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iSold It Declares Franchise Concept Unproven
Submitted by Don Sniegowski on Fri, 2007/07/27 - 16:02.
Reporter's Note: Blue MauMau made arrangements for an interview via email with iSold It's CEO, Ken Sully. After receiving our questions, Mr. Sully declined the interview.
Regarding "redlined" UFOCs, Mark Leyes, Director of Communications for California's Department of Corporations, explains: "For the state of California, a redlined UFOC is a revised Uniform Franchise Offering Circular that the state requires because of pertinent material changes that affect the required disclosure of a franchise system. Words that are added are indicated with a line under them. Words that no longer apply are crossed out with a line." Nick Bibby, a franchise consultant with over 25 years of franchise experience, observes: "Until a system is proven, it has no business being franchised." He continues: "But I believe that most successful businesses can be systemized and made ready for franchising under the proper leadership." The International Franchise Association writes that one of the key elements of buying a franchise, as opposed to setting up one's own business, is that a franchise provides a proven concept. "A franchise increases your chances of business success because you are associating with proven products and methods." (Introduction to Franchising, IFA, pdf p.10) When asked why iSold It amended its UFOC, Robin Day Glenn, an attorney at franchiselawteam.com who represents the company, declined to comment, citing attorney-client privilege. Meanwhile, the troubled franchisor of eBay drop-off stores continues to sell franchises on its website (see above photo). Its newest franchise recently opened in Hesperia, California. iSoldit Revised UFOCSubmitted by michael webster on Fri, 2007/07/27 - 16:35.
Very good article, Don. Demonstrates that nobody reads UFOC's The transalation of the red-line revision is the following. "We are really worried that our collective a**es are going to sued off, so we thought we really ought to disclose what piece of c**p this system is, and probably will be for some time." Put it on the Franchisor 500 Crap List. Michael Webster PhD LLB Great Article!Submitted by AmITheOnlyOne on Fri, 2007/07/27 - 18:47.
One interesting point that was not told to you, is that the attorney named is also a part owner in the company, and serves on the CA arbitration board. Do you think it is stacked against the franchisees, or am I just imagining things? Perhaps that is why they have had to gag former franchisees. Why gag someone if there is nothing to hide?! Questions Submitted to iSold ItSubmitted by Don Sniegowski on Sat, 2007/07/28 - 04:10.
Reporter's note: Here are the questions that were sent on July 18 to iSold It that were declined July 24. There have been rumors rolling around on the Internet about iSold It so we greatly appreciate you [Ken Sully, CEO of iSold It] taking the time to set the record straight.
Who buys uproven concepts and why?Submitted by Guest on Sat, 2007/07/28 - 06:19.
Really don't understand this. Thought it was admirable that ISoldIt stopped selling franchises ---and now they are selling them again. But, what is NEW is they indicate that it is not a proven concept and that they don't know as it evolves whether or not the stores will be profitable. Obviously, ISoldIt was told by their legal counsel to get back on the market. Why? Are the opportunities for profits so great that franchisees will take this GREAT RISK. What does it cost to set up an ISoldIt or are they doing this to protect the stores that survived? iSold It! UFOC Amendment - A Little LateSubmitted by Patricia on Sat, 2007/07/28 - 07:42.
It seems the legal team from iSold It read Mr. Franchise's article about the lack of disclosure in their UFOC about their unproven concept, including his observation this would be an issue in future litigation. So, they finally added the new disclosure to their UFOC which should have been there from the very beginning. Of course, this might help iSold It deal with franchises who buy under the new UFOC (and who would be crazy enought to do this). But the sudden appearance of the new disclosure is going to be a big smoking gun that will help past franchisees who sue for inadequate disclosure and misrepresentation. Hope the legal team has a LOT of malpractice insurance.
His comments about iSold It! can be found in his "Buying A Franchise" article at:
http://www.franchisefoundations.com/articlesiibuyingafranchise.html
iSold It Closing Retail To Experiment With WarehouseSubmitted by Juan F on Tue, 2007/07/31 - 14:08.
An iSold It retail center is moving from retailing to experiment with a warehouse format to service higher ticket items from businesses.
OPPORTUNITY MISSEDSubmitted by RichardSolomon on Sat, 2007/07/28 - 04:28.
One of your comments (about having a truck collect the higher end items) suggests a merger fit. If the eBay drop off/iSoldit model were to acquire 1-800-GOT JUNK, the trucks would already be part of the enterprise. [For those who dont spot the obvious sarcasm, please call me and I'll explain it to you] Richard Solomon No Business FranchisingSubmitted by Bob Frankman on Sat, 2007/07/28 - 05:25.
