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MOE’S SOUTHWEST GRILL Franchise Complaints

November 1, 2013

Moe’s Southwest Grill franchise complaints include alleged undisclosed kickbacks, numerous franchisee lawsuits, and franchisee harrassment.

Moes LogoAre you familiar with the Moe’s Southwest Grill franchise opportunity?  Share a comment below or email us in confidence at UnhappyFranchisee[at]gmail.com.

Focus Brands, Inc., based in Atlanta, is the franchisor of over 3,800 locations under the brand names Auntie Anne’s, Carvel, Cinnabon, Moe’s, and Schlotzsky’s.

According to its website, Focus Brands seeks “franchise partners to share in our pursuit of happiness” because its “franchise partners are integral to the success of FOCUS Brands.”

However, according to at least one Moe’s franchisee, the story is quite a bit different.

Taylor Investment Partners II, LLC operates not one but two Moe’s restaurants in Atlanta.   On or about September 9, 2013, Taylor Investment Partners II, LLC filed a Complaint against Moe’s Franchisor, LLC, Moe’s Southwest Grill, LLC and Focus Brands, Inc.  in the Superior Court of Fulton County, Georgia.

According to that Complaint, between 2007 and 2012, Taylor Investment filed not one but two lawsuits alleging Moe’s Franchisor, Moe’s Southwest Grill, and/or Focus Brands took “kickbacks” despite representations in two different Uniform Franchise Offering Circulars that neither Moe’s Southwest Grill nor its affiliates would derive any income from Taylor Investment’s purchases of fixtures, furnishings, equipment, signs, materials and supplies.

The Complaint also alleged that eight (8) days after Taylor Investment filed the second such lawsuit, Moe’s Franchisor failed Taylor Investment on an inspection report and, within months, declared it in default of its franchise agreements and terminated the same.  In its Complaint, Taylor Investment alleges Moe’s Franchisor concocted these defaults in bad faith in an effort to force it out of the Moe’s franchise system.

Such allegations are not uncommon in the franchisee community.

Anecdotes about franchisors “inventing” defaults to take over profitable locations, precipitate bankruptcies to buy prime real estate in foreclosure auctions, strip franchisees of “legacy” agreements with favorable terms, and engage in churning for initial franchise fees abound.  Synonyms for anecdotes, however, are “data” and “evidence.”

Are you a franchisee in the “Focus system” (or other franchise system) that has had its franchise agreement terminated under questionable or suspicious circumstances or is familiar with someone who has?

Share a comment below or email us in confidence.

ARE YOU FAMILIAR WITH THE MOE’S SOUTHWEST GRILL FRANCHISE OR OTHER FOCUS BRANDS FRANCHISES?  PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com


tags: Moe’s Southwest Grill, Moe’s Southwest Grill franchise, Moe’s franchise, Focus Brands, Focus Brands franchises, Taylor Investment Partners

LATHROP & GAGE May File Stratus “Scumbag” Defamation Lawsuit

November 1, 2013

Lathrop & Gage attorney Matthew A. Jacober sent a stern warning letter to Jerry Wenger that if Wenger didn’t agree to stop calling his clients “scumbags” (and making other disparaging remarks about them and Stratus Building Solutions), that he’d file suit for “libel, slander, tortious interference with business expectancy and breach of contract.”

Jerry Wenger is a former employee of a former Stratus Building Solutions master franchisee in Indiana.

Wenger has been openly critical of both the Stratus franchise organization (which some have called a pyramid scheme: STRATUS Franchise Called “Pyramid Scheme” on FOX News), Stratus CEO Dennis Jarrett, and Stratus President Pete Frese.

In his letter (published here:  STRATUS Attorney: Stop Calling Dennis Jarrett & Pete Frese Scumbags!), Jacober took exception to an email allegedly sent by Wenger in which he stated ““there are still some very scummy people left in the master system, most definitely the largest scumbag of them all is still Dennis Jarrett and the second is Pete Frese.”

Jacober also accused Wenger of posting disparaging remarks about Stratus on LinkedIn (as himself) and UnhappyFranchisee.Com (as the mystery commenter “Reasoned Source”).  He pointed out that Wenger signed a non-disparagement agreement that forbids him from bad-mouthing Stratus, Jarrett & Frese.

Jacober wrote:  “This letter is your one and only warning.”

If Jacober’s threat was a bluff, Wenger called it.

Jerry Wenger fired back a defiant, unapologetic letter that states his belief that Jarrett, Frese and their associates at Stratus Building Solutions have deceived and harmed “hundreds if not thousands of families throughout the United States…”

Wenger’s response letter (posted in its entirety below), alleges that Dennis Jarrett, Pete Frese & Stratus Franchising created and distributed deceptive Franchise Disclosure Documents and financial pro formas that misrepresented the company’s history, the business relationships of its related entities, and (assumedly) its financial strength and performance.

