ActionCoach Transparency

Trying, very hard…, to keep ActionCoach honest…

ActionCoach, Entrepreneur.com & the Franchise 500 ranking

with 11 comments

October 2010

For some time it has been a mystery to me to me how ActionCoach does so well in the Franchise500 classification produced annually by entrepreneur.com , a website specialized in advice on small business development. 

The 2009 ranking was especially strange with ActionCoach ranked # 65, their highest ranking yet. This lead to the sort of triumphant press release you can see below.

 Actioncoach Ranked #65 In Entrepreneur’s Franchise 500

In the latest Entrepreneur issue, ActionCOACH was ranked #65 in the Franchise 500. This is the highest ranking yet while retaining the leading position in Business Services.

(Tuesday, December 29, 2009) – In the most recent ranking of the top 500 franchise systems in the US, ActionCOACH was ranked #65.

This represents their highest ranking yet up from #103 in 2009, #76 in 2008, #96 in 2007.

“Although a down economy can hurt many businesses, it can also be a great motivator. In our market, small to medium sized business owners who want to be successful in both the short and long term, have turned to outside assistance to help accomplish their goals. The has given our business coaches a boost and positively impacted the marketplace in general”, says Steve Brock, Master Licensee for ActionCOACH in North Carolina and Connecticut.

“As the economy continues to get back on track, we expect increased growth in our clients, our coaches and our franchise overall”, adds Steve Brock. “It is an exciting time to be working with entrepreneurs in North Carolina and Connecticut and we excited with our 2010 rankings.”

Contact Information
ActionCOACH North Carolina
Steve Brock
336-288-8858
stevebrock@actioncoach.com
www.actioncoachnorthcarolina.com

Given this, it is worth understanding what criteria the Franchise 500 classification is based on and this is where it gets really interesting. Here is what they say on the subject on  

http://www.entrepreneur.com/franchises/franchise500/about.html

 About the Franchise 500

Before you dive into Entrepreneur’s 31st Annual Franchise 500®, a few words about how we compile this mega-list–the first, best and most comprehensive franchise ranking in the world.

The process began in July 2009, when we asked franchisors to participate in this year’s survey. Each submission was vetted before being entered for data analysis, with 738 companies making the first cut. Of those, the top 500 companies made the Franchise 500® ranking, based on financial and statistical data from July 2008 through July 2009.

Only franchise companies that supplied full Franchise Disclosure Documents (FDDs) or Canadian Disclosure Documents and whose information is verified by Entrepreneur can receive a listing in this issue. To be eligible for the Franchise 500® ranking, a franchise company must have a minimum of 10 units with at least one based in the U.S. It must be seeking new franchisees in the U.S., and it cannot be in Chapter 11 at the time the ranking is compiled. (The exception to these rules is Canada-based companies that are only expanding in Canada.)

All companies, regardless of size, are judged by the same criteria: objective, quantifiable measures of a franchise operation. The most important factors include financial strength and stability, growth rate and size of the system. We also consider the number of years a company has been in business and the length of time it’s been franchising, startup costs, litigation, percentage of terminations, and whether the company provides financing. Financial data are analyzed by an independent CPA. We do not measure subjective elements such as franchisee satisfaction or management style, since these are judgments only you can make based on your own needs and experiences. The objective factors are plugged into our exclusive Franchise 500® formula, with each eligible company receiving a cumulative score. The 500 franchises with the highest cumulative scores become the Franchise 500®. 

It is common knowledge that between 2008 and 2009, the ActionCoach franchise had negative growth and that trend hasn’t improved in 2010, far from it.

This must mean that other criteria such the size of the system and termination rates were also negatively impacted. Yet in spite of this reality, the ActionCoach ranking improved. So how was it done?

The answer was provided recently in a couple of posts on http://www.bluemaumau.org/node/8364/talk

In these posts it is explained how ActionCoach had successfully mislead Entrepreneur.com. It was quite simple, starting in 2009, they added options on future purchases of franchises to the number of active franchise outlets. By doing this, they successfully concealed the fall off in the number of active franchise outlets between 2008 and 2009 and even managed to make it look like they had fantastic growth. How clever!

