TD Bank and franchisor sued over lending practices involving U.S. guaranteed small business loans

August 10, 2012


From Shane D. Gosdis at the franchiselawblog.net, on December 8, 2011 (Franchisees Sue Matco Tools and TD Bank Alleging Loan Fraud Scheme):

The plaintiffs allege that Matco Tools and TD Bank “in a loan fraud scheme to encourage unsophisticated borrowers to enter into risky business loans to buy Matco Tools franchises.”  According to the plaintiffs, the “scheme enabled Matco to sell more franchises and TD Bank to make risky loans without concern” because the “bank knew if the loans failed, the loans would ultimately be repaid by the United States taxpayers through the SBA guaranteed loan program.”

Copy of Verified Complaint and Jury Demand (download, 24 page pdf)

Moving attorney estimates a class action suit involving “between 150-to-200 plaintiffs” stretching back until at least 2004.

Other coverage:

Cross-posted on FranchiseBanker.ca


Could franchise bankers also act as gangsters?

July 10, 2012

Are Canadian franchise bankers capable of engaging in “cartel-style anticompetitive corruption” in their $100-billion sales per year marketplace?

Every current or former Canadian franchisee who has had a Canada Small Business Financing loan may want to ask themselves some questions. My posts at  FranchiseBanker.ca (specifically: Banker “everybody is doing it” corruption admitted in the LIBOR scandal) might help frame your thoughts.

Without the Canada Small Business Financing program, many fewer deadbeat franchises would have been sold in the last 20 years.

Industry Canada asked me to jot down my concerns a few years ago.

Franchising Opportunism, a 20 page non-technical paper,  was the result.


Banks push fraudulent business debt using several financial instruments.

June 28, 2012

Ideas:


Are franchise bankers running a peep-show, a clip joint?

January 31, 2011

Franchising is low-grade entrepreneurial pornography.

Read Franchising Opportunism and you judge. The horrendous losses on unregistered guaranteed government loans are self-financed on inflated appraisals.

A clip joint or fleshpot is an establishment, usually a strip club or entertainment bar, typically one claiming to offer adult entertainment or bottle service, in which customers are tricked into paying money and receive poor goods or services, or none, in return.

Typically, clip joints suggest the possibility of sex, charge excessively high prices for watered-down drinks, and then eject customers when they become unwilling or unable to spend more money. The product or service may be illicit, offering the victim no recourse through official or legal channels. Wikipedia

The process by which banks create money is so simple that the mind is repelled. John Kenneth Galbraith

See Canada Small Business Financing Program and U.S. SBA 7a Loans [and UK and France and…]


Lending and franchising

January 29, 2011

I need to check this stuff out better.

Nationally before:  This time locally.

[Clictr.com]


Franchisors play the role of the false target

November 25, 2010

Identify the real protagonist, the Fixers.

And those that rent money.

The surest sign of a dying empire is when a franchisor starts  self-financing when new franchisees had traditionally used a regulated lender.

Very high dangers of private, unregulated lending (prime plus 5%). Same as loan sharking.

Your house is the real asset at risk, not some phantom idea that you have equity.

See Champions of Tyranny What will the grocers say?

[Cllctr.com]


Affordable, early and non-court dispute resolution: The identity already exists

November 1, 2010

In 1998, I was asked to create a corporate identity (see letter).

The purpose was to move from a temporary working group, chaired by the Ontario government (Franchise Sector Working Team, 1996-2000?)…

…to a permanent mediation function (non-court dispute resolution process)…

..that would be housed within a national, franchisee/franchisor/banking sector run self-regulatory agency:

  • National Franchise Council of Canada.

And here.

This never got off the ground for several reasons. But it was not for the lack of franchisee effort. The Canadian Alliance of Franchise Operators stopped in 2005 (lack of revenue).

After 11 years, the need has never been greater.

There is, until now, no economic market to  support it..


If you lost your money, Call your franchise banker.

October 27, 2010

Get smart.

Who do you think teaches new franchisors or amateurs like David Scenna (Hookers and Booze: Your tax dollars at work) franchise money management?

D’oh.

Your franchisor is nothing much more than a rodeo clown.

