PMD Furniture Direct Switches to Franchising

Editor's Note: This article turned from a small news clipping with a few comments to hundreds of comments that are marginally related to the original posting. As such, I have moved it from a short-term news blog to a public forum discussion on PMD Furniture Direct. News stories come and go but forums are long-term discussions and debates on topics anchored around a specific company or issue. I would remind posters that this is a site that shares information to help readers make better informed business investments. It's not enough to say don't invest in this brand. The reader will naturally want to know from front-line operators what in this sector will make them the best returns on their investment. One last point: the Blue MauMau culture is one of civility. Readers like to focus on business issues, rather than individuals or personal issues.

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Wow, invest $50K-100K and NET profit the first year is $269K!

Hosking [PMD Furniture Direct's CEO] added that PMD should stand out as a lucrative option when it joins the ranks of franchisors. He contended that franchisees of a national sub sandwich company have to invest $300,000 to $400,000 and make less than $100,000 in annual net profit, citing a PMD attorney who previously worked with the chain.

Some of PMD's current licensees, including startups, do much better. He said the company's top rookie last year was a Pacific Northwest dealer who made $269,000 net profit on an initial investment between $50,000 and $100,000. - Furniture Today

This is the best deal EVER! I wanna buy a franchise NOW! Where do I wire the money? If I wire $100K for 2 franchises, will I make $538,000 my first year?

Yet why are they losing so many licensees?

But with financial markets in turmoil, PMD's total network sales are down because it hasn't been able to replace the 20% to 25% of dealers it loses annually to attrition.

PMD Furniture Direct (Power marketing Direct) is a SCAM

DO NOT Interview to become a dealer with PMD Furniture Direct (Power marketing Direct)! It is a HUGE SCAM! Beware of Jeff Hosking and Joe Armetta. They will try to trick you into thinking PMD is a great opportunity and that the business model works well and you will make $50k to $100k or more. That is a lie as over 90% of the dealers go out of business within a few years. The mattresses and furniture are marked up 30% to 40% more than your competitors or other furniture/mattress stores in your area. ONCE again, PMD is a HUGE SCAM! Advice would be to take your franchisee dollars elsewhere, to a stronger more honest company.

Posted by Guest on March 25th, 2009

PMD IN LEGAL TROUBLE

PMD Furniture is in big trouble. What goes around, eventually comes around. Let me tell you... It's coming!!!

Posted by Guest on June 11th, 2009

PMD Debacle

PMD is a joke

Posted by guest55578 on July 4th, 2009

New PMD Franchisee

I have been reading the comments on PMD, and I need a ex-dealer to contact me about PMD, before I invest my money with them.