However if people in Entrepreneur.com actually do verify the data in the FDD this is certainly a little  trick that will backfire on them. If Entrepreneur.com does not verify the data, it raises serious questions about the reliability and objectivity of their whole ranking system.  It might even bring people to believe that Entrepreneur.com was in collusion with ActionCoach

  Here are the relevant extracts from the 2008 and 2009 FDD’s.    

2008

  

 

The total number of franchise outlets (ML’s + Business Coach Franchises) on June 30th 2008  is 38 + 318 = 356, fairly close to the figure of 377 reported on entrepreneur.com. which clearly did not include the 142 franchise purchase options mentioned in the last table. However even in 2008 it is  sort of strange that the figure published on entrepreneur.com should be any different to the figures in the FDD.

2009

The total number of franchise outlets (ML’s + Business Coach Franchises) on June 30th 2009  is 36 + 288 = 324, more than 120 less than the figure of 445 reported on entrepreneur.com. and down 32 compared to 2008. However, if the total of 111 in the “Franchise Agreement signed but outlet not opened column” is included, the figure does get closer to 445.

It is also worth mentioning that 68 of these “Franchise Agreement signed but outlet not opened” franchise outlets are in Idaho and South Texas. The M.L. for both of these territories is Kevin Alft, the “King of Churn” and, since there are presently only 4 active franchise outlets in Idaho and 9 in South Texas, it takes a lot of imagination to believe that these phantom franchise outlets will ever be anything more than that.

One way or another, it is very clear from this that the comparison between 2008 and 2009 is highly misleading and, if this were the Olympic games, the guilty party would be stripped of its medals and banned from the competition for many years…

On this matter, it looks like Entrepreneur.com still has a lot to do to put its house in order. Going by the latest figures published for ActionCoach (see below) they are still not verifying anything.

A far more pertinant view of the reality on the ground is provided in the next two tables.  The general trend is the same, clearly downwards. However there is a massive difference in the absolute numbers, no doubt explained by the integration of the figures for options on future purchases for all the countries/territories in the Entrepreneur.com numbers. For example when researching for this post, I noticed that Ian Blanchard, who only recently joined ActionCoach in the Caribbean, was sold a FIRM from day 1. While I wish him every success, I fear Ian was not told the real story on FIRMS upfront… 

No matter, what the tables show is that ActionCoach prestently has ~ 755 active Coach franchisees around the world to which you should add a 53 Master Licensees for a total of just over 800 active franchisees. This is far below the figure published on Entrepreneur.com and in all of the ActionCoach promotional materials.

What the tables also show is that the churn rate is absolutely horrific, 234 exits out of a starting total of 839 in just 13 months!  That is 234 more people badly hurt if not completely destroyed by this Franchise which continues to get plaudits from Entrepreneur.com

1) Coach Franchise Outlets 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Written by actransparency

October 24, 2010 at 9:37 am

11 Responses

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  1. Thanks for a very detailed and interesting post.It looks like ActionCoach is partially compensating for the sharp fall off in numbers in its traditional fortresses by opening new markets, particularly in Latin America. I just hope some of these new people speak good English.

    In a recent PR piece http://www.franchising.com/pressreleases/17506/,

    Jodie Shaw has this to say on the subject:

    “Our global growth is reflective of our growth here in the U.S. and in Canada,” ActionCOACH U.S. and Canada CEO Jodie Shaw said. “We’ve had a very productive, profitable and expansive year, and from our internal projections, that trend should continue into next year as well.”

    One wonders what the 234 people who quit the franchise over the last year might think about that.

    Interesting

    October 30, 2010 at 9:37 am

    • Looks like quite a missmatch between the PR and the facts on the ground. The only boost that their Business Coaches are getting from the down economy is a boost towards the exit and with expansion like that how bad does it have to be before someone talks about a contraction?
      The real bitch is that in spite of all the obvious B.S. too many people are still being suckered into signing on.

