Springfield, VA - An independent hardware store open for 60 years went franchise -- rebranding itself as Ace Hardware. Now, the owners say, they say they may be forced to close in 3 or 4 months and they're suing Ace, accusing Ace Hardware of "fraud and deceit". [Fraud and deceit in franchising? Who'd have thunk it?]
The current owners bought Fischer's Hardware three years ago, after Ace convinced them it would quickly turn a profit as an Ace Hardware. [What? Someone selling a franchise promised quick profits? Who'd have thunk it?]
The owners say Ace falsified documents and inflated revenue projections. [This probably sounds familiar to many franchise buyers.]
The allegedly falsified documents and revenue projections were used to obtain an SBA-backed $1.8 million loan. [So now they're deeply in debt, the case for many franchisees.]
The owners say the store immediately began hemmorhaging cash because of Ace's inventory system: “We had $200 items walking out the door priced at $2".
The owner discovered the situation was not unique: “A lot have failed. A lot of people are suing. There is a pattern”
And, indeed, there's a class action in the works which could grow to representing 50 Ace franchisees, according to an attorney working on the case.