Review of Stewart Kennedy Cost Reduction Services franchise - Expose Scam and Identify Good Business Opportunities

EASYEARN FRANCHISE
Stewart Kennedy
Cost Reduction Services (2010) Limited
X Wing, Ground Floor
Trident House
175 Renfrew Road
Paisley
Renfrewshire
PA3 4EF
Tel: 0141 889 8939
www.costreductionservices.org.uk

- Extract from sales copy
- Review
- Your feedback

Extract from sales copy:

Finally, the franchise and business opportunity the world has been waiting for has arrived.

Where your money definitely works for you.

No Premises, No Stock, No training, No complicated processes, NO WORK!!! Yes, you read it right NO WORK!!!. The EASYEARN© Franchise is the ultimate franchise for those who expect and demand money to work hard for them.

This is not a 'sounds too good to be true' or 'there must be a catch' business opportunity for the mega negative or serial doubting Thomas's out there to talk down. This is a very real opportunity and business. So real we invite you to visit our National Headquarters and see how it works BEFORE you part with your hard-earned cash.

We offer you the opportunity to be an Agency Franchise owner within your own exclusive post code territory. As an Agency Franchise owner you will receive fortnightly fee income generated by an employed sales consultant providing our copyrighted and highly successful Cost Reduction Services reducing monthly expenditure for both consumers and business owners. We will recruit, train, manage and pay the consultant who will be an employee of Cost Reduction Services (2010) Limited. We will fully manage all of the necessary marketing, administration and accounting from our National Headquarters. The only cost to you is the fee to purchase your agency franchise. There are NO ongoing or recurring overheads. When you have secured your Agency Franchise just sit back, let us do the work and enjoy the fee income sent to you every fortnight. We anticipate average monthly fee income to be £4,600.

Review:

Stewart Kennedy of Cost Reductions Services (2010) Ltd has recently sent out marketing material for his new franchise, and a couple of people who'd received this asked me about it.

I came up with a rather long list of questions about this franchise, which I've put to Stewart Kennedy as follows:

I note that your company Cost Reduction Services (2010) Ltd was only set up a couple of weeks ago, with yourself as the sole director, and it appears from Companies House records that this is the only directorship that you hold. So how can you say, on the page headed "Company" on your website that "As a business we have grown from a modest one man business to a multi-million pound national company"?
Since your company was only set up in mid-April 2010, how can there have been enough time for it to have gathered the ten testimonials shown on your web site?
In your email, you describe your business opportunity as "extraordinary and completely unique". Is this because, whereas most franchises concentrate on one main product or service, your franchise covers a surprising number of different fields, as follows:

- capital raising, refinancing, business restructuring and refinance
- estate planning and protection
- capital allowance tax refunds
- insolvency management to both individuals and businesses
- legal services, conveyancing, wills, lasting power of attorney and legal expenses
- utilities

It would not be possible to have expertise in all these fields, all the more so because the law and procedures in many cases will be different depending on whether the client is in Scotland or in England and Wales. So I assume that you personnel merely obtain leads which are forwarded to specialist companies. Is this right?

I see that one of your company's areas of cost reduction expertise is stated to be Utilities: "We are distributors for the leading utility provider in the United Kingdom who leads the market in delivering highly competitive and combined multi-products and services. Leaders in Which? surveys and voted as the UK's leading PLC". Is this the multi-level marketing company Utility Warehouse?
How do you know that your franchise business model works? If you have carried out testing with a pilot franchise, then do you have audited accounts or other evidence of the results which you make available to potential franchisees?

I was somewhat taken aback to see a post from you on the website at BusinessesForSale.com. Dated only a few days ago at 3rd May 2010, your post opens by stating that you are "carrying out some market testing prior to the launch of our copyrighted Easyearn Franchise" and then continues with sales material for your franchise. Two days later, you sent out emails to market your franchise.

As I'm sure you know, the word "franchise" means a business model that is tried and tested, and this would normally take between one and two years, including running a pilot franchise for a reasonable period of time.

