DirectBuy
Encyclopedia
DirectBuy is a membership buying service with over 130 locations in the United States and Canada. It is headquartered in Merrillville, Indiana
. It claims that it is the largest franchiser of members-only consumer buying centers in North America. Members pay a significant fee, which then entitles them to buy merchandise "directly from the manufacturer and its authorized suppliers".
DirectBuy says that they offer "manufacturer-direct wholesale prices on practically everything you need for your home, both inside and out." Product categories include home furnishings, home improvement, entertainment & outdoor, flooring, and accessories.
, a private equity firm, and Allied Capital Corporation (stock symbol: ALD) with $83 million to support the buyout.
reported that memberships at some DirectBuy locations in the New York area ranged from $4,600 to $4,990 for a three-year membership and then $190 a year for the next seven years. In 2009, the Star Tribune
reported that enrollment fees are $4,700 and then $99 a year after 30 months. The customer must decide at the time of their Open House visit, before leaving the showroom, whether to join DirectBuy after receiving a presentation of services. DirectBuy states that a customer may be shown confidential pricing during the Open House, and its "policy is in place out of respect for our members, manufacturers and the retail industry. It also prevents consumers from asking traditional retailers to match DirectBuy prices." Some franchises are offering 30 day trials to certain potential clients, valid for up to $1,000 in purchases.
In October 2007, DirectBuy of Boston South was recognized for 20 years of participation with the Better Business Bureau
and 9 consecutive years without a customer complaint.
In 2007 and 2008 DirectBuy of Ottawa received Consumers' Choice Award for Business Excellence in the category of "Blinds and Shades". In 2008 DirectBuy locations in Vancouver and Coquitlam won Consumers' Choice Award for Business Excellence in the category of "Kitchen design and Bathroom design".
, though some have a poor one or have been suspended from the BBB." West Virginia Attorney General Darrell McGraw filed suit Jan. 26 in Kanawha County Circuit Court against DirectBuy Inc., its local franchise and the company's president alleging it engages in unlawful, coercive, deceptive, and high-pressure sales practices. The suit also alleges that DirectBuy pressures consumers with its 'now or never' tactic. DirectBuy warns consumers that anyone who leaves the premises without joining the club will be banned from joining forever. This threat is false, misleading, and unconscionable according to the Attorney General.
letter to consumer blog
infomercialscams.com for "unwarranted and defamatory attacks" posted about DirectBuy by visitors to the blog and asked that the comments be immediately removed. The letter itself was forbidden to be posted online by the DirectBuy attorney, citing ownership of the copyright to the letter as justification. Public Citizen
claims that this is "a common method to counter that problem by scaring recipients into keeping quiet", and that the "letter is a good example of the many meritless threats that companies hurl at their online critics in an effort to silence dissent " and subsequently posted the cease and desist letter on their website along with their response to the letter.
Merrillville, Indiana
Merrillville is a town in Ross Township, Lake County, Indiana, United States. The population was 35,246 at the 2010 census. Merrillville is located in the east-central portion of Lake County.-Geography:Merrillville is located at ....
. It claims that it is the largest franchiser of members-only consumer buying centers in North America. Members pay a significant fee, which then entitles them to buy merchandise "directly from the manufacturer and its authorized suppliers".
DirectBuy says that they offer "manufacturer-direct wholesale prices on practically everything you need for your home, both inside and out." Product categories include home furnishings, home improvement, entertainment & outdoor, flooring, and accessories.
History
DirectBuy was founded in 1971 in Merrillville, IndianaTrivest
Trivest Partners, L.P. is a private equity firm focusing on partnering with founder and family-owned businesses. Trivest is the oldest private equity firm in the Southeast U.S., founded in 1981, and is headquartered in Miami, Florida. The firm focuses specifically on investments in the niche...
, a private equity firm, and Allied Capital Corporation (stock symbol: ALD) with $83 million to support the buyout.