      Anonymous

      October 30, 2010 at 2:56 pm

    • “What the tables also show is that the churn rate is absolutely horrific, 234 exits out of a starting total of 839 in just 13 months! That is 234 more people badly hurt if not completely destroyed by this Franchise…”

      Yes, I’m one of those who was destroyed by ActionCOACH, and unfortunately, I personally know many more who were as well. I’ve gone from being an executive making more than a quarter of a million per year, to literally living in poverty. I lost my home, but thankfully still have my family. The economy is bad enough for mid career job seekers, but try getting a job after you left corporate America to start your own business. It’s a black mark.

      The ActionCOACH pitch is that the system is plug and play. It’s appealing to a confident exec, even those who have no small business experience (and probably have little business telling SMB clients how to run a business). Make the investment, take the training, and “follow the system” and “you’ll have an abundant life”. The problem is that “the system” was designed for the Australian and NZ marketplace and really doesn’t work well.

      The rates that ActionCOACH charges small businesses ($1,500 – $3000 per month) is predatory, considering that the model is that the coach advises the business owner on what to do, but doesn’t actually do any of the work. That’s a fine model if a business owner has the time and staff to implement changes at a rate that aligns with the fees. But the problem is, most small businesses have little money, time, or staff to execute on business changes. Therefore, while the strategies that are recommended are generally sound, business owners can’t implement them fast enough to financially benefit from them in order to get a reasonable return on investment. This is why so many coaching engagements last less than six months and there is an enormous amount of churn with small business clients. As a result, ActionCOACH coaches have to deal with unsatisfied customers (due to poor ROI) and constantly sell new clients.

      Most of my colleagues at AC were very smart, formerly successful business professionals who were genuinely interested in making a difference for their clients. But in the end, this is just a bad business model for clients and coaches. The only one making out is ActionCOACH, and their real business is, of course, selling franchises. Unfortunately, they continue to do this all too well.

      Former Franchisee

      June 9, 2011 at 6:34 am

      • Thank you for your well thought out input and wishing you all the best in getting your life back on track. It is unhappily too late for you but, hopefully, with all the commentary now available on the web, people will think a bit more before getting involved with this very unscrupulous franchise.

        actransparency

        June 12, 2011 at 10:31 am

      • Thank you for this post. I am considering buying an ActionCoach franchise. This has given me a much more balanced perspective on the matter.

        bigsandbubs@yahoo.com

        January 7, 2012 at 8:08 am

  2. Thanks for a great post, you sure put your finger on the right issues. I hit on this a long while back and contacted folks at entrepreneur.com to highlight the problem.

    A lady called Tracy Stapp got back to me with this message.

    Sir,
    We do everything in our power to insure that the numbers used in our Franchise 500 ranking are accurate by requiring each company to send us a copy of their FDD and a list of their franchises. I do appreciate you pointing out this possible discrepancy, but after examining your evidence and ours, I believe the difference in numbers may simply be because some of ActionCoach’s franchisees own multiple units– and we base our rankings on number of units, not on number of franchisees. If you still believe that ActionCoach is misrepresenting itself, then reporting it to the FTC is absolutely the next step.

    Tracy Stapp
    Special Projects Editor
    Entrepreneur Magazine

    I contacted them again after seeing your post but got no answer. Since her answer doesn’t address the question on why they changed the counting method between 2008 and 2009 it sure looks like they prefer to look the other way.

