WIRELESS TOYZ Fraud Case: Franchise Company, Simtob Must Pay; Barbat Cleared

One of several franchisee lawsuits charging Wireless Toyz, and executives Richard Simtob, Joe Barbat, and Jack Barbat with fraud has ended with mixed results.

According to Crain’s Detroit:  “An Oakland County jury awarded $180,600 damages last week against Wireless Toyz and another $20,000 against Richard Simtob, its finance director and vice president of franchise development, in favor of Colorado franchisee David Abbo of Colorado Toyz Inc.

“Jurors awarded no damages against founder and President Joe Barbat, his company JSB Enterprizes Inc. or against co-founder and Vice President Jack Barbat.”

The single count awarded is for silent fraud. The other allegations of pure fraud, negligent misrepresentation and the franchise law violations were dismissed or resulted in no damage awards from the jury.

The plaintiffs in the case were represented by Birmingham-based Norman Yatooma & Associates P.C.  They were seeking $7.2 million in damages.

According to ClickOn Detroit:

Attorney Norman Yatooma also represents Abbo and other investors, who claim they were defrauded out of their investments by Barbat and the company.

"They didn’t much care what the franchisees were ultimately going to earn. What they cared about was getting their $100,000, their $150,000, their $200,000 down payment to open up that store or to reserve that territory. After that, what happened to the franchisee was their problem," Yatooma said.

He said the investors were lied to when they were told they would make huge profits with their franchises.

"[Joe Barbat’s] made obscene millions off this Wireless Toyz scandal. He’s made millions upon millions upon millions," Yatooma said.

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ANAGO CLEANING SYSTEMS Franchise Complaints

The Anago Cleaning Systems franchise website boasts that it has been named by Entrepreneur magazine as 5th fastest growing franchise in 2010, and that it is “ahead of the competition due to the availability of profitable markets throughout the nation.”

Like most commercial cleaning franchises (janitorial franchises), Anago Cleaning Systems offers both “Master” franchise opportunities and “Unit” franchise opportunities.  According to the Anago website: 

“An Anago Master Franchisor has exclusive rights to a defined territory. The Master sells and trains Unit Franchisees throughout the territory. The Master also obtains cleaning contracts to be serviced by the Unit Franchisees. A Master Franchise candidate should have a strong sales & marketing background

An Anago Unit Franchisee owns his or her own cleaning business, and the business can be started with a minimal investment.”

However, unhappy franchisee commenters have posted complaints about the Anago Cleaning Systems franchise opportunity, with some claiming the Coverall franchise is a scam. 

In December, 2009, commenter “holy one” wrote on the Complaints Board website:

“I thought my family and I were making a great move by purchasing into Anago not true. This is the worst experience I have ever gone throug they promise cleaning contracts never fulfill their mission. We invested $9, 000 into this company guess how many contracts we recieved 2 that’s right. Guess how much a total of 1300.00. Please do not invest with Anago please pass the word they are a noncompliant company here in atlanta GA their out to take your money.

More recently (on the same board) “Coverall Franchise owner/until expires” wrote:

I totally agree with the complains. I am a franchise owner myself. they are totally liers. I made a contract for $20k, I gave $14.000 downpayment and we agree that I was going to pay the rest each month /deducted from my paycheck. I though I was going to get my acconts (offices to clean) in one month. But, they made me wait about a year, plus I was making $9 dollars per hour (fast and hard work) and I did not had any money to hired an employee to help me. How much I was supposed to pay if I hire one? 1 dollar? THEY ARE SCAMMERS. Yes, they are in the forbes magazine, of course because they make money but franchises dont. they will take you money and make you work like crazy. they also charge for administration but you are the one who has to comfront the office owners if something is wrong or if you want them to increase your payment because you are working extra hours. DONT MAKE ANY CONTRACT WITH THEM, They are not good, this business is not worth it at all. I am totally dissapointed

on the same board, jjamiranda wrote that all janitorial franchises, not just Coverall, are scams:

I bought a franchise with Anago in 2006 and when I started everything sounded great – when I actually started doing the "real thing" it was different than what I was told in my initial interview- so the first 6 months I didn’t make any return on my investment (I was spending more money than expected or than I was making) – I had complaints from companies and lots of various problems – the whole conversion into franchise owner was very unorganized and chaotic – it made me very upset and frustrated.

