long term veteran franchisee of Sport Clips and I knew there were a “few” unhappy franchisees, but these complaints are funny! In my experience it has been a windfall of cash flow!
    I am in the Midwest, not Texas, and yes no one had heard of Sport Clips, and we had to create the buzz etc. about the franchise, but that is what you are supposed to do. If there are problems, the ADs sold franchises to people that were not prepared to work them. The ADs are under pressure to sell franchises as all franchise ADs are, very common and I agree that is a problem. Sorry to hear all the bad comments, but from our point of view, there is no business model we could have invested in with the kind of return we are getting in this economy, period Sorry to disappoint many of the people who posted and have lost money and I know you are out there, I sure wish it did not happen to you.Gordon did not pay me to say any of this, Gordon has never done me any favors, it is all business with him and yes I am sure he can be a bully, but the problem if you are not tough,the franchisees will run over you.

  • January 9, 2010 at 1:49 pm
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    Again! we see the conflict of interest between those who “win” with their franchise and those who lose but at least Jeff Guinn recognizes that “The ADs are under pressure to sell franchises as all franchise ADs are……” He sees the problem but he hasn’t suffered any loss because of the problem.

    The point is that franchises are sold as if there is very little risk, and without disclosing the risk of unprofitability and actual failure of units within the system as KNOWN to the franchisor who profits from the sale of the franchise even if the franchise eventually fails in a year or more. These MATERIAL facts are apparently not required to be disclosed to new buyers because of the subsidy of ineffective and captured regulatory policy.

    Why, if the franchises are profitable on average, do 90% of all franchisors pick up their option NOT to disclose “earnings claims” in Item 19 of the FDD to new buyers? Obviously, even when a franchise produces a low or fair-paying job for the owner and no actual profits, it is a way of earning a living for the investor. But, if the prospective franchisee invests in a startup and does nothing but lose money and becomes insolvent or is in danger of becoming insolvent if he/she continues to try to operate the business, this is a nightmare for the franchisee. Franchisees, on the bottom of the pyramid, do not reorganize to a better day when they suffer through a bankruptcy.

    Additionally, the standard franchise contract premeditates that franchisees will stand in place at breakeven or below if they can’t unload their business to another franchisee because of the “royalty damage” clauses that treat failure as “abandonment” of the business and a breach of contract for which the “failure fee” is immediately due upon the failure of the business and the closing of the doors.

    If the failing franchisee is able somehow to unload the business to another innocent, to avoid the “failure fee” – both the seller and the buyer (the “founding” franchisee and the new franchisee) will sign a release of liability to the franchisor for the sale when the franchisor approves the buyer to operate under the franchise agreement.

    If new buyers knew the ODDS of success or failure and the odds of actual profitability of the units within the system, as demonstrated by the unit performance statistics of the system, they would be investing with full knowledge of the risk of the investment and wouldn’t be so bitter at the outcome when they fail.

    Of course, if the actual risk, as known to the franchisor, were disclosed, the franchisor couldn’t sell as many franchises to produce gross sales upon which the franchisor always realizes profits — even as his franchisees are operating in the red! If the known risk were disclosed to new buyers, many would determine that the possible rewards of the investment could not justify the known risk of losing one’s life savings.

    The business model is exploitive and franchisors have been licensed by the government and inadequate and unfair regulation to lie, cheat, and steal, as necessary, to perpetuate themselves and THEIR businesses in the economy.

    Obviously, this unfair playing field for franchisees is justified as serving the public good.

    It is only NOW that the voices of dissent of franchisees are being heard on the Internet — thanks to Sean Kelly, Admin, who sponsors and pays to keep uncensored “Unhappy Franchisee.com” alive and well on the Internet. How can he afford to continue to do this if his advertisors (franchisors) leave him and there are no contributions to the Idea Farm?

    http://thegreatfranchisingrobbery.blogspot.com/ Articles: “Franchise Regulation Realities — Deception or Patriotism?” “Disadvantages of Buying a New Franchise” and “Franchise Disclosure Document –Beware of Red Herring”

  • January 10, 2010 at 9:19 pm
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    Again we see the rantings of Carol come out. Maybe if she had decided to look at a Sport Clips UFOC, she would have noticed that Sport Clips does put a Earnings Claim out there in their Item 19. In addition they do offer expenses related to their 11 corporate owned stores. In looking at these, someone investing a couple hundred thousands could determine the amount that they would need to cover their royalty and debt coverage. Some people weren’t meant to go into their own business. Makes me wonder how that person in the printing business is doing.