“Nick Bibby... observes: "Until a system is proven, it has no business being franchised." Great quote. Straight to the point. Zing! UPS STORE OWNERS BOUGHT AN UNPROVEN CONCEPTSubmitted by Guest on Sat, 2007/07/28 - 06:31.
Anyone who bought a UPS STORE was sold a franchise concept that was know to be a total failure.Even MBE/UPS's own F.A.C. said it would not work without major changes..but none were made before this was shoved down the throats of the franchisee's And what makes this entire "SCAM" soo sad is that UPS/MBE knew it ALL ALONG !!!! iSold It: What Were Those Buyers Thinking?Submitted by Craig Hsueh on Sat, 2007/07/28 - 09:04.
Very good point that Kevin Murphy makes in his article. What were the franchise buyers thinking? It turns out that they had an unproven concept from the beginning and were dishing out their dollars to prove the concept. Ken Sully is an old franchise vet, starting even before his days as VP of Franchise Development at MBE in the roaring early 90s. He knew better than to sell an unproven concept. Dock a point to the franchise seller for being able to pull the wool over the eyes of their buyers. But all those iSold It franchise buyers, what were they thinking to buy a business that hadn't even shown yet that it could succeed? Murphy answers:
Ah, passion, or more correctly blind greed with little analysis. Dock a point from the buyers for being taken in with little due diligence and dreams of a fat future. And Murphy correctly asks, who contributed to this travesty? The system and the media - that's who.
Dock California's Department of Corporations for not needing to disclose if a franchise concept has been in business and profitable for a year to two years. Want to see all the media going gaga over iSold It's uproven franchise? It seems the mass media have shuttled in synch to shout praises and whip up the buying fervor. Just look here. Sad. Dock many more points to the reporters and mass media who fawned over this novel concept with ne'er a thought to its franchise and business fundamentals. When New Leadership Is NeededSubmitted by Bob Frankman on Sat, 2007/07/28 - 06:03.
CEOs try to stifle franchisees and outsiders to think falsely: "No! Don't publicly discuss the negative. You will lose the value of your store investment." Psst, tell you a secret... Corporate officers don't like losing their jobs and think of ways to get franchisees to stay still. But franchise chains and enterprises have their own immune system when faced with mismanagement and the ominous threat of liquidation. It's fueled by the franchisee's sense of self-preservation. Franchisees begin to figure out ways to better influence and pressure - sometimes having to use the media. With mounting pressure and the need to make mullah, board members elect to find new officers with a clear direction to lead the network out of the wilderness before any system with a modicum of health collapses. If franchisees just hold their hands to their side and go quietly to that great beyond, then the network really had AIDS to begin with. P.S. How come there isn't literature out there about franchise governance? All I can find is some prof from Germany. UPS Unproven Concept ---The Shill of the Famous BrandSubmitted by Guest on Sat, 2007/07/28 - 07:27.
There is no doubt that UPS bought MBE to enhance their own profits and to compete with FedEX with no regard for the Mom and Pop franchisees whose investments and lives would be captured with the carrot of "unprecedented opportunity" and great success and profits for The UPS Stores. They used the famous and respected brand UPS as a Shill to sell an unproven concept to those who respected and trusted the famous brand name, and if they knew it wouldn't work and didn't even bother testing a pilot, this is truly malicious. I hope the courts will look at this and realize that UPS has used its famous brand presence and management policies to hide the failure rate of its stores and to sell new franchises, even today, out on the Internet with its No. 5 rating with Entrepreneur as well as through the SBA Franchise Registry and the Vet-Fran initiative. This is a huge public company who has managed to fly under the radar and who has badly hurt and damaged many innocent Americans who bought these stores in good faith. These working-class franchisees are just trying to make a living and they were led to believe that they were buying the American Dream of a form of partnership with a famous and respected American Corporation. The franchisees of The UPS Stores never realized that they were just a resource for "venture" capital and cheap labor to be used to enhance the profits of UPS. The face of GREED of many American Corporations has been revealed in these recent years and we see often that corporate honor, integrity, and citizenship is sacrificed to competition and the greed for greater profits in the wider world. WHAT WERE THE BUYSER THINKING?Submitted by RichardSolomon on Sat, 2007/07/28 - 09:47.
They were overjoyed at the money they saved by not getting due diligence assistance before they bought the franchise. Richard Solomon Advertising Gets you Everywhere ----The Need for Product!Submitted by Guest on Sat, 2007/07/28 - 09:56.
