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PIRTEK Franchise SPOTLIGHT 1

PIRTEK USA & The Need for Franchise Transparency

The FTC intended The Franchise Rule to ensure that prospective franchise owners have access to information, the experiences and the opinions of former franchise owners.  Today, thanks to NDAS, mandatory arbitration & a lack of federal franchising oversight, franchisors can create provide Kumbaya-like images of their franchisee-franchisor relationship while franchisees are prohibited from sharing their opinions… or the truth.

(Franbest.Com)  PIRTEK USA is hyping their milestone of having doubled its number of franchise locations since the Australian corporate parent took over in 2015.

Their press release states:

A growing customer base has prompted PIRTEK franchisees, Tom and Julie Fechter to open their second hydraulic and industrial hose service and supply center in Wisconsin. The new store, PIRTEK Racine, marks a significant milestone. It is the 100th franchise to sign on with PIRTEK USA in the US. The company announced the signing of the franchise agreement for Tom and Julie’s store in December [2020]. This achieved a goal established by the brand to reach 100 franchises by the end of 2020.

The Fechters’ flagship store, PIRTEK Menomonee Falls, was also notable for PIRTEK USA as it was their 50th US location.

The previous owner of PIRTEK USA grew the system to 50 locations over a span of about 18 years.

Glenn Duncan accelerated that growth, opening the next 50 locations in just 5 years.

PIRTEK’s  Glenn  Duncan  Doesn’t  Want  to  [Appear to]  Grow Too Fast

In 2015, Duncan claimed he wanted to be careful not to grow too fast.  In a Financial Review article, Glenn Duncan stated:

“I think the biggest challenge is not letting it run away on us, and getting clouded by expansion and the blue sky that’s out there,” he says.

It’s just keeping the reins on the growth, because when we set up a centre, we don’t want it to fail…”

One thing is for certain:  Glenn Duncan & CEO Kim Gubera are dedicated to creating the impression that their relationship with franchisees is a conflict-free love fest… and that they’ve had NO failures… even though they have.

How  PIRTEK  USA  –  Like  Other  Franchisors  –  Hide  Complaints  from  Prospective Franchisees

The PIRTEK USA franchise agreement requires that all franchisee disputes be resolved through binding arbitration via the AAA in Orlando, Florida using an arbitrator with at least 5 years of franchise law experience.  Arbitration provides not only a strong legal advantage for the franchisor, it is a private proceeding that helps keep the nature of the dispute and allegations away from the public and prospective franchisees.

Additionally, the PIRTEK USA FDD tells prospective franchisees:

Franchisees have signed confidentiality clauses during the last three fiscal years. In some instances, current and former franchisees sign provisions restricting their ability to speak openly about their experience with Pirtek USA, LLC.

You may wish to speak with current and former franchisees, but be aware that not all such franchisees will be able to communicate with you.

The PIRTEK USA FDD also states:

Exhibit 4 lists the name, city and state, and business telephone number (or, if unknown, the last known home telephone number)  of every franchisee who had an outlet terminated, cancelled, not renewed, or otherwise voluntarily or involuntarily ceased to do business under a  Franchise Agreement during the most recently completed fiscal year, or who has not communicated with us within 10 weeks of the effective date of the Disclosure Document.

As you’ll see, this latter statement does not appear to be true.

While CEO Kim Gubera publicly describes the PIRTEK USA franchise system as a virtual lovefest with ZERO franchise closures in 2020, we have reason to suspect that they’ve failed to disclose material facts in order to further that image.

Kim  Gubera’s  portrayal  of  PIRTEK  USA’s  COVID  support

In November, 2020, Franchise Times featured PIRTEK USA CEO Kim Gubera in a glowing tribute titled “Education, Mentors Fueled Rise of PIRTEK CEO.”

Kim Gubera painted an old-fashioned, Pollyanna picture of herself and the PIRTEK support team stopping at nothing to make the PIRTEK franchisees feel loved and listened to.

Kim Gubera said:

When COVID-19 hit, “We called every one of our franchise owners every single day for eight weeks. We made 2,200 phone calls. During that time, people wanted to talk to people…”

…fortunately we have not had any closures”…

Anonymous sources confirm that, yes, PIRTEK USA regional managers, operations managers and even Kim Gubera called their centers daily.

And they claim that, at first, it was helpful.  There was good information imparted about resources and aid available.

However, after a while the daily calls with the same questions and nothing new to report got routine, and then annoying. According to one anonymous source:

After a while it seemed like someone from above had mandated it so the franchise sales people could say ‘See how caring we are?  We called every day for 8 weeks!

And another:

With PUSA, sooner or later it always comes back to selling more franchises.  That’s the priority.

And what about Kim Gubera’s claim that there were NO franchise closures in 2020?

“We  Have  Not  Had  Any  Closures…”  PIRTEK  CEO  Kim  Gubera

Leading franchise watchdog site UnhappyFranchisee.Com has called Gubera’s claim into question in a new post:

PIRTEK USA CEO Kim Gubera Claim of No Closures in 2020 Questioned

What happened to PIRTEK Bronx & franchisee Asim Iqbal?

