Franchise Complaint: Pacific Auction Exchange (PAX)

by sean on July 3rd, 2008

(Best Franchise Opportunities) Pacific Auction Exchange, Inc. (PAX), with corporate offices in Bakersfield, CA and Pleasant Hill, CA, claims to be the only real estate franchise company in the United States specializing in the auction method of home and real estate marketing. PAX was established in 1999 and began franchise operations in November 2001.

In 2007, the company boasted 50+ Pacific Auction Exchange (PAX) franchises operating in California and Nevada, and announced aggressive growth plans to reach 150 units in operation by August 2008.

However, the company’s future became uncertain with the tragic automobile accident in May, 2008 that claimed the life of company founder and real estate auction pioneer Charles (Chuck) McAtee. According to Fortune Small Business:

McAtee’s sudden death stunned his family and business associates. No decision has yet been made as to the future of the business.

“He’s left us all with a good foundation to continue doing what he thought was such a great idea, which was franchising the auction business,” said Marti Barajas, PAX’s director of franchise operations.

Much of the company’s growth, acquaintances say, can be attributed to the personal attention McAtee devoted to PAX and its franchisees.

“Chuck was the kind of guy that would do anything you asked,” said Ken Tippitt, a PAX franchise owner in Pasadena. “I remember an auction I had near San Diego - he came all that way and stayed the night to be the auctioneer.”

In fact, McAtee spent so much time on the road visiting franchisees that he invested $200,000 in kitting out a 41-foot motor home… making traveling from franchise location to franchise location a more productive process.

“It’s very efficient, and being able to support the franchises is priceless,” McAtee said in an interview earlier this year.

However, Maryann B. of Yorba Linda, CA paints a less flattering picture of the support provided by Pacific Auction Exchange (PAX), likening it to a Ponzi scheme. In her entry on Rip-off Report, Maryann claims:

I was pressured into signing a franchise agreement with PAX inc. I was never given the UFOC, a financial disclosure document for PAX, showing the financial stability or lack there of. I was unaware that it is required by PAX, under CA and Federal law, to supply this document to me, prior to signing the franchise agreement.

PAX reps made promises of daily support, more business than I could ever dream of, and a huge benefit and growth for my existing mortgage company. Shortly after signing the agreement, the reps that signed me up and promised this extraordinary level of support, left the company and the daily support that was promised to me, was NEVER there.

I feel this franchise takes money from unsuspecting individuals, like a PONZI scheme. The management was always out seeking new franchises and support of current franchises was SECONDARY. Management rarely had the time to return my calls for support.

PAX finally agreed that they had not supplied me the UFOC and agreed to refund my money, $21,000, in monthly installments of $3000 until paid in full.
When I insisted only on refund in full, because I needed spinal surgery due to an unrelated accident, they pulled the agreement.

I have a signed offer to refund in installments and NO refund money.

WHAT DO YOU THINK? ARE YOU FAMILIAR WITH THE PACIFIC AUCTION EXCHANGE (PAX) FRANCHISE? SHARE YOUR INSIGHT BELOW.