Posted by Guest on March 11th, 2010

PMD = False Promises

I fell hook, line, and sinker for this same pathetic business illusion. The company is run by a greed filled, hateful, villainous, cheating pig named Jeff Hoskings, who surrounds himself with goons that he pays a pitiful sum of money to be in \"management\" and they bow to him and serve him, helping him cover the horrific tracks this company leaves, and he rules the company like a shrewd dictator. If everyone knew the trail of the dead in this company, no one would ever sign on to be a part of it. His new right hand man and National Sales Manager, Mega-Greaseball, Joe Armetta, is now scamming Jeff and stealing out of his fat pockets, and I find it quite hilarious. He is also simultaneously disqualifying multiple dealers from being dealers because none of them can adhere to the rigid standards of performance he has instituted, forcing people to quit. Never fear, Ex-PMD Dealers, these idiots are about to have their day in the sun. Jody Armetta is robbing Jeff blind now, to the crazy tune of over $500k annually, and all his dealers are quitting and rebelling against him. He marks up furniture 30-60% above what he buys it for, then turns around and sells it to his dealers, his lifeblood, and asks them to turn profits. The best salesman in the world will eventually fail trying to consistently do this, because they can\'t size up with the competition. The competition, in many instances will sell something for less than the PMD dealer bought it for. When I would run out of a bedroom group I could go to Big Lots and purchase the group for $26 less than what I bought it through PMD for. According to the PMD formula, this same bedroom group that cost me $975 was supposed to be sold out of my clearance center for $2,450, and you are to lie and tell the customer that it retails for $4,900. The formula they fraudulently sell to their dealers is COST x 5 = Retail Price, and Cost x 2.5 is your clearance price. This is a sure-fire formula to run a dealer out of business because the margins are so ludicrous. Even if they weren\'t so bad at face value, you must rememeber that Jeff has laready marked this stuff up 30-60% before he sells it to the dealer, so your numbers are EXTREMELY SKEWERED by the time the customer is actually quoted. It is a formula to go out of business. But Jeff and Joe don\'t care if you go out of business at all. The most beautiful part of the scam is that you are charged a franchise fee once you are \"chosen\" for your market. In my case it was $15,000. Now that number has ballooned to $35,000. Before you ever get a single product, or learn a \"trade secret\", you are out $35k. See, if your business never sells a single bed frame, the company has already nailed you pretty good. Then, if you spend $100,000 over the course of the next year buying products, which most do at a minimum, at the current PMD product mark up rate, you have given Jeff Hosking at least $30,000 of that money to pay for his markup on your product. You have given the company $65,000 in your first year, a pretty *** good salary these days if you ask me, and you are just one ***. Some dealers will buy as much as $1,000,000 wholesale over the course of the year, and they will have personally paid $300,000 to Jeff. You have to pay 100% up-front for your product, and it typically arrives 3-6 weeks later, typically never all of your stuff makes it, and a portion of it is always broken. The return process and damage process is done through the PMD home office. All dealers are forbidden to have contact with any vendors, and now you have paid for this stuff up front and can\'t get cash to flow back into your business until you satisfy your current customers who have been patiently waiting 3-6 weeks already for their stuff and then it doesn\'t show or is broken? You begin selling on deposit because you can\'t afford to stock the product 3-6 weeks in advance, then your stuff arrives but not in its entirety, or it is broken, and you are stuck in a vicious circle.You find yourself upside down pretty quick, but also financially obligated to continue down the path, in the vain hope that you will turn this around and see a profit, or at least recoup some of your massive loss. By that time, they are already looking for a new dealer in your territory. If you go out bankrupt they don\'t care. There are never steps to assist you in your time of need. In fact, apart form the accounting department, all calls from your managers and \"friends\" will cease. Jeff will never inquire about you. This illusion of a close-knit, brotherhood of dealers quickly vanishes, and no one admits they ever knew you. If anyone asks whatever happened to you, they will typically respond that you weren\'t running the program specifically as you were told, and that you failed as a result of this. You are discouraged as a dealer not to interact at all with ex-dealers, and in many cases are threatened by management or Jeff himself if you do. It is a brilliant scam. I am glad to see it is coming to an end. Jeff allegedly lives in the house formerly owned by the founder of Wendy\'s Hamburgers, Dave Thomas. It is my sincerest hope that someone finds him stuck with a cheeseburger in his big, fat heart, and rid the world of such a vicious and heartless theif. Either that, or eventually the fat *** is sued so venomously by his ex-dealer base that he winds up working at a Wendy\'s once his jail-time ends. I can only pray that there will be jail time, and not white collar. No one deserves Ned Beatty Deliverance treatment like our hero, Jeffrey Hoskings. Well, no one except maybe Jody Armetta. Have a lawyer examine the contract. No lawyer could ever read this peice of garbage and then in good conscience tell someone it is ok to sign. Justice will eventually see through on these horrific people, and I hope they all die penniless, lonely, and miserable

Posted by PMD is BAD News on July 5th, 2009

Invest $50,000 - $100,000 net profit $269,000 the first year!

Proof anything that sounds too good to be true, it isn't true.  Do they have documentation to prove this has been done?

on July 5th, 2009

Proof of Results? Are You Serious?

They have 10 years of unaudited and estimated sales with no way to track net income or performance. It's one big misrepresentation and they know exactly what they do! This is a ponzi scheme and they know exactly what they are doing with their net worth claims and those exotic trips are attractive bait for the "fish". It's time for everyone ever damaged by PMD to flood this site  and others with their "true" story about how they operate and how many people they have abused over the years. Please limit your comments to the "truth" as they have a hard time with truthful facts. Don't be shy or afraid  its time to stop anyone from every being involved with this group. Get involved and stop this scam once and for all!

Posted by Jake on July 5th, 2009

Unaudited and estimated

Key words to say no.  I know this because of studying.  Unaudited means it was not proven.  Estimated isn't concrete.  Anything ify throw it away. 

on July 5th, 2009

Uninformed Barb

Please know what you are talking about before posting Barb. You have a way of tarnishing excellent topics with your poorly thought out and inexperienced posts.

What PMD should have is an FDD with an Item 19 FPR to make a claim. The FPR does not need to be audited, it does require a "reasonable basis". The basis could be franchise locations that would likely not be audited.

Now the Furniture Today excerpt  "Some of PMD's current licensees, including startups, do much better. He said the company's top rookie last year was a Pacific Northwest dealer who made $269,000 net profit on an initial investment between $50,000 and $100,000." is most certainly a performance claim. And if a prospective franchise relies upon it the claim may be a violation by PMD of federal and state laws.

The question is also is will PMD's thrird party outsourced franchise sales broker FranDeavor use the article to sell franchises? 

Posted by Tyrone Malcom III on July 5th, 2009

Telling the truth Tyrone?

This thread is people who sound like I did when I got fleeced.  There is nothing like the school of hard knocks to teach you a few things. 

You must know that it is Federal law that states when an earnings claim is given there needs to be documentation of proof at the "first personel meeting."  There is no "if" a prospective franchise relies upon it the claim may be a violation."  It is a violation of FTC disclosure laws of 1982.  Just because one zee did it doesn't mean others will.  Every zee is different.  Without solid proof it means nothing.  People shouldn't listen to the salesperson.  

I am convinced you are a zor that wants to keep everything the way it is.  Bashing me will not take away what I have experienced and many other's have experienced.

