Referrals For Your Prospective Clients

If you become an EASI dealer, your prospective clients will ask you for referrals.  This means that they are going to want to be assured that other credible customers have purchased and installed EASI projects and have been satisfied.  They will often want referrals that are in the same industry and/or in the same geographic area.  This is very important, and it is very difficult to sell EASI projects without being able to provide that assurance.

The EPAC guarantee provides a measure of assurance, but in many cases, it will not be enough.  Put yourself in the prospective client's shoes for a moment:  Wouldn't you still want some kind of assurance of the quality of past performance?  Even with the guarantee, would you commit 10's of thousands of dollars to someone with an unknown or no credible history?

How will you provide that credibility and assurance with no experience with EASI projects?  EASI may tell you that you have the EPAC guarantee (which I will discuss in another blog post), the entire history of EASI standing behind you, and that they have referrals that you will be able to present to your prospective customers.  Beware.

Here is my advice on the matter of referrals:

Before the end of your first day of new affiliate training (when you have to pay), and before you sign anything or pay any money, make EASI show you their collection of referrals.  Do not be satisfied until you have seen them - all of them not just a sample - for yourself.

I trusted EASI when they lead me to believe that their collection of referrals was going to be a great resource to support my sales effort.  I didn't ask to see them.  After signing the contract, handing over my hard-earned money to EASI, and going out into the field to sell projects, I learned that the referrals were not at all what I had expected.  There were not very many, and for the most part, they were very old and outdated.  The majority were from one company in Syosset, NY.  This company may have been somehow related to Merlo's old business prior to forming EASI.

At the time I was provided access to the referrals on the EASIworld website, there were just 37.  18 of those were from the business in Syosset, NY, all of which were dated 1982 or earlier.  That's not a typo - you read it correctly: 1982 (At this point, you should probably review your information to see when EASI was formed and compare that date to 1982).  Only three were dated after the year 2000.  Four were dated in the 1990's.  Think about this for a minute - how many hundreds of dealers has EASI signed over the years - and this is all they have to provide for you in the way of referrals?  I felt so duped when I discovered the quantity and quality of the available referrals.

When I asked about this quantity and quality of referrals, I was then told by an EASI employee that dealers rarely provide their referral letters to EASI because most dealers either don't care enough to support that resource and have virtually no incentive to do so, or they just flat out don't want other dealers using their referrals to sell other projects (potentially in their own geographic area - remember, you have no exclusive territory).  I can't say that I blame dealers for not sharing referrals.  That explanation made sense, but it didn't help me, it conflicted with what I had been led to believe during the recruitment and training.

The point was that there were essentially no recent, credible referrals (especially from my geographic area) to support my sales efforts.  I found myself on my own, with no history in the business, and that really makes it hard to sell an EASI project.  Trying to sell a project by standing on the "long and esteemed history of EASI" doesn't carry much water either when you can't back it up with a referral, and it is therefore a dangerous card to play.  The customer's perspective will be this: "You're telling me that EASI has been in business for all these years, and has installed all these projects, and has never had a claim against the guarantee, yet you can't produce a single credible referral for me to review or call?  Something is not right."  I was laughed at on one occasion when I showed one of the referrals that was dated in the 80's or 90's.  I left that prospective client's office that day knowing that my business was in trouble, and feeling ashamed of myself for having placed my trust in EASI.

Maybe and hopefully EASI has improved the quantity, quality, and availability of referrals since I was in the business.  But the point is that you must turn this stone over before paying them a penny.  Make sure you know what's available to you in that referral collection, and do not settle for verbal assurances from anyone at EASI about the quantity or quality of those referrals.  See them for yourself.  I don't expect them to give you copies of the referrals, but there is no reason why they can't set you up on a computer at their office to eyeball them.  Be suspicious if they refuse to let you see them, no matter how convincing the reasons may sound.

EASI All-Stars

During the recruiting process, EASI will provide you with a list of affiliates that you can contact in order to get their perspective on being an EASI dealer.  The names are drawn from a very small pool of "All-Stars" - so small in fact, that pretty much the same names are provided to most prospective dealers.

Can you trust what these All-Stars tell you?  Are they getting any benefit or other consideration from EASI for giving the thumbs up?  The answer: you don't know.  And if you don't know, you should assume that they are not objective.

But you do know that EASI is not going to give you the name of anyone who might give them a thumbs down.  Now let's talk some conservative numbers here - if EASI runs one class of new affiliates through every other month, and there are 10 new affiliates in each class, then there are 60 new affiliates each year.  Let's assume that only half of them are in the United States.  That's 30 new dealers per year in the US, and 60 worldwide.  In the past ten years, that means there should be 300 dealers in the US (an average of 6 in every state), and 600 worldwide.  But EASI has been in business longer than that.  Where are all these dealers now?  If being an EASI dealer is so profitable for some, why are they so hard to find when searching on the Internet?  And why does EASI give out pretty much the same 5 or 6 names to most prospects?  If I were in your shoes again, I'd be more interested in the other 295.  What happened to them, and what would they have to say?