Will Stratus Initiate the “Scumbag” Defamation Lawsuit?

Dennis Jarrett Pete Frese

Wenger rebuffed Jacober’s request for him to zip his lip, warning him back: “Going up against me, would be nothing but a losing battle…”

Wenger may have a point.

While Lathrop & Gage might relish the opportunity to generate more billable hours while smiting a smart-ass detractor with far less financial and legal firepower than their client, the question remains:

Do Stratus CEO Dennis Jarrett & Prez Pete Frese REALLY want to initiate a lawsuit in which the central question may be whether or not they are “scumbags”?

To Unhappy Franchisee, it seems like Jarrett & Frese could invest a lot of money, time, and effort and end up with nothing but humiliation and loss.

You know… kind of like buying a janitorial franchise.

 

Jerry Wenger’s Threat Response Letter

October 30, 2013 Via: Certified Mail

Lathrop and Gage, LLP.

7701 Forsyth Blvd., Suite 500

Clayton, Missouri 63105

Attn: Mr. Matthew Jacober

Re: Response to your letter dated 10/25/13

Martinez, et. al v. Shamrock, Stratus Franchising, Kevin Spellacy, Jerry Wenger, Pamella Martinez

Dear Mr. Jacober:

Let me start this letter off by acknowledging obvious receipt of your letter as it did not arrive via certified mail as of the response date/time of my letter. Secondly, please be aware that letter as I felt was appropriate, was forwarded to Plaintiff’s counsel, your letter and my response letter will be placed in the court file and forwarded to Mr. Spellacy’s attorney of record as well.

Thank you for recognizing me as an “honorable man”, I have the same level of respect for you and Mr. McCauley and have recognized that in our previous dealings verbally and now in writing, You have an impossible task (in my opinion) at hand in the defense of Pete Frese and Dennis Jarrett. Your clients however, do not deserve nor will they ever get that statement/feeling of respect from me, nor have they since December 2011. That is a date that I started checking their backgrounds, their past history with Coverall Pacific and/or Jan-Pro. As you are aware, I have been in the commercial cleaning industry for over 30 Years. I have numerous friends in this industry, many of whom quite frankly walk in higher and different circles than I do. Some of those friends include Ed Selkow and Ken Galo.

Your letter is extremely upsetting to me on a variety of levels, so please forgive some of the passion and emotion you are about to read, I understand you did this in your role as counsel for your clients Dennis Jarrett, Pete Frese and Stratus Franchising, LLC. Just to be clear on that matter, for your clients to believe for a moment that I am solely or even majority responsible for their “fall from grace” is not only delusional but should further call into question their obvious mental state of affairs and lack of responsibility for what they have done and inability to “look in the mirror”.

Your clients “dye was cast” on or about 2003/2004, when they knowingly decided to put together a false FDD, a false Performa and begin a program of marketing/sales based upon those basic premises of lies and deception. Those lies were discovered and verified in various Lawsuits and avenues of discovery in the multiple cases that they now have against them personally and in a corporate sense in Missouri, Indiana, California and I believe in the coming month’s additional suits in California and Texas. Not that we need a “history lesson” but let’s briefly outline it:

a) False FDD was based upon not revealing the relationship between the previous Jan-Pro Branch, Simpatico, Pete Frese, Stratus Building Solutions.

b) False FDD in following years not only didn’t reveal the above (a) but didn’t reveal the relationship between some/all of those entities with Jarrett Realty, Affiliated Services, Nyco Chemical and others.

c) False Performa created with the assistance and full knowledge of Afshin Cangarlu a current Stratus Master in Los Angeles, California were presented throughout the United States as a Performa and presented by such esteemed colleagues of Stratus Franchising as Marvin Ashton, Bob Stapleton and Bill Blair. All of whom not only knew the truth behind the formation of Stratus Building Solutions and its past history, but knew without a doubt that the Performa used as part of “Validation” by numerous soon to be Masters was False and full of Fraudulent Information. Further “verbal” validation was done directly by Afshin Cangarlu, Tom Weiss, John Coleman, Ken Cassiri, Jeff Aibel and others in return for “favors” handed out by Dennis Jarrett and Pete Frese. Some of those “favors” included breaks on royalty fees, cash awards and other “one off” deals.

The harm that your clients have done is far reaching and has cost dearly in the lives of hundreds if not thousands of families throughout the United States and it ranges from Masters investing their Retirement and/or Life Savings down to the hundreds of Unit Franchisees some of whom I know personally, that in their own way/amount did the same.