You are misleading people.       

   

on July 5th, 2009

Re: Telling the truth Tyrone?

Are you insane?

You should carefully reread my post regarding PMD.

Posted by Tyrone Malcom III on July 5th, 2009

Have you read this thread Tyrone?

This thread is people screaming fraud.  It is insane to continually hurt people financially.  Are you insane?

on July 5th, 2009

Re: Have you read this thread Tyrone?

A yeah! 

What constructive advice or commentary do you have other than the same tired old crap you post?

Posted by Tyrone Malcom III on July 5th, 2009

Tired old crap?

I have nothing to gain from commenting on things future zee wannabees need to look for.  I do not like seeing someone's life shattered because of greed.  I comment with the sincere desire that people will look for red flags before listening to a crappy salesman.  I comment because I am tired of seeing people get taken to the cleaners.  Read the thread Tyrone.  The thread is CLEARLY people who have been hurt from a unscrupulous zor.

l.  People need to take the FDD and study it with the help of a franchise lawyer like those here on BMM.

2.  Seek advice from a business advisor about the viability of the concept.

3.  Do not listen to the zor concerning the build out because that is where most people get hurt from the beginning.

4.  Add an addendum wiping out the one sided clauses that hurt the zees.  If there is a no territory clause add a territory that is a five mile radius of your business.

5.   Add to the addendum no arbitration only litigation in the zees home town.

6.  If they say no, then run. A zor who has nothing to hide will not reject litigation. 

7. Negotiate, negotiate, negotiate everything in the FDD.

8.Document and record all the meetings with sales rep and the zor.  Have them sign your documentation.

on July 5th, 2009

Re: Tired old crap?

You have no clue on how to actually follow your own advice, do you? It's just some hazy out-of-focus dream of yours!

Posted by Tyrone Malcom III on July 5th, 2009

You would love future zees

to be your next victim.  Hopefully people writing their stories will make people really move slow until they find a decent zor that will want them to succeed and not fleece them.

on July 5th, 2009

Are you Kidding Me?

Just got the new franchsie agreement. If we take your advise the legal fees to add the addendums would probably be $50K.Can they just make the prior company disappear and act as if it never existed? They are calling Power Marketing Direct a manager of suply chain and relationships with vendors. What happened to the $82 million emerging brand, with 100 locations and the Rookie who made $269K in his first year? Your comments are great but the new agreement is so over the top, I don't see how anyone could ever sign up. Bernie Madoff requested a copy as he has the same stablity and longevity future franchisee will have if they sign this. No wonder Armetta said don't read it just sign up and get your points for the trip!

Posted by Current dealer on July 8th, 2009

Royal Heritage "Brand"

Google "Royal Heritage Mattress" 

Nothing good comes up on Google

As an outsider I wouldn't pay money to use that brand in my store.....

 

 

Posted by Guest on July 21st, 2009

Frandeavor used a retail

Frandeavor used a retail sales figure of $82 million in 2006. Seems like a very, very high estimate but consistent with the outrageous claims of the past. Why 2006 and not 2007 or 2008? I am sure the Frandeavor group has information that is not very accurate or a reasonable basis They got it from PMD management. .The initial announcement was very inaccurate just like the article. They misrepresented the locations and never audited their financials. At least that was the website claim which indicated performance of the company as stated by the company through 2007. They never updated it for 2008 and it now under reconstruction. Yes, i agree the timing is interesting!

 Tyrone, you seem like a well informed guy so run the numbers on how a "rookie" dealer can have a Net Profit of $269,000 regardless of his initial investments. His purchases were around $600K.at best  Also, have the company identify the person and region. Let all new prospects talk to him and see his keys to success in a very difficult Furniture year 2008. Most Franchise's do not go into this type of hyperbolic statements for the resaons you have indicated. Just another day in the life of this group.

Yes, i agree the FDD is a key. It's only taken them 17 months to produce so let's just wait until its out and as Jeff stated  in the same article "we are a transparent company". Most who know the goup would state that he had no reasonable basis for that statement.

Posted by Jake on July 5th, 2009

Tyrone is Correct

Tyrone and not Barbara is correct with respect to what is required in the item 19.  There is no requirement that the performance claim be based on an audit.  Indeed, many item 19's eschew that requirement.

As to the article, this raises an important problem -when can a franchisor use an article, complete with redacted performance claims, if the original article published  by a third party with the performance claims is easily found?

Posted by michael webster on July 5th, 2009

If item 19 is not up to date information

how can a person make an informed decision?  How can people find the up to date information? Can a future zee request an up to date audit? No up to date audit, no signature.

on July 5th, 2009

Re: If item 19 is not up to date information

Take a chill pill Barb! You are makin a fool of yourself. 

Posted by Tyrone Malcom III on July 5th, 2009

Your showing who you are.

