Scott Pooler, a former official eBay Trading Assistant, and a master franchise representative for an eBay drop store franchise chain weighs in on the subject of franchising and stand alone eBay drop stores in Trading Assistant Journal, a weblog that provides news and commentary for eBay consignment specialists. Scott’s experience on both sides of the fence reveals certain truths, and since he was at one time a proponent of the franchise model, his views are helpful to anyone considering the purchase of a new franchise eBay drop store or opening one on their own. These views are Scott’s opinion and do not reflect upon eBay any eBay franchise drop store chain in particular or upon eBay consignment as an addition to any other type of business. His views regarding the stand alone drop store franchise model and why it has failed are worth reading. Read the whole story Cross Posted at Let’s Talk Franchising

QuikDrop is closing its eBay drop-off store franchise business at the end of the month, but franchise stores will be able to continue to use the QuikDrop name, logos, and signage. A conversation with the company’s cofounder Jack Reynolds on Wednesday netted a laundry list of complaints about the challenges of selling on eBay that contributed to his company’s demise, beginning in 2006 with the Stores search and fee changes. QuikDrop storeowners did not seem surprised at the news of the closure, which arrived via email from QuikDrop headquarters on Friday night – and some actually seemed relieved. The number of QuikDrop stores shrunk from a high of 95 in mid-2006 to under 30 stores today. Reynolds said the store closings, combined with a number of stores who were unable to pay franchise royalties, led to the decision to close the corporate franchise office. In late 2005 and early 2006, Reynolds said eBay worked on joint marketing with QuikDrop and things were going well. eBay discovered that consumers who visited drop off stores became more active as buyers on eBay, so the auction site marketed to people who weren’t sellers to promote eBay Trading Assistants. But things took a downward turn in 2006, he said. Read more in an article by Ina Steiner in Auctionbytes.com Read an earlier article on Franchise Pundit about eBay Drop Off Franchises Cross posted at Let’s Talk Franchising <!– –>

This article takes a look at the competing independents and franchise eBay dropoffs. With a couple of employees, Rodriguez estimated that his little store needs to make $12,000 to $13,000 a month just to break even. Helping him out is the fact that he is selling a lot of his own merchandise, tools and imported electronics, using the SpeedeSale log-on name to eBay. Also, he is an authorized UPS and FedEx shipper. …this is exactly what we mentioned before at Franchise Pundit – this business should be coupled with other offerings that can bring traffic in the door. now onto mortality rates… The mortality rate in general is high, as the trading assistants struggle to pay rent on a storefront while trying to find the right balance: what business should they go after, what should they refuse and how much should they charge? One of Sarasota’s first drop-off stores, 1StopAuctions, has closed its doors. Its Web site, which still shows up high on search engines, is up for sale on the Net. Its owners did not return a call for comment. In South Florida, where more auction drop-off stores have existed for a longer time, Rodriguez guesstimates that the failure rate is 80 percent or more. “Of the 20 stores that used to be around two three years ago, only five are still in business,” he said. An 80% failure rate is higher than I would have guessed. But there is NO WAY a town can sustain more than a couple of eBay drop-offs, let alone 20+. All those involved in the drop-off game now realize that to succeed, they must do more than sit in their shops and wait for valuable objects to arrive. “The reason we are on Main Street is to go after business-to-business deals,” said …

eBay is fighting new government regulations (taxes and licensing requirements) on people who sell things using auctions. Ohio has already passed a law requiring licensing.

I question at this early stage in the industry whether the ongoing franchise fees of 5-6% will kill the margins need to be worthwhile.

David Crocker, Sr. Vice President of Marketing and Business Development for iSold It, LLC has posted on Blue MauMau an open letter to iSold it franchisees from Chief Executive Officer Ken Sully. The iSold It franchise opportunity has been named “Hotter than Hot” and the “Best New Franchise for 2007″ by a leading national magazine.  However, a letter currently circulating the Internet indicates this American Dream may have become an entrepreneurial nightmare. Mr. Crocker stated, “In the letter, it says that we are considering litigation, reorganization or liquidation.” Regarding a time frame to declare bankruptcy, he commented, “I cannot comment on when any liquidation might occur.” When asked whether the eBay drop off store model works, he said, “The model works for some and doesn’t work for others. There are stores that are profitable.” AN OPEN LETTER TO OUR FRANCHISEES As we have previously announced, we are now focusing all our headquarters resources on supporting our current base of franchisees, while limiting the sale of additional stores to new franchisees. We will continue to add new stores with existing franchisees under current development agreements and will also help facilitate transfers of existing stores to new owners. iSold It, now in its fourth year of operation, currently has over 170 franchised stores open. The chain has sold more than $100 million of merchandise on eBay since inception. As you may know, in December 2003, iSold It joined the fledgling eBay drop-off store category, still in its infancy. The first two iSold It stores, one company owned and one franchised, generated significant interest from customers, the press and franchise candidates. The initial customer response was so strong that, encouraged by their results, that first franchisee quickly went on to purchase additional development areas and opened more stores. As the category rapidly grew and sales volumes were easily tracked (due to the transparent nature of …