  • January 11, 2010 at 1:35 am
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    This personal character assassination is off topic. In spite of a team leader’s best efforts to”follow the system”, the concept of a male-only haircutting shop is simply NOT economically viable in dense retail areas oversaturated with cut-rate competitors or inappropriste demographics (approved by the SCI “real estate committee of course – what a joke). This CONSTANT conversation about “following the system” is simply a smokescreen to distract owners from the hard fact that the Sport Clips business model is simply NOT generally economically viable. THAT is the REAL issue. What makes team leaders angry is that both Gordy & Clete know the risk is MUCH higher than is implied in any document or communication. Stores that fail and change hands several times for pennies on the dollar don’t even show up anywhere as statistics that are visible in any to prospective franchisees.

  • January 11, 2010 at 5:23 pm
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    And these Press Releases aren’t Illegal earnings claims or performance claims under the FTC Rule governing franchising and advertising? —huh!

  • January 12, 2010 at 11:12 am
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    Jeff Guinn writes “…these complaints are funny!”

    Bravo. Nothing like a business broker with an “I got mine. Let them suffer. What do I care?” attitude. Your attempt to care in the remainder of your post is obviously fake.

    The most pathetic comment in the drivel from SCI is that they have a “rock solid management team.” This after another President has resigned. The people with “director” and/or “VP” on their SCI cards have one core competency: they never dare to cross Gordon Logan. How many prople with management talent have left? [None have stayed.]

    Regarding system results, it appears that both Great Clips and Supercuts had better years than SCI.

    In his post, the gleeful business broker Jeff Guinn notes that he is in the midwest, not Texas. Portions of the midwest are the second strongest region in the system, behind TX.

    Before I had had enough, I pulled together some facts regarding 10K stores. [That’s the only data available. SC not only doesn’t share system-wide data with prospects. The last thing they want is for franchisees to have access to much data.] While a store can do well without ever having a 10K week, it can’t do well when it averages 4K or less like many stores in the system. [

    When I gathered data, 70 stores had experienced 10K weeks. Almost 60 percent (41) of those were in TX. Mr. Guinn’s state had the next most with 5 10K stores. That is 27% of TX stores and 20% of Missouri stores who have hit 10K.

    There are 21 states with over 200 stores that have never had a 10K week. [Best guess is that some states have never even had a 9K week.] Cal has had one of it’s almost 50 stores hit 10K. Note that’s it’s hard to keep track of the number of stores in Cal as they are closing there almost as fast as they open. I heard that in Fla the stores are closing faster than they open.

    As for the often repeated “the system is the solution, just follow the system” there is one key question. SCI has operated a store in Jacksonville for over two years. People tell me that is still performing worse than when a “failed franchisee” ran it. It has averaged barely 3K a week in gross sales since SC took it over. Are they following the system in that store? If so, why is it bleeding so bad after so long?

    Facts are facts.

    BTW, my store was above average for my state and region. But it wasn’t providing a decent return on investment, and the future held nothing but expensive upgrades, an increase in fees to SCI upon renewal, and departure had pennies on the dollar.

    One question for Jeff Guinn. As a business broker, how about sharing some information on what Sport Clips stores outside of Texas have sold for?

  • January 13, 2010 at 11:15 am
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    Jeff Guinn: Are you a broker for Sports Clips? Or an area developer?

    I read a comment you made on the Entrepreneur site that read:

    “…I want to point out a few things to the readers. I am 21 year veteran business broker (so I have a little experience in business, but 0 experience in hair cutting) and we opened the 49th Sport Clips franchise in 2002 and 2 more in the next 5 years, all in a market of less than 100,000 people for a total of 3. We have been profitable in all three, 2 of the 3 in 3 months after opening.”

    In your 21 years as a business broker, have you ever come across the term “illegal earnings claim”?

    If you make these claims in public forums, I’d hate to see what kinds of promises you put on cocktail napkins.

  • January 14, 2010 at 7:22 pm
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    Sports Clipped, etc. Please refrain from ad hominem, personal attacks, especially against those who post under their real names. Attack the argument, not the arguer. Thanks.

