372. Met with corporate and didn’t feel listened to but rather them wanting to use me

Chapters

• 0:00 Opening up about the corporate call
• 3:06 Bankruptcy realities and being unheard
• 5:46 False accusations about paid-in-full sales
• 8:11 Corporate demands and questionable requests
• 12:01 Contract disputes and next steps

Transcript

Speaker 1: 0:32

Good morning. Well, I caught up with corporate yesterday. It went so-so. It didn't go extremely well, it didn't go terribly well, but I definitely did not feel listened to as a franchisee. Basically, the call started off a little bit rough. It was myself and a couple folks that are frontline workers for the brand and then so high up people on the brand as well. I'll keep titles and names um confidential, but basically said all right, um, thanks everyone for hopping on. Today we're going to talk about the studio.

Speaker 1: 1:10

Um, yeah, as you probably saw, I'm not able to keep the doors open, so we're declaring personal bankruptcy. My attorney advised we close the doors and yeah, I have everything here ready to go so that it can be handed off if you guys want to take it over. Yeah, I don't know how else we'd like to open. And one of the higher ups, he said well, man, you kind of F this whole thing up. And he didn't say F, he said the actual word. So pardon my French, but you F this whole thing up. You made the brand look bad.

Speaker 1: 1:42

There are other people whose livelihoods are at stake. My family is impacted. The other folks on corporate's families are impacted. I mean, I know you have a family. But, yeah, I just want to get that out there and say my piece. And he may have said that stuff later on, um, but that's the thing that comes to mind from recollection from yesterday. So wrote that in there two minutes into the 40 minute conversation. And, um, obviously I know that they're going to be butthurt about what I did. Um, they're not going to get paid royalties anymore. They now have members to handle for the pushback.

Speaker 1: 2:19

So, yeah, I wasn't expecting them to give me hugs and kisses walking into the call, but it definitely started. It felt like they were implying that I owed them something and I can owe them good faith, brand representation, a good faith transition for members, but the point of personal bankruptcy is to not financially owe them anymore. So I went through a few more things, one of the higher ups at one point. There were two points where I knew that I was not being listened to, and one of them was where, well, I guess there were three. The first one was where I said like, yeah, like. This is a business. We cannot keep injecting our personal cash into, like we are. We're losing money personally every month. It's not just business funds, we're not losing personal funds. Declaring bankruptcy was the only way to stop the twice a day phone calls, twice a day certified letters to me and the studio and stop collections efforts Like we just don't have the money.

Speaker 1: 3:17

We were told the bank was going to seize assets on the 1st, and so, yeah, we told the members, like on the 5th, that we're closing the doors, and so, yeah, we now have zero credit cards. We have zero ways to pay for anything other than our debit cards. We now need to go find those so that we can buy groceries this week. And I don't know how we're going to do that. We don't. And then they just continue talking about something completely different, and I'll admit that was kind of like a fishing attempt on my part to see if they were listening To say like, hey, I don't know how we're going to buy groceries. This week We'll be able to buy groceries, we have the money to do it. But I was hoping that they were listening enough to catch them off guard To be like wait, you can't buy groceries or you don't know how to buy groceries Enough to at least hear when I say something that's a little bit outlandish but yet real at the same time. And they completely glossed over it. They moved past it. So that was my confirmation. They were not listening to my scenario.

Speaker 1: 4:19

Um, to the credit, one of the guys in the call did speak up at the moment and say like hey, for what it's worth, nathan, yeah, we're having to deal with a lot of customer questions, a lot of customer complaints, um, and so I've run. I'm not going to make plight of your situation. I'm sorry that you're declaring bankruptcy. Um, so I don't want to make light of that. Uh, and then we continue talking about other things. But one of the folks on the call was very reasonable and I did appreciate that. The frontline person was very, very good at being able to pull stuff up very quickly and he was just more listening. I guess it was the main upper person that I'm more perturbed by. So that was the first one Not acknowledging we didn't have a confident way to buy groceries. Another one was like.

Speaker 1: 5:12

Probably two minutes later they said like, so let me get this straight. Uh, your plan, nathan, was to go ahead and sell a bunch of paid in fulls, shut the business down and then run away with all the cash. Is that right? And on this, and right before that, I told him uh, no, last year we bought the business. The seller did a paid in full sale. They took the cash, sold it to us. We've been servicing those 35 members for over a year now they are due for a paid in full. We have sold zero paid in fulls and now whoever opens the studio can sell those paid in fulls.

Speaker 1: 5:40

And then the upper person said like so let me get this straight. You, your plan, was to sell a bunch of paid-in-fulls, take the money and run and then corporate has to issue refunds. Am I right? And I said no, the exact opposite. The seller did that to us. We could do that. We have not done that. I have given executive order to my team for the past four plus months to not sell a single paid in full. They have been explicitly told to not do that. And someone chimed in. But Nathan, like you're the owner, anything that your staff does you're responsible for. I said okay, I'm fine with that. I asked them how many paid in fulls we've sold. I've told them to sell none. We have sold none and if they have, I would have undone it on the spot.