I am not going to spend a whole lot more time in my response to this outrageous letter of warning from you and your clients on “history” anyone that wants to know has to look no further than the records of multiple lawsuits including Goldeneye v. Stratus Franchising et. al, the multiple past and current “Fortman Cases”, the letter of intent to sue in Texas, the letter of intent to sue in California and of course the “Indiana cases” which there are two. One in Civil Court proceedings and documents of record in Bankruptcy Court Proceedings of former Master, Kevin Spellacy.

Your letter to me also shows a sheer arrogance and in many ways disregard for Indiana and its Judicial System. You and Your clients are not pleased with the outcomes in various rulings that have not gone your clients way in both the civil court hearing nor in the Bankruptcy Hearings and it shows.

Your letter to me also talks about the disparagement agreement that I signed and let us not forget the reasons for me signing the agreement were quite simply as follows:

After months of attempting to “negotiate” a separation from Stratus Franchising (started in March 2012 and finally completed end of July 2012) Kevin Spellacy and his attorney’s Michael Alerding and Scott Krieder were on a conference call with Kevin when I was asked to come into Kevin’s office, an agreement of Separation had been reached and only one “sticking point” remained. It was the non-disparagement agreement that I eventually signed. Their direct words to me were as follows, “Jerry, Matt Jacober informed us that there will be no agreement, without your signature on a non-disparagement agreement”. “Now, we don’t represent you, we cannot ask you to sign, all we can tell you is the work done on Kevin’s behalf cannot move forward without it”. I read the agreement that Kevin had, I couldn’t sign it, I instructed them to remove or change several areas and make them as “grey” as possible. Upon those changes, I freely signed the document as I personally saw the need to get the “deal done” and move on, Kevin is a man of high morals and integrity despite what has been written in the lawsuit and on blogs. He simply couldn’t stomach being associated with Pete Frese, Dennis Jarrett nor Stratus Franchising one more day than necessary. I knew Shamrock/Kevin didn’t have the finances to fight Lawsuits on two fronts (Martinez and Stratus Franchising), it proved that we didn’t have finances to fight a Single Lawsuit in the end. I couldn’t allow Kevin, the other employee’s, the area developer, the Unit Franchisees and their respective families to be harmed because of this document not being signed by me. Kevin is now in bankruptcy court as an individual, as a corporation and his 250k investment in Stratus is lost, his nearly 3 million dollar per year business is closed, his employees are working for themselves or other companies, his nearly 100 Unit Franchises are gone and their families and investments affected dramatically along with his and the sheer emotional stress and damage is hard to nearly impossible to measure.

All of this is direct result of your client’s decisions made back in 2003/2004 and the subsequent lawsuits, findings of fact and separations of previous Masters in Buffalo, Rochester, Conn., Atlanta, Jacksonville and Miami (current Pro2FS). I bring those up as they were the ones that primarily discovered the various detailed flaws in not only the Performa, but the history associated with the Performa and additional flaws in the FDD that were not discussed in the original Simpatico or aka Fortman Case. Their separation was devastating on a variety of levels as they were the primary leaders that had formed a group that not only initiated the separations on their behalf but many of those that followed including Kevin, as they were party too various phone conferences that started in January 2012 and led directly by Ken Cassiri and Jeff Aibel and that I was present for/in via listening on speaker in Kevin’s office. Those persons include both former (Florida, Indiana, California, Oregon, Illinois and others) and still a few current Stratus Masters in various states in all there were 22 Masters that were part of that group at one point or another. When Ken Cassiri and Jeff Aibel went “quiet”, it was Kevin himself that became the defacto “leader” of the remaining group.

In regards to whom has harmed whom as you claim, simply “Google” my name, read on the very same website that you quote in your letter, unhappyfranchisee.com what was said about me personally, call my current employer and have him tell you that not only did I do a “full disclosure” of all court filings against me, but shared with him the unhappyfranchisee.com website and the comments made about me personally on that website BEFORE he decided to hire me and then let him tell you about the issue that involved a minority partner who paid an attorney to solely investigate me and his personal recommendation that I be REMOVED from my position without even meeting me, calling me on the phone etc… Let me give you and your client’s numbers of people who actually at some point in time questioned verbally and in documents (emails) my lack of supposed morals, integrity and honesty. No Mr. Jacober, the one that has been harmed the most in this mess between Me and your clients is clearly ME. I think you seem to forget that I never owned a piece of, was never shareholder of, not even an Employee of Stratus Franchising, LLC. Nor did I EVER have any relationship directly with Pete Frese nor Dennis Jarrett financially or otherwise. Yet, my name, my integrity, my honesty, my morals have all come under FIRE/QUESTION simply because I worked for a Master in the State of Indiana that utilized the Stratus Name, the Stratus Business Model, the Stratus Business Plan and those findings were utilized in the filing of a Lawsuit that I am “co-defendant” of in Indiana.