In the trade and business media, as in all media, the need for product is great and ongoing. While they may issue disclaimers, the franchisors who use these high ratings in their sales pitches and on the Internet do not issue disclaimers on behalf of the raters, like Entrepreneur. This is a circumvention of Truth in Advertising and a kind of fraud on the public that apparently isn't against the law ---but should be! All of the truth in advertising laws have not helped the consumer franchisees because, of course, the FA's are designed to discount any hoopalah that goes on before and during the sale and to protect the franchisor no matter what kind of dog or pig he sells. The FA's together with the UFOC's are a license to steal for those franchisors with unviable business plans who will continue to sell to the public to perpetuate themselves, even when they know they are selling a bad and an unviable product. The California Department of Corporations, apparently, under technical rules governing UFOC's has allowed I-Sold-It to Register and sell their franchises in California with improved disclosure language. Apparently, I-Sold-It's counsel advised I-Sold-It to do this. This is a demonstration that the UFOC is really more of a license to do business in the State than protection for franchisees ---who might be stupid enough to invest their capital and their labor under this full disclosure of the risk required under the California UFOC. California is to be congratulated in its efforts to protect its consumer franchisees. While magazines like Entrepreneur print faint disclaimers, their ratings are used to sell and hype the franchises that they have rated as high picks on their famous lists. Entrepreneur put ISoldIt out there and UPS and Quiznos and even respected publications like AARP pick up on these ratings and use them because they need "product" for their publications. Franchising is a vital part of our economy and is pushed and supported by the status quo that supports franchisors, if not franchisees, who are expendable as long as they contribute to standing up the franchisors who are contributing to the economy. The hard reality is so often that it is ONLY the franchisee who loses and who loses his voice in failure. In the ongoing and evergoing search for product for the media, great disservice is done to prospective franchisees who do tend to believe what they see in print. They believe there are laws against spreading false information to the public. They don't understand the fraudulent intent of the franchisors to use the advertisements to deceive them. Someone needs to clean up this mess that injures so many innocents. The Deal of the UFOC should be scrapped and we should go to NO Regulation of Franchising or Franchising should be regulated at least as well as Securities are regulated under US Law. Our British cousins don't regulate franchising because they want to avoid the appearance of government endorsement of franchisors and franchising that could work against innocent citizens who are looking for a way to support themselves. We, in the US, ineffectively regulate franchising under UFOC's and endorse the franchisors with the SBA Registry and our media, while sacrificing many of our naive and inexperienced citizens, who do ineffective due diligence, to the purchase of the American Nightmare that is represented as the American Dream. Shame on us! Media In Praise of iSold ItSubmitted by Craig Hsueh on Sat, 2007/07/28 - 10:09.
In case iSold It decides to delete their news page, here are the media going gaga over iSold It:
There's much more, but let's just jump to the television spots so that this doesn't scroll to the whole page. Beginning to understand how easy it is to get taken in by the trade and mass media hype?
ORGANIZED AND AGGRESSIVESubmitted by RichardSolomon on Sat, 2007/07/28 - 06:05.
Organized, aggressive franchisees are the only remedy (other than litigation) for the abusive and misrepresenting franchisor. Unfortunately, that just doesn't happen until there is one foot in the grave and the other on a banana peel. People still believe, contrary to fact, that they can just talk it out with a bad franchisor. Well, you can't. Talkers are simply too easy to deflect with psuedo cooperation window dressing responses. You have to do that which will make their hearts and minds follow. There are parts to every franchisor which, when aggresively squeezed, end the talk and start to get real cooperation. No matter what the franchise agreement says, there are effective guerilla warfare options that drive bozo franchisors nuts and bring about improvement. Organization and generalship are the key. And of course, no general can prevail without an army of "ready" soldiers. Franchisees have to make their own minds right before they can make the franchisor's mind right. Richard Solomon franchise governance?Submitted by Guest on Sat, 2007/07/28 - 06:42.
From the outside looking in, it appears that the Franchise Agreements and the mandated one-on-one arbitration with the franchisor is for the purpose of preventing any collective bargaining by franchisees as a whole. Unbelievable Hype of ISold-it to produce product ---Ask RichardSubmitted by Guest on Sat, 2007/07/28 - 12:21.
Can't believe how this was pushed to the public ---- Still don't understand why the CEO who did the honorable thing and indicated that they would stop selling franchises has now reversed his position. Must have something to do with the legalities ----Richard Solomon would tell us, if he would. GOVERNANCE - HOW IT SHOULD WORKSubmitted by RichardSolomon on Sat, 2007/07/28 - 15:49.
