Minuteman Press International Inc FRAUD - Ripoff franchisees for Royalties Farmingdale New York

 Minuteman Press over charges its franchisees for Royalties by deliberately and fraudulently inflating franchisees’ Gross Revenue. Gross Revenue is inflated because Minuteman does not deduct all sales credits from Gross Revenue as is provided in the Minuteman Franchise Agreement. Minuteman charges franchisees 6% royalty on the inflated Gross Revenue.

 Minuteman is over charging franchisees for royalties in breach of its own Franchise Agreement.

 Minuteman is using its FOCUS Management System (FOCUS) to commit the fraud against its franchisees.

 Minuteman has been requested on numerous occasions to fix the problem. It steadfastly refuses to do so.

 What does the Minuteman Franchise Agreement say about the deduction of sales credits from Gross Revenue?

The Minuteman USA Franchise Agreement defines the deduction of credits from Gross Revenue as:

 “Cash refunded and credit given to customers shall be deducted in computing Gross Revenue to the extent that such cash or credit represent amounts previously included in Gross Revenue on which Royalty Fees were paid.”

 The Minuteman Australian Franchise Agreement defines the deduction of credits from Gross Revenue as:

 “Excludes any sales credits such as the sale price of any Services or products rejected by customers where cash or allowances have been refunded or made to the customer.”

 Does the Franchise Agreement require sales credits to be passed within a time limit to qualify as a deduction from Gross Revenue?

The franchise Agreement does not specify a time limit for credits to be passed in order to qualify as a deduction from Gross Revenue.

Why is Minuteman’s FOCUS Royalty Statement fraudulent?

The FOCUS Royalty Statement has a paragraph inserted which quotes the definition of royalty payable as from the Franchise Agreement. However the quote deliberately and fraudulently omits to quote the permissible deduction of sales credits from Gross Revenue.

How can the fraudulent and complex FOCUS Royalty computation be explained?

FOCUS performs the monthly calculation of Royalties payable by franchisees to Minuteman.

FOCUS prepares a Royalty statement for the franchisee. It simultaneously prepares a file which FOCUS transmits electronically to Minuteman. Franchisees do not have access to the information in the file, however it is known that, amongst other information, the file contains Gross Revenue and Royalty Payable information.

When FOCUS performs the calculation for Royalties Payable to Minuteman, it does not deduct the following sales credits from Gross Revenue:

-  Prior Period Voids (i.e. current month sales credits for sales invoiced during prior months and which invoices FOCUS previously included in Gross Revenue).

-  Prior Period Write Offs (i.e. current month sales credits for sales invoiced during prior months and which invoices FOCUS previously included in Gross Revenue).

-  Credit Adjustments (i.e. current month sales credits).

Consequently Gross Revenue is overstated. FOCUS calculates Royalties Payable to be 6% of the overstated Gross Revenue amount. Minuteman therefore fraudulently overcharges franchisees for Royalties.

The non-deduction of the above mentioned sales credits from Gross Revenue is abreach of the Minuteman Franchise Agreement.

Why must franchisees submit the FOCUS Royalty Statement to Minuteman and why must franchisees pay the amount on the Royalty Statement?

It is a requirement in the Minuteman Franchisee Agreements that franchisees have to use Minuteman’s FOCUS Management System (FOCUS) in the franchise business.

Minuteman insists that Franchisees have to pay the full amount on the FOCUS Royalty Statement. Should a franchisee pay a lesser amount Minuteman would:

-  Threaten the franchisee that he / she is in breach of the Franchise Agreement.

-  Victimized the franchisee.

-  De-activate the FOCUS system and consequently the franchisee would be unable to manage the day-to-day activities of the franchise business.

-  Cease store support to the franchise business.

-  Threaten the franchisee with an audit of the franchisee’s financial books at the expense of the franchisee.

-  Threaten to terminate the Franchise Agreement.

Why is it necessary for franchisees to pass sales credits?

Queries and disputes arise in all businesses with regards to sales transactions. Often sales invoices have to be reduced with a sales credit before a customer would pay an outstanding amount. In many instances invoices may have to be credited in full.

Consequently the passing of sales credits is a standard practice in all businesses all over the world. Sales credits are passed for many reasons, e.g. incorrect pricing on an invoice, product quality issues, or wrong customer was invoiced, quantity disputes and many more reasons.

Customers can at any time complain to a franchisee if they are not satisfied with an invoice, quality of product or any other reason. There is no time restriction. Franchisees deal with queries and disputes as and when customers bring it to their attention. Often differences or disputes may take considerable time (sometimes months) before it is resolved.

It is prudent and sound business practice to pass credit notes as soon as a franchisee has determined that an invoice is not correct.

Are there real life examples of franchisees who were over charged for Royalties by Minuteman?

Yes there are. Franchisee no 1 used FOCUS to pass Credit Adjustments and Prior Period VOIDS (sales credits) to a value of more than $165,500 over a period of approximately 2,5 years. FOCUS did not reduce Gross Revenue and consequently fraudulently over charged the franchisee $9,930 (i.e. 6% of $165,500) for royalties.

Franchisee no 2 used FOCUS to pass sales credits to the value of more than $30,000 using the Prior Period Void / Write off transactions in FOCUS. FOCUS did not reduce the Gross Revenue and consequently fraudulently over charged the franchisee $1,800.00 (i.e. 6% of $30,000) for Royalties.

Most, if not all, franchisees have been fraudulently over charged for Royalties by Minuteman.

Is the Minuteman fraudulent mal-practice restricted to one country?

No. Minuteman operates its franchise system in USA, Canada, United Kingdom, South Africa and Australia. Franchisees in all these countries use the FOCUS Management System. It is highly probable that all Minuteman franchisees in all countries have been over charged for Royalties.  

For how long have Minuteman been over charging franchisees for Royalties?

Minuteman boasts in its marketing presentation to prospective franchisees, that it has been developing and fine-tuning its FOCUS Management System since 1978. It is highly probable that franchisees have been over charged for royalties for a period of up to 36 years.

Do we know by how much money franchisees have been over charged?

No we do not know. What we do know is that Minuteman has more than 900 franchisees and Minuteman has been franchising since 1975.  Most, if not all, franchisees have been over charged for royalties. It can be safely assumed that the over charges will be millions of dollars.

Is Minuteman aware of the over-charges?

The problem was brought to Minuteman’s attention more than a year ago. Minuteman has been requested to fix the problem on numerous occasions during the past year. It steadfastly refuses to do so!

Minuteman has deliberately and fraudulently programmed FOCUS to compute 6% royalty payable on an inflated Gross Revenue amount.

Minuteman cheats its franchisees over charging them for Royalties using FOCUS.

Minuteman over charges franchisees for royalties in breach of its own Franchise Agreements.

Current state of affairs

Franchisees and ex-franchisees are out-of-pocket whilst their money is in the bank account of Minuteman. Minuteman is denying the problem and apparently has no intention to fix it!