On second thoughts, have I perhaps misunderstood what you meant by "market testing"? Did you mean that your post on the BusinesssFor Sale.com website was nothing to do with testing whether your franchise model worked or not, but whether people were interested to buy it?
Since you state that people buying your franchise will be able to earn a return of 513% in the first two years simply by investing £15,000 and do "NO WORK", why are you franchising your business at all?

Most companies offering franchises need to have franchisees to deliver their products or services and market their brand. It seems, however, that you don't need franchisees for anything except their £15,000. So why don't you, instead, simply exploit this opportunity and earn these enormous returns yourself?

It seems nonsensical that you are going down the franchise route, particularly since you say that your company is going to be employing the sales consultants who generate this income.
Could you please clarify the position regarding these sales consultants. You say that "We will recruit, train, manage and pay the consultant who will be an employee of Cost Reduction Services (2010) Ltd." However, on the Jobs page of your web site, there is no mention of vacancies for consultants to become employees of your company. There are, however, openings for self-employed Agents whom you say you will be appointing throughout the UK, and you will be giving them full initial and ongoing training so that no experience is required. You say that these agents will be given customer appointments centrally by your company and that "Remuneration is by way of fees up to £1,000 per case. Expected on target annual income in excess of £60,000 easily achievable."

Since the only jobs you are advertising on your website are telesales operators, agents and franchisees, presumably you already have your full quota of employed sales consultants in place despite the fact that your company is only three weeks old.

Is this correct?
Could you please advise whether you personally or your company is registered with the Financial Services Authority as a financial adviser and whether you are registered with the Department of Trade and Industry to hold a Consumer Credit Licence, because I was unable to find any current registration.

I have, however, found a personal registration for someone called Stewart Kennedy of Newton Mearns, Glasgow, but this lapsed in 1997. I have also found a consumer credit licence which was terminated on 14th July 2003 for a company called One Stop Insurance Services Ltd of Paisley whose officer was Stewart Kennedy.

What puzzles me is that your website says that your company offers "bespoke solutions to personal and business client's [sic] which may include consolidation, capital raising, refinancing ... Insolvency Management - we have been heavily involved in assisting both individuals and business throughout the United Kingdom understand the impact and implications of Trust Deeds, Individual Voluntary Arrangements, Sequestration and Bankruptcy".

However, there is no indication that you or your company are registered with the Financial Services Authority.

Is this correct?

There is no indication, either, that the agents you are recruiting need to be themselves registered with the Financial Services Authority, so this means that they would not be able to give any financial advice unless they operated under the umbrella of an authorisation held by your company.

The same consideration would apply to the consultants whom you say will be recruited, trained and managed by your company.

If there is nobody authorised to give financial advice, then what does your company actually do?
In the course of my researches, I came across a company called Hampton Trust of Glasgow, which described itself as "Cost Reduction Consultants" on its website (now disappeared) at www.hamptontrustuk.co.uk. As shown on its website in March 2008, it operated through a network of self-employed agents. According to several comments on various forums from 2007 to early this year, it seems that the business of this company was to obtain the contact details of people on the Insolvency Register and then contact them to offer to end their Individual Voluntary Arrangements early, for fees which seem to have ranged from £450 to £900. The comments that I saw were uncomplimentary about the service they had received from Hampton Trust.

One commentator said that he had submitted a complaint to the FSA about Hampton Trust for potentially un-regulated financial advice.

Apparently, Hampton Trust was run by somebody called Stewart Kennedy.

Was this you?
Also in the course of my researches I came across a Glasgow-born man called Stewart Kennedy, described as a bankrupt mortgage expert. This person, who is the same age as you, moved to Renfrewshire and worked as a mortgage adviser under the names of several firms in the Paisley and Glasgow areas. These names include Mortgage Options, One Stop Mortgage Solutions and Lifestyle Marketing. This person was made bankrupt in April 2005 with estimated debts of £196,000 and flouted a court order by sending threatening letters to former clients demanding payments. In August 2007 the Evening Times reported that an arrest warrant had been issued for this person after he failed to turn up at court to answer a criminal charge. He was accused of illegally transferring more than £12,000 into the bank account of his wife Jacqueline, without notifying the accountant appointed under Scottish law to deal with his bankruptcy.

