Ace Hardware lawsuit: Fischer's Hardware owners claim Ace ruined business
Northern Virginia could soon lose a well-known institution, Fischer Hardware, one of the last remaining independent hardware stores around.
The owners of the mom and pop shop on Backlick Road in Springfield say they got nailed by national chain Ace Hardware and may be forced to close down in just two or three months.
Roy and Pattie Ewers are suing Ace in federal court, alleging the hardware giant “worked a fraud and deceit” upon them. According to the lawsuit, the national chain “severely and irrevocably damaged a 60-year-old business.”
Two federal agencies are investigating the case and a local congressman is demanding answers.
Roy Ewers said he and his wife bought the store from the Fischer’s three years ago after Illinois-based Ace Hardware convinced them that making Fischer and Ace franchise would quickly boost profits.
“We were setup to fail, “ said Ewers. His lawsuit claims that Ace executives, in order to open the franchise and start profiting from it, ordered corporate managers to falsify financial documents and inflate revenue projections.
According to the suit, an Ace manager even came forward and admitted he was given that order.
“They told them (to) fix the numbers, manipulate the numbers; do whatever it takes to get this through,” said Ewers.
The suit alleges Ace used those phony financial projections, without Ewers’ knowledge, to get an Arlington bank to give Ewers a $1.8 million loan and to get the U.S. Small Business Administration to guarantee that loan with taxpayer money.
Shortly thereafter, the new Fischer Ace Hardware opened up, but Ewers said it immediately hemorrhaged under Ace’s faulty inventory system.
“We had $200 items walking out the door priced at $2,” he said, adding that the conversion to the chain was fraught with numerous problems.
A thriving business for six decades, Fischer quickly spiraled into bankruptcy and had to lay off 70 percent of its staff.
After 20 years at Fischer, employee John Ott said he’s worried he will be next.
“I have my fingers crossed,"Ott said. "I say a prayer every night."
Meanwhile, Ewers discovered he’s not alone when it comes to Ace's alleged practices. A class action lawsuit against Ace sites nearly identical claims as Fischer’s. An attorney on the case said the suit could grow to include more than 50 Ace franchise owners nationwide.
“A lot have failed. A lot of people are suing. There is a pattern,” he said.
Two federal agencies are now examining the Fischer case: the Comptroller of the Currency, which regulates national banks, and the U.S. Small Business Administration. In addition, Rep. Gerry Connolly (D-Va.) has asked those agencies for a “robust investigation.”
Ace corporate officials told ABC 7 News it believes it “will prevail” against Ewers but would not comment on other lawsuits. Meanwhile, as the shelves at Fischer grow more bare, customers are trying to remain loyal, but Ewers said he can only hold on for another two or three months.
“It’s heartbreaking,” he said, adding that if they win their lawsuit against Ace they will use any restitution money to save the store.
Ace representatives will be in court next week trying to convince a judge to dismiss the Ewers’ case.