No Mr. Jacober, YOUR clients are the reason, the sole reason that they have been HARMED. THEY will have to answer for their deceit, lies, fraud, fraudulent inducement in the various courts throughout the U.S. THEY and THEIR ASSOCIATES are the sole reason that Stratus Franchising is in the current financial shape and P/R and Brand problems that THEY have, THEY are the Masters of a destiny that THEY created with their knowingly False FDD and Performa and NO ONE ELSE!

In regards to “Reasoned Source”, I am simply going to allow you to speculate as to “whom” that is. Your basic premise of “Reasoned Source” solely being one person is in of itself, flawed. From what I have read, from what I have seen, from what I have heard, there is absolutely NO WAY that “Reasoned Source” is simply one person as the sheer scope of the information posted/provided no one person could possibly have that much information and/or be party too that number of discussions and actions, quite literally at the same time throughout the United States.

In closing, Mr. Jacober you are a partner in one of the Largest Law Firms in the Country, your clients despite their recent financial issues are still worth in the Tens of Millions of Dollars when you look at their cash, their real estate holdings, their assets etc. Your threat and their “approval” of a Lawsuit to move forward against me is totally out of my control. You are all adults (so Am I) and since to date, there has been NO Criminal Filings versus Dennis Jarrett nor Pete Frese that would require mandatory representation by Lathrop and Gage, we have all made choices as adults. Your threats to do further harm to me and my family will be responded to appropriately in whatever courtroom, whether or not it is in the Great State of Indiana which I am currently a resident of and party too a current lawsuit in. And since the agreement signed was done so in Indiana and under the factors that I have already “testified too” in the current civil action against me and your clients “see interrogatories for Plaintiff’s and signed by me under penalty of perjury” and in the court record. I believe that ANY potential case filed against me would have to flow thru Indiana at some point in time, without too much question or issue.

Personally, if I were you, I would advise your clients to move themselves into Bankruptcy Protection and stop this non-sense and accept the fact their lies, deception, business practices and lack of moral based business ethics are the direct cause of what has happened to themselves and Stratus Franchising, LLC. This would avoid additional harm being done to remaining Masters, their unit franchisees and their employee’s. Though I personally don’t care about some of them, there are others that I do care about very much….. Going up against me, would be nothing but a losing battle for a variety of reasons and in all honesty would accomplish little for any of us.

Sincerely,

Jerry M. Wenger

Pro Se

Also read:

STRATUS BUILDING SOLUTIONS Franchise Complaints

STRATUS BUILDING SOLUTIONS: Open Letter From Unit Franchisees

STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship?

STRATUS Franchise Called “Pyramid Scheme” on FOX News

LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 1)

LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 2)

STRATUS BUILDING SOLUTIONS Franchise is a Scam, Attorney Claims

STRATUS BUILDING SOLUTIONS Franchise Class Action Lawsuit Filed

ARE YOU FAMILIAR WITH DENNIS JARRETT, PETE FRESE, STRATUS BUILDING SOLUTIONS OR LATHROP & GAGE?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

tags: Stratus Building Solutions, Dennis Jarrett, Pete Frese, Lathrop & Gage, Attorney Matthew Jacober, Jerry Wenger, Stratus, Unhappy Franchisee, janitorial franchises

STRATUS Attorney: Stop Calling Dennis Jarrett & Pete Frese Scumbags!

October 31, 2013

An attorney for embattled janitorial franchise company Stratus Building Solutions is lashing out at a critic for (among other things) allegedly calling Stratus CEO Dennis Jarrett “the largest scumbag of them all,” and Stratus President Pete Frese “the second” [largest scumbag of them all].

A threatening letter dated October 25, 2013 was sent by Matthew A. Jacober, an attorney with law firm Lathrop & Gage, to Mr. Jerry Wenger of Connersville, IN.

Mr. Wenger has 30 years of experience in the commercial cleaning industry, and served as Regional Director for Stratus Building Solutions master franchisee Kevin Spellacy.

Matthew A. Jacober is a member of the legal team (derisively referred to as “the poodles” by UnhappyFranchisee.Com commenter “Reasoned Source”) that represents the much-litigated Stratus Building Solutions.

In his letter, Jacober states that Wenger signed a non-disparagement agreement stating that he “would not disparage or make any negative comments about Dennis Jarrett, Pete Frese and Stratus Franchising, LLC or any of their affiliated parties.”

The Lathrop & Gage attorney stated that he had repeatedly represented to his clients that Wenger impressed him as “an honorable man who… had no desire to see anything negative happen to them.”