    Also, if Jeff Guinn really is doing well, it would be valuable to know what he’s doing – or if it’s his market, lack of competition, operation, etc.

    Reading back through the comments, I can’t find a lot of explanation as to why these stores are failing, and why they might be profitable in some markets and not others. While many don’t like Gordan Logan, that doesn’t explain the failures.

    Is the men-only focus too limiting? Too low an average sale?
    Are the buildouts too expensive? Franchise fees, royalties, etc. too high?
    Not enough brand awareness, advertising?
    Why does it work in Texas?
    There are other men-only hair franchises (Bishops, Roosters, Knockouts). Are they all struggling, too?

  • January 15, 2010 at 1:27 pm
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    All indications are that success is driven by Location more than any other factor. This may be the physical location and visibility, or location in an area with limited competition. Ideally great visibility, great business neighbors, and limited competition. From what I hear about Columbia, MO there is limited competition.

    SC, and many people who post here, try to blame the franchisees for failure. That maybe a factor, but doesn’t explain the many stores that don’t succeed.

    The men only focus targets the market with the least amount of loyalty and at the low end of the average sale.

    The buildouts are much too expensive. Guys like the TVs and the absence of chemicals, but they could care less about many of the costly SC elements.

    Regarding the fees, the Ad Fund is a costly blackhole. I never talked to a single franchisee who thought it was used well. I hear that they really don’t like what is happening with it now. Plus Logan attempted to increase the fee even though the franchise agreement didn’t provide for an increase.

    In the majority of markets there is no brand awareness. A former VP pushed for marketing analysis which proved that there was a manjor problem with branding and advertising. Logan fired him for trying to make things better by focusing on the problem.

    Yes, the other mens only franchises are struggling.

    The push from SC has been to open more stores. They have not focused on making existing stores successful. In fact, they don’t seem to care that the number of closures is increasing. There has also been a focus on selling multiple units, even though the majority of the licenses don’t result in store openings.

    Cut through it all, and the problem rests with the founder. He should have stepped aside when Clete Brewer bought in. Now I understand that he has chased him off too.

    SC is in a death spiral. Logan needs to stop blaming and start fixing, or better yet, he needs to walk away and let a competent management team take charge.

  • February 11, 2010 at 12:17 pm
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    I am not suprised to read all of these negative posts. Blaming others for your failures and running to lawyers is the new American way.

    I am opening my third store with many more to follow because I worked hard and put the burden of being successful on myself not corporate. The truth is that all off these disgruntled franchisees thought they were buying an ATM with their investment, newsflash for all of you, that type of investment does not exist. You don’t turn on the sign and start making money, it takes hard work and dedication.

    I don’t agree with much of what corporate does and have had several clashes regarding: Nascar, training fees, incompetent mngt. and in the Illinois market cannibalism. But, I’m a free market capitalist with a superior work ethic to most of you and that is why I will continue to succeed whether I’m competing with great clips or another SportClips. I look forward to purchasing your stores for a song and bringing them to profitability.

    You hur t our brand, we want you out of the system, be gone. Perhaps most of you should enter corporate America where laziness and passing blame to others is rewarded. Leave SportClips to the real entrepreneurs.

  • February 12, 2010 at 7:53 am
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    Lots of anger from someone who claims to be a successful entreprenuer!!

    You wrote that people “thought they were buying an ATM with their investment.”

    They thought they were buying a business that required 10 hours a week of their time and would produce positive cashflow. That’s what SCI sells. In most cases that is NOT reality.

    You write that you have “superior work ethic to most of you.”

    You have absolutely no idea how hard some people have worked at this business only to lose hundreds of thousands of dollars.

    Anger and arrogance are not pretty.

    You write that you “look forward to purchasing your stores for a song and bringing them to profitability.” Send out a blanket e-mail and let all the owners know this. You’ll be deluged with folks eager to get out from under their financial burden. Since you’re from Illinois, maybe you should track down “worksforus” who seems to think that a 4K a week store is successful.

    You refer to “our brand.” That’s hilarious. There is NO SC brand.

    You say that “we want you out of the system.” Unless the “we” includes Gordon Logan, it doesn’t matter in the least. I heard that Clete was leaving. Without his moderating influence, Logan will really show what a bully he is. Logan just wants people who will buy MUDAs and open stores, and who will rollover at his every whim.

    Your funniest line is your last sentence.