In Fall, 2019 PIRTEK issued press releases and a PR blitz heralding its first franchise location in New York.

As of January 8, 2020, franchisee Asim Iqbal’s Bronx location was listed on the PIRTEK website.

By April 14, 2020 the only PIRTEK location in New York had been deleted from the list.

The press release was deleted from the website as well.

The 2021 PIRTEK FDD would list Asim Iqbal as having left the system during 2020.

It stated:  “Reason for Leaving: Voluntary abandonment”

Not a closure?  Voluntary abandonment?

PIRTEK USA franchise

Follow Up Post Cites Possible Closures in California, Arizona, Texas & Virginia

In this follow-up post,

PIRTEK USA, Glenn Duncan Asked About 2020 Franchise Closures

UnhappyFranchisee.com questions PIRTEK Chairman Glenn Duncan regarding closures of the following locations:

  • Long Beach / Signal Hill, California (Franchisees Paul Martin & Marian Martin)
  • Palos Verde / Tucson, Arizona (Franchisees Jeff Ohstrom & Debra Ohstrom)
  • Dallas & Fort Worth (Meacham), Texas (Franchisee Jim Lager)
  • Bronx, New York, New York  (Franchisee Asim Iqbal)

Is  PIRTEK  Disclosing  Failed Franchisees as Required?

Unfortunately, sometimes prospective franchisees cannot rely on franchisor’s representations – even those disclosed in the FDD – without their own detective work and independent due dilligence.

The Federal Trade Commission Franchise Rule Compliance guide states:

Item 20 of the amended Rule requires the disclosure of contact information for every franchisees who has had an outlet terminated, canceled, not renewed, or otherwise voluntarily or
involuntarily ceased to do business under the franchise agreement during the most recently completed fiscal year…

The FTC intended for prospective franchisees to communicate with recent franchisees who left the system.

In PIRTEK USA’s case, contact information for these franchisees are not listed:

  • Asim Iqbal
  • Jeff Ohstrom & Debra Ohstrom
  • Paul Martin & Marian Martin

Perhaps that doesn’t much matter, since “former franchisees sign provisions restricting their ability to speak openly about their experience with Pirtek USA, LLC” anyway.

So for the time being, prospective franchisees must be super sleuths… or hire one to do proper due diligence for them.

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Featured 1 RETAIL FRANCHISE

7-Eleven Asset Protection Under Fire

The website UnhappyFranchisee.Com reports that the 7-Eleven Asset Protection Department is under fire.

7-ElevenThe post 7-ELEVEN Bombshell: Insider Accuses 7-11 of Predatory Franchise Practices,   states that “Former 7-Eleven Corporate Investigations Supervisor Kurt McCord has dropped a bombshell in the lawsuit of 7-Eleven, Inc. v. Karamjeet Sodhi, et. al., alleging that the convenience store giant has a covert team designed to illegally seize franchisee stores for profit and to eliminate respected franchisee association leaders they deem to be a ‘pain in the ass.'”

The “Bombshell” alluded to is the Declaration of 7-Eleven whistleblower Kurt McCord, a loss prevention professional  who served as 7-Eleven’s Corporate Investigations Supervisor for 7-Eleven, Inc. in 2013.

Read his damning tell-all statement here: Certification of Kurt McCord

Read the law firm’s complaint regarding alleged stonewalling by 7-Eleven, Inc.:  Letter to Judge Schneider

Things are really heating up in the war between 7-Eleven, Inc. and its franchisees.

It sure doesn’t look like it’s going to be subsiding anytime soon!

What do you think?  Has 7-Eleven asset protection finally gone too far?

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NEWS

Erwin “Erv” Keup: A Lifetime of Achievement

A Tribute to Erv Keup, author of the Franchise Bible, by Rick Grossman.

Erv Keup
Franchise industry legend Erwin "Erv" Keup

A Lifetime of Achievement: Remembering Erwin (Erv) Keup

By Rick Grossmann

When I was in college I had a small business.

I wanted to expand my business and was evaluating the different methods of business expansion when I was introduced to franchising in one of my classes. I immediately fell in love with the model and started researching different ways to franchise my existing business. At that time being a young college student, resources were tight and the options were few.

I contacted numerous franchise development companies, consultants, and attorneys just to find out that the investment was way beyond anything I could ever come up with. One day, I went into a bookstore and was searching in the business section for books on franchising when I came across Franchise Bible. The author was, of course, Erwin J. Keup. I read the book in one day and started putting together my thoughts and vision for a franchise.  Even though we were a young start up company and had very few resources, we believed we could really make a franchise happen.

