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10-17-2006, 03:31 PM
| #2 (permalink) | ||
  Join Date: Nov 30 2000 Location: Ontario Age: 61
Posts: 38,594
Rep Power: 107   | Re: frachising Quote:
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10-17-2006, 03:34 PM
| #3 (permalink) |
| Join Date: Nov 30 2000 Location: Ontario Age: 61
Posts: 38,594
Rep Power: 107 | Re: frachising Friends don't let friends buy tanning franchises for good reasons! Read this post from Sunday's Denver Post Some dreams come with too much risk By Al Lewis Denver Post Business Columnist DenverPost.com April Hudson got her driver's license at age 14 so she could shuttle around her two blind parents. At age 19, she began investing in real estate. At 28, she had equity in rental properties and $50,000 in the bank. Then, in April 2002, she bought a tanning salon franchise from Lakewood-based Executive Tans. Today, at 33, Hudson is recovering from personal bankruptcy. She claims Executive Tans and its founder, Wayne Smeal, overstated revenue potential and understated costs of operating franchised tanning salons. More than 20 franchisees - owning about one-third of Executive Tans' 70 stores - are suing the company with these and other claims before arbitration panels. Hudson is among them. In struggling to get hertanning business out of the red, Hudson said she not only burned through her own real estate equity but her mother's as well. "I made huge mistakes," she said. "Things I will never forgive myself for. My blind, unemployed mother - I owe her for all of the equity in her home." Smeal, 44, a lifelong salesman who founded Executive Tans in 1991, denies his company made any misstatements. "We have not overstated one iota," he said, arguing that some franchisees simply failed to control startup costs. Executive Tans never lost a store until 2003, Smeal said, but since then it has closed 19 amid an unexpected downturn. "I am not going to sugarcoat it in any way," he said. "It's a tough, tough business. Nobody in the industry is making tons of money. There are distributors going under. There are lotion companies about ready to go bankrupt. "I truly think the gas prices have something to do with it," he said, explaining that the money consumers used to spend tanning is now going into their tanks. "I don't think the business is down as much as I think the market is saturated," said John Overstreet of the Indoor Tanning Association. In these tough times, franchisees that sue are trying to renege on franchise fees, said Smeal. "Instead of paying $1,285 a month to me, they're paying $1,000 to an attorney," he said. The attorney in this case, Bud Culp of Denver-based Moye White, typically defends franchisors, such as Denver-based Quiznos. In this case, he's representing franchisees. He claims most Executive Tans franchisees never made money, and many are simply belly up. "I have never seen a franchise system like this in 16 years of doing franchise work," he said. "I don't want them in the business." However it ends, the case is a cautionary tale for anyone considering the hyperbole-filled world of franchising. Buying a franchise can be a road to riches, but it also can be a road to ruin. Over the years, some franchise owners have told me they've taken on unconscionable debt loads only to toil countless hours for less than what a regular job would pay. The Federal Trade Commission and a few states loosely regulate franchisors. Most disputes are settled quietly, often before private arbitration panels. Hudson told me she bought into Executive Tans, expecting expert advice opening her store at Parker Road and Florida Avenue. "Executive Tans didn't lift a finger to help me," she said. She said she spent $100,000 more than what Executive Tans said she needed opening the store in April 2002. Today, after filing bankruptcy, she says the store barely breaks even. Hudson thought if she expanded, her business might improve. Borrowing money from her mom, she purchased a failed Executive Tans store on Arapahoe Road in Littleton in September 2004. She says she closed that store in July after learning the company had misstated revenues. Smeal denies Hudson's claims and complains that she stuck him with long-term lease obligations after closing her store. Jill Hutson-Martin, the first owner of the failed Arapahoe store, still owns two more that barely break even. Like Hudson, she hopes to rename them "Exotic Tans" and get as far away from Smeal as possible. She too claims Smeal grossly misstated numbers to sell franchises. "We lost all of our 401(k)s," she said. "We lost everything in our home equity. We're still paying creditors. We have no life. He's taken everything we have. And he's doing this to a lot of people." Al Lewis' column appears Sunday, Tuesday and Friday. Respond to Lewis at denverpostbloghouse.com/lewis, 303-820-1967, or alewis@denverpost.com. |
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10-17-2006, 06:23 PM
| #6 (permalink) |
 Join Date: Oct 15 2003 Location: Florida, New Jersey Age: 39
Posts: 165
Rep Power: 21 | Re: frachising that's why executive tans names have been changing, i thought they were being bought out and sold to other people....wondered whats been going on...hmmm...interesting, but not all franchises are bad! |
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10-17-2006, 06:42 PM
| #8 (permalink) | |
 Join Date: Apr 20 2005
Posts: 592
Rep Power: 23 | Re: frachising Quote:
__________________ :angel: | |
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