A zor who likes hurting people.  Who's the fool? 

on July 5th, 2009

PMD FURNITURE THE BIGGEST SCAM EVER

Unfortunately, there isn't a negative comment on this page that isn't true. PMD has the elements to be a great opportunity for all involved but is run by reactive salesmen whose strengths don't lie in leadership. I was a dealer for a handful of years and while I can draw a lot of positives from the experience (with regards to customer service, accounting, setting goals, marketing, hiring, etc.) that it presented on a daily basis to my wife and me; the day Joe Armetta called me and broke the news to me that "my business" was no more was actually a great day (in retrospect). How and when they did it was very demeaning and a slap-in-the-face and it happened after a personal crisis they were fully aware of but didn't care. The abrupt disconnect left us financially strapped for some time afterwards as we tried to figure out how to handle customer inquiries about where there stuff was (we gave them PMD's direct number). There was another dealer just a few months prior who experienced a crisis and fortunately, Jeff's group gave his dealership a $40,000 credit because, well, Jeff liked him, I suppose. My manager told me this to convey the "love" PMD has for its dealer base at the time it happened. Maybe I didn't sign the "Love Addendum" page in my contract? Joe A. is a self-proclaimed genius, "doesn't need PMD", loves Armani suits and shoes, Wall Street success, etc. and he'll talk to you as if you're floating in his toilet. I once heard him say (at a conference) that he was glad that some dealers shared their testimonies of their daily activities and challenges within the business because it reminded him that dealers are people, too. Here are a few things I've witnessed and/or experienced personally (not stuff I've heard): I've witnessed them pump up dealers at conferences (especially new ones); have their names all over pep-emails and newsletters; have them give speeches at conferences; invite you to switch your paradigm to theirs, call them, or visit their clearance center because you're running your business wrong. I've even witnessed those same dealers disappear or leave the business quietly by the next conference just months later. I've witnessed those same dealers being escorted out of later conferences because they arrived with the wrong attitude or were not willing to put what it took into their business to make it successful, etc. (or at least that's what I was told). I witnessed PMD's own managers circumvent Jeff Hosking's group because the markup was so high (among other things) and open up other warehouses and run them simultaneously (because you can only have Jeff's products in your clearance center, naturally). I witnessed managers ignore me when our numbers weren't up to par. When numbers were good, I was invited to dinners, etc., received calls on my birthday, and gifts for my kids. I've witnessed not receiving marketing materials and important operational information. When I'd call to inquire, I'd get the run-around from staff. I've been told I was not allowed to attend sales conferences because my center underperformed during a particular quarter. I've had mysterious dealers pop up in my territory and open up shop without any prior consultation. When I alerted PMD, I was met with accusations or was told to move somewhere else. Yea, like sell my house-kinda move! I've attended conferences where Jeff would stand before us 100+ deep in a hotel ballroom and tell us that they could replace us in less than a few months time if we didn't meet the minimums they prescribed. I was told that I could not close my clearance center for any length of time without telling them first. I've spent thousands on new stock items they pressure me to buy in order to be successful only to have the items discontinued by the time they arrived (due to low sales across the nation or some other reason). I, too, frequented Big Lots and other discount stores because I was able to purchase the same sets from them about $250.00 cheaper than I would from PMD AND I didn't have to wait for it OR pay minimums (like, you can order from these bedroom sets from VENDOR A but your order has to be at least $6000.00 before shipping costs) among other things. PMD (or whatever they are called now) will try to convince you that you have your own business and that this opportunity is super-amazing, which it can be but do it yourself or through another company. What they offer is a business opportunity that wavers between a franchise and a lucid hallucination that you own your own business. You are a dealer-at-will and at ANY time, for ANY reason, they can cut all ties with and you better have a strong exit strategy to refund your customers and get out of your lease(s) should/when they do this. PMD retention is low. I've witnessed people sell their business or sell off stock for liquid, sell their homes, etc., move across the country, lease a 20K sq.ft. facility for 10 years, buy $30K worth of mattresses and furniture in one lump purchase, setup accounts with 35 news sources, buy pickup trucks, and hire help only to find out that "following the program" ain't workin' after a few months. After that, it's "Work the program, work the program, go to Basics, go to Basics again!" ... "Well, so-and-so is in this territory which is this size and did more than you". Once they wine and dine you, get you excited, get your loot aka ***, they lose interest, stop returning your calls, and you become a ho. You'll say, "Well, hey, I'm making pretty good money" and they'll say, "You should be making more. You're done" Keep your dignity. Don't be  rippe off by Jeff-Joe.P.S. They'll try to tell you that you can't sell mattresses, etc. within some period of time after leaving PMD (usu. 5-10 years) because, after all, PMD invented not only the concept of exchanging goods for currency in classified ads but they also invented mattress sets, leather couches, and bedroom sets, too. These thing were non-existent before 1996. Their non-compete clause is useless outside of Columbus, OH. The only thing that may happen is Jeff may call and threaten you or your spouse should you continue without them. Check with your local attorney.