    If you were even remotely a “real entrepreneur” you wouldn’t be boasting about opening more stores and paying more fees to SCI. You’d be building your own network of independent salons. You say you don’t agree with much of what corporate does, yet you want to open more locations? LOL.

  • February 21, 2010 at 2:09 am
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    What is wrong with Sport Clips business model????

  • March 3, 2010 at 2:49 pm
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    The company must be weak. I can’t believe they are from Texas.

  • March 9, 2010 at 12:54 am
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    I am such a loser!!!

    I bought into Sport Clips and finally started to make a real profit.
    If you really know Gordon then you probably know the rest of the story. Kill or be killed! He will take what he wants and nobody is left standing to tell the truth. Eventually somebody will find a way to speak up because they have nothing left to lose!

  • March 11, 2010 at 7:47 pm
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    Logan is a bully. He has no heart, and certainly not the heart of a champion.

    There is an e-mail account set up for former TLs, or those looking to deveope a course of action.

    It is @gmail.com.

    [del]

    [Editor’s note: We don’t publish email addresses or contact information in comments for several reasons. If you would like to have emails forwarded to you, contact unhappyfranchisee[at]gmail.com. You will have to provide proof of identity.]

  • March 13, 2010 at 2:34 pm
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    Hey Heart of a champion,
    I would like to see get the e-mail account, I was one of the first owners in Ca., lost lots and gave away my business. you wont see my store as failing in any perspectives. Sportclips got me, little support and no professionalism.
    I will try to get the e-mail.
    Matt E

  • March 15, 2010 at 9:18 pm
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    The Torrance, CA franchise has closed unceremoniously and I’m stuck with 5 haircuts left on a 6 haircut package. What a #@$%^&!@@# waste.

  • March 19, 2010 at 1:21 am
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    This company seems to be a real loser.

  • March 19, 2010 at 1:23 am
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    If this is true it is a shame.

  • April 23, 2010 at 12:20 am
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    The Dorchester Road Sports Clips location in SC is a joke! It’s ran by children who’s first priority is to party, then drink, then party! Then nitpick on the serious workers about miscellaneous BS that makes no difference to anyone or anything! The owner is NEVER around to manage the managers! This promotes the disarray! The salon manager calls in and has someone CLOCK HER IN when she not even present, isn’t this STEALING in a sense??? Turnover is at an all time high because the crappy management rolls straight down to the lowly stylist who tolerate the “manager” who also is: unable to communicate effectively (unless planning a trip to the beach), makes up and reinforces rules without telling THE STYLISTS, “holds grudges”, and flops around the salon like she (TONI) is queen of the universe. The lop-sided, sloppy management is indicative of the type of business that is run here. Truly a sad mess! Good job Sports Clips. You need to take a closer look at what’s going on. Train your managers on the proper way to interview potential stylist and avoid lawsuits by asking illegal questions…”Do you have children, How old are you…” this is basic business101 people. Sports Clips is a wonderful concept with mediocre managers. Step in, Evaluate, Get Feedback, DO SOMETHING!

  • August 19, 2010 at 6:22 pm
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    II worked for SportClips in San Diego doing marketing for new stores and to be honest, the concept is cool, but the what the upper franchise management fails to recognize a couple of things.

    1. Sports, like music differ in importance to the residence. My market Southern California is a huge extreme sports Mecca. We do love our local teams, but Nascar, and reruns of Sports Center not so much. It gives us the vibe that “This is the place I go when I wanna trim my mullet.” The stores need to effectively tailor the sports aspect of sports clips to the region…an not just huge commercial sports….think about it, men an boys haircuts, but they only show what 30+ guys or the absolute sports nut would watch. This doesn’t bridge over well to the different age groups. Maybe throw in one of those arcade basketball hoops machines for free….think about it….bridge the age gap….to better understand this concept go to the Ted Talk web site and Search : Connecting Tribes…..there is a good lecture on the dynamics of creating connections to different parties.

    2. The two main focuses of their marketing is neighborhood business park marketing, local sports ( Local Sports Franchise teams included ), and neighborhood events. So they have neighborhood business park marketing, and larger sports geared for the Men, and the local sport events/civic events to hook the boys, with the moms who would bring them in…..if you really want to break it down.