  • The brains behind the outfit are the franchise bankers. Only a fraction of the government loan losses are claimed because accurate reporting would queer the deal. They self-finance the used franchises via compliant equipment appraisers on the front end and their captured bank receivers on the other (exit franchisee into bankruptcy.
  • See 2005 details.
  • Crapola franchises.

Last time I checked, +80% of Canada Small Business Financing program loans were done via these people below. Why not give them a call and ask them for a 10 minute interview?

Bank of Nova Scotia
Mr. John Dykeman
Ms. Irene Thomson
National Franchise Programs
Phone: (877) 252-6088 Toll Free
http://www.scotiabank.com/franchising
franchising@scotiabank.com

BMO Bank of Montreal
Mr. Steve Iskierski
Senior Manager, National Franchising Services
Phone: (416)927-6026 / (877)629-6262
Web: http://www.bmo.com/franchise
steve.iskierski@bmo.com

Canadian Imperial Bank of Commerce, CIBC
Mr. Charles Scrivener
Director & Head, CIBC Packaged Loans Group
Phone: (416) 980-3225
http://www.cibc.com
charles.scrivener@cibc.com

Royal Bank of Canada
Mr. Paul DaSilva
National Franchise Market
Phone: (416) 974-8299
http://www.rbcroyalbank.com/franchise
paul.dasilva@rbc.com

TD Canada Trust
Ms. Irene Law
National Manager, Franchise Banking
Phone: (866) 871-2178 / (416) 307-9270
http://www.tdcanadatrust.com/franchise
irene.law@td.com

Source of contact information


Franchise lenders are swill

June 17, 2010

Some systems hardly have any franchisee debt.

This is particularly true of ones that converted employees to franchisees.

That changes once franchisors listen to their bankers explain how much they both can make (ie. interest kickbacks) if they leverage as many franchisees to the teats.

The primary control method of newer (maybe more formally educated?) franchisees is debt. Hundreds of thousands of supportable debt, if the franchisor who controls their gross margins, lets them service their debt.

It’s ugly:

  1. prime plus 5% (“love to give a better rate but it’s unsecured, don’t you know“),
  2. immediately callable (demand loan = short leash),
  3. plus personal guarantees up the wazzo (“just need the missus to okay the paperwork…“), but
  4. secured by NOTHING but the franchisor”s “good faith” (ok as long as the present management stays put but all deals are off if…).

If you want to unlock the chains, start asking your “preferred” lender some questions (on a public blog, btw) about their lending duty under the Bank Act.

Franchise bankers: a breed apart.

A little more sensitive than you run-of-the-mill doofus franchisor: don’t like being fingered for loan pushing, collusion or predatory franchise lending.


Card scammers lift ++$50 million from AUS McDonald’s customers

January 21, 2010

Reports coming of large scale debit card scams from October 2009.

Banks are not required to report fraud occurrences publicly.

Watch the video

News item: January 20, 2010, Maccas EFTPOS scam

An international crime gang is targeting fast food stores in Queensland, stealing EFTPOS terminals and cleaning out accounts.

Quote from a cop:

Happy days for the crook and sad days for the victim.

Other Austrialian news reports:

1. Bank blocks 10,000 banking cards after EFTPOS scam revealed

A McDonald’s spokeswoman remained tight-lipped about how many of its EFTPOS machines had been compromised.

“We can’t discuss any details of the investigation,” she said yesterday.

A security upgrade of McDonald’s EFTPOS terminals across the country had been completed the week before Christmas, she said.

The upgrade followed attacks on McDonald’s outlets in Perth last year.

2. EFTPOS scam reports ‘disturbing’: Rudd, Prime Minister Kevin Rudd has described reports of a nationwide credit card skimming scam as “highly disturbing”.

NSW Police say every Australian capital city and some regional centres have been hit by the scam, which has netted more than $50 million in NSW alone.

Six people have been arrested in NSW in relation to the scam, which police say involves criminals committing armed robberies to get hold of EFTPOS machines.

3. Crims rip off $50m in Eftpos scam

Fraud squad investigators say the criminals have ripped off Australian cardholders for at least $50 million.

NSW Police Strike Force Wigg told the Daily Telegraph that 50 members of an Asian-based criminal gang had been identified as “persons of interest”.

Detectives say the skimmers were mostly operating in all capital cities and in major rural centres.


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