Was this you?
Finally, your franchise seems to be making an investment offer rather than a business offer because your sales material stresses that people buying this franchise do NO WORK and all the day-to-day management and arrangements are undertaken by your company. All you require of your franchisees, it seems, is payment of £15,000 and in return for that you promise them a fortnightly return of £2,300. It seems to me that this is deposit-taking activity which is in breach of the Financial Services and Markets Act unless you have the appropriate authorisation, such as a banking licence - of which there is no sign.

The only reply we received from Stewart Kennedy was to say that he will be announcing an open day "over the coming weeks" but we had no reply to our questions.

In view of the concerns raised, we're rating this at zero out of ten.

Rating:

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BOW Notice: A critical review which raises hard-hitting questions means that in our opinion the business model or the investment model has flaws and/or we have found inadequate evidence to back up claims about earnings, sales, profits etc. It doesn't mean this evidence does not exist and it doesn't mean that the promoters are unprofessional or dishonest. Questions arising are normally contained within the body of the review, and readers who are interested should contact the company with these questions and/or questions of their own.

Update 24th January 2011:

The Cost Reduction Services EasyEarn franchise is now being promoted by email under the heading "I Don't Believe it!!!", with a photograph of the TV actor Richard Wilson in the role of the grouchy old Victor Meldrew in the BBC sitcom "One Foot In The Grave".

This promotion comes from a company called TFCN - The Franchise Consultant Network - run by Graham Scott of Avonbridge, Stirlingshire who set up his website at www.tfcn.co.uk less than two months ago on 30th November 2010.

This promotional email contains links to a Vimeo "CRS Thursady (sic) Webinar by Stewart Kennedy" and an interview of Stewart Kennedy by Graham Scott posted on You Tube.

All of the above serious questions continue to apply to these latest presentations of this opportunity.

One important danger raised in question ten above is in fact emphasised in the webinar recording by Graham Scott, apparently in blissful ignorance of what it means, when he says as follows:

"Why would you invest £15,000 in a Cost Reduction franchise and why would we pay you fees of anything from £46,000 to £75,000 per year? Well, millions of people all over the world buy shares in companies. They invest their money in a company, the company does the work and at the end of the year you get a dividend and that is your profit from your investment. Cost Reduction Services operate on similar lines, only you get your dividend or return every two weeks, and it's certainly more than you'd get on the stock exchange."

Graham Scott seems to agree with me, then, in saying that the Cost Reduction Services offer is an investment. However, what he doesn't seem to realise is that there is a mass of regulations and procedures which have to be followed before anyone can market an investment to the public. This is to protect the public from unrealistic and hastily-conceived investment offers.

As I said in question 10 which I forwarded to Stewart Kennedy (and which he never answered) it seems to me that the sale of Cost Reduction franchises is deposit-taking activity which is in breach of the Financial Services and Markets Act unless you have the appropriate authorisation, such as a banking licence - of which there is no sign.

If I'm right, then that would be a criminal offence.

I forwarded this update to Stewart Kennedy, asking him if he has consulted lawyers on this point, but he did not reply.

Update 12th April 2011:

An investigation by Chris Musson of the Scottish Daily Record reveals the links between Stewart Kennedy and a trio of lawyers with controversial histories:

INVESTIGATION: Record rumbles rogue lawyers' and chancer's get-rich-quick scheme

(Note that you will need to copy and paste this link into your browser to read Stewart Kennedy's letter because our website does not carry any links to websites promoting business opportunities because it's important to show that we are independent and unbiased.)

Update 19th May 2011:

Chris Musson of the Scottish Daily Record continues his exposure of the activities of Stewart Kennedy and Cost Reduction Services.