    Men: The inside is designed like the boys clothing section at JC Penny. No man feels like “This is a mans world” when they come in there……adding flat screen TV’s is not an easy way to fix that problem….just looks like a band-aid….and cut it out with the selling those impulse sports merchandise items….I wanna go to Blockbuster to rent a movie, but I wouldn’t go there to buy a DVD player.

    Boys: Who is the one that usually brings little boys to get their haircuts? Moms…a mom would rather go to Super Cuts because of the androgynous design, and they are less threatened because most of the women who cut hair their are look like a lil’ more hip version of a mom…and they cut great hair….in a SC franchise its either cute young women who don’t know a pair of scissors from a cell phone ( by the way moms hate these women), or old haggard women who are good at cutting hair but would make any successful white collar man turn and run since they are under the impression that SC is a Hooters for haircuts. ( I dare you to argue this point, I was told numerous times to put blond, more endowed women in the marketing print collateral )

    3. Take the ad fund and stop just doing coupons, giving out B.S. promo products, and local meet and greets. Spend some quality cash on a great and smart nation wide ad campaign( emphasis on smart )…check out an ad firm who specializes in small brands and turns them into rock stars. Named appropriately David & Goliath.

    I’ve seen your T.V. ad running…The whole, “We Know What Guys Want…BLAH BLAH BLAH…” It’s like a polished 1980’s beer commercial….if thats what you feel is your target ( 18-35 year old males ) study what Carl’s Jr. did….they have your same target market, but their ads are smart, and not some douchy dork fest.

    I have more, but I need to get back to work….seriously take these things into consideration…it isn’t some rant…its the main reason I left SC….your brand is doomed unless you address your branding and marketing issues. Your area developers aren’t the problem, its corporate’s disillusion about their brand.

    This first session was free….I’m sure SC San Diego area developer has my email if you actually wanna address these problems….you owe it to your franchise owners to address them.

  • August 20, 2010 at 8:30 am
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    How dare someone challenge Logan’s illusions of grandeur! How dare someone be critical of Logan’s marketing plan or store design! How dare you!

    If all the stores just did everything Logan’s Way, they would all be filthy rich. Well, at least Logan would be.

  • August 30, 2010 at 3:14 pm
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    I have been an Sport Clips franchise owner for a little over 5 years and own 4 stores. I am in the Houston market and all of my locations are very profitable. My slowest location averages over $6k weekly. I do not understand how this concept can fail if you really follow the system. I would consider the purchase of any location for Team Leaders that just want out, even if they are out of Texas. Quit complaining, take your losses and move on to something else. I truly believe I can take any location and make it profitable…

  • September 1, 2010 at 4:24 pm
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    Thank the Lord that my days at Sport Clips are in my rear view mirror.

    Robbie just had to be from Texas. TX seems to have the market cornered on arrogance, ignorance and blinders. Must have something to do with those belt buckles, boots and stetsons.

    Get some facts Robbie boy. Outside of your state there are indeed pockets of successful stores. There are also lots of stores that follow the system and struggle or fail.

    If you are serious about purchasing stores, I suggest that you start on each coast by contacting Area Developers in CA, GA, and FL. You could get a long list of owners who’d love to be like me, lots poorer and with SC as a lesson learned. Pennies on the dollar will get you a lot of stores.

  • October 19, 2010 at 9:35 am
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    I had heard on the street that there is at least on class action suit forming against these criminals……any word on how that is going…..they needed at least 35 franchisees to join in…………….there are apparently at least 2 attorney general offices looking into all the complaints pouring in about how only 10 % of stores even have positive cash flow……many folks have gone bankrupt and lost houses, etc………there has to be a way to bring these people down and make them pay for selling a defective business model and luring people in like they do……

  • October 19, 2010 at 1:10 pm
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    Getting 35 current and former franchisees to participate should be easy if the lawyers take the case on a contingency basis. If, however, the participants have to kick in any money, the chances are slim of putting together that size group since most former owners are broke.

    There is also the general release that Logan is having people sign not only when they manage to get out, but for almost any circumstance. Before long he’ll make people sign a general release before they go to Discovery Day. People who have signed this release probably can’t participate in a class action suit.

    If someone is serious about pulling together a group for a class action suit, they should start with the list of former owners in the UFOC.

    While many stores have closed and many continue to flounder, the 10% number isn’t a believeable figure based on the number of stores in Texas. There are also some pockets of profitable stores in a few cities outside TX.

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