After a year or so I began to understand why I was having all those problems and most of the problems were because I simply did not read the contract – although the person I bought the franchise from did not supply me with the training necessary to begin my journey after we worked it out everything began to get better and I began to learn and make good money.

Being a franchise owner is NOT for everyone no matter if it’s a cleaning company or a restaurant – you have to posess the certain skills and determination to keep trucking along when times are tough and become the proper business owner that you need to be.

The thing to make you successful at anything in life -not just this is to read and constantly develop your personal skills on every spectrum of learning – from managerial skills to business knowledge in general – building your self esteem as a business owner will put you leaps and bounds in front of others.

A franchise is a learning experience – in the first half of it – consider yourself an employee you are still learning THEIR system and training and developing the skills – it is not until YOU learn how to work and run the system for YOU that you become a business owner and start making the system work for you instead of against you.

Anago is a good starting point for any franchise owner – it allows you to get in cheap and develop your necessary skills to make more than you have put in – in a short period of time compared to other big name mainstream franchises. I learnt how to make my franchise system work for me and with me beside me at all times – I hope you can too – the key = learn the system.

NEVER quit – or give up – let your obstacles guide you in a new direction – good luck!

ARE YOU FAMILIAR WITH THE ANAGO CLEANING SYSTEMS FRANCHISE?

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Also read:

JAN-PRO Franchise Complaints

JANI-KING Franchise Complaints

COVERALL Franchise Complaints

JAN-PRO: Janitorial Franchise Warning

JANITORIAL FRANCHISE ISSUES

FTC Guide to Buying a Janitorial Services Franchise

FTC’s Janitorial Franchise Buyer’s Guide

 

 

COVERALL Franchise Complaints

The Coverall franchise website states:  “Since 1985, Coverall® has assisted nearly 9,000 entrepreneurs in becoming successful business owners and commercial cleaning professionals…

“Coverall provides its Franchise Owners with comprehensive training, an initial customer base, billing and collection services, financing, a global network of 90 Support Centers, plus the unique benefits of the Health-Based Cleaning System program, for measurably cleaner, safer customer facilities…. Coverall offers you the support you need to grow and develop your business.”

However, unhappy franchisee commenters have posted complaints about the Coverall franchise opportunity, with some claiming the Coverall franchise is a scam.  In 2008, commenter “ntoi” on the Complaints Board website wrote:

I’m a franchise owner for Coverall for almost two years now in San Mateo, CA and I really regret it joining and starting my business with them because all they did is SCAM me. Coverall Cleaning Concept aka Coverall-Based Cleaning System is where you can start your janitorial business by buying a franchise. You basically starting your cleaning business by using their name and you pay them yet they automatically deducted 15% each month plus insurance other charges. They suppose to guarantee you an account so that way you can start making money right away. They only guarantee you with account just enough that they can take and make money out of you each month and you left nothing. Which what is happening to me. All this time which all I get is headache because I always have to call the office to give me more account but no result. Now their holding my check and their not paying me. I called so may time what happened to my check and they just pass me around and no on knows. I’m ready so sue Coverall all for all my lost. I’m ready take them to court.

Anyone who want to start a janitorial cleaning business do your research. As I tell DO NOT DO BUSINESS WITH COVERALL CLEANING CONCEPT aka COVERALL HEALTH-BASED CLEANING SYSTEM because is a SCAM.

More recently (on the same board) “Coverall Franchise owner/until expires” wrote:

I totally agree with the complains. I am a franchise owner myself. they are totally liers. I made a contract for $20k, I gave $14.000 downpayment and we agree that I was going to pay the rest each month /deducted from my paycheck. I though I was going to get my acconts (offices to clean) in one month. But, they made me wait about a year, plus I was making $9 dollars per hour (fast and hard work) and I did not had any money to hired an employee to help me. How much I was supposed to pay if I hire one? 1 dollar? THEY ARE SCAMMERS. Yes, they are in the forbes magazine, of course because they make money but franchises dont. they will take you money and make you work like crazy. they also charge for administration but you are the one who has to comfront the office owners if something is wrong or if you want them to increase your payment because you are working extra hours. DONT MAKE ANY CONTRACT WITH THEM, They are not good, this business is not worth it at all. I am totally dissapointed