Boston’s ”Simply Done” Unpacking Service Now Franchising The slogan of Simply Done is “Unpacking Made Easy” — and it is made easy for relocating executives, upsizing families, and downsizing seniors — even vacation homebuyers. Sounds like an interesting niche if you have prior relationships or can secure large contracts. But, emove.com, started by U-haul, is a popular eBay-style web site to find movers and strong guys to help you unload a moving truck, move furniture, etc. emove and Simply Done target different customers, and Simply Done may want to take a page form the emove strategy book and create a similar auction and peer-review web site for high-end unpacking and decorating service.

The past decade has seen substantial innovation and entrepreneurship in the moving industry. As a general observation, there seems to be ample opportunity for franchise success in the trades and laborer market. The public typically responds to recognizable franchise names in an otherwise disorganized industry (see Roto-Rooter, MerryMaids, Handyman Network, Two Men and a Truck, Prospection, CertaPro Painters, Geeks on Call, Mac Tools, 1-800 Waterdamage). Low-margin, labor-intensive businesses in industries such as landscaping, painting, plumbing, moving, repair and installation, can earn premiums if professionally branded with the attempt (or illusion) of standardized, ethical business practices. Here are a few examples: Two Men and a Truck (and copy cat strategy Little Guys Movers): A simple yet successful branding strategy that made local moves less intimidating with the image of a trustworthy, hard-working team of guys. PODS franchise (plus copy cats UNITS and SmartBox) and ABF’s U-Pack: Most moves are local, yet people fear the scams, delayed deliveries, your stuff unloaded in a warehouse to make room for another move, etc. The selling point of large metal-box storage is that your stuff is always locked up, eschewing the chance of damage or loss from frequent unloading. I don’t like the fact that PODS charges a non-refundable $50 to even learn more about their franchise offering, but for a $2+ million startup cost, $50 is nothing to and it filters the inquiries to serious ones only? eMove.com, part of Amerco’s U-Haul, has cornered the market for laborers to help you move with an ebay-like service for hiring those needed strong bodies to load the truck. I have personally used this services and its become one of those “How did I ever do without it?” reliances.

Interesting nuggests of information about the UPS Store outlets… Since the acquisition, a UPS spokesman says, overall sales have grown “impressively.” The company doesn’t break out results for its retailing chain. But sales data reviewed by The Wall Street Journal show that domestic UPS Store outlets averaged about $295,000 in revenue last year. Five of the stores had more than $1 million in sales subject to royalty. That number excludes the sale of stamps and other postage and some weekend delivery charges. Mr. Mathis adds that same-store sales, a key indicator, rose last year. As for capping prices franchisees can charge, the company says it did so because “our research showed that the high rates franchisees were charging simply didn’t sync with what customers were willing to pay.” Customers also found differences from store to store confusing. Hat Tip, as usual: Paul Steinberg in the forum While I can understand that pricing consistency is an important marketing tool, it hasn’t hurt McDonald’s or other fast food franchsies that drift from the menu and $.99 specials often. It would be clever for the UPS stores to try and open up “eBay drop off” concept and co-brand it….similar to Dunkin’ Donuts, Baskin Robbins, and Dunkin’ Deli. It would generate a lot of PR, drive business, and reposition the brand as a high-tech, small business friendly store.

