"How often does Great Western receive full payment in the wake of a sale?" I asked McCreary. "We rely on the seller's voluntary compliance with his or her contractual obligation to notify us at the time of the sale," he said. "Do we get notifications? Sure. We get them every month. Do we get as many as we would like? No, because not everyone complies with their responsibility."
"How many notifications do you get a year?" I asked.
"We don't audit those," McCreary said. "We put them in a general fund." In other words, Great Western does not track the number of sales for which the company collects a full fee.
A Seller in Kentucky Complains
If the thrust of Cal Brown's grievance is against Great Western's modus operandi, which he contends misled him, Dewayne Hutchens's anger is more personal. Much of his ire is focused on the salesmanship of Great Western field consultant John Persaud, which, Hutchens says, took advantage of his own trusting nature. "My style of doing business is everything open and honest, and you lay everything on the table," says the 30-year-old Hutchens, who's a self-taught businessman and a volunteer firefighter in the Louisville suburb of Fern Creek, Ky.
In many ways Hutchens's and Brown's stories are similar. When Persaud visited him in July 2000, Hutchens was eager to sell the storage facility that he and a business partner, Joe Jarles, had bought for $1.5 million in January 2000. Before meeting Persaud, Hutchens and Jarles had in mind an asking price of $1.9 million for the 269-unit Fern Creek Mini Storage. They had enhanced its value, they reckoned, by adding a U-Haul dealership and improving rent collection.
Persaud made his own calculations based on Great Western's formula and stated his estimate: $2.4 million. "I said, 'Wow, that's pretty good,' " Hutchens recalls.
When Persaud described Great Western's services -- particularly, how Fern Creek might in effect tap into its database of thousands of qualified buyers, including many from countries outside the United States -- the scenario also sounded good to Hutchens. "He was saying [Great Western] had a special group of buyers, basically a group of international buyers who wanted citizenship in the United States," which they could obtain by acquiring a business in this country, Hutchens says. "It was one of those I-can't-say-as-the-official-record type thing, but, hey, we've got the people who'll come in here and grab it in a week."
Most of all, Hutchens liked what Persaud told him about the comprehensive evaluation that Great Western could provide. A $10,205 fee would buy an evaluation that would be "within a couple of percent" of the preliminary $2.4-million estimate, Hutchens quotes the sales rep as saying. What's more, Hutchens recalls Persaud's saying that an unspecified "large, independent accounting" firm would perform the evaluation. Hutchens figured that an authoritative document of that kind would serve as an important tool in selling his business.
"We provide small sellers with the ability to reach out to a broader audience than Main Street, USA."
--David Mccreary
Persaud says that he quit Great Western in April, after 14 months as a sales rep for the company. He says he had become disenchanted with the company. What Persaud told his customers, he says, coincided with what he had learned in Great Western's training course, including a claim that "one-third of [the company's] buyers are located outside of the country." Persaud, however, denies Hutchens's allegations that he indicated Great Western would find a buyer for Hutchens within a week, that the formal evaluation would be within a couple of percentage points of the preliminary estimate, and that a large accounting firm would handle the evaluation.
On July 10, 2000, Hutchens and Jarles signed a Great Western contract, paying Persaud $10,205. "A very personable guy," Hutchens says of Persaud, remembering his first impression of the field consultant.
When Great Western's evaluation arrived in the mail, Hutchens didn't think it looked much better than the one Persaud had completed in short order, even though the second one valued Hutchens's company at $2,514,000, almost 5% higher than the first estimate. "Our banker looked at it," Hutchens recalls, "and it's like, 'What is this?' " In December, Hutchens filed a complaint with the Better Business Bureau of Metropolitan Dallas, terming the evaluation "worthless" and objecting to the "pitiful total" of four referrals that he had received by then from Great Western. When he tried to contact the prospective buyers, he discovered that two of their telephone numbers had been disconnected, and another two "had no interest," according to him. He demanded a refund.
"There must be some misunderstanding regarding our contractual obligations," John Binkley responded in a letter to the bureau. The letter defended the methodology followed by Great Western's "independent valuation companies." By initialing the eight-point disclaimer, Binkley's letter said, Hutchens had indicated that he understood the "scope of our services." No refund, the letter stated, would be forthcoming.
Great Western had the same answer for Cal Brown when, in April, he demanded a refund of his deposit. In an E-mail that he sent to Great Western, Brown cited, among other arguments, the paucity of leads that he had received, and he questioned whether the entity that performed his evaluation, the Fisher Business Group, functioned independently of Great Western. "We have fully and diligently complied with our contract," the company responded by letter. The letter didn't respond directly to Brown's question about the Fisher Business Group but said an accounting firm that performed an evaluation like the one done for him would "typically charge $3,000 or more." Even if Brown had taken his dispute to court -- which he decided not to do -- he concedes that the papers he signed or initialed might have doomed his chances of winning.