THEPUNISHER wrote that all janitorial franchises, not just Coverall, are scams:

JANITORIAL FRANCHISES ARE A SCAM! It might work for some but I guarantee it doesn’t work for the majority. This is how they work:
_You pay them a package, for example you pay about $16K for a $4k monthly income
_They’ll get you the accounts.
_Although they say you can choose to accept or not a specific account, it’ not true. They will turn around and say they satisfied the agreement of providing your accounts and if you didn’t take, they won’t give you more accounts.
_They underbid contracts to compete with everyone else, since they are NOT the ones doing the work..they don’t care. They get the accounts due the low price and you’re stuck working hard for few hundred dollars a month. You would be better off working for McDonalds getting $8 an hr. DO THE MATH!
_NOW This is the worst of ALL…once they have too many franchisees and can’t find enough accounts, they will find anything wrong in some buildings as a missed trash can and ask the company if they want another person to clean…since it doesn’t make a difference for them, they will say yes. Then the Franchise call you and say your customer requested to get another contractor because he’s not happy with your job. Now they sale that account to the newer franchisees so they honor the agreement to get accounts. THAT’S STEALING!
WITH A CLEANING FRANCHISE, IN REALITY YOU NEVER OWN YOUR OWN BUSINESS! If you owned the accounts you should be able to walk away with them after a period of time..right? NO..YOU CAN’T BECAUSE THE CONTRACT IS ON THE FRANCHISE NAMER…NOT YOURS!
I just hope that a Federal Court one of these days force all cleaning franchises to get the accounts on the franchisees’ names…not theirs. Create a money back guarantee and protect the little guys..the franchisees…I can’t believe in this age Cleaning Franchises are able to get away with this scam.

kbill, who claims to be a former Coverall franchise owner in Ohio, wrote:

I was also a Franchise owner through coverall in cincinnati OH. They are complete scam artists. I wasted 6 years with them, trying to get something started and they did not hold up to their end of the bargain. I agree with what you guys are saying. Buyer beware!!!

ARE YOU FAMILIAR WITH THE COVERALL COMMERCIAL CLEANING FRANCHISE?

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Also read:

JAN-PRO Franchise Complaints

JANI-KING Franchise Complaints

JAN-PRO: Janitorial Franchise Warning

JANITORIAL FRANCHISE ISSUES

FTC Guide to Buying a Janitorial Services Franchise

FTC’s Janitorial Franchise Buyer’s Guide

 

 

Commercial Cleaning Franchises: 10 Reasons to NOT Buy One

Guest post:  Ten Reasons Not to Buy a Commercial Cleaning Franchise Or a Janitorial Franchise by Ron Van Orden, CEO, Building Care Services 

I am a business broker and I have facilitated the sale of several commercial cleaning franchises and spoken to the owners of many more. I also have a commercial cleaning business. Every franchisee I have spoken to stated that if they could go back and go it again they would choose to not be a franchisee.

Let me start by saying that I do not necessarily have any problem with franchises. For budding business people franchises offer a structured and simple way to get into an industry. Usually franchises have an established brand identity and a training program. Franchisors are very good at selling franchises and typically have exciting brochures that describe the riches that will flow in once you get started. For some, franchises are the right way to go.

The point of this article is to point out a few items specific the commercial (business to business, not homes) cleaning / janitorial industry. One only has to to a internet search for commercial cleaning and the franchise opportunities are endless. Jani King touts themselves as the largest player here with, Jan Pro, ServiceMaster, Coverall and several others also having a national presence. Even with the size of these franchises they only have 10% market share in this industry. This article pertains to the unit franchises who actually perform the cleaning, not master franchises or area developers.

In a nutshell here is the concept. You purchase a franchise from a franchisor. With the franchise you get training, the equipment to perform the work (usually new) and some startup accounts. You purchase your insurance and bond through the franchisor. Once up an running the franchisor handles the billing, customer relations. Often you are required to purchase your supplies through the franchisor.

Let me stop here and say that a franchise is probably a good choice if you want to do the cleaning yourself and stay small. If you want to grow and add accounts and employees then you need new accounts. You can either get them yourself or purchase them from the franchisor….that brings me to my ten points.

