PLAY N TRADE: Execs Respond to Blog Critics

While Rapper 50 Cent was promoting his new video game at a Play N Trade store in Manhattan last week, PlayNTrade Franchise Inc. Founder Ron Simpson and President and CEO Larry Plotnick were appearing at franchise discussion site Unhappy Franchisee, defending their company and brand.

In reporting on the suspension of the CA franchise registration of Play N Trade (See PLAY N TRADE: CA Suspends PnT Franchise Registration), website Unhappy Franchisee set off a lively debate about the video game retail concept and its franchisor.

Some commenters allege that Play N Trade used deceptive tactics to achieve its rapid growth, and was not forthcoming about early franchise failures, necessary capitalization and flaws in the business model.

Defenders of the Play N Trade franchisor and concept claim that the franchise registration will be restored and PnT exonerated on appeal, that the concept is sound and marketing and support to franchisees is exceptional.

Play N Trade President and CEO objected to the implication that Play N Trade had been found guilty of any wrongdoing:

As the President and CEO of Play N Trade I feel it… is very unfortunate that http://www.unhappyfranchisee.com would state that Play N Trade has been found guilty of anything, when nothing could be further from the truth.

Play N Trade has not been found guilty of any wrong doing, and that the citation highlighted is a preliminary order that is not final. We are working closely with our Attorneys and the California Department of Corporations to clarify and settle this matter quickly and with the least amount of impact to our franchisees.

This preliminary order only impacts the state of California, and will not be finalized until the completion of a negotiation or appeals process.

Play N Trade Corporation takes this and all legal matters very seriously, and are and will cooperate fully with all state agencies.

We will be communicating with our current and future franchisees appropriately as facts become available.

Sincerely,

Larry Plotnick
President and CEO
Play N Trade, Inc.

Larry Plotnick, who joined Play N Trade in January of this year, cautioned readers from taking the often emotional criticisms of his company at face value:

I would like to caution anyone reading this website and the comments being made; that much of what has been said is incorrect, misleading and/or opinion only. If you have concerns with Play N Trade I would suggest that you call or contact our Corporate office and we can answer your questions appropriately and directly. Yes there are a few upset individuals, mostly ex-employees that have attempted to compete with Play N Trade unsuccessfully (Like Gamer Doc and others) that have reason to create problems. We will not use a public forum, such as this for discussions back and forth.

We continue to work very hard for our franchisees, not only in clearing up this current situation and working with the state of California but in completing for rollout this summer our new POS system, the new unified buying program and a new national marketing campaign all to support our franchisees.

I hope that our franchise community can see through these “rants” and understand that their partners at Play N Trade are doing everything possible to create a world class brand and to create a continually improving model in an exciting and growing industry.

Larry Plotnick
President and CEO
Play N Trade

Play N Trade Founder Ron Simpson stated that franchisees are always taking a risk and that failed stores are “a fact of business and our economy”:

It hurts me to see what is being said about such a great brand… For the people thinking about buying any franchise, there is very real risk and take all the information you can gather before buying one. The allure of running your own business can cloud your judgment. I set out to compete against a true giant in Gamestop, and have always said the franchisees will decide the outcome. I truly believe the our franchisees are given as much as can be given to compete from PNT, and it is up to them from there. I have never promised anything I couldn’t deliver and never asked anything from franchisees that I haven’t accomplished myself. As for the State of California, I know PNT will prevail and a lot of what this blog is based on will cease. As for closed stores, that happens to all franchises, even coporation like Gamestop…it’s a fact of business and our economy. God bless everyone on this blog (negative and positive) and all of our franchisees, I hope nothing but the best for all of you.
Ron Simpson
Founder
PlayNTrade Franchise Inc.

Read or join the discussion here: PLAY N TRADE: CA Suspends PnT Franchise Registration

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Carol Cross

It appears that the owners of Play N Trade believe that they were unfairly targeted by the California regulators who have found them in violation of California law.

Of course, franchisors understand that the carefully written words of the franchise agreements and the FDD’s generally do generally protect them from any franchisees who will fail to thrive and who feel that they were defrauded in the pre-sale process by misleading statements and failure to disclose RISK, as known to the franchisor.

But, apparently the California authorities believe that Play N Trade did not disclose in compliance with California Laws and they are in substantive violation of California law, or they would not have negotiated a rescission for the California franchisees.

I’m sure that Play N Trade are in consultation with their attorneys who prepared their disclosure documents for them.

It will be interesting to see the final results of the confrotation with the California authorities.
http://bizop.ca michael webster

Mr. Plontik writes: “Play N Trade has not been found guilty of any wrong doing, and that the citation highlighted is a preliminary order that is not final. We are working closely with our Attorneys and the California Department of Corporations to clarify and settle this matter quickly and with the least amount of impact to our franchisees.
This preliminary order only impacts the state of California, and will not be finalized until the completion of a negotiation or appeals process.”