Here's one interesting point about a specific all-star: Pete Bubas.  Is he on your list?  Here is why you should not rely on Pete's testimonial: Pete has a financial interest in you becoming an EASI affiliate and selling projects, and is therefore not to be considered objective.  Why?  Because Pete has an agreement with EASI to supply many of the lighting supplies to EASI for use in affiliate projects.  More projects = more lighting products sold = more money for Pete.  Has Pete successfully sold some EASI projects?  Probably - but you should be aware that he also makes money from the lighting supply business, and he also has an interest in a restaurant.  Apparently, being an EASI dealer is not so lucrative that even this famous all-star is exclusively focused on it.  His affiliate website is www.shoreenergy.com.

At least do this: When EASI sends the list of all-stars to you, tell them thanks, but that you want 5 new names that were not on the first list.  Can you rely on the next 5?  Probably not, but at least you'd be forcing them to scrape up some names other than the same old poster boys.

When speaking to these affiliates, ask these specific questions:

1. What month and year did you become an EASI affiliate?
   
2. How much did you do in total revenues for your EASI business in the first 12 months?
   
3. How many months into the business were you when you made your first sale?  How big was it?  How long did it take to complete install and get your final check from the client?
4. How many projects did you sell in your first 12 months, and what were the revenues on each?
   
5. How much did you do in total revenues for your EASI business in the last tax year?
   
6. How many projects did you sell in the last tax year, and what were the revenues on each?
   
7. Do you do it full time?
   
8. Do you have other sources of income?
   
9. What is your level of education?
10. How much were you earning annually prior to becoming an EASI dealer?
11. How much are you earning annually since becoming an EASI dealer?
12. What is the price of electricity in your part of the country?

You may feel uncomfortable asking direct financial questions like these to a stranger.  But let's face it, this is largely a financial decision you are making.  If they won't talk money with you, you're wasting your time on the phone with them.  If you can't justify the business financially, none of your other reasons for getting involved will matter.

I think you will get a lot of very evasive or indirect answers to these questions.  Please let me know if I'm wrong on that prediction -

History

Readers,

Here is an article that was provided to me by a reader. It discusses some of Joe Merlo's history in the business:

Burton, Peter. "Checking vendor stability seen crucial in EMS buy. " Energy User News. 9 (Feb 20, 1984): 1(3). Academic OneFile. Gale. Public Library (CELPLO). 3 Nov. 2008 find.galegroup.com/itx/

Abstract: As an industry shakeout occurs among EMS suppliers, buyers of energy management systems are urged to scrutinize the stability of vendors. Customers should look at the vendor's financial statements or annual report, credit reports from service firms, and trade-payment reports to determine the firm's total sales, assets, liabilities, and profit or loss. Assets ratio should be 1.5 the size of liabilities.

Full Text:COPYRIGHT Chilton Company 1984

MEC Folds After Furor; Owners Form 2 New Firms

The owners of Multi Energy Concepts (MEC), an energy management firm that recently came under fire from a number of its customers, have dissolved the firm and formed two separate companies under new names. One of the former principals, Joseph Merlo, said his new company, Energy Automation Systems Inc., Hauppauge, N.Y., will assume no warranties or liabilities of MEC. The other principal, Phillip DeRosa, said his new firm, Diversified Energy Controls, will honor all warranties and service obligations, but he claimed to have no records of former customers. "We had 30 to 50 salesmen--I just don't know where the files are,' said DeRosa. While both Merlo and DeRosa say that the new companies have no link to MEC, the two men were the owners of MEC, and the president and vice president, respectively. The two new companies also sell the same basic equipment and service as MEC had offered. Further, Energy Automation Systems is using sales literature nearly identical to MEC's, and Diversified is located at EMC's old address in Syosett, N.Y. The dissolution of MEC closely followed a story in Energy User News detailing a number of user complaints about unfulfilled savings promises, careless installations, and slow service. (See Aug. 30, 1982, EUN, page 1.) MEC operated by reviewing a prospective firm's electricity bills, then projecting savings-- typically 20 percent. Then the company would install a package of equipment that generally included power factor controls, small energy management systems, and fluorescent lighting controls. The cost would be based on the users' electricity costs--usually four or five times his monthly bill --rather than on the type and amount of equipment installed. In October, the principals dissolved the company and the Suffolk County, N.Y., Supreme Court appointed a receiver--a type of trustee--to resolve any outstanding business affairs, a Diversified Energy spokesman said. However, four customers of MEC told EUN that as of last week they had received no notification of the company's dissolution. One said he has tried unsuccessfully to contact the company since November to get information on a load-shedding device that MEC installed at his plant. According to Joseph Merlo, former president of MEC, former customers will be contacted within a month, notifying them of the dissolution and advising them how service can be obtained. All equipment warranties will be honored by the manufacturers, Merlo said, but any warranties issued by MEC are void. "If customers want service, they'll have to contract someone from outside,' he said. However, DeRosa said his firm would honor any outstanding MEC warranties at no cost. Because he has no records of who the customers were, he said, he invites any MEC customers needing service to contact Diversified Energy Controls in Syosset, N.Y. Warranties for some of the MEC equipment will be honored by the original equipment manufacturers. Mac Victor Mfg. Co., Concord, N.C., manufactured the MEC energy management systems, and will honor all warranties, according to Dean Pfliger, Mac Victor's director of marketing. MEC's Phase Liner power factor controllers will remain under warranty through its original equipment manufacturer, Queen Electric Co., Fort Worth, Tex., a Queen spokeswoman said. Service problems occuring outside the warranty period can be handled by these manufacturers for a service fee, both sources said. MEC itself manufactured the FLC II, a fluorescent light controller, and the warranty for these systems was carried by MEC. Temporarily, neither Diversified nor Energy Automation Systems is selling this product due to legal problems between the two new companies.