1. Cost: The cost of acquiring new accounts are expensive! Usually they are in the neighborhood of 4x the monthly gross. A $500 account would cost you $2,000 – Ouch!

2. ROI: Using this example and a 40% profit margin it would take you 10 months to just recoup your money. I do not have a problem with fees – this is a competitive business and it costs money to get new business but at 4x this is a profit center for the franchisor not the franchisee.

3. Bidding Accounts With the franchisor bidding the accounts they are setting the price. They then bring them to and in some cases you are required to take it. They have no incentive to try to get the highest price, they just want to get the business.

4. Limitations With a franchise your growth is limited and you are confined to a geographic area.

5. Training I have not been through a franchisor training, but I will say that cleaning is easy! That is one of the beauties of this business – it is simple. There are many excellent internet resources and books that will teach you the tricks of commercial cleaning. Don’t want to do that? You could hire an experienced janitor and he or she could teach you for far less that the cost of their training. You can get all the forms and software you need online for less than $200.

6. You have to buy their equipment or supplies Why not shop around, buy used or only buy as you need to. There are many accounts that do not require the top of the line floor buffer.

7. Do you really need the Brand? Customer loyalty is very low in this business. Most often customers only care about the consistency and quality of the work and the price rather than the name.

8. Are you just buying a job? Most people want to own a business because they want to be rewarded for performing. With a franchise your rewards may be limited.

9. Don’t want to do Sales, Billing or deal with Customer follow up? There are alternatives. There are Janitorial brokers who sell accounts for those who don’t like to sell. You can work as a subcontractor and never have to deal with the customer. You can outsource the billing if you want.

10. Beware of projections and financial promises No one can predict how well you will do in this industry. This business is resilient to economic pressures and will always be in demand but no one can predict the future.

For some franchises, with the option of getting a "business in a box" is irresistible. My advice is to start small, buy what you need as you go and avoid going into debt as much as possible as you go.

Ron Van Orden is the CEO of Building Care Services a Sales and Marketing Solution for janitorial and building maintenance professionals and companies located in Los Angeles, California. http://www.BuildingCareServices.com

Article Source: http://EzineArticles.com/?expert=Ron_Van_Orden

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CURVES: 5 West Virginia Curves Close Abruptly

5 West Virginia Curves fitness clubs closed abruptly with no more than a voice mail to notify members.

The closed Curves for Women fitness clubs are:

Curves, Wheeling,

Curves, Martins Ferry,

Cuves, St. Clairsville,

Curves, Cadiz

Curves, Wintersville

According to a news story on the Curves closures,  all 5 locations are owned by the same Curves franchisee:

Curves in Wheeling, Martins Ferry, St. Clairsville, Cadiz and Wintersville closed suddenly Monday, with only a voicemail message saying the closure was permanent and that it was due to national and local economic conditions.

But other club owners say it certainly was not a national thing, and that other Curves locations in this area and across the nation are still going strong.

Linda Mayberry, owner of the Barnesville Curves, has gotten frantic phone calls from members, fearing that all Curves clubs were closing.

She says only five have closed, all owned by the same Wheeling owner….

Mayberry emphasizes the closure was not nationwide.

She said Moundsville, Barnesville and Cambridge are going strong and would warmly welcome members from the clubs that are closed.

West Virginia has the third highest rate of adult obesity in the nation, at 31.1 percent and the eighth highest of overweight youths (ages 10-17) at 35.5 percent.  It trails only Mississippi and Alabama as the fattest state in America.

Many Curves clubs across the country are closing as the economy and member boredom take their toll.

Also read:

CURVES: Robert Lay’s Story

CURVES: Can Indie Clubs Thrive Where Curves Failed?

CURVES: Complaints of Unauthorized Membership Charges

CURVES FOR WOMEN: An Unhappy Franchisee Tale

Tip of the hat to Fitdude for the link to this story

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WIRELESS TOYZ: Joe Barbat Claims Lazy Franchisees Have Selves to Blame

Joe Barbat claims that Wireless Toyz franchise investors have themselves to blame for their failures.

According to a  Local 4 Defenders video report posted on Click On Detroit, the Wireless Toyz founder accused of fraud said that if the franchisees suing him had worked as hard as he had, they’d be rich, too.  Barbat’s allegedly banked $13 Million on the Wireless toyz franchise chain he founded.