Having held Mr. Wenger in such high esteem, and thinking they were friends, Matthew Jacober was shocked (shocked, I tell you!) to learn that Wenger was telling people that his clients are scumbags.

Writes Jacober:

It was therefore very shocking to me when my clients forwarded to me postings from August 30, 2013 which they have recently learned were written of on [Stratus Master Franchisee] Shannon Smith’s LinkedIn page questioning why Mr. Smith would be associated with a company like Stratus Franchising and individuals like Pete Frese and Dennis Jarrett.  More disturbing still was an email you sent on August 29, 2013 to a number of individuals who remain masters under the Stratus system in which you say “there are still some very scummy people left in the master system, most definitely the largest scumbag of them all is still Dennis Jarrett and the second is Pete Frese.”

Matt Jacober also accuses Mr. Wenger of being the prolific Stratus Building Solutions critic and whistleblower who posts on UnhappyFranchisee.com under the pseudonym “Reasoned Source.”

“Reasoned Source” is a frequent commenter on Stratus Building Solutions blog posts, having posted the equivalent of 200 typed pages of opinion and insider information regarding the crumbling Stratus master franchise system.

“Rest assured,” writes Jacober, “if these postings and communications do not immediately cease and desist” that Wenger will be hit with a lawsuit for “libel, slander, tortious interference with business expectancy and breach of contract.”

Jacober continues:

We believe significant damages have occurred to the Stratus Franchising system and to Messrs. Frese and Jarrett individually as a direct result of the comments you have made and will pursue those damages vigorously… This letter is your one and only warning.

Matthew A. Jacober letter P. 1Matthew A. Jacober letter P. 2

CLICK ON LETTERS TO ENLARGE

Tune in for the Next Exciting Episode…!

How will Mr. Wenger respond to Matthew Jacober’s “one and only warning”?

Will Jerry Wenger apologize for his “wrongful behavior” so he and Matt Jacober can be bro’s once again?

Will Stratus Franchising sic the poodles on the ex-employee of an ex-franchisee for tarnishing its otherwise sterling reputation?

To establish defamation, will Lathrop & Gage have to prove beyond a reasonable doubt that their clients, Dennis Jarrett and Pete Frese, are not the largest and second-largest scumbags, respectively?

Will whistleblower “Reasoned Source” disclose his/her/their true identity after seeking asylum in the Moscow airport?

Stay tuned to Unhappy Franchisee to exclusive Stratus coverage as this drama unfolds!

Also read:

STRATUS BUILDING SOLUTIONS Franchise Complaints

STRATUS BUILDING SOLUTIONS: Open Letter From Unit Franchisees

STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship?

STRATUS Franchise Called “Pyramid Scheme” on FOX News

LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 1)

LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 2)

STRATUS BUILDING SOLUTIONS Franchise is a Scam, Attorney Claims

STRATUS BUILDING SOLUTIONS Franchise Class Action Lawsuit Filed

ARE YOU FAMILIAR WITH DENNIS JARRETT, PETE FRESE, STRATUS BUILDING SOLUTIONS OR LATHROP & GAGE?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

tags: Stratus Building Solutions, Dennis Jarrett, Pete Frese, Lathrop & Gage, Attorney Matthew Jacober, Jerry Wenger, Stratus, Unhappy Franchisee, janitorial franchises

STRATUS Master Franchisee Bashforth Accused of Fraud, Franchise Violations

October 18, 2013

According to UnhappyFranchisee.Com reader and commenter Reasoned Source, Stratus Building Solutions master franchisee Mark Bashforth and his Camino Real Ventures,  LLC is being accused of fraud and violations of both federal franchise disclosure laws and Texas business opportunity laws related to the sale of his master franchise to Echo Green Cleaning, LLC and Tom Baker.

A copy of the $11,000,000 demand letter is posted below.

Reasoned Source writes:

“Reasoned Source has learned that an 11 million dollar lawsuit is about to be filed in the State of Texas! In the “warning letter” that Reasoned Source has obtained, it outlines all of the transgressions not only against Mark Bashforth and his Camino Holdings Company, but against Stratus Franchising LLC.

  1. Stratus Franchising, LLC. did not file the proper paperwork in regards to the State of Texas requiring them to not only file the FDD, but financials and other documents necessary to SELL Master Licenses in Houston, Austin, North Texas (defunct/bankrupt/ruined Tom Mosley and his family) nor the current Dallas/Ft. Worth Master.
  2. Mark Bashforth utilized Stratus Franchising’s, LLC. Master Agreement in order to SELL agreements in LA, Austin and Dallas vs. producing a proper agreement/legally.
  3. Reasoned Source has contacted the Secretary of State of Louisiana and forwarded them Mark Bashforth/Camino Real Estate information, FDD, Stratus Franchising, LLC lawsuits from California, Indiana, the intent to sue in California by Lincoln Baker and other information in regards to the former Stratus Master in LA being fraudulently induced, non-registered FDD and additional paperwork needed to sell a Master License in LA to begin with!!!!!

