STATEOF MICHIGAN RICK SNYDER GOVERNOR DEPARTMENTOF LICENSING AND REGULATORY AFFAIRS STEVEN HILFINGER DIRECTOR MICHIGAN COMMISSION FOR THE BLIND PATRICK D. CANNON STATE DIRECTOR LANSING Memorandum DATE: 27 May 2011 TO: Mark Rothenhauser, BEP Licensee FROM: Constance Zanger, BEP Manager SUBJECT: Follow up Compliance Review of 5 May 2011 On 28 March 2011, a letter was sent to you informing you the Michigan Commission for the Blind was commencing the license proceedings to revoke your license to operate a Business Enterprise Program facility in the State of Michigan. On 28 April 2011, a compliance review was held in Lansing at the Victor Office Center to review your actions and compliance with the issues raised in the revocation letter. You received a summary of that meeting on 3 May 2011. And, your 4 May 2011 response to that summary is attached to this letter. LARA is an equal opportunity employer/program. Auxiliary aids, services and, other reasonable accommodations are available upon request to individuals with disabilities. 201 N.WASHINGTON SQUARE P.O. BOX 30652 LANSING, MICHIGAN 48909 TOLL FREE 800-292-4200 (VOICE) 888-864-1212(TTY) LOCAL 517-373-2062 FAX 517-335-5140 WWW.MICHIGAN.GOV/MCB Memorandum Page 2 27 May 2011 As agreed, we met again on 5 May 2011 to continue our conversation in this matter. Present were Mark Rothenhauser, Josh Hoskins and Constance Zanger. -Regarding violation of rule 27 (I),(2), (3), and (9) relative to licensee reporting requirements: At the 5 May 2011 meeting, no additional set-aside fee payments had been made, making you still out of compliance with program rule 27, subrules (I), (2), (3) and (9). -Regarding violation of rule 27 (4), (6) (8) and (9) relative to licensee reporting requirements: Submission of set-aside fees has historically been a compliance issue for you, Mark. In fact, failure to submit set-aside fees on a timely basis was also a matter for a compliance review in March 2009. In your e-mail message of 4 May 2011 to the Program Manager, you outlined your plan to submit an additional monthly payment of $200 -$300 each month to resolve the outstanding balance of set-aside fees due. In addition, you committed to "setting aside" half of your sales each day to allow you to have monthly for replenishing inventory and to have funds available for Memorandum Page 3 27 May 201 1 set-aside fee payments due on the 25th of each month. This new business practice of setting aside half of each day's revenues is a good practice and should help re- establish the business cash flow. As you also noted in your 3 May 201 1 e-mail message, the Program's promulgated rules do not permit the B E P to accept partial payments, nor do the rules permit the B E P to enter into a repayment agreement with a licensee. Consequently, you are still out of compliance with program rule 27 (4), (6) (8) and (9). *Regarding violation of rule 24 (7) (a), (d), and (k) relative to licensee health and safety obligations: On 5 May 201 1, we discussed several business practices that prohibit you from coming into compliance with this program rule. Primarily, our conversation centered around additional commitments in your 4 May 201 1 e-mail message to the program manager. Briefly, you committed to limiting use of the "honor system" only to times when you have to momentarily be out of the snack bar, for example to make a short personal telephone call or to use the rest room. You committed to procuring change for the business either Memorandum Page 4 27 May 2011 after 4 p.m. weekdays or on the weekend. Also, you committed to asking your niece to assist you on those days when you need to purchase product at United Wholesale. Adhering to this standard provides a higher level of personal service to your customers, and more appropriately secures your inventory. Finally, in your 4 May 2011 e-mail message you committed to keeping a clean pair of dress slacks and a clean polo shirt for each day's operations. Clearly in the past 45 days or so, you have given consideration to a plan for returning to compliance and building your business, Mark. You now accept credit cards for customer purchases, and you continue to look into developing a website for your business. As your fine tune your plan, please consider the following: -Do you remember Abe Saunto? While he was not a savvy computer user, he was an astute business man and advisor to our operators. Abe recommended the 70/20/10 rule. In other words, operators should save 70% of each day's sales for re-investing in the business, save 10% of each day's sales for set-aside fee payment, and 20% of each day's sales become the operator's net income. Memorandum Page 5 27 May 2011 -The assigned inventory for the State Capitol snack bar is $5425. Based on reported purchases for the past 12 months and the current inventory policy, 3 weeks of purchases, i.e., the assigned inventory, would be about $985. Clearly, current sales do not justify keeping on hand an inventory valued at $5425. By copy of this memo, I am asking your promotional