To Whom This May Concern:
In April Lynnette Northup and I entered into an agreement with Brake Depot to buy four of their franchise locations. The money was supposed to be held in a trust account until three things were accomplished. We were to obtain a Bureau of Automotive Repair license, Brake Depot was to give us lease assignments, and Brake Depot was to provide us with a Bill of Sale. We did obtain the BAR license. We were to have two months before we signed any notes or final agreements. When the two months were up Brake Depot came to us with sub-leases and notes for the stores.
When we first talked to Brake Depot's representatives, we were told they were selling the stores as a plea bargain agreement for a violation of a restraining order against them for using the phrase Average Repair Order (ARO) in their evaluation of managers. We were told all the charges against them were unfounded and dropped.
We later talked with Robert Trent in the Bureau of Automotive Repair (BAR) Oceanside Office. He told us that there were 48 counts of fraud and they were dropped in a plea bargain agreement. They were fined and were ordered to sell their stores. The only reason the stores were kept open was because thousands of warranties were in effect. Mr. Trent told us the BAR sent cars into Brake Depot stores and there were violations on practically every car inspected. Mr. Trent met with Pat and Phil Walby and told them the results of their investigation.
Brake Depot was given thirty days to straighten out the managers and more cars would be sent in. More cars were sent out with the same results. Mr. Trent told us if we did business the way Brake Depot insisted we do it, he would put us out of business also.
We also discovered there was a lot of bad blood with the public and Brake Depot. We demanded our money back per our original agreement. They told us there was no money, so sue us. We have spent thousands of dollars trying to negotiate a settlement with these people, to no avail. We had a scheduled arbitration hearing on or about 1/7/02. Brake Depot Inc. (Chapter 11) and Brake Depot Systems (Chapter 7) filed for bankruptcy on 1/4/02.
Brake Depot, Inc. Owned the stores that were laden with debt, judgments and liens. The stores were transferred to Brake Depot Systems simultaneously with the sale of the stores to franchisees, leaving the debts behind. The stores were sold as being free of debt and encumbrances. They were not. This was proven in the case of Rick Ashburn who sued them and won a judgment against them.
The Walbys have manipulated everyone into putting the money in a trust account in order to avoid escrow costs. To my knowledge no one has ever received a bill of sale for his or her stores. Arnie Cohen purchased a store and acted as the area franchisee in San Diego County. He never collected any monies for any of area franchisee work and wound up losing his store because of a lease/signage problem. They then took his store and resold it.
Eight franchisees have either sued Brake Depot or have lawsuits pending. They owe practically everybody they have ever dealt with; suppliers, vendors, uniform services, health insurance companies. I understand there are employees who have had health insurance deducted from their checks and thought they had insurance, only to find they didn't when they went to the hospital. Uniforms cleaning costs were deducted from employees checks yet the employees had to wash their own uniforms, because the service (which was owed money) would not return them if they got them back.
Brake Depot is currently trying to find buyers for the stores that belong to the franchisees who are suing them. The Walbys do not have a valid Franchise License and are offering outdated Franchise Offering Circulars (FOC's). This is violation of franchise law and may very well be fraud. We feel we have been defrauded. They gave us numbers that were based on what the State of California determined fraudulent business practices.
It is matter of public record that Brake Depot committed fraud against their customers (their liscense has been revoked not once, but twice). We believe that an investigation of their business practices with vendors and suppliers may very well indicate a multi-layered pattern of fraud including a long history of using vendor and suppliers until they are cut off, with the intention of never paying them.
Lynne
San Marcos, Arkansas
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