Uh, this is a final order. It might be appealed, once the $135,000 is paid. The finding of facts might be overturned, but right now there are finding of facts which are serious in nature.

“The Commissioner finds that beginning on or about June 1, 2006, Play N Trade Franchise, Inc., Yuvi Shmul, and Thomas C. Bozarth violated multiple provisions of the California Franchise Investment Law, including but not limited to Corporations Code sections 31110, 31200, and 31123, as set forth in greater detail herein. Pursuant to section 31406 of the Corporations Code, Play N Trade Franchise, Inc., Yuvi Shmul, and Thomas C. Bozarth are hereby ordered to desist and refrain from:
(a) Making unregistered, non-exempt offers to sell a franchise in violation of section 31110;
(b) Making material misstatements or omissions in a franchise registration application filed with the Commissioner in violation of section 31200; and,
(c) Failing to notify the Commissioner of material changes made to the terms of the registered franchise offer in violation of section 31123.”

This is a brand to avoid for many reasons, blatant disregard of the law is never an encouraging sign.
Carol Cross

Thanks to Michael Webster, Attorney and PhD, for the WARNING to PlayNTrade prospects.

He says “blatant disregad of the law is never an encouraging sign.”

Apparently, the attorneys for PlayNTrade are sure that the one-size-fits-all Franchise Disclosure Document that they prepared for their clients will trump California Law, or that the time spent on the Appeal in the meantime will ensure that PlayNTrade can continue to sell their franchises throughout the United States.
izod

Wow, Carol Cross has found a new home so it seems. Hard to find a franchise blog she has not infected. Well, good luck to you all. It seemed like it might have been a nice blog at one time.
rita j wilson

Carols got waaaaay to much time on her hands. No wonder she could not make a go of being a franchise operator.
http://www.unhappyfranchisee.com/carolcross/ Carol Cross

Carol’s comment moved here: Carol Cross
rita j wilson

Ha! I just think it is fun to pull your chain. I know you watch all these message boards like a hawk to make sure you don’t miss anything! Thanks for proving me right =)

Have a great day, Carol.

Rita
http://www.unhappyfranchisee.com/carolcross/ Carol Cross

Carol’s comment moved here: Carol Cross
http://www.franbest.com Sean Kelly

izod & Rita J Wilson:

Please refrain from personal attacks and diect comments to the topic.

FYI izod, “outing” a commenter’s real name is a cardinal sin in blogging and forums. I deleted your attempt. Bad form, dude.

Carol Cross:

As we’ve discussed, when your comments are not specific to the subject and are just variants of your previous comments, I’m reposting them to your Carol Cross on Franchising page here: http://www.unhappyfranchisee.com/carolcross

In fact, if your comment contains any of these words, please post there directly and save us both time: “FTC” “Federal Regulatory policy” “rescission” “Robert Purvin” “Franchise regulation” “fraudulent inducement” “FTC Rule in 1979″ “congress” and related phrases.

Thanks
Carol Cross

Thanks Sean! I will try to remember not to mention the constructive fraud of the FTC Federal Regulatory policy” rescission” “Robert Purvin” Franchise regulation” fraudulent inducement, “FTC Rule in 1979, “congress” and related phrases

I understand that you are a good man who believes that Regulation will never change and that you volunteer to help franchisees through your Unhappy Fanchisee Site, at your own expense, and this site does SERVE to WARN other prospective franchisees about risky franchises. You do your share!

I appreciate the opportunity you give me to post and to try to educate failed and failing franchisees who really don’t understand what has happened to them and how they were induced under cover of official rhetoric to buy unprofitable franchises with high failure rates.

I have been banned and blocked out of Blue Mau Mau and Franchise Pundit’s websites and can neither read, nor post. I realize you have been patient with me because you don’t really care whether or not there are changes to the current status quo of regulation of franchising because you are a MARKETING expert and not a franchisor or an attorney or a franchise advisor or broker.

Thanks for posting my comments on the Unhappy Franchisee Site and NOT blocking me from posting and talking to Rita and Izod.
jd

