Payback sought from payday firm

In Colorado, Bob and Sue Knight united with three other Cash Now franchisees to file a letter of complaint to the office of the state attorney-general after they each invested between $19,500 and $29,500 U.S…"Everything they've got," says Bob Knight, "is just smoke and mirrors and a sham."

The Toronto Star
July 3, 2004

Payback sought from payday firm
U.S. franchisees pursue Markham loan company. Cash Now has also tangled with regulators in four states.
Nicole MacIntyre and Jim Rankin

Less than a year ago, Cash Now ranked 10th on Profit magazine's hot 50 list of Canadian businesses to look out for. The Markham-based company sells payday lending franchises over the Internet. Sales, according to the magazine, had jumped from $165,000 in 2000, to $2 million in 2002.

"The Gold Rush is On," declares the company Web site. "If you missed the Real Estate Boom of the '80s, the Recycling Boom of the mid '90s, the Internet Boom of the late '90s … DO NOT let this opportunity pass you by!"

Miro Zecevic, CEO of Cash Now, is eager to sit down for an interview. He picks a time and place. The day before the interview is to take place, he cancels.

"I'm just a small guy trying to run a business," Zecevic says over the phone. "We develop software. We've got this fabulous technology, we are on the threshold of going public. This can really derail everything … I work too damn hard, I put my heart and soul and my life, I mortgaged my soul, everything to do this. … It's not worth it."

Zecevic is the man behind a labyrinth of Internet ventures, the most prominent of which is Cash Now, a Markham-based company that offers payday loan franchises, including software and territorial rights, for sale online. The payday lending business is a controversial and unregulated industry that charges heavy interest and fees on short-term loans.

Cash Now has run afoul of U.S. regulators in at least four states for selling unregistered franchises, and more than a dozen American investors feel they didn't get what they paid for.

In California, Cash Now USA collected money from at least five entrepreneurs before officials stepped in and ordered the company to stop. Virginia Jo Dunlap of the California Department of Corporations says Cash Now USA didn't disclose to its purchasers that it had been issued similar "stop" orders in other states, including Washington, Wisconsin and Illinois.

After changing his mind about a face-to-face interview, Zecevic agreed to accept a set of questions from the Star by e-mail. He didn't answer many of them, and instead directed the Star to public documents and company information posted on Cash Now's Web site.

"At Cash Now we strive to answer our clients' needs and to assist them through their temporary financial difficulties," Zecevic wrote in a reply e-mail.

Zecevic said the problems the company had in Illinois and Wisconsin had been cleared up, and directed the Star to a news release announcing the dismissal of Cash Now staff at its Philadelphia offices. The lengthy release says the office's top managers were fired because they attempted to usurp Cash Now's franchisees by starting their own payday lending company. Cash Now headquarters has filed a lawsuit against one of the Philadelphia staff.

"There are no ‘difficult times’ ahead for us. There is no hardship. To us this is just ‘another day at the office,’" reads the release, which goes on to tell franchisees that Cash Now will not hold them back if they want to jump ship.

"We believe in the old saying, if you love something, you set it free. The only difference in this relationship is that if it does comes (sic) back, we don't want it!"

A number of the American franchisees say they were never given a list of franchisees or a Uniform Franchise Offering Circular, a prospectus required by law. Franchisees also say there was a lack of support, inferior technology, inaccurate earnings projections and inadequate training.

Uday Roy is still waiting for his money back. He paid $29,500 (U.S.) for a Cash Now Plus franchise last fall after reading about the business online. Roy, 31, says he was told he would be the first franchisee in California. He later learned there were others and they were unhappy. That was enough for Roy. He wanted out.

In an e-mail to the company, Roy, stating his concern over the illegal offering, requested his signed contract be returned, along with his money.

"We are not returning any signed contracts. You told us why you cancelled and it has no merits," Zecevic wrote in one e-mail forwarded to the Star. When Roy wrote back demanding a full refund, Zecevic responded with a single line: "Get Real!"

Fearing he wouldn't get a cent back, Roy says he brokered a deal, telling Zecevic he wanted to change to a Cash Now Express franchise, which would allow him to offer payday loans over the Internet, without a storefront. The online franchise is cheaper at $19,500 U.S. Zecevic agreed and refunded Roy $10,000.