Posted by Former PMD Dealer on July 5th, 2009

The greed and arrogance will be their undoing

As a former dealer for PMD, I could't pass up the opportunity to weigh in.  This group started with all the right intentions, to help people achieve the American dream of owning their own business and creating a livelihood for people to raise their families.  However, greed and arrogance permeated the company causing it to become a cancer.  When troubles began arising and dealers began failing, instead of addressing the problems, they chose to lay the blame on the dealers.  They use one or two "success stories" to "show" that business is good and these people are running their businesses accurately and you should be doing what they're doing.  When you attempt to do what they're doing and still fail, the blame is laid squarely on your shoulders and you are told to take personal responsibility.  Women in the company are treated extremely poorly, even the managers.  It's a good ole boy mentality and if you're on the inside, then you're treated completely different than an average dealer.

The reason for the franchise is not to grow the company.  There are underlying reasons for it that any person who does due diligence in researching the company prior to signing the FDD will find.  Lawsuits follow this company like rats to the pied piper and it doesn't matter whether it's a dealer suing them or they are suing the dealer.  There's more than enough reading material out there to make anyone wary of getting in bed with them.

I did learn a lot from PMD and for that I'll be eternally grateful.  Unfortunately the biggest leasson I had to learn was not everything is as it seems and when it comes right down to it, all they really care about is themselves and getting richer even if it means you going out of business to do it.

Posted by Just the Facts on July 6th, 2009

Facts but still not the whole story

Your comments were great and many ex-dealers share your sentiments. No name calling (which makes you feel better but everyone knows the chararcters) just solid truthful statements. Unfortunately, many other issues have been discovered and it now seems what started as an opportunity was always meant to be a scam. You don't lose 400 dealers in 10 years if you want a business that provides satblity and longievity. You help "poor performing" dealers become good solid performers. You don't tell dealers that they need (YOU) the President. Why do you think the managers and owners don't run clearance centers anymore? The answer is obvious but they still tell dealers how to be successful in your location. I have never seen a corporate group be so out of touch with the real world but they keep doing the same thing over and over like its working. Its Ground Hog day over and over. Well, what's working is the turnover of dealers the collection of license fees and the 35% markup on purchases. They could care less if the dealers lose their house, their family or their business. Now they get the Quizno scam that allows you to sign up but they can terminate you if you don't open a location and the fees just keep on rolling.  You even get "points" for the President's trip if you sign your life away to this group. You can sell your business for another $50K (of the 400 ex-dealer how many wanted to sell and what was their business worth?).

I will not even touch the comments about the how women are treated. That might be for someone else to comment. However, I will state they truly don't really care about anyone male or female so at least they are consistent. The company makes believe it cares but it cuts you lose faster than a speeding bullet. If the FBI had the PMD witness protection processes you would never find a former member. Once they are gone they are gone!  An interesting story at best!

Your comments on the lawsuits are accuarte and if you don't believe it just check Franklin County Civil Court and type in PMD. You will find the whose who of past PMD dealers. The law firm representing PMD needs more staff just to handle the day to day PMD issues. Interestingly, I have never spoke to a dealer who had access to this required disclosure.

This is a nefarious group and they have hurt many people. Truthful comments without the emotional name calling will win in the long run and I hope more people impacted by their misrepresentations will share their comments.

Posted by Jake on July 6th, 2009

Lucky to be an ex-dealer

Heard the scope of the new Franchise Agreement and how ludicrious it really is. How can a company that has little or no support from its dealer base propose a more restrictive covenant that legally binds you in ways that are not even imaginable.The FDD was a waste as it provided the bare minimum as it relates to disclosure and the egregious past. They couldn't provide results because they did not meet the resaonable basis test. Interestingly, they highlight a risk in getting your wife as a personal guarantor. See if Armetta's wife signed up? Beware of people who tell you the agreement provides for a brighter future.

Posted by ex-dealer on July 9th, 2009

Get help and don't sign!

You have the right to refuse to sign the Franchise agreement. Exercise that right and let the chips fall as they may. PMD has been accused of being a Franchise in many prior court cases. They have settled those cases quietly and without much in return.  You current dealer agreement while one sided protects you more than the new Franhise Agreement ever will. They want that voided and need you to sign and release them. Can't imagine why? if you ever heard of the "push away technique" use it to your advantage.

By the way, what are the advantages they provided to get you to endorse this move? It doesn't sound like any great advantages were listed in the FDD. Please post the advantages derived from agreeing to the new agreement. In most Franchise disclosures they provide a list of current Franchisee's and former Franchisee's so that prospective Franchisee's can talk intellegently to representatives of each group before making. this complicated decision. PMD claims that they have not offered franchises in the past.  While techically true (?) maybe they can providednames from the 80 current Dealers and 400 Former Dealers to talk about their experinces. Reputable Franchises encourage this type of communication. Some Franchisee try to hide and restict that communication. The FTC wants to know if anything in the FDD is wrong or left out as it might be deceptive.and may be against the law.  As PMD stated , contact FTC at 1-877-FTC-HELP.

