This is about par for the course when it comes to dealing with Sunbelt. I met with Sunbelt in January 2004 about a restaurant for sale in North Dallas. Most of the listings that Sunbelt has listed in the Metroplex are such fraudulent junk, that they won't even take a CA by fax, and fax any information back to a buyer in return. They force you to take off from work and come see them in their office. This is a practice that Sunbelt uses nationally more than any other brokerage house that I've dealt with. They then show you information not only about the business that you are inquiring on, but on all their businesses as you are hemmed into a little office. Well, I decided not to make a move on that restaurant because there were just some things that didn't smell right. That was in January of 2004. Well, in October of 2004, that Sunbelt broker was sending out a mass e-mail to a bunch of prospective buyers (and I was on that list) that a restaurant of theirs had recently been reduced in price. I recognized the listing as the same one I had taken time off from work and visited him about in January 2004. This business was supposedly in January 2004 a business that made more than $150, 000 in owner's cash flow. Well, THE REVENUE WAS EXACTLY THE SAME, but the price for the business had been cut in half from what it was in January, and the owner's cash flow was listed as half what it was in January!!! How is that mathematically possible?
This same Sunbelt Business Broker pitched a couple of Schlotskys to me in April or May of 2004. These businesses were supposedly making six figures. Just a short three months later, Schlotsky's, the national franchisor headquartered in San Antonio, TX, filed for Chapter 11 protection in August 2004. I've been seeing them closing their doors all over the Metroplex.
And I'll never forget my frustrating dealings with Sunbelt Business Brokers in Louisiana. I inquired about a supposed 6 figure earning restaurant in Shreveport in December 2003, which is only 50 miles from my small hometown. This business served southern Louisiana cuisine, and I visited it twice in January 2004 on Saturday nights during good weather, and stayed more than an hour and a half each time. I saw less than ten diners enter the restaurant (which was a dump) each time. Needless to say, this was frustrating because it takes over eight hours to drive to Shreveport and back from Dallas, and basically these trips ruined two of my weekends, which are extremely valuable to an overworked accountant trying to close the year end books in January for a publicly traded company. Needless to say, I didn't buy the business and never even initially tried to take the broker to task. I, through e-mail, politely told him I wasn't interested. He seemed offended and e-mailed me back saying that he owed his clients the duty of telling them why I wasn't interested, and that I should be courteous enough to tell him. When I told him about the simple mathematics of what I observed, he became very angry and told me that he had known the owners since college, and that I just lacked the intestinal fortitude to buy a business. It burned me so bad, I wound up having to pen a long e-mail (similar to this one) where I had to explain to him that to support their asserted revenue numbers, they would have to be making over $150 per plate from the volume of customers that I observed on two Saturday nights. This restaurant was a tin building that had bars on the windows and doors, and their menu was cheap. Believe me, they weren't bringing in one hundred fifty dollars a plate in revenue. Luckily, he didn't respond back, but the whole ordeal had me so upset, at one point I decided that if he continued to respond and insult me, I was going to offer to PAY HIM $200 to come sit in the parking lot of that restaurant with me on a Saturday night and count customers going in the door for three hours. My wife thought I was nuts to consider doing it, but enough is enough. Luckily, after my long mathematical/logical e-mail in which I defended my intestinal fortitude (he had said I lacked guts) he left me alone. (I don't know this for a fact, but my old Louisiana Sunbelt Business Broker buddy recently had an add that suspiciously sounds like a Schlotsky's.)
Of course, this doesn't have anything to with me, but Sunbelt's crookedness extends even to members of Congress. I read last year about a well publicized lawsuit that involved Senate Majority Leader Bill Frist. Apparently, the case made national news because of Frist's involvement. In the late 1990's Frist was a minority owner in a small, service based business that was located close to a Tennessee college campus and served the college student population. (Frist was not active in the ownership). The majority owners decided to sell the business, and the listing broker was Sunbelt Business Brokers. The couple that bought the business were shown TAX RETURNS that later proved to be fraudulent. The tax returns purported to show that the business made over $100, 000. The couple paid over $400, 000 for the business, and they subsequently never had a single month of ownership in which they made money. They lost their life savings, and were forced into bankruptcy within a couple of years. They are now suing Sunbelt and the owners, which include Senator Frist. Sunbelt, for it's part has denied any wrongdoing, and made statements to the media claiming that the new owners mismanaged the business, and that is why it failed. I could go on and on and on about my other unfortunate experiences with Sunbelt Business Brokers in the last couple of years, but I'm tired of typing. I've had many, many other unfortunate dealings with Sunbelt, but why go on? . I could point out that when cruising BizBuysell.com and Bizquest.com over the last couple of years, the businesses that have the lowest spread (dollar difference between revenue and cash flow….low revenue and high cash flow usually don't go hand in hand) are usually Sunbelt Listings. Sunbelt is the undisputed national "King of the Junk Listings." That is why Sunbelt Business Brokers are slimy, defensive, aggressive, and mean spirited. That is also why Sunbelt is the king of faxing a one page typed P&L that usually causes more questions than it answers, and if you ask any questions about it, they'll say "Make an offer, put ten percent in escrow, and then you'll have seven days to do due diligence." Who the heck is going to spend thousands of dollars to audit a P&L that doesn't make sense in the first place? The uninformed, that's who. The same people who buy all these smaller (less than $250, 000) franchises and 80% of them lose everything.) My wife met a young mother in our childern's playgroup a few years ago, and she and her husband have since been financially devastated by the purchase of a Quiznos franchise. She can no longer stay at home, and has been now forced to place her small children in daycare and return to the workforce. The typical franchise agreement is definitely the most one sided legal document commonly used in American business. The International Franchising Association is such a powerful lobbying group on Capitol Hill, (which is primarily funded by the larger, "safer" franchises "think Golden Arches" their pockets so deep, that year after year, no reform ever takes place, and as a result, cronies like Sunbelt go about destroying uniformed, middle class families, with no fear of regulation or legal recourse. Meanwhile, because of a few high profile audit failures, my profession (CPA) gets crucified in the media, and Sarbannes Oxley is passed as a result. Why is there not reform of the business broker profession? I guess there is a lot of sympathy for the poorest in our society, but the people who have amassed several hundred thousand dollars don't get much sympathy. They are not rich, but they are not poor. Too rich for the Democrats to be outraged when they're defrauded by sleazy business brokers. Too poor for the Republicans to get all up in arms. Words cannot describe my frustration, but all I can say is this. There is an old adage from the Bible that says you reap what you sow.