I purchased a Distributorship with them 2 years ago, prior to the FTC Ruling of June 19, 2003. At the time they WERE in violation of the FTC Franchise Rule in that there was required information missing that SHOULD have been provided in order for prospectives to make their decision.
I was not given a current list of distributors and their contact information. The financial information that was provided was unaudited and over a year old. When I asked for the information I was told they had no obligation to give it to me. "We do not have to follow the Franchise Rule." This was directly from the President's mouth. They told me that they could give me phone numbers of up to 3 current distributors so that I could speak with them. They said they would provide no more contacts becaused they had promised their distributors they would not give out their numbers and I would only be "bugging them". I was not allowed to choose with whom I spoke and CONVENIENTLY, none of them had any negative opinions.
They also made false statements about the territories and number of distributors per area. They told me that there would only be 3 distributors in my area and that I was the last one. I found out that was a LIE when they were required to send a list (The SAME LIST I had asked for before purchasing!!!)of their current distributors. There were WAY more than 3 distributors in my area. I also started receiving calls almost daily from people in my area who were interested in signing up with them. Obviously, they didn't care how many people were in the area!
The marketing people were setting up appointments for me in places where other distributors already had machines just like mine. THEIR distributors. Other people just like me who signed up thinking we had exclusive territories! The marketing people didn't care and tried to blow it off when I questioned them about it. They all of a sudden had NO IDEA where those machines came from since they were brand new in my area. Later, I found out they had lied about that as well. They were NOT new to the area and had placed distributors there a year before!
I was also told that my customers could not purchase machines and parts from anyone else. That is another LIE! You can purchase the machines and supplies on internet. What is to keep our customers from purchasing on internet and not goin through us. That in itself will put us out of business!
I have had ZERO luck with Customer Service! Last time I called to purchase coffee, it took them a week to return my call. They just keep signing people up, taking their money and then we become invisible to them.
The bottom line is this:
I spent $20,000 on 10 espresso machines (that ALWAYS break!) and NO customer service! The machines can be puchased on-line for $200.00 It costs them less than $100.00 to make the machines. The re-order price they are charging their distributors is ridiculous! They are charging anywhere from $650 to over $1000.00 for us to buy these machines that are cheap and leak or break down constantly! Not to mention how much it will cost you to fix them or send them in for repair. Wake up distributors! You are being taken for a ride!