TheaterXtreme Franchises Thrive After Franchisee Falters

In the wake of TheaterXtreme’s suspension of corporate operations, the non-corporate franchise stores in Draper, Utah and Boise, Idaho are actually doing quite well, according to the owner of those locations.

“I’m not saying we’re doing great for a good economy, but we’re doing very well for a down economy,” says Tyler Compton. “Store traffic is up and we just about doubled our revenue from last year.”

The biggest drag on the two stores’ business, according to Compton, is some customers’ perception that they're going out of business. It seems many of Compton’s clients read stories about TheaterXtreme’s Chapter 7 filing and failed to understand that stores like his are no longer connected to the corporation.

“I’ve had customers call and tell me not to cash their checks because they read that we are going out of business,” Compton says. “I am having to explain to them that it’s corporate; it’s not us. We have nothing to do with them anymore.”

The remaining non-corporate franchises include:

• Compton’s stores in Boise and Draper
• Lewis Center, Ohio
• Pittsburgh, Pa.
• Springfield, Mass. (East Longmeadow)
• Auburn Hills, Mich.
• Richmond, Va.
• Sacramento (Roseville)
• Seattle (Lynnwood, Wash.)

These stores had already disenfranchised themselves from corporate operations. “We have had nothing to do with them [corporate] for a long time,” Compton says. “I didn’t even get a call when I opened by Draper store.”

The owner of the Pittsburgh store, Tim Ciccone, told CE Pro virtually the same thing just after the corporate operations were suspended in early December 2008. "My interaction with them [corporate] has been basically none for quite some time."

Ciccone’s store, Compton’s two stores and all the other non-corporate TheaterXtreme franchises “seem to be doing very well,” says Marc Fisher, a Klipsch regional rep who handles all the remaining TheaterXtreme franchise accounts.

However, it’s not just Compton who has gotten calls from confused customers, according to Fisher. He has heard the same story from several TheaterXtreme non-corporate franchise owners.

Compton, for one, has no intention of changing his stores’ names. It’s working out for him, even though he began breaking from TheaterXtreme’s corporate identity a long time ago. “If we had followed TheaterXtreme’s [corporate] plan we wouldn’t be around anymore,” he says.

Non-Corporate Identity

Shortly after buying both his stores in 2006, Compton emphasized to corporate that TheaterXtreme should diversify more — place more emphasis on lighting control, multiroom audio and forge partnerships with builders, “lots of things that corporate hasn’t done.”

Although corporate opted not to go in those directions, according to Compton, he did. “We went after a select group of builders,” he says. “We picked the right ones because they’re still in business and they haven’t stiffed us.”

Compton says the philosophy for his two stores is simple: “customers first” and that includes builders. The corporate philosophy, Compton says, has varied. “They went from wanting to be a franchisor, to wanting to flip the company [sell it to a suitor like Circuit City] to wanting to create corporate stores.”

Although TheaterXtreme corporate helped his franchises get out of the gate, Compton says it wasn’t long before the support disappeared. “At the beginning they were going in the right direction. Then things changed and we didn’t seem to be the customer anymore. They didn’t provide anything for us. They did nothing but hinder. We paid for a franchise that did nothing for us and paid royalties for nothing.”

For instance, Compton says TheaterXtreme provided the franchises with handy software at the onset. Then the software developed some issues and, although they were reported to corporate, they were never fixed.

In terms of hindrances, Compton says ordering products through corporate took too long. Eventually, he contacted vendors and negotiated direct deals. He began to wonder why he was paying royalties.

There was a summit meeting in 2008 at which the franchises got together in Delaware, home of TheaterXtreme’s corporate headquarters. “It got worse from there,” Compton says. “It wasn’t a collective thing that we all got together on but we all pretty much decided to stop paying royalties because, what are we paying for? They were doing nothing for us, other than hurting us.”

Compton says he has no ill-will toward TheaterXtreme executives. His sense is that "they are good people" but he disagrees with their business decisions. He also recognizes that TheaterXtreme executives probably had to devote an excessive amount of time to seeking funding, a notion that is confirmed by former CEO Scott Oglum.

Now that TheaterXtreme corporate has suspended its operations, business hasn’t changed a bit, other than the fact that people think I’m going out of business,” Compton quips.