Check out the Local 4 Defenders video:  Wireless Toyz Founder Goes On Trial.

Read and discuss the Joe Barbat, Wireless Toyz lawsuits here:  WIRELESS TOYZ: Joe Barbat Fraud Trials

Here’s an earlier video from the Local 4 Defenders that gives an overview of the charges and allegations against Joe Barbat & Wireless Toyz:

Are Wireless Toyz franchisees victims of deception or lazy entrepreneurs looking for someone to blame for their lack of initiative?

That’s what the courts are trying to decide.  Share your opinion… and stay tuned.

ARE YOU FAMILIAR WITH JOE BARBAT & WIRELESS TOYZ?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

WIRELESS TOYZ: Joe Barbat Fraud Trials

Known for his mini-mansion, fast cars, and millionaire lifestyle, Joe Barbat, founder of the 200 unit Wireless Toyz franchise chain, was named to the Crain’s 40 under 40 list in 2005.  In 2007, Barbat was named as Entrepreneur of the Year by Detroit-based firm Ernst & Young.

More recently, however, he’s named as a defendant in multiple lawsuits by Wireless Toyz franchise owners.  Joe Barbat, and his associates, are being accused of violating Michigan franchise laws and falsifying information about profitability to franchisees.

From Millionaire’s Fraud Trial Begins:

…a number of investors said they were defrauded out of massive amounts of money and a number have sued Barbat for violating Michigan’s franchise investment laws.

“Outright lies, deceit and illegal methods to dupe my clients into investing hundreds of thousands of dollars,” [attorney Norman]Yatooma said.

Rod Kello is one of the investors claiming to be a victim. He talked with Local 4 Defenders about his plight.

“I’ve lost just about my life savings that I had, pretty much put all my money into this company. I’m pretty close to foreclosure on my home, kids’ tuitions, I mean you name it,” Kello said…

“They feed you all these numbers and all these lies and you find out a year later that they are all lies,” Kello said.

Sumil Rupani of Texas was another investor. He testified in court on Friday and later said his experience has cost him personally.

“Financially it’s been the worst thing I’ve ever gone through. I’ve lost friends, made enemies along the way. Family members don’t speak to me like they used to,” Rupani said.

Wireless Toyz and Joe Barbat claim there was no fraud.

Attorneys for Wireless Toyz and Joe Barbat deny the allegations.  Steven Cohen, Joe Barbat’s attorney in the Kello lawsuit, stated  “My clients are neither cheats nor liars nor did they defraud anyone.”

According to a Crain’s Detroit story, Wireless Toyz attorney Bradley Schram also believes the fraud charges are unfounded:

“There was no fraud involved in any of the franchises,” Schram said. “The market has just changed, just like many industries are dealing with a market that changes.”

Also read: WIRELESS TOYZ: Joe Barbat Claims Lazy Franchisees Have Selves to Blame

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DIVERSIFIED HEALTH: Testimonials From Failed Franchisees

Today’s amusing lesson in why you should dig deeper than the franchisor’s franchise marketing web page comes to us from Diversified Health & Fitness.

Diversified Health & Fitness, founded by “Dynamic leader, Successful Entrepreneur, Steadfast Friend and beloved Father” Roger Wittenberns, is sort of the fitness industry hospice for terminally ill franchise chains.

If you look at the franchise marketing page for Diversified Health & Fitness concept Fit For Her, you’ll see that they tout the safety of investing in a franchise with the bogus, widely discredited claim that “90% of franchise businesses are still operating after 10 years, but 82% of independent businesses fail.”

(Read Lies, Damn Lies & Franchise Statistics for more on FranBogies)

Another Diversified Health & Fitness web page contains testimonials from 7 Diversified franchise owners representing 8 clubs.

Funny thing is, 2 of the 7 franchisees currently featured in Diversified testimonials have closed their clubs.

The testimonial of Carol Weickardt, franchise owner of Shapexpress of Pewaukee, Wisconsin, still reads:

…I have been with Diversified since July 1, 2008. Although this is not a long time… I really appreciate working with a dependable company like Diversified that who I feel I can put my trust into to help my business succeed.

ShapeXpress of Pewaukee, WI has been removed from the location directory and the phone has been disconnected.