“It was truly a bad day for DJ, Pete, Marvin, Bob (stinky) Stapleton and others…..

“Here’s to more bad day’s in the near future as Reasoned Source contacts more states, more attorney general’s, more Secretary of States in every State that Stratus Franchising illegally SOLD or had Agents Sell like Mark/Jason Bashroth illegally SOLD Masters!”

Read the Demand Letter below, or a PDF of the Stratus demand letter here:  Mark Bashforth Stratus Demand Letter.

munsch logo

 

Direct Dial 214.855.7519

Direct Fax 214.978 .5316 kganzberger@munsch  .com

 

September 20, 2013

 

Via Certified Mail. Return  Receipt  Requested Via Email: mark@stratusqreenclean.com

Mr. Mark Bashforth, Founder and President Camino Real Ventures,  LLC

2537 South Gessner Road, Suite 121 Houston, Texas 77063

 

Re:   NOTICE OF VIOLATION OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT RELATED To YOUR SALE OF A STRATUS BUILDING SOLUTIONs® MASTER FRANCHISE TO ECHO GREEN CLEANING, LLC AND TOM BAKER

 

Dear Mr. Bashforth:

The undersigned and the law firm of Munsch Hardt Kopf & Harr, P.C., represent Echo Green Cleaning, LLC and Tom Baker in their claims against you and your company, Camino Real Ventures, LLC, related to their purchase of a Stratus Building Solutions® master franchise from you. Please direct all fut ure correspondence to my attention.

 

The Fort Worth Territory

As you are aware, in early 2011, Mr. Baker and you began engag ing in discussions which led to his decision to purchase a Stratus Building Solutions® master franch ise business from you in August 201 1. The business is operated in and located in Irving, Dallas County, Texas.

On August 2 and 3, 2011, Mr. Baker travelled to Houston, Texas and met with you in person in furtherance of your discussions regarding the potential sale of a master franchise business. During this discussion,  you made various oral representations  to  Mr. Baker and you  provided Mr. Baker with  a spreadsheet  projecting  the  first  three  years  of  revenues  and  expenses  of  the  master  franch ised business1,   including the following:

 

First Year:

  • Total Gross Revenue: $805,300
  • Estimated Gross Profit: $127,975 (after loan payments : $107,245.44)

Second Year:

  • Total Gross Revenue: $2,584,200
    • Estimated Gross Profit: $390,542

 

1 A copy of the spreadsheet is enclosed with this letter.

 

Third Year:

  • Total Gross Revenue: $5,023,200
    • Estimated Gross Profit: $818,615

 

The representations included “Year 1 Assumptions” of :

 

  • $10,000/month in new account sales = 2 x salesperson
  • $25,000/month  in franchise  sales  based  on  selling  5  x  SBS  30  per  month  or  the equivalent in $10,000/month business owed
  • $4,000/month  in franchise  upgrades financed  at 75%  = $1,000/month  in  new franchise cash

 

The numbers provided in this spreadsheet were false and misleading. In reliance on the above-descr ibed and numerous unlawful and fraudule nt pre-sale  financial  performance representations, Mr. Baker made the decision to sign the 15-year master franchise agreement, buy the master franchise rights to the Fort Worth area, and to otherwise invest over $200,000 of his personal savings into the development and operation of a Stratus Building Solutions® master franchise in Fort Worth, Texas .  He was also induced into signing a $75,000 promissory note.

 

The Dallas Territory

In further reliance on the above-described fraudulent misrepresentations, on or  about September 19, 2011, Camino Real Ventures, LLC and Echo Green Cleaning, LLC entered into an Addendum to the Master Franchise Agreement, whereby Echo Green Cleaning, LLC  bought  the master franchise rights to Dallas, Delta, Ellis, Johnson, Henderson, Hill, Hood, Hunt, Kaufman, Parker, Rockwall,  and Van  Zandt  Counties,  Texas .   The  initial franchisee  fee for  the  Dallas Territory  was

$400,000, which was calculated by multiplying  $20,000 by 40 (e.g., territory population of 4 million divided by 100,000), for a total of $800,000.  The initial fee was then discounted by 50% to $400,000. However, this was a significant material change from the Franchise Disclosure Document and Master Franchise Agreement, which only called for a fee of $18,000, for an estimated overpayment of at least

$40,000. Further, Mr. Baker was induced into paying an additional $100,000 of his personal savings and signing $300,000 in promissory notes.