Gale Document Number:A2595767© 2008 Gale, Cengage Learning.

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Can you rely on the Better Business Bureau?

When I was considering becoming an EASI Affiliate, one of the many inadequate steps that I took was to check with the Better Business Bureau. After all, everyone has heard of the BBB, and surely their information can be relied upon. Correct? They are reputable, aren't they? Don't they exist to help protect the little guy?

At that time, BBB indicated no red flags. That was encouraging, and contributed to my decision to move forward with EASI.

Fast forward a few years to when I filed a complaint against EASI with the BBB and pursued it over a period of time. The BBB facilitated a correspondence between myself and EASI which consisted of me laying out my basis for complaint with the BBB and EASI admitting nothing, denying everything, and making counteraccusations. After a few rounds of this correspondence, the BBB dropped out of the process, citing an unfortunate inability to resolve the dispute. The reality is that they didn't really do anything but pass written communications between myself and EASI.

If you were to look on the BBB website during the time of this complaint and after, it showed that there were zero complaints on file about EASI. I don't really understand that. Clearly, they were mediating an active complaint. I could be wrong, but the impression I got from the BBB was that their process only works if the defending party agrees that there was a wrong and agrees to take action to make it right. If that does not happen, the BBB drops out of the process, and will not record it as a complaint. Since I am not aware of EASI ever admitting to wrongdoing, I guess I should not be surprised to see zero complaints against EASI on the BBB website.

Here is a link to another blog on the web (with which I have no affiliation) that discusses the subject of EASI and the BBB:

http://bizop.ca/blog2/due-diligence/better-business-bureau-of-midd.html

Are you confused yet? Me too. Apparently I do not understand what the BBB is all about and how it works.

Do you? If you don't fully understand how the BBB works and whose interests they serve, maybe that's reason enough to not rely on their information.

Washington State Law Violated by EASI

I have added a new link to the January 5, 2009 document from Washington (State):

"STATEMENT OF CHARGES AND NOTICE OF INTENT TO ENTER ORDER TO CEASE AND DESIST" filed by the State of Washington against EASI.

Similar to recent findings by the State of Maryland, Investigation by the State of Washington found that EASI sold dealerships to individuals in the State of Washington while not registered to do so, and failed to disclose required information to those dealers, including a 2002 Chapter 7 Bankruptcy of Paul Bleiweis and various lawsuits.

EASI had been registered to sell their business opportunities in Washington on more than one occasion in the past, dating back to June 1999, indicating their awareness of the responsibility to meet state-mandated requirements to sell dealerships there.

A prospective dealer must ask the question, "Why, when EASI has been aware of state requirements to register and to disclose required information to prospective dealers since at least 1999, do they continue a pattern of behavior in which they fail to disclose material information to prospective dealers?" Have they been sloppy and negligent about complying with state laws that are designed to protect prospective buyers of business opportunities, or is this behavior intentional? Either way, neither answer is good for a prospective dealer.

The document may be found by searching for "EASI" at http://dfi.wa.gov/sd/ordersearchengine.htm

Which leads to:
http://dfi.wa.gov/sd/orders/S-07-480-08-SC01.pdf

Maryland Law Violated by EASI

I have added a new link to the disclosure portion of the Maryland law that EASI violated, resulting in their recent 2008 settlement there. The law requires 28 items of information be provided to prospective buyers of a business opportunity at least 10 days prior to entering into the agreement. EASI did not comply with this law, resulting in the state's action.

http://mlis.state.md.us/asp/web_statutes.asp?gbr&14-114

If you are considering becoming an EASI dealer, this list of 28 items might be a good list of questions to ask EASI before you sign with them, even if you are not in a state that requires such disclosures by sellers of business opportunities.

The other part of the MD law that EASI violated was that they had not registered their business opportunity with the state, as required.