Posted by ex-dealer on July 10th, 2009

Past History

The franchisor must provide franchiees with a history of their past activities in the FDD especially as it may relate to potentially negative information, misrepresentations or litigations. While difficult, the honest franchisors disclose the issues and address the outcomes and corrective actions. In the real world companies do not hide their problems or make prior predecessors disappear or seem marginal at best. This information is critical to the franchisee to learn all they can about the company and how they might handle critical issues or franchisee problems in the future. If you have any concerns ask the company to address your issues in writing and have them on the record. You have a responsiblity to make sure the legal requirements actually serve the purpose of protecting and safeguarding your interests. Review your agreement and individual circumstances with a Franchise attorney before signing. You might want to add addendums that protect your interests and ensure you are protected.

Posted by legal eagle on July 11th, 2009

Your franchise law experience must be wit ha very fine company.

Most franchisors today don't come anywhere close to the standards of disclosure you just described. That the disclosure is supposed to be at a high level of quality rarely translates into it actually being there.

Posted by RichardSolomon on July 11th, 2009

Agree but that doesn't make it right

I agree with your comments and that makes it more important to have an advisor (legal, accountant or business person) look at the Franchise agreement and offer critical advice and identify the potential problem areas. In this situation, many areas of the prior company. positive and negative which can impact the future, were just eliminated and not mentioned in the disclosure document. They meet the minimum standards required and nothing more.

Posted by legal eagle on July 11th, 2009

Past History

They changed the company name to hide the fact that two thirds of their dealers have gone belly-up.

Posted by Guest on July 20th, 2009

A Big Concern

Does anyone really know what happens if you don't sign this agreement. My wife and family are all over me and I don't think its in my best interests. Need help if anyone would be kind enough to provide comments. PMD doesn't like when you ask questions or don't comply with their wishes. The franchise agreement tightens the srcews even more and business is not very good. How can they claim this new business was in operation since June 2008 and send this agreement out in June 2009. I had my doubts about the old PMD and the new PMD scares the hell out of me.

Posted by Current dealer on July 12th, 2009

You need to see a franchise lawyer in your jurisdiction about

that. I suggest Simon Young if you are in Australia - You can find him here, He is one of the regulars.

Posted by RichardSolomon on July 12th, 2009

Aus hasn't been PMD lucky

As far as I can make out PMD doesn't operate here.  This isn't legal advice but I can tell you what happened when Goodyear decided that licensees would be forced into a franchise agreement.

The initial threat was to deny renewal.  When that didn't fly that well they decided to make examples of some dealers and while they had invested great sums of money in the brand they were told they were out at contract end.  Many freaked and thought a franchise agreement couldn't be that bad so they signed.  What are the end of terms rights and obligations for both parties to the license agreement?  That is the question!

Many that didn't sign or where Goodyear found a replacement for a non-compliant licensee, the outgoing went on to align with one or a variety of brands and many operate indepentantly .... and successfully.  Many kicked out for not signing had been assoctaited with the brand for decades and were obviously good operators who stupidly expected some loyalty.

For those that did sign a franchise agreement they should have visited BMM where the behaviours reported are often much worse than the interpretations of one-sided contracts.

What an Ohio PMD franchise agreement looks like I don't know.  And I don't know what the implications are to the previous business model and I don't know whether the franchise model is viable. 

It isn't sounding like too many do so I would strongly suggest you all put your money together and get some expert advice about the contract and some expert advice about how that will affect the individual businesses.  Just get an expert to look at the contract but even more importantly look at the business model they offer.  I already don't like their performance as a franchisor. 

Franchise agreements never look fair .... because they are never fair.  But can you make lots of money or not and with this introduction what else can you expect once you get hit with any additional one-sided income streams in the operations manual?  It would be unfair of me to say this but I will anyway - if you are going to sign this without expert advice then sell everything you can to someone that you trust to sell it back when you learn later if that was smart.

One thing is for sure; PMD isn't driven to introduce franchise agreements because you will be better off.

Posted by Ray Borradale on July 13th, 2009

I have not heard of PMD in Australia either

but that's not to say they aren't here.   

I have recently been dealing with a number of franchises that are either looking to upgrade their franchise agreements across the board, or impose new agreements.

Generally any change to an existing agreement must be by consent - which ideally means a negotiation process of some description.  Some franchisors are genuine in their intent to standardise their agreements (it is a nightmare managing 4 or 5 different versions over a 5 year period) but most do it to cover a perceived gap in the system.

As with any negotiation (no matter that it is more in the style of an ultimatum) a franchisee should seek to maximise their benefits or improve their conditions.  If you don't ask, you don't know

There is certianly scope to argue that if a franchisee is presented with an entirely new agreement (as opposed to a 'renewal' of an existing agreement) there may be elements of misrepresentation that can be pursued against the franchisor.

on July 13th, 2009

So can a franchisor operate

So can a franchisor operate under 2 different types of franchise agreements if some sign and others don't? How does that work?

Posted by also interested on July 12th, 2009

Franchise agreements are always changing

Bit by bit they address whatever is percieved to be a weakness where the franchisor might be inadvertantly allowing for possible redress.