Roy hasn't opened up his online shop, and doesn't intend to. He says he wants nothing to do with Cash Now, and is still trying to get all his money back. When asked to comment on the complaints of the California franchisees, Zecevic did not respond.

His story is repeated in Illinois, where a franchisee is suing, demanding a refund after Cash Now was fined $1,500 U.S. by the state for selling a franchise illegally. The queue of disgruntled Cash Now franchises stretches across the United States.

Randy Wright started out a happy customer. So much so, he gave a videotaped testimonial, extolling the benefits of being a franchisee. If you click deep enough into Cash Now's Web site, it's still posted as a marketing tool. Wright says he and Zecevic don't speak any more though, except for "very malicious e-mails."

Wright first bought the rights for Cash Now in Maryland. After setting up shop, he discovered payday loans are illegal in Maryland, a technicality he hadn't bothered to check because he presumed Cash Now knew the rules. "My own stupidity, I went on their word. I was told that they were an up-and-coming big company and obviously, I just assumed they were legitimate if they were offering a system for $20,000-plus."

Changing his Maryland business to an online operation, Wright then bought the rights to Cash Now in parts of Washington, D.C., and Virginia, where he could sell loans face to face. Soon after the $60,000 U.S. investment, he sued Cash Now for selling franchises within his territory. The case was settled outside court.

Roger Sawatzky bought a Cash Now franchise for $19,600 U.S. in January, 2003. He says the company told him it would take care of any licences he needed to sell payday loans in Wisconsin. Nearly 60 loans later, Sawatzky says he discovered he was operating illegally as neither he, nor Cash Now, had gotten a licence. The state sanctioned Cash Now for illegally selling a franchise. Sawatzky eventually got a licence and reopened his business. He says he contacted a lawyer who told him it would cost more to go after Zecevic in Canada then he could ever recover.

In Colorado, Bob and Sue Knight united with three other Cash Now franchisees to file a letter of complaint to the office of the state attorney-general after they each invested between $19,500 and $29,500 U.S.

The Knights bought their Cash Now franchise after Bob retired from the police department in Grand Junction. They were open for less than a week when they realized they were breaking the law by operating without a licence. When they submitted Cash Now's contracts for approval by the state, they say they were rejected. In their nine-page complaint letter, which the attorney-general's office has forwarded to the Federal Trade Commission, the Knights and others say they were forced to hand over a non-refundable deposit before they could see disclosure documents.

"Everything they've got," says Bob Knight, "is just smoke and mirrors and a sham."

Cash Now's headquarters is the second floor of the Data Mirror Technology Tower on Steeles Ave. E. It's unclear how many franchises Cash Now has sold in Canada and elsewhere. Zecevic wouldn't answer that question.

According to an undated story posted to http://www.iefranchise.com, there are 100 "international and domestic" Cash Now franchises. A search of Canadian phone listings spits back about 20 Cash Now stores sprinkled across the country, including several in the GTA.

A Web domain registration search shows the iefranchise.com Web site shares the mailing address of Cash Now. The story with the hundred figure is about Zecevic's wife, and her success as chief operating officer of Cash Now.

Roxanne Cashluba is one of the Canadian franchisees. She bought into Cash Now nearly three years ago, and says her Hamilton store is making money, and that the business pulled her out of serious debt she had racked up on two failed business ventures. For that, she is grateful.

But she knows of others who weren't so fortunate. She pays Cash Now $300 in royalties each month, and has little communication with headquarters.

"Cash Now, the head office, is very inexperienced," said Cashluba. She is aware of the problems in the U.S., and says other Canadian investors have had problems as well.

In an e-mail, Zecevic reminded the Star:

"Our good reputation is paramount to the success of our business. Therefore, any misleading or inaccurate statements made about any of the Cash Now principals or the Cash Now group of companies will have a significant detrimental and damaging effect on our business."

When he made the top 10 list in 2002, he was asked for his "best advice."

Zecevic was brief: "Take risks and let things flow."


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Risks: Raining litigation, Independence, Uniform Franchise Offering Circular, UFOC, Encroachment (too many outlets in area), U.S. Federal Trade Commission, FTC, Internet franchise-sales hype, Canada, United States, 20040703 Payback sought

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