Membership terms
Initial membership costs vary by franchise location and have two or three year terms. Members may have 3 days to cancel the contract. Members have the option to renew the membership each year beyond the initial term for the current renewal fee. In 2007, Consumer ReportsConsumer Reports
Consumer Reports is an American magazine published monthly by Consumers Union since 1936. It publishes reviews and comparisons of consumer products and services based on reporting and results from its in-house testing laboratory. It also publishes cleaning and general buying guides...
reported that memberships at some DirectBuy locations in the New York area ranged from $4,600 to $4,990 for a three-year membership and then $190 a year for the next seven years. In 2009, the Star Tribune
Star Tribune
The Star Tribune is the largest newspaper in the U.S. state of Minnesota and is published seven days each week in an edition for the Minneapolis-Saint Paul metropolitan area. A statewide version is also available across Minnesota and parts of Wisconsin, Iowa, South Dakota, and North Dakota. The...
reported that enrollment fees are $4,700 and then $99 a year after 30 months. The customer must decide at the time of their Open House visit, before leaving the showroom, whether to join DirectBuy after receiving a presentation of services. DirectBuy states that a customer may be shown confidential pricing during the Open House, and its "policy is in place out of respect for our members, manufacturers and the retail industry. It also prevents consumers from asking traditional retailers to match DirectBuy prices." Some franchises are offering 30 day trials to certain potential clients, valid for up to $1,000 in purchases.
Awards and Partnerships
In 2006, DirectBuy was ranked #42 on the Franchise 50, a list of the top 50 franchises as rated by their owners, published by Franchise Business Review and ranked #1 franchise in the Miscellaneous Retail Business category in Entrepreneur Magazine.In October 2007, DirectBuy of Boston South was recognized for 20 years of participation with the Better Business Bureau
Better Business Bureau
The Better Business Bureau , founded in 1912, is a corporation consisting of several private business franchises of local BBB organizations based in the United States and Canada, which work through their parent corporation, the Council of Better Business Bureaus .The Better Business Bureau, through...
and 9 consecutive years without a customer complaint.
In 2007 and 2008 DirectBuy of Ottawa received Consumers' Choice Award for Business Excellence in the category of "Blinds and Shades". In 2008 DirectBuy locations in Vancouver and Coquitlam won Consumers' Choice Award for Business Excellence in the category of "Kitchen design and Bathroom design".
Criticism
Consumer Reports' 2007 review is that "the lack of price transparency makes it hard to evaluate whether you’ll save by joining DirectBuy. But even if you were to save 25 percent on purchases after joining, you’d need to spend more than $20,000 just to recoup your membership fee. DirectBuy might save you money if you’re furnishing a house from scratch or doing a major renovation" but cautioned its readers that "since you can’t shop around beforehand, you’ll be joining blind." Prices for items such as electronics are higher than available from online retailers; the "deep discounts" were found on flooring and high-end furniture. Customers cannot return items, cancel orders, or terminate their membership. An 8% handling fee, shipping fees, and tax are added to the cost of items purchased. Some complain of poor customer service and long waits for purchased goods. "Since DirectBuy outlets are franchises, service varies by location. Most outlets have a good record with the Better Business BureauBetter Business Bureau
The Better Business Bureau , founded in 1912, is a corporation consisting of several private business franchises of local BBB organizations based in the United States and Canada, which work through their parent corporation, the Council of Better Business Bureaus .The Better Business Bureau, through...
, though some have a poor one or have been suspended from the BBB." West Virginia Attorney General Darrell McGraw filed suit Jan. 26 in Kanawha County Circuit Court against DirectBuy Inc., its local franchise and the company's president alleging it engages in unlawful, coercive, deceptive, and high-pressure sales practices. The suit also alleges that DirectBuy pressures consumers with its 'now or never' tactic. DirectBuy warns consumers that anyone who leaves the premises without joining the club will be banned from joining forever. This threat is false, misleading, and unconscionable according to the Attorney General.
Cease and desist controversy
Attorneys for DirectBuy issued a cease and desistCease and desist
A cease and desist is an order or request to halt an activity and not to take it up again later or else face legal action. The recipient of the cease-and-desist may be an individual or an organization....
letter to consumer blog
Blog
A blog is a type of website or part of a website supposed to be updated with new content from time to time. Blogs are usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in...
infomercialscams.com for "unwarranted and defamatory attacks" posted about DirectBuy by visitors to the blog and asked that the comments be immediately removed. The letter itself was forbidden to be posted online by the DirectBuy attorney, citing ownership of the copyright to the letter as justification. Public Citizen
Public Citizen
Public Citizen is a non-profit, consumer rights advocacy group based in Washington, D.C., United States, with a branch in Austin, Texas. Public Citizen was founded by Ralph Nader in 1971, headed for 26 years by Joan Claybrook, and is now headed by Robert Weissman.-Lobbying Efforts:Public Citizen...
claims that this is "a common method to counter that problem by scaring recipients into keeping quiet", and that the "letter is a good example of the many meritless threats that companies hurl at their online critics in an effort to silence dissent " and subsequently posted the cease and desist letter on their website along with their response to the letter.