 

Federal Franchise Rule Violations

On or about July 8, 2011, Mr. Bashforth sent Mr. Baker a copy of the Camino Real Ventures, LLC Franchise Disclosure Document (“FDD”). The FDD provided to Mr. Baker was from 201O and was not an updated 2011 document. Further, upon information and belief, neither Camino  Real Ventures, LLC nor Stratus Franchising, LLC had filed a Business Opportunity Exemption Notice with the Secretary of State of Texas’ Office in accordance with the Texas Business Opportunity Act.

 

By disclosing Mr. Baker with an old FDD, failing to file an exemption notice and pay  the required fee, and having Mr. Baker sign the Franchise Agreement and pay you the initial franchise fee without providing him with the 2011 updated FDD, you knowingly and willingly violated the Federal Trade Commission’s Franchise Rule and the Texas Business Opportunity Act

 

In addition to the above-described violations, the FDD failed to disclose various key requirements of the Federal Trade Commission’s Franchise Rule, 16 C.F.R §436, (the “Federal Franchise Rule”) including, but not limited to:

 

  • You disclosed a 2010 FDD instead of an updated 2011 FDD.

 

  • Item 1: The Franchisor, and any Parents, Predecessors, and Affiliates
    • You improperly state that Stratus Franchising, LLC is a predecessor and affiliate of Camino Real Ventures, LLC, which is not true and is misleading.
    • You fail to disclose that Simpatico, Inc. is the owner of Stratus Franchising, LLC.
    • You incorrectly state that Camino Real Ventures,  LLC was formed in October of 2006, and that Camino  Real Ventures,  LLC has been offering janitorial  service
    • You state in the first paragraph that in order “to  simplify the language in the [FDD]” the terms “us,”  “we,” “our,” “BSB,” “Stratus,” or “Stratus Building Solutions” means Camino Real Ventures, L.L.C. Yet, throughout the FDD, you use these same terms to include Stratus Franchising, LLC and/or Stratus Building Solutions, Inc. Your intentional misuse of these defined terms leads the reader to believe that Camino Real Ventures, LLC is the same entity as Stratus Franchising, LLC and/or Stratus Building Solutions, Inc., which is deceptive, confusing, and unlawful.

franchises since 2005.

  • You state that Camino Real Ventures, LLC owns and operates a Master Franchise business in St. Louis, Missouri, which is false.
  • You fail to provide the identity and principal address of Camino Real Ventures, LLC’s agent for service of process, as required by the federal Franchise Rule (§ 436.5(a)(4)).

o      You fail to disclose that Camino Real Ventures, LLC owns and operates businesses of the type being franchised (§ 436.5(a)(6)(i)), and your other business activities (§ 436.5(a)(6)(ii)), as required by the federal Franchise Rule.

o              Finally, you fail to disclose the prior business experience of Camino Real Ventures, LLC (which was none) or any of its affiliates, including the length of time you conducted the type of business that Mr. Baker would operate, the length of time you have offered franchises provided the type of business that Mr. Baker would operate, and whether you had offered franchises in other lines of businesses, as required by the federal Franchise Rule (§ 436.5(a)(7)).

 

  • Item 2: Business Experience

o    You falsely and/or misleadingly state that Mr. Jarrett co-founded Camino Real Ventures, LLC (i.e., the defined term “Stratus”).

o     You failed to disclose the names and positions of all of Camino Real Ventures, LLC’s directors, trustees, general partners, principal officers, and any other individuals who will have management responsibility relating to the sale or operation of the franchise offered, including Lincoln Baker, as required by the federal Franchise Rule (§ 436.S(b)).

o     You falsely state that Mr. Jarrett was President of Jan-Pro International, when his title was Vice President.

o    You fail to disclose Mr. Bashforth’s principal positions and employers during the past five years (2011-2007), including each position’s starting date, ending date, and location, as  required by the federal Franchise Rule (§ 436.5(b)). Specifically, you failed to disclose Mr. Bashforth’s positions with Stratus Building Solutions of Houston, Inc., Roxar, Inc., and Roxar Software Solutions .

 

  • Item 5: Initial Fees
    • You failed to disclose that the formula for calculating the Initial Fee included up to $20,000 (instead of $18,000) for each population of 100,000 people in the exclusive territory, which is the amount that was paid by Echo Green Cleaning, LLC for the Dallas territory in September 2011, as required by the federal Franchise Rule (§ 436 .5(e)).

 

  • Item 6: Other Fees
    • You failed to disclose the royalty fee and other payments due for a master franchise that is found in Section IV of the Franchise Agreement, as required by the federal Franchise Rule (§ 436.S(f)).