Ray Shoaf’s testimonial currently reads:

I am currently in the process of opening… Fit For Her in Sherman, TX… The consistent help and support provided by DHF is unlike any in the industry and sis sure to make any of the unique health and fitness brands be a huge success!

Ray Shoaf’s Fit For Her franchise in Sherman, TX reportedly closed a month after its grand opening.  He came under fire after he allegedly continued to bill members for 6 months after the club closed.

(See the post: DIVERSIFIED HEALTH: Fit For Her Members Cry Fraud).

25% of Testimonial Clubs Fail in the First 2 Years?

Just a thought… It might be wise for Diversified Health & Fitness to rethink its claim that 90% of franchises succeed when, in fact, 25% of the franchise clubs featured in the company’s own testimonials didn’t survive 2 years.

Just sayin’…

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DIVERSIFIED HEALTH: Fit For Her Members Cry Fraud

“"Diversified Health has a pattern of doing this same type of thing, where they open a franchise and then go out of business and continue to draft the member’s accounts."  Jim Hall, Nautilus Fitness Centers, Sherman, TX

Franchise owner Ray Shoaf has high praise for Diversified Health & Fitness, the Fort Lauderdale-based conglomeration that collects and operates troubled and/or dying franchise fitness chains.  Shoaf’s franchise testimonial is prominently featured in Diversified Health & Fitness marketing materials.  However, Shoaf’s Fit for Her franchised club in Sherman, TX closed a month after its grand opening… and former members have few kind words for him. 

Members billed for 6 months after Fit For Her club closed

According to a KTEN news report,

“Fit For Her in Sherman closed down a month after its grand opening, but the gym continued to draft its former members bank accounts for over six months. Two members we spoke with say the tried to cancel their accounts multiple times, but after failed attempts both decided to cancel their bank accounts to stop Fit For Her from continuing to debt their accounts.”

Diversified Health & Fitness Allegedly Stiffs Competitor, too

According to the news report, parent Diversified Health & Fitness worked out a deal with the local Nautilus club to honor the Fit For Her memberships.  “Once Nautilus and Diversified Health and Fitness reached an agreement,” the report states, “Fit For Her members began working out at Nautilus, but Nautilus never received a dime from Diversified Health.  Jim Hall, owner of Nautilus in Sherman says, ‘Fit For Her never paid us what they were suppose to pay us.’”

The good news?  It seems the club was no great loss.

Online reviews indicate the Sherman, TX Fit For Her club – with a one-star rating – is no great loss.  One reviewer wrote:

   …The place is always nasty. Most of the employees are rude… There is always some reason that the gym is closing down, rather it be for the electric getting shut off or because of malfunctions with the card reader. its ridiculous, i mean how can someone run a business like that….He is always late paying his employees, and everyday that he is late on payment for them, there is always another excuse that comes up, ALWAYS, it never fails, then he refuses to pay his employees what he owes them after they no longer work for him… Ray Shoaf needs to learn a little about the management of a business before he trys to start something up, and be a little bit more professional with the way that he runs things…

Guest wrote:

WOW!!!  Place closed Down less a Year for not paying his bills or employees. Equipment was so out dated! When you try to call the place there is no anwser why he closed down, as well no REFUNDS! He is also closing the fitness center in ANNA "The Zoo".. So he scammed… members of there money, Since the finance company will [not] stop payment!

Is billing members of closed clubs normal for Diversified Health & Fitness?

Ray Shoaf’s glowing testimonial for Diversified Health & Fitness is prominently featured in the company’s franchise marketing materials.  And it seems that he indeed has years of experience running Diversified-affiliated health clubs.  According to franchisee Ray Shoaf’s Linked In profile, he owned and operated Lady of America fitness centers for 14 years, owned the Sherman Fit For Her club and still owns The Zoo fitness club in Anna, TX.  All three of those chains are or were affiliated with Diversified Health & Fitness.

It makes one wonder:  Is billing customers for 6 months after a club closes just the way things are done at Diversified Health & Fitness?

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

JANI-KING Franchise Complaints

Entrepreneur magazine lavishes high praise on the Jani-King franchise opportunity via its 2010 franchise rankings.  Entrepreneur ranked the 10,000+ unit Jani-King #8 overall in the 2010 Franchise 500, the #2 low-cost franchise, the #1 home-based franchise and #7 in the “America’s Best Global Franchise” category.