agent to meet with you to discuss and identify a reasonable on hand inventory as you work to re-build the business. -Continue to think about any business practices that might have precipitated a loss of sales. The Program stands ready to assist you in developing and implementing new business practices designed to increase your bottom line. - And, was suggested earlier, the Program is willing to convene a team, including a BEP peer, which investigates best business practices for a facility such as yours. While you are not yet in full compliance with Program rules, you have taken steps toward coming into compliance. Consequently, we agreed to temporarily suspend the license revocation process to permit you to implement and evaluate new business practices. We will meet again on Friday, 5 August 2011 at 4 p.m. in the Commission's large conference room. Memorandum Page6 27 May 2011 In the interim, if you have any questions or require further information, you may contact your Promotional Agent, Josh Hoskins at 335.4259. Cc: J. Chaney (via e-mail), J. Hull (via e-mail), J. Hoskins (via e-mail), J. Wallace, File From: mark rothenhauser [markrothenhauser@hotmail.com] Sent: Wednesday, May 04,2011 4:52 PM To: Zanger, Connie (DELEG) Cc: flingem@hotmail.com; keaithleygreg@yahoo.com Subject: License Revocation Other Payments" Constance, Thanks for meeting with me on 4-28-11 to discuss how to resolve this issue. I am sorry that your time constraints did not allow us to a full conclusion, but I assume this can be done at our follow-up meeting on Cinco De Mayo. In the meantime, I would like to discuss the aspects of this issue. This will also serve as my response to your letter of 5-3-11: 1. LATE SET-ASIDES: Last year was a very difficult one for me, on several fronts. However, this does not excuse my responsibilities to the BEP program. Regarding the $940.78 that I still owe from last year, I will be submitting a monthly payment of $200 -$300, along with my monthly set aside payment (under "Other Payments"). While I know that the BEP cannot accept partial payments, I want to demonstrate my desire to resolve this matter as quickly as possible. To prevent this matter from happening again, Iam "setting aside" half of my sales each day. This wlll allow me to have money for re-stocking inventory and to have funds avallabte for the set aslde payment due on the 25th. 2. BUSINESS PRACTICES: "HONOR" SYSTEM; While I realize it is Important to be present, to offer good customer service, there are times when I have to be momentarily away from the snack bar. This includes restroom breaks, going to the bank for change, and to make monthly trips to United Wholesale (Hours: 8 AM -4 PM, to get drugs and cough drops). With the exception of United Wholesale, nine of these tasks should take more than 10 -15 minutes to complete, so the door to the snack bar will be locked, the lights will remain on, and a sign shall be placed on the door reading "WIII Return in 10 -15 Minutes". On days when 1 have to go to United Wholesale (again, probably once a month, and on a Monday or Friday), 1 will go from home to United Wholesale, buy the needed product, and then go to the snack bar to open, which would be around 8:45 AM. This shouldn't inconvenience too many folks, because on Mondays and Fridays, customers don't start showing up until 9 AM. If it is past 4 PM, and it Is just legislators, staff, and lobbyists In the building, and it looks like session will be going into the late evening hours, I reserve the right to use the honor system. This shouldn't be a strange concept, as other BEP operators have used an honor system to facilitate overnight customer need. INCREASING SALES; In two weeks, I wlll be instituting a credit card system with a vendor that I met at the trade show from our most recent workshop. No phone lines will be needed, as credit cards are read through a device that is attached to the audio jack in your cell phone (which I have). There is no charge for the device, and the only fees involved are a flat 2% of each transaction, which I can live with. The only reason I didn't go with a credit card system in the past was because it was too cost prohibitive. A website for the snack bar is in my plans. Until I can make that happen,' I will explore the possibility of using FaceBook or Twitter. 3. APPEARANCE AND DRESS: Each night at the snack bar, I will leave a clean pair of dress slacks and a clean polo shirt, both to be worn during the following day's operations. Appearance also applies to the snack bar itself. Crates will be moved (if possible) and any clutter will be taken care of. Neon signage and informal seating are in the works. I fully understand that mainly because of this set aside issue, I will still be out of compliance and subject to license revocation and employment termination. I guess I should consider myself lucky I wasn't kicked out of here sooner, but as I mentioned in the opening of this message, I wish to quickly and amicably resolve this matter! Cordially, Mark Rothenhauser