Speaker 1: 6:25

And then the frontline guy says actually pulling up the report, and the upper guy says hey, frontline worker, how many pips has Nathan sold recently? Frontline worker says actually, it looks like he has sold zero paid-in-fulls since the CRM migration eight months ago, so it's hard to tell from what they sold last year. So on the spot I said I've sold zero of these. Basically, it's like selling a gift card, closing the business and then the customer has no way to redeem the gift card and so it's a sneaky, sleazy way to get money and screw the consumer over. And so I was not selling gift, I was not selling gift cards, and I was being accused of that on the spot by the upper person. The frontline person said hey, like please don't be doing this. I said I'm not doing it. Frontline person says oh, you haven't sold a gift card in eight months. And so I felt confirmed and validated.

Speaker 1: 7:15

So, upper person, if you're listening to this, I hope you eat the words, because I told you I was not screwing over the consumer. You assumed I was screwing over the consumer. Everyone else has confirmed I'm not screwing over the consumer. So I will gladly accept your apology when you decide to issue it and I will issue a correction when I receive that.

Speaker 1: 7:34

So that was the second one where I knew I was not going to be given the light of day by the upper person. Well, I told you I was not screwing the consumer. You said I was screwing the consumer. You heard I was screwing the consumer. You said I was screwing the consumer. You heard I was screwing the consumer and everyone else says I was screwing the was not screwing the consumer. So there you have it. So there's that one. Um not listening when I said I'm not sure we're gonna buy groceries, being told I'm screwing the consumer when that's not in fact the case. Uh, and then at the end, um, the upper person said well, nathan, things have to be made right. You have a moral obligation to have told this stuff sooner, which, sure, yes, I will concede that I could have told corporate sooner. I was closing the doors.

Speaker 1: 8:13

After talking with other franchise, former franchisees of this and other brands, other business owners, this was the unanimous feedback I received to not inform corporate ahead of the consumer. Feedback I received to not inform corporate ahead of the consumer because, historically, corporate has stepped in and harmed the experience for members and staff and owners more than if they had not known, and so, for better or worse, track record wise. That was the advice I received and that was the advice that I followed. So corporate did find out ahead of everyone else by like five or 10 minutes. It was not a multi-day heads up, and so I will. I will acknowledge that, um.

Speaker 1: 8:50

But near the end of the call, corporate said all right, well, nathan, um, well, and I did mention along the way, um, I've been intentional with my conduct, with my wording and everything. I've used the word indefinitely, not permanently closed. All the pages are frozen and paused, so nothing has been deleted and everything has been allowed to remain open in the sense that, like, I just needed to give the new password to management and then, like it's a turnkey business essentially, so nothing has been deleted or burned and I even, like, recommended the four nearest other brand other locations when closing the studio and so I've done nothing to exploit, I've explicitly done nothing hard to harm the brand and, yes, people may be butthurt that they found out 12 hours before the next class that the studio was closed. But anyhow, the upper person said all right, well, you have a brand obligation. I can't remember if he said moral obligation, but I believe he said moral obligation to have conducted myself differently.

Speaker 1: 9:57

I've conducted myself differently and so to make it easier for them to refund all the customers, he's asking me to wire the remaining bank account funds from my business account to corporate and then they will handle the disbursement and cutting checks to members. I said I'm open to it. I'm going to talk to my attorney first and go with what he recommends. He said well, don't forget, nathan, you have an obligation to your customers. You need to do the right thing here. And all the while, my merchant account got shut off several days ago.

Speaker 1: 10:28

So what would make sense is if I issue a refund through our, so people pay us through a CRM, like they pay the club through like a credit card processor, what would make sense is I issue the refund back through the credit card processor so that the funds go straight to the client account. So for me, back to the customer. However, corporate has asked me to wire them funds and then they will handle all the distribution of the funds. However, if I do that, then corporate keeps all the royalties and commissions that they receive and then members get a feedback and I have no confirmation that anyone got a refund. So that sounds fishy. Uh, I will ask my attorney about that, Like I said I would. Uh, but it sounds fishy. Whenever someone says, wire me funds, that sounds fishy from the get go. So that was an oddity as well. They're trying to keep their royalties before customers get refunds so they can get their slice of the pie. So that's a little fishy too, along the way. And so, yeah, that's where things are at right now.

Speaker 1: 11:29

So they also emailed out the members that I am in breach of contract and have broken my contract with corporate. And I asked them about that, like where in my 50-page franchise agreement did I breach it? And the upper person said Nathan, I'm not going to go and find the exact line item for you, but somewhere in there it says you have to stay open for 10 years. You've been open for one year, so you're in breach of contract. And they messaged that the fact that I did not inform them of major operational changes ahead of time means I'm also in breach of contract. Okay, um, first, I cannot confirm that in the franchise document. Yes, that would be. That would be. That would be the the right thing to do when it comes to business relations. Um, it'd be the handshake thing to do when it comes to business relations. It'd be the handshake thing to do.

Speaker 1: 12:20

I'll concede that, if we're sticking to the letter of the contract, I'm not seeing that. So, for what it's worth, I haven't received confirmation on where I did wrong on that side, so I'll pause there. I have to hop into my first thing of the day. But as it stands, it sounds like the upper person is content throwing my name under the bus and dealing with the fallout without me being a partner in it. So they're teed up to open the the studio if they so ask. They have not asked for any permissions or passwords or things to make it easy for a transition. It sounds like they're wanting the remaining funds and then they will do with it as they please. So, for what it's worth, uh, it doesn't look like they want the studio to stay open, from what I can tell at the moment. Uh, we shall see in the future if that is different. That's where we're at, that's where we're going. Let's rock and roll.