Damn Sean, it sounds like Carol is calling your website third rate, and that she’s only posting here, because Ryan and Don have banned her from their websites.
http://www.franbest.com Sean Kelly

jd, rita, izod:
Compared to the scoundrels and thieves we’ve dealt with over the past couple of years, I don’t think that you should use up your ire on Carol Cross. She’s not meanspirited, she means well and she believes that she’s helping people with her comments.
While I’ve fought the temptation to follow suit, I can understand why Ryan & Don did what they did. She believes that it’s her mission to drop the same pedantic text into many blog posts regardless of context. It’s killed some conversations, diverted some, deadened others and ticked off a lot of commenters. She, like that Bloody Franchise moron, are simply antifranchising and believe franchisors are always wrong and franchisees are always victims. The main problem with such a black & white view (besides being simplistic and wrong) is that it’s not interesting.
But still… to me, blogging is about giving people a voice and I hesitate to ban someone simply for being annoying (Sorry Carol).
My experimental solution is to set up the Carol Cross on Franchising page (http://www.unhappyfranchisee.com/carolcross/) on UnhappyFranchisee.com, where I can move any repetitive and/or off-topic comments that Carol makes, and put a link in their place.
That’s right. The Carol Cross on Franchising page is all Carol Cross, all the time. And there’s no beating up on Carol on her page. You can, however, pay homage to Carol Cross.
So go back to bullying the bullies… because now that she’s got her own page, you won’t have Carol Cross to kick around anymore!
http://www.franbest.com Sean Kelly

I will try to remember not to mention the constructive fraud of the FTC…
Carol:
Add “Constructive fraud” to the list. “Adhesory contracts” and anything regarding Dale Nabors.
You are really missing the point here. These comment sections are meant to spark discussion, dialogue, exchange of ideas. Your mission, as you’ve stated it, is to lecture.
If you want to lecture, write your viewpoint in article form and I will post it as a guest post. Bloody Foo-ba will post it. That’s the correct format for one-way communication. Even better, start your own blog and use it as your bully pulpit. I have suggested this on numerous occasions.
I know you believe that no one will read your blog if you start one. That’s ok, it will force you to make your content engaging. If your content’s not engaging enough for your own site, it’s not fair to post it to others’ now is it?
Carol Cross

Thanks Sean, for the good advice. But you are THE clever and talented blogger who attracts the people I want to try to influence on this site and on your Unhappy Franchisee site.

Since we are talking about Play and Trade on this thread, is it possible that Play and Trade are counting on playing and trading with the money of prospective franchisees because they can play and trade in all of the states in which they are registered to sell their franchise because “franchise law” is different and “blatant disregard of the law is never an encouraging sign” as Michael Webster indicates above —-but it sure sells a lot of franchises?
Pingback: PLAY N TRADE: Overview & Links | Unhappy Franchisee
Izod

Sean, I simply think you are wrong. Posting Carol’s real name(readily available by searching) serves a very constructive purpose. It exposes her very diverse, yet time line specific attacks on a variety of topics. Take a look. A more suspicious mind might think she was paid to drive propaganda. First a several year tirade on one topic (gee funny how there was not mention of UPS stores then), then a campaign for a political candidate (gee no UPS stores then) and then suddenly, out of the blue – franchising. But what happened to the other great crusades she so obviously cared about and was so very committed to, a commitment that rivals her passion for franchising? Suddenly they were gone. In fact if you went back and reviewed BlueMauMau early on you will see where her story was tripped up a few times and she was nailed for inconsistencies, eventually she fleshed out a more coherent story line.

I think you did a disservice by deleting the comments. I believe readers really should have full access to what she does and the very diverse topics she has professed expertise in over the years, so when they read these over the top comments, and her name provided that link. Carol may be a serial crusader who runs hot to cold and no longer cares about that which she was passionate about last year, or maybe the check stopped coming that paid her to care about that topic so she went on to the next paying gig. I don’t know what the real story is here, but if you dig around it stinks to high heavens.

Food for thought.

Izod
http://www.franbest.com Sean Kelly

Play N Trade franchise conference in Vegas kicks off. Theme is “Stronger Together 2009″
http://www.unhappyfranchisee.com/play-n-trade-vegas-franchise-conference-underway/
http://www.bizzia.com/franchisepick/play-n-trade-franchise-conference/

PnT continues to try to sell franchises. Discovery Day franchise sales presentation today.
http://www.unhappyfranchisee.com/play-n-trade-franchise-discovery-days-continue/
http://www.franbest.com Sean Kelly

Be sure to check out: PLAY N TRADE Forum Gets Spammed N Slammed
Also, the article links at:
PLAY N TRADE: Overview & Links
Pingback: PLAY N TRADE: The BIG Franchise Discussion : Franchise Pick - Picking the Perfect Franchise
Pingback: PLAY N TRADE: Recruits Multi-Unit Video Game Franchise Owners : Unhappy Franchisee
Action Jackson

Since I am no longer in the system, I thought I would share my experiences with anyone considering getting into the video game industry and if there is any significant benefit to being involved with The Big Bad Play N Trade franchise system in the hopes that you don’t make the same mistake that I and the hundreds of others that got duped into believing that you’re making a good investment.