So it isn't unusual that networks have 1, 2, 3 whatever agreements running.  Some at the end of term are on old agreements and the newbies have new agreements and so on.  But your question relates to those who don't sign this franchise agreement. If they cannot be cajoled or conned then I expect they will be gone.  Check your end of term or better still; get someone that knows to check it.  Are they threatening a restraint of trade?  That would be a good threat; but I hear that in the US it would not hold up.

Posted by Ray Borradale on July 13th, 2009

Reply: A Big Concern

Current PMD Dealer: The question is what happens if you don't sign the agreement. I'm not a lawyer, but it seems you already have an agreement correct? What has changed? You don't sign, then you keep operating as you always have. Nothing can change. You may miss the trips, but those may be gone anyway. The Rolex, hah, most that won them never got it. Do you see these perks in the franchise agreement? Wonder why????. Don't be scared, they can't stop selling you product legally and they can't afford not to. PMD needs revenue and can't afford to turn anyone away. They have 2-4 new dealers this year and they have lost over 10.

Do not let them intimidate you as normal. They can't legally stop selling you because you have a contract. Be strong, stand firm, and wait for the lawsuit coming this fall to explode. Do not give up your rights, you will want them when all is said and done.

Posted by ex PMD dealer on July 17th, 2009

What lawsuit?

What lawsuit are you talking about?  We haven't heard about any lawsuit.

Posted by Current Dealer on July 22nd, 2009

What happens if you don't sign

If you don't sign, you continue on with your everyday business the same way you are operating now, except you won't get the perks.  No President's Club Trip, no Rolex, no Super Bonuses.  To me and my family, it seem it's a small price to pay.  Interestingly enough, your current agreement allows you at the end of its duration to choose to stay in business another 120 months!  I had never realized that until someone else told me. 

The things you lose if you do sign:  1) they can tell you what hours you need to be open as well as what days of the week; 2) you're basically going to be a glorified delivery service for them so that they can sell product to customers in your territory and simply pay you a delivery fee; 3) they can send you product any time and you're responsible for paying for it, whether you can afford it or not; 4) if you daughter gets a job at a local furrniture store, technically you could be sued because the franchise agreement says no one in your immediate family can be in the furniture business; 5) if you develop a program that works really well in your territory and you choose to share this information with PMD, it becomes theirs, not yours.

I could go on and on.  I think they expect us all to sign and it will be interesting to see the s*it hit the fan when the majority won't.  My main reason for not signing:  this is MY business, not theirs.  They want the control and guess what, we all know that he with the control wins.  I'm not giving up MY control.

Posted by Current Dealer on July 22nd, 2009

Don't be crazy

Based on the research we had done by our lawyer neighbor, any current dealers who sign this agreement as it is now should have their head examined.  I can't imagine what moron would sign this one sided agreement. PMD is trying to trick the current dealers into thinking that agreement is no big deal.  SIGNERS BEWARE MAKE SURE YOU DO YOUR RESEARCH AND TALK TO A GOOD LAWYER.  If you still think it is ok to sign....God help you.

Posted by PMD Dealer on July 12th, 2009

Pretty easy decision

Bad agreement, bad releases, bad potential, bad requirements,bad private label stipulations, bad reasons they could terminate, bad legal risks developed by a very bad group of individuals. How could they knowingly develop an agreement that replaces a bad dealer agreement with exponentially bad franchise agreement. If you didn't have the feeling you were involved with a bad group you now know they are very bad. If you can't understand the direction of the PMD dealer who commented he is right, God help you and your family.

Posted by Former dealer on July 13th, 2009

It's really simple, sign or quit!

Who cares how restrictive the agreement is? Not one dealer I've met came from the furniture industry, NONE! It is highly unlikely that any of the current dealers would stay in the industry, most would go back to the industry they came from. What is the real risk that a current dealer would violate any competitive restrictions in the future? The only one's I've known about are those that failed as PMD dealers, blamed it on Jeff and then failed trying to do it alone. It's interesting how this system doesn't work for some, but the one's who left still use the same script and do the same thing. I called one the other day just to check.

I read a lot of angry messages on here from past dealers, most of the messages coming from probably one or two people immitating many individuals. I work my butt off as a current dealer and I'm successful although not yet a millionaire and not soon to be one. I'm realistic!I like to spend money...lots of latte's.

I have always taken responsibility for the decisions I make and take responsibility if the things I choose don't work according to plan. I quit blaming others for my failures a long time ago.

This company is like any other endevour or company you work with. People change, managers change, the economy changes, competitor stores open, some people work harder than others, some people get it and some people don't. That life!

Move on if you didn't make it work. Move on if it's not working for you today. I've moved from company to company in my 22 years of working in industry. Sometimes by my choice and sometimes not my choice. Right now, this works for me really well, I'm covering all the bills, putting money in the bank and work my butt off 7 days/week, day end and day out! I get tired, I get weary some days and others I'm on top of the world. Overall, It beats working in a salaried job getting the annual 3% increase and getting permission to take a vacation. I work hard! I work harder than I ever worked in my executive positions in corporate America. I sweat, unload trucks, move furniture, spend late nights advertising and meet every customer. This is what I choose to do. I voluteered for this when I bought my territory, I was not surprised.