With the housing market booming, bypassing and undercutting real estate commission is becoming increasingly popular. It’s even catching on in Canada with PropertyGuys.com. In the USA, the leading franchise is probably Help-U-Sell.com with 750 independently owned and operated Help-U-Sell Real Estate offices. Help-U-Sell is a fee-for-services agency that can provide all of the services of a real estate firm, or just select a basic service package for a flat $3,000. The company provides all signage, advertising and negotiations. Sellers are encouraged to show their own properties and hold open houses. There are both fans and critics of the a-la-carte real estate helpers where you pay a flat fee. Paying a 6% commission to a real estate broker on a $500,000 home is $30,000. Alternatively, for under $5,000, you can hire a real estate attorney to represent you for a $600 flat-fee and pay Help-U-Sell $4,000 for signage, MLM listing and price negotiations. Heck, you can also post a small ad in the local newspaper and on eBay for another $100. Here are 2 more good articles: One, Two. I think Help-U-Sell is hot and deserves your attention, especially those interested in real estate. I’d buy it!

VERY OUT OF DATE.  Do a search instead.  This was manually updated March 21, 2006 Companies Mentioned in Posts (likely incomplete):Automotive 1-800 RADIATORS Oil Butler Lube N’ Go On-Site-Lube Business & Home Services 1-800-WATER-DAMAGE Bartercard Garagetek Help-U-Sell Home Instead Homewatch Caregivers My Girl Friday PropertyGuys.com Sears Carpet & Upholstery Tax Centers of America Cleaning & Maintenance none Computer & Internet (some are listed in “Retail”) Screenz Food and Restaurant Arby’s Auntie Anne’s Blimpies Cheeburger Cheeburger Chipotle Dippin’ Dots Dream Dinners Doc Green’s Gourmet Salad Dominic’s of New York The Dugout Durango Grill Fazoli’s Fire of Brazil Fogo de Chao Goldstar Chili Jamba Juice Jerq’zine Krispy Kream Lenny’s Sub Shops Mauwi Wauwi Original Hamburger Stand Panaderia Taza Papa John’s Pizza Factory Pizza Patron Pretzel Time Quiznos Red Rock Chili San Francisco Soup Co Shane’s Rib Shack Skyline Chili Smoothie King Smotthie Planet Soup Nazi Steak-out Subway Submarina Sub Station II Super Suppers The Soup Box Supercuts Suzanne’s Kitchen We’re Rolling Pretzel Company Wetzel’s Pretzels Z Pizza Zoup! Fresh Soup Co (List all sub franchises) Health & Fitness Curves Liberty Fitness Home Building & Repair Services See “Business and Home Services” above Personnel & Staffing none Pet Retail and Services Camp Bow Wow Doody Calls The Pet Pantry Wag My Tail Interquest Detection Canines Pets Are Inn Retail Franchises Ace Hardware AuctionDrop Battery Plus Best Cuts GNC Educational Outfitters Fantastic Sams Fastframe Foot Solutions Friendly Computers Geeks on Call GNC Hair Cuttery Herman’s World of Sports Imagine This Sold Orbit Drop Play It Again Sports QuikDrop Roosters Men’s Grooming Centers Screenz Snips Its Sports Clips Stone Mountain Carpet Mill Tom’s Foods We the People Categories: eBay drop offs (generally) Hair Travel & Hotel none Industry Lists & Research 2004 Same Store Sales Growth of QSRs (quick service restaurants) Royalty and Advertising …

I’ve written a few articles on eBay drop offs. I was neutral on the franchise… Pros: it’s a service people will use eBay buzz and hype is still strong all franchisors are charging the same 35% fee (for now) Cons: the business is too simple to start, has no barriers to entry, new competitors will literally springing up overnight existing used and consignment stores will soon add eBay sales the service will have to compete based on fees (who wants a constant lowering on margins?) I’m sure I’ll be negative on the business within the next 5 years, but for now I’m staying neutral because the next 2-3 years will be strong. Want proof the eBay drop off store is easy to start and run without a franchise? Campus Easy Sales recently set up shop on the Washington University in St. Louis campus. A couple of fulltime students thought it’d be a good idea and just started it. They do nothing different than any other franchise out there (the hold the item, take pictures of it, post an ad on ebay, ships the item after the auction ends, and send the seller their cut). However, the total fees add up to ONLY 24% COMMISSION off the first $500. Compare to other eBay drop offs who charge 35%. You can bet your dog’s favorite toy this puppy will see their commissions slashed to 25% or less in a few years.

The Battery Plus franchise might just work. There is probably enough people who won't buy knock-off batteries online to support this business. And major retailers won't carry these Asian made batteries because of safety issues (the exploding battery).