Of course, Entrepreneur states that when compiling their rankings they do not “measure subjective elements such as franchisee satisfaction…” since “…these are judgments only you can make.”

In a time when many individuals are struggling to make ends meet, the Jani-King franchise opportunity – with its low start-up cost and guaranteed cleaning contracts – seems especially enticing.  But do a bit of digging and you’ll find some troubling – and remarkably consistent – complaints from Jani-King franchise owners.

Lawsuits allege a cleaning-contract shell game.

In an August, 2009 Franchise Times article on lawsuits leveled against commercial cleaning franchise companies, Julie Bennett writes:

…the lawsuits, filed recently in Massachusetts against all three companies and in Pennsylvania, Minnesota and California against Jani-King, contend that the cleaning companies misrepresent their offerings, because they do not have sufficient customers to guarantee each franchisee the amount of monthly cleaning business they purchase. Instead, the lawsuits allege, they breach their contracts by underbidding the amount of time and staffing required for each job, refusing to allow franchisees to inspect cleaning jobs or bid sheets before accepting or rejecting a job, offering geographically inconvenient jobs and unjustly taking jobs from one franchisee to re-sell them to others.

Consumer complaint sites are abundant with specific complaints about the Jani-King franchise, the franchisor and the regional master franchisees who recruit unit-level owners. 

On the Complaints Board, 2009-08-22 letshelp wrote

franchise is a scam

I purchased a Jani-King Commercial Cleaning Franchise after reading they were a great franchise opportunity in several franchise magazines. During my initial meeting with the regional director I expressed concern over the 40% they take off the top of what clients are billed. He told me not to worry as they take all their fees into consideration when giving a cleaning quote to a client.

When they started offerring me contracts I would do the math and tell them there was very little profit in some contracts and absolutely none in others. I was told this was a low profit margin industry and I had to learn to work some "break even" contracts for I would get additional business from those same clients ( floor waxing ).

I accepted some of these contracts since they are only required to offer you the amount of cleaning business you purchased (with the franchise cost ). If you don’t accept the accounts they are not required to offer you anymore.

Once I started working accounts, the operations director would go by the account every month to evaluate the franchisee’s performance. He would always find something negative to write about to justify taking the account away from the franchisee and reselling it to a new franchisee. So the franchisee ends up losing the original franchise fee and whatever fee he paid for the accounts he was working at hardly no profit.

I later learned this type of scam preys on people who have never been in business for themselves – so trust the Franchisor. If anyone is looking into purchasing this type of franchise, do yourself a favor and run a Google or Yahoo search on Jani-King. They have had numerous lawsuits and government complaints. I lost all my savings, but hopefully others can learn from my mistake.

85 days ago, Rickety Rabbit responded:

Almost the same thing happend to me in Boston. I bought a Jani King franchise in 2006. I paid $15, 000 for $4000 per month in business.  Minus the 22% Jani- King takes off the top. With what is left I pay for labor, chemicals, and equipment.

Jani King has it so they do not have to provide you with the $4000 per month in business, they only need OFFER it to you. If you refuse it, that’s it. They don’t owe it to you any longer. You had your chance. But here is what they do. They underbid the account by hundreds of dollars. They make false promises to the business owner, and do not tell the franchise owner about it. When the business owner cancels because the promises are not met, the franchise owner is left to make a decision. Take care of the promises never mentioned to you ( such as delivering the newspaper ever morning, or a free strip and wax every month) both are actual cases, and both would have put me in the negative for profit.

So I was forced to give it up. No fault of mine. Also the account is not supposed to cancel before one year. If they do Jani King promises to file suit with a killer legal team. Which they must have because they are still in business. However they only use it to defend itself from angry franchise owners.

They purposely offer you accounts that are way underbid, or too far away. When you deny them, they no longer owe you the account. If I could do it all over again I would invest in real estate on Venus before having to deal with this again.

One last thing. I placed over 40 calls per month to the district manager for four months straight. Not one call answered not one call returned. I had to buy an existing franchise that was already working with history in order to pay the bills while waiting for my $4000 in business. Now I am about to lose those accounts to under bidders. Can you believe that? In this economy there are those worse then Jani King that UNDERBID them. Sorry. Very sorry.

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