Governance means many things. Grossly stated, governance means how you run the company/busness/relationships with other contract parties. Managers are people, not perfect. People are always under performance pressure that sometimes clouds the real issues. This is debilitating. Sometimes good people simply can't overcome the performance pressures, and it is the system itself that turns them into worse people that they really are. If the leadership is venal, the system will function that way and the worst will usually happen. With a contract that says you are always right and everyone else is always wrong, that venal behavior is greatly facilitated. For some insight into how that might work in an enlightened company, see http://www.franchiseremedies.com/franchise-compliance.htm Richard Solomon Stifled Voices Amidst the Hyped Boom of Business MediaSubmitted by Bob Frankman on Sun, 2007/07/29 - 09:04.
Craig, You show just how much of the hyped-up business media dished out this concept to unsuspecting buyers, without asking fundamental questions about the viability of the model. The business media must do better! In contrast, other than Blue MauMau, here are the lone, muffled small voices saying "hey, wait a minute..." amidst the constant boom of endorsement of the business media pack. Where To SqueezeSubmitted by Bob Frankman on Sat, 2007/07/28 - 06:20.
Hmmm, so franchisees need to figure out where and how to squeeze corporate by the *****, huh? Such action would certainly get my attention - in either one way or the other. For squeeze lessons, contact Richard, squeeze consultant extraordinaire. P.S. This site has to be a bad franchisor's worst nightmare and a good franchisor's best blessing. (I said that so Mr. Blue doesn't censor me.) NO REAL "LEGALITIES" INVOLVED HERESubmitted by RichardSolomon on Sat, 2007/07/28 - 14:29.
I must be really dumb, cause I can't think of "legalities" as a motive for continuing to be in position to sell failed concept franchises while at the same time contemplating bankruptcy. Contemplating bankruptcy has to be in the game plan under these circumstances. The bankruptcy option is conspicuously on the table. It probably has more to do with simply wanting to get money by hoook or by crook without regard to investment worthiness. But since, in hindsight, there was no competent concern for investment worthiness at any time in the history of this franchise, why start now? Unless there is some hidden golden oppotunity here that no one knowledgeable can identify, this is just more of the same low life, devil take the hindmost rip off. Richard Solomon ISoldit Discussion about a year agoSubmitted by michael webster on Sun, 2007/07/29 - 09:28.
Bob, about a year ago there were a series of threads, this is one of them at franchise-chat.com, http://www.franchise-chat.com/forum/showthread.php?t=714&highlight=isoldit. It was easy to show that the stores weren't making any mone. Michael Webster PhD LLB A real opportunity for changeSubmitted by Franchise Pick on Sun, 2007/07/29 - 09:37.
Bob: Thanks for inclusion. There are some other, like The Biz-Op News (Michael Webster), FranchisePundit.com (Ryan Knoll), FranBest.Com (me), and the forum at Franchise-Chat.com. I first learned about iSold It from Amitheonlyone.org and rip-offreport.com. Recently, while putting together a "blogliography " on eBay auction franchises, I was amazed to discover that Michael Webster and others were warning about this concept three years ago on Franchise Chat. BMM & FP since played major roles in creating dialogue about this and other important issues. I've received emails and comments from thankful franchise prospects and I've seen many more here from people Blue Mau Mau has saved from unwise, ill-informed decisions. Good franchisors need to realize that unproven, unstable franchise offerings and unscrupulous franchisors are hijacking potential franchisees that might otherwise have joined their systems and succeeded. The good franchise companies - and there are many - will hopefully come to realize that the blogging phenomenon is a threat only to those who need the shadows to thrive. For good franchisors creating win-win opportunities, it's a tremendous opportunity. There's a great opportunity for real change here. Remember, this is a very new phenomenon (FranchisePick.com only launched last November, BMM has been around since '04 but really got rolling in the last couple of years) However, there's undoubtedly going to be increasing efforts to shut down this dialogue by those who profit from the status quo. It will be a terrible tragedy and lost opportunity if that's allowed to happen. Sean FranBest (article submissions welcome)
SQUEEZING 'EM TILL YOU HEAR SCREAMINGSubmitted by RichardSolomon on Sat, 2007/07/28 - 08:09.
If you want resources for aggression regimentation, try www.FranchiseeAssociationManagement.com Richard Solomon CaleasiSubmitted by michael webster on Sun, 2007/07/29 - 12:57.
