ProCycle inventory repossessed

Columbia-based ProCycle is owned by Shernaman Enterprises Inc., which is co-owned by Jo and Allen Shernaman, of Columbia, where they operate a third ProCycle store.

Jo Shernaman told Springfield Business Journal that the darkened dealerships in Springfield, which sell motorcycles, all-terrain vehicles and personal watercraft, had cut staff amid a seasonal downturn but that the stores would remain open.

A white poster board hanging in the front window of the Yamaha showroom at 350 S. Ingram Mill Road, however, indicated that the building was for sale and listed the Columbia store’s phone number. A single employee at the newer, larger Honda showroom, 2960 N. Eastgate Ave., referred all questions to Jo Shernaman.

“In order to maintain the high volume (and) low prices, we’ve got to get our inventories down and get our cost of doing business down,” Shernaman said. “A lot of dealerships do this in the wintertime.”

About 40 employees staffed the 44,000-square-foot Eastgate store when it opened in July 2005.

Legal troubles

In late January, tractor-trailers loaded up motorcycles and ATVs from ProCycle’s Springfield locations and hauled off the inventory.

Local motorcycle enthusiast Frank Gonzales, a self-employed real estate investor, recorded footage of the trucks parked along Eastgate and later posted the video on YouTube.

“It wasn’t my intent to hurt or help ProCycle, just to provide information,” he said. “My sole motivation was to cut the speculation.”

Gonzales said ProCycle’s business seems to have steadily declined since Missouri Attorney General Jay Nixon sued the dealership in January 2006 for an alleged “bait-and-switch” scheme that lured customers – many from hundreds of miles away – with misleading advertisements. Nixon said customers of all three stores filed complaints with his office about hidden processing fees and credit-card surcharges. ProCycle denied allegations.

Gonzales said he noticed ProCycle’s multistate advertising dropped off significantly after the negative publicity.

In an August 2006 consent judgment filed in Greene County Circuit Court, ProCycle agreed to pay $67,450 to Nixon’s office, $30,000 to the Greene County School Fund and $12,000 to cover associated investigative and legal costs. ProCycle, which never admitted guilt, satisfied the terms of the settlement last July, court records show.

Just two months later, ProCycle surfaced again in Greene County court records when American Honda Finance Corp. sued the dealership for breach of contract. The suit, filed Sept. 19, alleged that ProCycle sold Honda inventory but failed to remit $268,259 owed to the corporation.

Two weeks later, GE Commercial Distribution Finance Corp. filed a similar suit against ProCycle in Greene County, alleging that the dealership owed $105,341 for Yamaha inventory sold “out of trust.” Circuit Court records show the corporation temporarily terminated ProCycle’s line of credit, but both parties reached a settlement agreement, and the suit was voluntarily dismissed Oct. 16.

ProCycle again defaulted on payments earlier this year, prompting both financing corporations to petition a judge for permission to repossess inventory at the local Honda and Yahama dealerships valued at more than $1.7 million. Their requests were granted.

Uncertain future

Gonzales said he contacted Jo Shernaman early last year to inquire about buying the ProCycle location on Ingram Mill, but the asking price was too high. He said Shernaman rebuffed a second overture after the Yamaha inventory was repossessed last month.

“It would have been my goal to combine the stores back into one and change the name,” he said.

“I knew that buying directly from the Shernamans would be my only opportunity. If the dealership went back to the respective manufacturers, I wouldn’t have a chance,” he added.

The Shernamans technically still own the dealership and could reopen the doors, Gonzales said, but the future of their financing agreements with the motorcycle manufacturers remains uncertain.

“Both (dealerships) have great potential,” he said. “The motorcycle industry is down as a whole; it’s just not doing good. It would take a very different game plan to make it successful.”

Jo Shernaman indicated that the store’s inventories eventually would be restocked via other financing providers.

“Springfield’s a wonderful market,” she said. “It’s very centrally located as far as our high-volume, low-price business plans (go). We’ve been in that area for 20 years.”[[In-content Ad]]