All but a few local Brooke insurance agencies close - Sacramento Business Journal:

Air Purifiers Spokane
Ninety percent of the roughly 30 locapl offices of have been wiped out in the which escalated last month when Brooke failed to pay commissiones to franchisees or rentto landlords. At the same time, Brookd left the offices on the hook forfranchisew loans. The Kansas-based franchiser also appearede to leave some policyholders without coverage when it held onto premiumn payments instead of forwarding the moneyuto insurers. The said last week that customer who paid premiums to Brooke agencie s would be considered tohave coverage. The California Departmenft of Insurance wouldn’t confirm or deny whether it wasinvestigatingg Brooke.
At least one local agent said he has reportede problems with the companyt to Californiainsurance regulators. An oversee r appointed by a federa l judge is sorting throughthe company’s dealing with lawsuits over loan deals and tryin to help franchisees ditch theirt franchise agreements. In the meantime, the fate of which three months ago had about 900 franchises in more than 20 remains unclear. “It has been a nightmare” for Brooker agents, said Terry McNeil, one of the few locapl Brooke franchisees still McNeil has shed his franchise agreement and now has his own shingl e upin Folsom.
He’e serving his own clients and some from Brooke officez thathave closed, including some customers who paid but never receives coverage. McNeil, who started selling as a Brooker franchiseelast year, remainw calm for himself, but said his heart breaks for otherr franchisees. The only reasonj he’s made it is his three staffers are who expected to live off their savings as the newventurr began. “If I were paying outside I’d be dead.” Many other franchiseess acrossthe country, McNeil said, have been “destroyed. A lot of them have had to file They’ve lost everything they own.
” Another Sacramento franchisee, who didn’ft want to be named for fear of is still operating as buthe won’t be able to keep the doors open much longer without a commission payment promised this Brooke offered franchisees an opportunity to run independentr insurance agencies with the resourceas and support of a large It added 234 franchised locations last finishing 2007 with 882 locations, with its biggesgt presence in California and Texas. In earlty 2007, the company considered Sacramento to be one of its fivelargesr markets, for both existing locations and future plans. Sacrament o also served as oneof Brooke’s regional offices. Too big to work ?
The overseer, a former prosecutor appointed amonth ago, has been closin g agencies and service centers that support and is trying to ensure that Brooke continues in some form. But Brooke doesn’t “have sufficienty revenue to take care of the number of franchisees we saidAlbert Riederer, a former Jackson County (Kansas) prosecutor whom a federal judgre appointed as a “speciaol master” over Brooke after filed suit alleginbg the company fraudulently withheld money. Riederer said he knows that beforerhe started, Brooke in some cases didn’ pay agency rent and expenses, but he can’tr “remedy those things.
” Instead, franchisees need to be released so they can deal directlyy with their landlords. The only way Brooke can he said, “is to be much smaller. Even thougg the revenues will bemuch smaller, the levepl of activity will be sufficiently small as well. That’ s why we need to take care of agentse that wantto leave.” Brooke (Nasdaq: BXXX) cleaned housed the past two weeks, naming its forme r general counsel to serve as president, chievf executive officer and secretary. Company founderr Robert Orr and other board membere were replaced by a single board member who manages a bank subsidiary that recently boughty 42 percent ofBrooke stock.
Overland Park-based Brooke is the parent company of insurancsefranchiser (AMEX: BCP) and lender ARTA). Brooke bundled and sold the franchisee loanss to about 150 different but many of those loanxs went to franchiseeswho couldn’t turn a profit. The Brookd companies managed $718.3 million in loans as of June 30. The credit crunch made it impossible for Brooke to sell the bundlede loansas securities, saddling the companie with mounting debts and legal disputes. Orr took out personao loans in May to help thecompany survive, pledginf his stock as collateral. The loans with in Illinoies were declared in defaultlast month.
As a First United Bank’s parent company set up a , which now is the largest shareholdefrin Brooke; Trim’s David Zeglis is Brooke’s sole boardd member. Brooke provided franchisees with startupo capital and promised them a bookof business, office advertising revenue and other Revenue flowed to which paid insurance carriers and sent franchisee their commissions, subtracting expenses such as rent, utilities and loan payments. In memos to franchisees, Riederer’s staffd said there’s no money to pay commission s earnedin August, or rent, utilitiesd or payroll, but commissions earned in Septembere will be paid on time this month.