Top Reasons Why Not to Buy Pirtek Franchise

While PIRTEK USA Chairman Glenn Duncan hesitantly answers questions about previous statements made by its CEO Kim Gubera, it’s clear that PIRTEK franchise closure figures are often misinterpreted. When franchisees close their businesses, it mainly indicates business failure. Also, many franchises, especially those with a mature market presence, choose to sell their stores either because of personal choices or the Franchisor’s swindling “churning” activity.

The “much-celebrated” multi-year NASCAR sponsorship by Pirtek has been a point of contention for franchisees who have gone to battle with the company over an allegedly high percentage of funds from the sponsorship being billed to the franchisee’s marketing fund.

Pirtek is a hose service center franchise, with many unhappy franchisees growing year by year. They complain that the Pirtek franchise requires a hefty upfront investment, doesn’t have a sound inventory system, and up-charges customers. Thus, it’s not a franchise that will have success in the long run.

So before you make a big decision to invest in the Pirtek franchise, read this blog for unbiased suggestions.

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Pirtek Franchise Overview

Peter Duncan started his small business from the garage of his home in Australia in 1980. Pirtek has its headquarters in Florida and has been in business for over 40 years. With over 400 locations and more than 100 franchises in 23 countries, it caters to several industries, including defense, logistics and transport, agriculture, quarrying and mining, manufacturing, utilities, automotive, and many more.

Initial investment cost of Pirtek franchise

• Initial Franchise Fee- $50,000
• Liquid Capital Required- $150,000
• Net Worth Required: $250,000

Pirtek provides two types of franchise options, including the following:

• Tier 1- Consisting of a traditional storefront, a staff of 5 to 7 individuals, and three mobile service vehicles.
• Tier 2 -Consisting of a storage facility, a team of 2 to 3 individuals, and two mobile service vehicles; within three years, upgrade to Tier

What Makes Pirtek An Inappropriate Franchise Option?

Pirtek franchising faces high employee turnover and frequent litigation. Additionally,  considering the fluctuating fuel and territory disputes. All this makes a franchise opportunity difficult. Along with that, the top reasons why not to buy the Pirtek franchise includes:

#1 Total franchise investment cost higher in the industry

The total investment cost to open a PIRTEK franchise depends on which tier to purchase, the location of the shop, and other purchase choices. The cost of opening a PIRTEK start-up can range from $386,300 to $869,300 for Tier 1 franchises in the United States and $201,400 to $518,000 for Tier 2.

4% of gross sales for continuing license fee and 1.5% to 3% of marketing fee are other expenses. Besides, there is 0.375% to 0.75% of local marketing, 20% of total job or product cost, and additional fees, which is relatively higher than other franchise options in the industry.

#2 Pirtek franchisees have been left in the dust with no recourse.

A 62-year-old couple is homeless because of the fraudulent churning activity of the Franchisor. Bob and Rose Jackson declared bankruptcy after a dispute with Pirtek. The Franchisor has accused Bob of breaking his franchise agreement by buying and selling products from other brands, which he firmly denied.

A small business advocacy group is taking up this franchise owner’s cause, looking to open up the debate about the company’s strategies and methods.

We’ve identified more than a dozen other franchisees saying they had similar grievances with Pirtek, raising concerns about its practices. This is all bad news for Pirtek – which has experienced some disappointing setbacks.

#3 Unsatisfied Customer is Another Major Setback

Pirtek’s franchises cannot retain their customers because they must purchase supplies at Pirtek-prescribed prices three or four times higher than market standards. Franchisees have reported that competing with other, less expensive brands that offer the same equipment quality is not easy.

Also, Pirtek advertises an “ETA of one hour” but fails to mention that nearly every van has limited hose capacity. Because many hoses are significantly bigger jobs, they take longer, making several customers highly disappointed and dissatisfied.

#4 Higher Front-end loaded business model.

Pirtek’s business model is so heavily front-loaded that it’s nearly impossible to be profitable. Many of Pirtek’s franchise locations have been closed, terminated, bankrupted, or re-franchised in more significant numbers than they could succeed. The franchisees are trapped in a single-sided agreement, compelled to stock with high-priced merchandise, allowed a limited territory, training, and support. All of these increased costs are passed on to the clients.

#5 Franchisees filed Lawsuit against Pirtek USA for disability discrimination

Pirtek USA LLC was charged an $85,000 disability discrimination lawsuit filed by the EEOC, i.e., the U.S. Equal Employment Opportunity Commission. EEOC charged Pirtek with allegations of breaking federal law by terminating an employee based on a perceived disability.

#6 Restrictions and Obligations

Pirtek necessitates franchisees to perform the day-to-day operation as per their guidelines, including selling and offering only approved services and products. Besides, Pirtek does not provide indirect or direct financing and guarantees the franchisees’ obligations, leases, or notes.

#7 Problem in the Brand Product Line Is Worrisome for franchise Owner

Staple-type systems are commonly used to secure traditional hydraulic fittings. This tried-and-true method has been around for decades; however, it has multiple significant drawbacks compared to SKV/SSKV fittings.

Although the staple efficiently locks the two fittings, it could still be detached easily when pressure is under the hose. In those kinds of scenarios, rapid pressure relief can be disastrous. Besides, staples often cause corrosion in the place with time, necessitating the utilization of a large hammer to remove them, adding to the risk both for customer and franchisee owner.

Conclusion

Even buying a Pirtek’s franchise has a few benefits like on-site, marketing, technical, and customer support. It has significant drawbacks that necessitate consideration before buying it, including specific restrictions, high franchise costs, certain lawsuits, the violation of the Disabilities Act, etc. So, if you take all the things into account, buying a franchise business from Pirtek is not that reliable.

References:

https://www.franchise.city/franchise/pirtek-usa

https://www.jdsupra.com/legalnews/pirtek-usa-to-pay-85-000-to-settle-eeoc-3122364/

https://www.franchise.city/franchise/pirtek-usa

https://www.unhappyfranchisee.com/pirtek-glenn-duncan/

https://www.unhappyfranchisee.com/franchisee-associations-push-back/

https://pirtekusafranchise.com/about-us/faqs/