If you ask 5 people at corporate how many stores they have open your likely get 5 different answers. Also, if you asked the same 5 people how many stores have closed, once again you’ll get 5 different answers if you even get an answer at all. I think its fair to say they currently have app. 160 stores open in the US and Canada, app. 15-20 of those stores are in Canada through a recent merger During their peak, they boasted about having 240 operating stores. In the past couple of years, I would guess they’ve still opened 20 new stores to new franchisees (that’s probably on the high side). . Let’s do some quick math…. So of the 160 current stores, roughly 40 of those stores were open in the last 2 years, app. half new franchisees and the other half through the merger. So they where at 240 at their peak and now app. 160, with 20 of those being through the merger which translates into 120 stores that have closed. Roughly HALF or a 50% success rate (I would say this is a generous figure if anything). These statistics are off the charts!! So while they are opening stores, they are closing more than they are opening.

There are some key factors that I would be willing to bet everything I lost on going into business with them that I promise you they will not share with you. Unless your name is Gamestop, Best Buy or Wal-Mart, you are limited to purchasing your games from a 3rd party distributor. The Big 3 buy direct from the video game manufacturer. What does that mean? It’s pretty simple… Big Bad PNT offers zero, zilch, nada assistance in the ability to purchase new games. If you are going to try and compete with the big boys, you have to not only sell new releases, you have to push pre-orders. It’s part of their montra and its true. In order to push pre-orders, you have to have great relationships with these distribution companies. What this means is that its critical to get your titles prior to release date. This varies by location and distributor. Some distributors are not even able to service certain parts of the country based on where they are located and how many copies of these titles they are allocated. Allocation is a very important term in this industry. Just because you want 500 copies of Call of Duty doesn’t mean you’ll get it. By no means am I saying that its impossible. Here’s how you can improve (but still not guarantee) your chances… You have to find a great distributor in your area, if there is one that has the clout to get their hands on enough titles to appease all their clients, not just BBPNT. There are 2 ways of getting these titles, 1) you leave a revolving line of credit with said distributor and when you’ve used that line, you have to put money back in to able to get future titles. In other words, you have to pre-pay for your games, not COD, not net 30, PRE-PAY!! The other is based on your credit worthiness, just like applying for a loan. It’s based on your credit history, collateral, etc.. Even the best credit will not get enough inventory, especially for the bigger titles and during the holidays so that really only leaves the 1st option. Most if not all of these franchisees (existing and former) find it difficult to tie up enough funds to get the inventory they need. While you are taking $5 deposits on these titles so that the consumer is “assured” of getting their title on release date. These people don’t want to wait, they are going somewhere else to get that game. Many times these titles come in later that day or the next day and you’re pissing off and/or losing customers. Imagine going to see a movie on release date and someone coming out saying we never got our movie and doing that repeatedly. I don’t know about you but I wouldn’t go back, or at least not to get a new release. This is where the fun starts. Not the recipe for success to say the least.

BBPNT does not own any corporate stores. They used to own 1 in Orange County and closed it down due to poor sales (at what seemed like a very good location so you can’t blame it on the real estate), so in essence they are just in the business of selling franchise’s when they have no clue how to run a profitable store themselves. They are telling you how great their franchise is and you should put your hard earned money into their business when in fact they know the difficulties/challenges that are waiting for you after it’s too late. Pretty cool huh?

If they tell you that they have buying power collectively through all the franchisees, it’s a crock!!! You do not get better pricing because you belong to a franchise model unless there is 1 buyer. That’s the way the world works, buy in bulk, get a better deal. Until recently, they didn’t touch anything (new/used games and accessories). Now they are nice enough to get you pennies on the dollar to buy back your used inventory only to turn around and sell it to another franchisee or on their e-commerce site for a profit. That’s nice of them isn’t it? I haven’t even gotten into how volatile the industry is or the tremendous turnover they’ve have with their corporate “if you wanna call them” executives in the past couple of years. Or how none of them have any video game industry background of any relevance. You are paying a franchise fee and royalties for the POS system and some nice marketing material. Translated, that basically makes you an independent that’s paying a franchise fee and royalties.

While there are some franchisees that are successful and making money, the vast majority are barely making any if not losing and simply can’t continue bleeding. Again, I would be willing to bet everything I lost that there are indeed more casualties in the not too distant future. So after you’ve lost hundreds of thousands of dollars, they will still come after you if you have an outstanding balance to the extent that they can. They may seem nice and sweet while you are paying them royalties but once the faucet gets turned off, they flip the switch and turn into vultures and will pick at as much of the carcass as they can. In my opinion, these people belong in jail next to the Bernie Madoff’s of the world. Please, please, please, I am begging anyone who reads this before its too late to proceed with extreme caution unless of course you have a few hundred thousand to burn like our friend Mr Chesney above. If you are interested in hearing more, please post your comment or feel free to send me an email at pntclassaction@gmail.com. And oh by the way, speaking of class action, nothing would serve them justice more than an army of us to put them out of business and stop destroying peoples lives. You would be better off giving me the money, at least you know where its going and it would be for a great cause…lol. Sadly, there’s more truth than humor in that last comment.