I didn't invest a lot of money in this business for the return I'm getting currently. I recovered my initial investment in the first year! I'm on track to do $190K net income this year and I'm in a small city 200K population. Maybe I'm just lucky for now, who knows. No not lucky...when I resigned to join PMD I was nervous. My boss (CEO) told me one thing that stuck in my head because he owned a small company. "If you work harder and longer than your competitors, you will win. Most people don't want to work hard and they will quit". One of my competitors just closed.

In the end, there might come a day when PMD decides to go a different direction that I chose not to go. I'll quit then. It's that simple. I won't bitch about it, tell others to quit, share my bad luck story. I'll do something else.

Posted by O-Marc on July 14th, 2009

Interesting

I thought your post was interesting, but what city are you in?  How in the worst furniture economy most have ever seen are you about to make profits like you do, while most PMD dealers are struggling and going out of business?  How are you doing it?

Posted by J.R. on July 14th, 2009

some people work harder than others?

Frandeavor's media release from June 13th uses PMD Furniture statistics stating:

PMD Furniture Direct Dealers have become one of the most compelling success stories in the furniture industry with more than 100 locations nationwide generating more than $82 million in annual retail sales in 2006.

Move on if you didn't make it work...Sadly, I guess that is why from 2006 only 3 dealers from the TOP TEN are still running PMD Furniture/Power Marketing Direct clearance centers. Only three years ago! Yet even more pathetic, only 1 dealer from the top ten in 2005 is still current. The info is there if you seek it out. As always in life some people tend to bury their head in the sand rather than face reality.

But take it for what it is perception vs. reality.

Posted by JW on July 15th, 2009

PMD Earnings Claim?

"PMD Furniture Direct Dealers have become one of the most compelling success stories in the furniture industry with more than 100 locations nationwide generating more than $82 million in annual retail sales in 2006."

Does PMD have this information in their FDD Item 19? It is an earnings claim, but is it legal (the average PMD unit sales are about $820,000)

MG

Posted by My Gosh! on July 15th, 2009

PMD Sales

Does anyone know why all of PMD information in FranDeavor's release refers to 2006? Don't they have current sales or number of dealers at least as of 2008.  The 2006 information is misleading and at best outdated.. The old website never indicated that they did $82 million in retail. Who knows what their dealer count is but Jeff claims they lose 25% annually. That means they probably lose 35 to 40% annually. As Jeff said" We are an open book. We're a transparent business."  I would not use the words "compelling success" but realize they need to have some sizzle.

I suggest that all current dealers do what you and your advisors feel is right for you. Don't let the former dealers influence your decision once you have done your homework and due diligence. Only you can make this critical decision.

Posted by Jake on July 15th, 2009

You derserve what you get!

You derserve what you get. Sign that release, give up the right to proceed legally  and should any  Fraud or  Misrepresentations be discovered you give up the right to take any legal action. You get what you derserve. Get your wife to sign personally for your debt, accept the merchandise "as is" , give them the right to debit your bank account. You have every right to sign and be happy!  Don't care about the restrictions as PMD would never use them against you or anyone else. You probably didn't check the Franklin County Civil Courts cases involving Power Marketing Direct the supply chain/vendor relationship company. You probably don't have a clue PMD markups up your merchandise 30 to 40 % and plans to increase that by 5 to 10% qith the Franchise scam. You probably think the trips to exotic places are really cool and when you sign the agreement getting points towards the trip is really great.

Don't believe only one or two former dealers are concerned about the future of PMD dealers. Over 300 former dealers have an interest in ensuring others don't make the same mistake they made. You probably think they all blamed the company and that's why they failed but you are mistaken.

Good luck , past statistics prove that this company has a very difficult time retaining dealers for whatever resaon. You seem to be a "one " man gang and are making it work. Enjoy it, the numbers say you won't see year 5.

O-Marc, rumor has it they only have 4 dealers agreeing to sign. Looks like you and the other three are really on top of your game.  Good luck!

Posted by Former dealer on July 14th, 2009

PMD Dealer Markup!

The source of the majority of PMD's problems is greed. Dealer markup on product specifically. PMD marks up product roughly 20% over "wholesale cost" allegedly. Wholesale cost for a distributor (PMD) or large retailer is not the price point products are acquired at.When goods are purchased or contracted to be purchased by the container a whole different pricing structure goes into affect. Additional discounts up to 30-40% are not uncommon. Pre-paying for product also affords discount opportunities.The market price of commodities such as steel, wood, foam and fabric also represent discount opportunities for distributors.This gray area of "wholesale cost" is briefly touched on in PMD's licence and franchise agreements. In reality it represents a huge profit center the dealers never benefit from.Word for the wise. Do your due diligence. Engage legal council to look out for everyone's best interest.Another thought: Have a company wide confidential questionnaire that gave feedback on Joe Armetta's character and trustworthiness.With the actual cost of goods and Joe Armetta's value add defined PMD would have unlimited potential.

Posted by teacheskidsabc on July 16th, 2009