We will know that real change has arrived in the franchise due diligence world when the UFOCs at Caleais are discussed in serious detail. Michael Webster PhD LLB iSold It Blogography: Some Voices of WarningSubmitted by Bob Frankman on Sun, 2007/07/29 - 13:36.
Michael & Franchise Pick, Thanks for the input. OK. Let me compile what we have. Listed below are the few small but extraordinary voices that asked "Where's the beef?" about iSold It and other eBary drop-off store concepts.
FranchisePick has compiled a great blogography on the genesis of the eBay drop off store warnings. And according to FranchisePick, Michael Webster was the earliest to make noise about this dog when he did so three years ago (got a link?). Hence, I nominate Mr. Webster as Blue MauMau's franchisee champion of the month. Hell, the year ... Kahuna, kahuna, kahuna... The wisdom and the truth of SolomonSubmitted by Guest on Sat, 2007/07/28 - 12:50.
What I like and admire about Richard Solomon is that he is never politically correct and he always indicates where he is coming from. He sometimes says what I post is crapola but I don't mind because so much of what he posts is true gold. It is apparent that he is complex with a split personality and sometimes we get a little bit of both Muldoon and Solomon in the post and he is often very brash, rash, aggresive and offensive on Mondays, more so than other days. But, he never deals in bull shit on serious matters of the law. To get the kind of truth from an attorney that Richard Solomon has posted on this site is a true GIFT. I'm sure he has to watch that nobody tampers with his drinks at the ABA meetings. It is against the bi-laws of the ABA to give away any legal opinions for nothing unless you are buying the wine and the dinner at the Top of the Rock or Muldoons. It is good that he is a citizen of Texas because the egos of the citizens of Texas are larger than the citizens of other states, and while he is very cynical at times, it is obvious that he loves and understands his fellowmen and women and himself. If he has a big ego, and other big parts, like his brain, we are privileged to have him post on Blue Mau Mau. Sure, he is drumming up business but he knows his business and unlike dealing with franchisors, I think you will get your money's worth when you deal with Richard Solomon Still think his $1,000 negative due diligence offer is one of the best deals in franchise due diligence because it can be used both before or after due diligence with your own attorney, who may not have the years of experience and the instinct for bozo offers and outright fraud that Richard has seen in his long years in the franchise business. Here's to Richard Solomon, Paul Steinberg, and Michael Webster, our attorneys, who share their knowledge and their conversations with all of us ZEES who post on, and who read Blue Mau Mau, to learn how to become knowledgeable buyers of franchises or to learn the reasons for their failure. on SolomonSubmitted by FuwaFuwaUsagi on Sat, 2007/07/28 - 14:10.
It was written: Solomon…and he is often very brash, rash, aggresive My reply: To my view, he simply is a man, he posts like a man, and he acts like a man which is a rarity in this feminized metro-male society around us. I like Richard's posts and his way, 'cause frankly I think a lot of people prance around the issues here like a bunch of non-union pipe fitters. I am a more or less a poor ol’ southern boy and we tend to think a bit different. But apparently the world has changed. Ya'll make think it is for the better, but my people have been here maybe 400 years now...business was conducted on a hand shake and man's word was his bond. He broke his word no one would supply him, no one would do business with him, and no one would spot his back trail. Pretty much he was done for. Now days people think they can get away with anything simply because people let them. Normally I don't talk about such things ‘cause I know it offends a lot of people’s delicate sensibilities, but when I read Richard's post somehow he just doesn't come across like a mamby-pandy boy. I can appreciate it as I spend most of my day in the board room surrounded by a bunch of ivy league educated east coast types. Cripes, between the smell of hair gel in the air and skin exfoliates I think I am in a 10 dollar cat house. I tip my hat to you Richard. FuwaFuwaUsagi The $150K Lottery TicketSubmitted by Franchise Pick on Sun, 2007/07/29 - 08:45.
Who buys unproven concepts and why? Intriguing question. I know a great guy who works really hard. When he gets off his shift at the factory, he puts in more hours at the little laundromat he owns, and some rental properties he has. He's about to lose all he's saved on a blatantly stupid pyramid scheme. This will be the third time, the third scheme. He's not (otherwise) an idiot, but there's no dissuading him: This one's the real deal. This one's different than the others. This one will change everything. Maybe it's the same reason people buy lottery tickets. Only these lottery tickets require second mortgages, savings accounts and loans. Sean  |
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But Continues to Sell Franchises
SOLANA BEACH, Calif. (Blue MauMau) - Earlier this year iSold It's CEO Ken Sully wrote 
