Red Bull NA Fraud, forgery and shirking responsibity: Energy Drink giant, Red Bull, takes advantage of individuals and small businesses Santa Monica California

Even before the term the American Dream was first coined by James Truslow Adams in his 1931 book "The Epic of America," there has existed a belief in freedom that allows all citizens and residents of the United States of America to achieve their goals in life through hard work. While our system encourages such an environment, there does exist a dark side - one where even successful corporations take advantage of individuals and small, family owned businesses. Our story is one of these and involves the energy drink giant, Red Bull.

We had originally been introduced to the vending business through Creative Concepts of America (CCA). They were advertising a turn-key franchise business opportunity, complete with brand new Red Bull vending machines, arrangements with partner locating companies to identify prime locations and handling of location fee negotiations. CCA even offered business guarantees based on sales volumes (minimum 20 cans/day per machine), and protected geographical territories.

However, being new to the vending business, we were skeptical. CCA had positioned themselves as the sole representative of Red Bull Vending in the US and their staff assured us that the franchise would be a turn-key operation with their locators handling and securing the most ideal locations based on detailed research and market analysis.

We contacted Red Bull NA, and spoke with a Customer Service Representative, to verify CCAs credentials. We were told that CCA is, in fact the sole distributor of Red Bull vending machines in North America.
This led us to the conclusion that CCA and Red Bull North America were partners, and that CCA was licenced to operate the vending distribution component of Red Bulls overall sales strategy. This was further affirmed by CCAs use of the term Red Bull Vending in all advertising and the fact that CCA actually provided Red Bull approved vending machine advertising materials.

Being the manufacturer and therefore a credible entity, we relied on Red Bulls confirmations of CCA and the legitimacy of the business opportunity. It gave us the confidence we needed to move forward with CCA, a company which we had never heard of prior to this.

We agreed to purchase their 10 Red Bull Vending machine package on December 5, 2005 and were charged $42,750 for the package and an additional $2,350 for shipping charges to a single drop ship location. In addition to the 10 vending machines, this package fee was to include the business guarantee, the territory protection, 3,600 Red Bull product (a combination of regular and sugar-free drinks), and reimbursement of shipping costs for each machines placement to a location identified by their preferred locating company. Placement services of each machine would be an additional $300 per unit, however.

Over the next 18 to 24 months, we were misled and deceived on several occasions and endurred misrepresentations in terms of the business, its potential, what it included, support structure, and the parties we were working with. Long story short, here are some of the areas that impacted us:

1. The business opportunity was misrepresented to us as a complete, turn-key business including:
products and equipment delivery we have not been fully reimbursed for the location of the vending machines.
a) locations/placement with guaranteed performance Over this entire period, we managed to move about 250 cans total (of the original 3,600 purchased) the rest have since expired and had to be discarded at a total loss.
b) business exclusivity - After not being able to successfully place the machines in locals malls as they all have contracts with Pepsi or Coca-Cola, we called the Customer Service number at Red Bull NA to see if Red Bull was doing any corporate level contracts. We were told that Red Bull is not involved in finding locations for any machines and that were not owned by them.

2. Fraud - When poor and under performing locations resulted from a CCA recommended locating company, CCA sent another location firm this one was headed by Jack Baumann, who actually had a office within CCA facilities and had been provided a CCA employee as an assistant. Jack then ran up hotel bills, charged them to our expense, and provided no legitimate locations.

3. Forgery Jack Baumann/CCA presented (and charged us for) Vending Machine Location Agreement contracts which were in fact forged signatures of several Wal-mart Store Managers.

Red Bull NA should have been more vigilant about their partner CCA, and alerted all of their customers of such deceptive business practices as soon as they found out. Instead, we were left to believe that Red Bull NA had a solid partnership with CCA.

Meanwhile, Red Bull NA focused on distancing themselves from CCA. On April 26th, 2006, we suddenly received a formal letter from Red Bull NA stating that the affiliation between them and CCA had ended on April 8th. All Creative Concepts Operators (as we were being called), could still work directly with Red Bull distributors for all can purchases. The letter also states that Red Bull NA would sell vending machines to operators that wanted to grow their business and entertain machine buyback from distributors not willing to continue. We responded using the email address provided within the letter, but never received any further response from Red Bull NA.

If Red Bull NA had become aware of mis-doings by their partner, CCA, then they should have immediately notified us. Why did they wait until the month end to tell us that the partnership had ended back on the 8th? By the way, this letter confirmed that there was in fact, an arrangement between Red Bull NA and CCA, which Red Bull later denied.

Had we been notified in a timely fashion, we would have been able to curtail additional losses, avoiding the second locating company and fraudulant Wal-Mart locations, as well as associated shipping charges, etc. all of which occurred in mid-April.

Amongst mounting pressure from hundreds of folks in a similar situation, Red Bull NA came forth with a buy-back program for any outstanding Red Bull vending machines. After 24 months of shattered dreams, $48,035.81 in hard costs, additional several thousands in operating expenses, all in an attempt to make something of this business, the machines were sitting in storage.

As one could conclude, this is an opportune time for Red Bull NA to litterally take the machines and thats exactly what they did. In January, the put forth a buy-back program offering $1,700 per brand new vending machine (we had 4 machines that fit into this category 2 were still on their original shipping pallets and shrink wrap), and $1,500 for like-new units. Red Bull would make the determination as to the machine classification and the purchase of even a single machine would result in the individual/small company yielding their rights to legal recourse against Red Bull NA.
Encurring costs due to equipment storage, etc, meant that we were deparate and encuring a negative cash flow on a monthly basis. Red Bull NA, fully aware of this situation, remained firm with their program offer and rolled away last month with our 10 machines. They even refused to remove and/or help us destroy any remaining outdated Red Bull product.

After 29 months we were left with with a check for $15,800, and unfortunately serious reservations about our system and doubts about the american dream. Unfortunately, our system enables successful corporations to exploit the families and individuals that actually set forth to help create new opportunities for them. Red Bull recuited sales partners such as CCA, to help them grow profitability and are now shirking all of their responsibilities towards the individual and family owned business. What kind of company does this?

We have all of the documentation, including emails and letters from Red Bull and their partners proving that even successful corporations engage in fraud, forgery and shirk responsibity, when profits are at stake.

Tejas
Cary, NC, North Carolina
U.S.A.