    Concerned

    November 12, 2010 at 4:58 am

  3. As a former franchisee I can say this:
    ActionCOACH is well aware of all these stats and they seriously could care less- as long as there are as many or more new franchises being sold as are leaving, they don’t care. I know way too many who bought this franchise and are now broke because of it. There are some who make good money doing it. The problem is that this side of reality is hard for people to fond on the Internet unless they know exactly what to search for. The reason for this is because in 2009 brad sugars decided to hire as many people as he could to put content on the web to drown out all the negative (I.e. Real) stuff. So now theyve got 20 pages of listings under any google search with the name in it. Hopefully most people are savvy enough to search a little in depth online though. Jodie shaw is a nasty thing who threatens and intimidates people from speaking out- theyre always threatening lawsuits because they want to shut people up. I can tell you as one who has quite objective feelings about action (I was with them a long time) that it really is a franchise sales organization that also happens to do business coaching. They make way more money from selling the franchises and that’s why its not a great coaching company. The 13 week coaching process is a joke. And most of the content is ripped off and the rightful owners’ names are replaced with either “action” or “brad sugars” like “brad sugars definition of a business”. Did brad come up with that? I seriously doubt it since he comes up with no original ideas aside from creative ideas on how to sell more franchises. He and Jody really are people who are driven by money and greed and operate with little to no conscience (and justify it by the few percentages of coaches and clients who do well). They tell themselves every day that they’re helping the world- but deep down they know better. They really ought to be ashamed of themselves. But hey- its all worth it when you jump on that next private rental jet to go to another ball game, right brad? For those of you looking to buy a franchise, call Alan hill in Minneapolis. He got taken/swindled for over $500,000! I could have told you in 5 minutes that he wasn’t a good candidate for this franchise- and they knew it too- but his money was too appealing. Greed. It sucks.

    Another former franchisee

    September 26, 2011 at 12:48 pm

  4. I engaged an action coach in Western Australia by the name of Ian Lane. He charged me nearly $3,000 per month and Did nothing. My business has grown by nothing during his so called coaching. Hetook money from my credit card without my authority and when I asked him for it back as I had given him notice as per our agreement he lied and still has not returned. I am having to take legal action to get my funds back .

    I contacted Action coach Australia and had a call from the CEO in the states all liars!!

    Do not use this franchise

    Anne Cavenagh

    September 3, 2013 at 4:25 pm

  5. Having worked with ActionCoach for 12 years ,I have found their organization to be comprised of highly professiona and caring people.

    Anonymous

    May 30, 2014 at 1:23 pm

  6. Life moves on and I hadn’t visited this blog in quite a while. However, given the way ActionCoach is going down, down, down, it looks like this blog and others like it had the desired effect. Thanks to the internet , people are thinking twice before signing on the dotted line with this empty shell of a franchise.
    On the latest count, there are only about 110 ActionCoach franchisees left in all of the US which means that numbers have been divided by almost three since 2009.
    Our good friend Brad Sugars used to say that a “Business is either Growing or Dieing” so I guess he can draw his own conclusions about where his business coaching scamchise is going.

    Anonymous

    August 18, 2015 at 12:03 am

    • Yes we all move on but it is interesting to see that this blog continues to receive large numbers of visits, still around 200 per month. Actually, the record for total visits in one day was set on the 2nd May of this year with 116 visits.
      It may be of of interest for you to know that the US is not the only place ActionCoach franchise numbers are down. In the historic territories (Australia, NZ, US, UK…) they are down massively everywhere except the UK. I haven’t checked in a while but it looks like there are only about 500 coach franchisees world-wide with the much vaunted beachheads in places like China and India coming to nothing. This is versus a total of around 1000 in 2008-09
      To keep numbers up, there have been a few attempts to more or less give the franchise away, most recently last winter, but even that hasn’t done the trick.
      However, spin artists to the bitter end, on the bottom of the home page of their website actioncoach.com you will see a list of all the “countries” where they claim to have a presence. Amusingly it even includes the Syrian Arab Republic and I’m quite amazed that we haven’t seen trimphant press releases telling us about how much Action Coach has been helping Islamic State, the Al Nushrah Front, Ajnad al-Sham and others with their business strategies. But of course the great marketing guru Judy Shaw left the boat in 2013 so things have been a lot quieter on that front since then 🙂

      actransparency

      August 18, 2015 at 6:10 am


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