An article was published yesterday claiming that the fraud squad are now investigating:

Fraud squad probe rogue boss Stewart Kennedy over clients' missing £1 million

Amazingly, the Cost Reduction Services franchise was advertised until earlier this month on the leading franchise web site www.franchisedirect.co.uk and it continues to be advertised on various other franchise websites, including the Daily Telegraph:

http://telegraph.franchisesales.co.uk/franchises/cost-reduction-services
www.franchisesales.co.uk
www.businessesforsale.com
www.franchiseden.com

This clearly demonstrates that you can't rely on anybody else to do your due diligence for you if you are thinking of buying a franchise or a business opportunity. Essentially, you need to get proof of the claimed earnings.

In my opinion, no franchise can expect to be taken seriously unless they can provide you with audited accounts for the pilot franchise. As back-up, you should also ask to see the order book/recent sales invoices and the recent bank statements showing the sales revenue coming in.

That's the evidence that any typical businessman who was thinking of buying a business would be asking for.

Franchises are supposed to be proven businesses, and any franchisor should run the business model for at least a year before marketing it to the public. This is known as a "pilot franchise".

Some franchisors think that they can get away without running a pilot franchise, let alone providing accounts, audited or otherwise.

Sadly they often succeed, because the typical person buying a franchise does not have business experience and so they simply accept at face value the franchise sales material and the assurances of the company's salespeople without asking for evidence.

For any business opportunities other than franchises, you should ask the company what evidence they can provide to you of the claimed earnings (and note that screenshots of PayPal accounts and cheques are not reliable evidence).

P.S. Chris Musson's article reports that Stewart Kennedy says that Cost Reduction Services (2010) Ltd has no assets and can't pay creditors and has ceased trading. Apparently, though, this does not mark the death of Cost Reduction Services because Stewart Kennedy has now set up a new company called Cost Reduction Services (UK & NI) Ltd, which has share capital of £1 which he owns and where he is the sole director.

Stewart Kennedy seems to be unaware that the term "UK" means the United Kingdom of Great Britain and Northern Ireland.

Or perhaps he simply wants to flag up the fact that Northern Ireland residents are soon to experience the Cost Reduction treatment?

According to an article by Chris Musson in the Scottish Daily Record dated 25th August 2011, Stewart Kennedy was arrested and charged with an alleged assault on a man who apparently went to his house to ask Kennedy about a large sum of money he claims is owed.

The article says that Stewart Kennedy "has recently tried to reinvent himself as HBC, or Home Business Corporate Expense Reduction".

Your feedback:

Have you tried this opportunity?

Or would you like to comment on the opportunity or on our review, even if you haven't tried it?

If so, please send us an email. Your feedback will then be posted here anonymously unless you tell us that you want your contact details included.

Feedback 19th May 2011 from CostMeBadly:

Dear BOW,

I paid £5,000 for nothing.

He sold me an agency agreement under cost reduction consultancy - where he took my money and I wasted two days with him, during which time together he made lots of promises about what he would deliver to me under my agreement e.g. business cards, many business appointments per week, marketing campaigns and back office support.

In my opinion, the two day session Kennedy called training was a joke as it was held in a hotel reception and there was no real structure to any of his training

After the training Kennedy only managed to secure me one very bad appointment and everything else he promised at the training to me did not happen.

After this appointment I started to become very concerned and I contacted a solicitor who sent Kennedy a letter and Kennedy told me I had breached the terms of my agreement by contacting a solicitor.

During a number of telephone calls Kennedy became more and more aggressive and threatening towards me.

I have tried to take legal action against him. However I was advised that his contract had been written under Scottish law and therefore I would need to take any action against him in the Scottish courts. I could not find an English lawyer who was prepared to take the case on even though I was told that I had a very good case.

I also contacted the local police and they in turn contacted Strathclyde Police who told my local police that Kennedy is well known to them, but there is nothing that they can do.

I am very disappointed that there appears to be no way to stop this man.

Editorial note:

We sent CostMeBadly's feedback to Stewart Kennedy for his comments, but we've had no reply.

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