On a long shot, I started a little primary research and looked on the back of the book and saw the picture of Erv Keup and his address. I was able to find his phone number with a little hard work and research (this was way before Google). I contacted his office and expected to leave a message. But, when I explained to his secretary what we were trying to do, he immediately took my call and graciously spent over an hour talking to me about our franchise model and shared some money saving tips and ideas to get us started. After we were able to have a few phone conversations, Erv volunteered to drive over 100 miles to Santa Barbara, which is where I lived. But he didn’t mind because his passion for franchising and the enthusiasm that we had made the trip worthwhile.

“Erv Keup’s passion for the franchise industry, the people who worked within it, and his overall belief in franchising and its contribution to the economy, has helped countless people realize their dreams through business ownership.”Rick Grossman

He was able to show us cost effective ways to create our franchise model and was flexible with helping us put our franchise documents together. We launched our franchise and had successful growth over several years. We never would have been able to do it without the help and assistance and the belief that Erv Keup gave to us.

Erv and I quickly became friends and started working on other franchise projects over the years. Erv took me under his wing and acted as my mentor. He taught me the business. I then started my own franchise development and consulting company and Erv and I worked on many projects together over the years and became friends in the franchise business. We knew when our wives were tired of hearing us talk about franchising we could always call each other and spend hours talking about the ins and the outs of our industry.

At the end of last year, I decided that, as Erv entered into his retirement years, it would be a good time to nominate him for a lifetime achievement award. I started working on it several months before the end of 2011 in hopes to present it to him in November of 2011. Unfortunately, we were all surprised and shocked when Erv suddenly took ill and passed away on October 16, 2011.

Even on his deathbed, he was instructing his sons on how to finish the 7th edition of Franchise Bible. Erv Keup’s passion for the franchise industry, the people who worked within it, and his overall belief in franchising and its contribution to the economy, has helped countless people realize their dreams through business ownership.

While crafting ideas for the Franchise Bible 7th edition, Erv told me that he really wanted to emphasize how franchising is such a huge part of the backbone of America, such a part of the success of the American dream, and how it could be a big part of pulling us out of the current economic situation that we’re in today. Erv was a great man and he’ll be greatly missed. This lifetime achievement, remembering Erv Keup, is our dedication and memorial to a great franchise believer and to a man who was always there to aid others in the pursuit of their franchising dreams.

Erv was most proud of his loving family. He would often tell me stories of their many adventures.

He is survived by his wife Mary of 54 years, his eight children, and his 17 grandchildren.

He told me he often teased his kids that 17 grandchildren was a good start but if they followed his pattern he should have had 64.

I had the privilege of attending his funeral service and getting to know other members of his family. They are a family of strong believers in God and his service was a beautiful celebration of his life.

Erv Keup practiced franchise law for over 45 years and helped countless franchisors and franchisees through the discovery and evaluation processes both personally with his firm and through the Franchise Bible. The 7th Edition of the Franchise Bible is due to be published by Entrpreneur Press in Fall of 2012 and it will be dedicated to the life and legacy of Erwin J. Keup.

 

Rick Grossman

Goodbye my friend.

Thank you for being my mentor.

 

–  Rick Grossmann

 

Did you know Erv Keup? Feel free to add a remembrance or comment below.

ABOUT THE AUTHOR:  Rick Grossman is founder and owner of franchise development firm Franchise Matchmaker.

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SPOTLIGHT 1

Favorite BBQ Chains

Which of these 50+ BBQ (Barbecue, BAR-B-Q, Bar-b-que) chains are your favorites… and why?

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NEWS

Great Clips: Ethical Business Practices Pay Dividends

Despite the recession, hair care franchise company Great Clips is growing at, well, a great clip.

According to Vice President of Franchise Development Rob Goggins:

  • Great Clips has posted same-store sales increases for 22 straight quarters.
  • Great Clips is on target to recruit more than 100 new franchisees this year.
  • Great Clips is track to sign close to 200 leases.

Yet not only are they awarding new franchises at an impressive rate, Great Clips is also receiving awards… the latest being for business ethics.

Great Clips Receives 2010 Minnesota Business Ethics Award (MBEA)

Wednesday, May 19, 2010, Great Clips was presented with the 2010 Minnesota Business Ethics Award (MBEA) for “ethical excellence.”

The MBEA was established in 1999 by the Twin Cities Chapter of the Society of Financial Service Professionals and the Center for Ethical Business Cultures at the University of St. Thomas.  The purpose of the award is to raise the standards for business ethics in Minnesota and to honor companies that exhibit the highest standards of ethical performance.  In 2009 the Minnesota Society of Certified Public Accountants joined as an award sponsor.

MBEA recipients are selected based on company size.  Certes Financial Pros received the small-company award.  Edina-based Great Clips Inc. received the midsize-company award.  Imation Corp. received the large-company award.

Congratulations, Great Clips

In tough times, maintaining a reputation for ethics and honesty is more important than ever.  Obviously, the commitment Great Clips has made in building a reputation for fair-dealing and good business practices is playing a key role in their success.

Congratulations to Great Clips and its franchise owners for the MBEA award and for setting a winning example.

Are you familiar with Great Clips? Share a comment below.