Tanning Salon Franchises Among Riskiest Franchise Investments
July 11, 2012
(UnhappyFranchisee.com) According to the 2012 list of franchise loan defaults released by the Small Business Administration, several tanning salon franchises have alarmingly high default rates for SBA-backed loans.
Are you familiar with tanning industry and tanning salon franchises? Please share a comment below.
Four Tanning salon franchise companies fell within the worst 75 franchises among all franchise companies whose franchisees were granted 25 or more SBA loans since 2001.
The Executive Tans franchise had the worst default rate, with 81% of their franchisees unable to pay back their SBA loans.
The Image Sun franchise was not far behind, with a disturbingly high 70% default rate.
The owners who invested in Planet Beach franchise defaulted on their SBA loans 57% of the time.
Hollywood Tans franchise owners had a high 37% loan default rate.
Despite the high failure rates, these tanning salon franchises seem to still be recruiting franchise owners, and it seems the SBA will still consider guaranteeing their loans with taxpayer money.
If you are still considering investing in a tanning salon franchise, we recommend proceeding with extreme caution.
ARE YOU FAMILIAR WITH THE TANNING INDUSTRY OR TANNING SALON FRANCHISE OPPORTUNITIES? PLEASE SHARE A COMMENT BELOW.
HOLLYWOOD TANS Franchise Complaints
July 11, 2012
Are you familiar with the Hollywood Tans franchise opportunity?
If so, please share your experience, opinions or insights with a comment below.
If you are an Hollywood Tans franchise representative or employee, please help us understand why the Hollywood Tans franchise owners have one of the highest loan default rates in the industry.
Hollywood Tans franchise owners have an alarming 37% SBA default rate.
The Hollywood Tans franchise website states:
“We were recently named “Top Tanning Salon Franchise” by Entrepreneur Magazine. The time is right for you to join our rapidly growing company. Contact us now to learn more about our fabulous franchising opportunities.
“Learn about the many ways Hollywood Tans supports its franchisees:
- Our manufacturing facilities, tanning booths, lotions and bulbs.
- Real Estate
- Finance
- Advertising & Marketing
- Construction
- Maintenance
- Operations & Training
- Hollywood Tans University”
However, according to the Small Business Administration, 37% of Hollywood Tans franchise owners are unable to repay their SBA loans.
Tanning salon franchises as a group demonstrated alarmingly high SBA franchise loan default rates on the 2012 list, including the Planet Beach franchise (57%), Image Sun franchise (70%), Executive Tans franchise (81% ) and Hollywood Tans franchise (37%).
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Hollywood Tans Franchise Lawsuit Documents
December 19, 2008
Four operators of Hollywood Tans franchises located in three states allege that Hollywood Tans and its leasing company induced them into “entering into unconscionable franchise agreements, defrauded them by sending them deceptive and inflated invoices, and violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”).”
They have sued the franchisor company, Hollywood Tanning Systems, Inc. (“HTS”); two of its officers, Ralph Venuto, Sr., (now deceased) and Ralph Venuto, Jr., the company to which HTS assigned its interest in the franchise contracts, HT Franchising, LLC; and Highline Capital Corporation, which provided three of the franchisees with equipment leasing and financing services in connection with the operation of their Hollywood Tans franchises.
The Hollywood Tans franchisee lawsuit suit makes 10 allegations:
1. Plaintiffs made substantial investments of time, money and effort into the franchise opportunities marketed by Hollywood Tans.
2. As described more fully below, Plaintiffs were sold their respective Hollywood Tans franchises through false and misleading representations.
3. Hollywood Tans also omitted from their representations numerous material facts that were necessary in order to make its other representations not misleading.
4. In order to induce Plaintiffs to sign their respective franchise agreements, Hollywood Tans made a host of unlawful “earnings claims”, verbally, in writing, and by video presentation, and made false promises regarding training, support, advertising assistance, equipment and supplies.
5. Plaintiffs reasonably relied on the representations by Hollywood Tans and, accordingly, made substantial monetary investments in their respective Hollywood Tans franchises.
6. However, Plaintiffs did not receive the promised financial returns on their Hollywood Tans franchises.
7. Hollywood Tans also failed to deliver on the promised training, equipment and on-going support.
8. Upon information and belief, Hollywood Tans also unlawfully accepted undisclosed benefits from the Plaintiffs’ purchases and financing arrangements.
9. Hollywood Tans also conspired with Highline Capital to fraudulently take money that they were not entitled to receive from improperly disclosed and fraudulent leasing transactions.
10. Hollywood Tans fraudulently concealed its wrongdoing and Plaintiffs did not, and could not have been expected to discover the existence of the majority of their claims until recently.
11. Plaintiffs bring this action to recover from Hollywood Tans the actual damages suffered as a result of the wrongful and fraudulent conduct of Hollywood Tans, including the money that Plaintiffs invested in their Hollywood Tans franchises.
12. Plaintiffs also seek to recover their damages from Hollywood Tans’ executive officers, Ralph Venuto, Sr. and Ralph Venuto, Jr., who, upon information and belief, knowingly and willfully directed the unlawful conduct of Hollywood Tans’ sales team.
Here are the public legal documents:
Hollywood Tans amended_complaint1
Over at the Hollywood Tans debate at Franchise Pick, current Hollywood Tans franchisee Jamie contends:
I will point out that the lawsuit that was cited is a year old, and refers to events that happened over 3 years ago, and for what it’s worth EVERY HT employee named in it no longer work for the company (at least one of them is actually deceased). I don’t know the validity of the lawsuit nor do I personally know of any of the former franchisees who filed it, but as to former owners being named in it, HT has been under new ownership since long before the lawsuit was filed, so I don’t see how it all pertains to Hollywood Tans as a franchisor today…
What do you think? Are these alleged misdeeds relevant to Hollywood Tans franchise today? Share a comment below.