 

  • Item 7: Estimated Initial Investment
    • You fail to disclose whom payment is to be made for training expenses, as required by the Federal Franchise Rule (§ 436.5(g)(i )(B)). Further, in footnote 9, you falsely state that Camino Real Ventures, LLC (i.e., “Stratus”) is located in St. Louis, Missouri.

 

  • Item 11: Franchisor’s Assistance, Advertising,  Computer Systems, and Training
    • You incorrectly state that Camino Real Ventures, LLC’s headquarters is located in St. Louis, Missouri, and that Camino Real Ventures, LLC’s instructors would train Mr. Baker. Further, you falsely state that the instructors, Mr. Jarrett and Mr. Frese, are executives with Camino Real Ventures, LLC.

 

  • Item 13: Trademarks
    • You falsely state that Camino Real Ventures, LLC (i.e., “Stratus”) has a registration on the Principal Register for “Stratus Building Solutions .”

 

  • Item 19: Financial Performance Representations
    • You falsely state that you do not make any representations about a franchisee’s future financial performance or the past financia l performance of company­ owned or franchised outlets . Yet you were aware that you had provided Mr. Baker with multiple financial performance representations, as described in detail above .

 

  • Item 20: Outlets and Franchisee Information
    • You failed to disclose any outlet information for the calendar years 2010 and 2009.

 

  • Item 21: Financial Statements
    • You failed to provide audited financials and statements for Stratus Franchising, LLC for the fiscal year 2010,  as required by the federal  Franchise Rule (§436.5(u)).

o              You failed to provide an unaudited opening balance sheet for Camino Real Ventures, LLC, as required by the federal Franchise Rule (§ 436.5(u)).

 

Texas Business Opportunity Act  Violations

 

You are also subject to the rules and regulations of the Texas Business Opportunity Act.   See

Texas Business and Commerce Code §51.001, et seq. (‘TBOA”).

 

Under the TBOA, you were required to provide Mr. Baker with an updated 2011 written disclosure document at least 10 days before the earlier of (a) Mr. Baker signed the Franchise Agreement, or (b) you received any consideration. See TBOA, §51.151. Your acts were in violation of this disclosure rule.

 

Further, the TBOA provides specific requirements for disclosures that must be made, many of which the FDD did not contain.

 

The TBOA also prohibits you from:

 

1)     Employing a representation, device, scheme or artifice to deceive a purchaser;

 

2)      Making an untrue statement  of material fact or omitting to state a material fact in connection with the documents and information required to be provided to the secretary of state or purchaser;

 

3)      Representing that the business opportunity provides or will provide income or earning potential unless the seller has:

 

  1. Documented  data to  substantiate  the  representation  of  income or  earning potential; and

 

  1. Discloses the data to the purchaser when the representation is made; or

 

4)      Making a claim or representation that is inconsistent with the information required to be disclosed by the TBOA in:

 

  1. Advertising or other promotional material; or

 

  1. Any oral sales presentation, solicitation, or discussion between the seller and purchaser.

 

See TBOA, § 51.301-302.

 

Notice of Demand Pursuant to Texas Deceptive Trade Practices Act

 

The types of patterns and practices described in this letter violate the Texas Deceptive Trade Practices Act (the “DTPA”). Specifically, you have violated the following DTPA provisions:

  • Causing confusion or misunderstanding as to affiliation, connection, or association with, or certification by, another [TEX. Bus. & COMM . CODE § 17.46(b)(3)];

 

  • Representing that good or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities which they do not have [TEX. Bus. & COMM. CODE § 17.46(b)(5)];

 

  • Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, when they were of another [TEX. Bus. & COMM. CODE § 17.46(b)(7)];

 

  • Advertising  goods  or services with intent not to sell them as advertised [TEX. Bus. &

COMM. CODE § 17.46(b)(9)];

 

  • Representing that an agreement confers or involves rights, remedies, or obligations that it does not, or that are prohibited by law [TEX. Bus. & COMM. CODE § 17.46(b)(12)];

 

  • Failing to disclose information concerning good or services which was known at the time of the transaction if such failure to disclose such information was intended to induce the purchaser into a transact ion in which they would not have entered had the information been disclosed [TEX. Bus. & COMM. CODE § 17.46(b)(24)];

 

  • Violation of the Texas Business Opportunity Act [See TEX. Bus. & COMM. CODE §§ 17.46, 17.50(h), and 51.302].

 

The foregoing violations were committed knowingly and/or intentionally; and Mr. Baker justifiably relied on your representations, acts, and omissions to his damage and detriment.

 

Further, the representations, acts, and omissions made by you in your dealings with Mr. Baker constituted an “unconscionable action or course of action” as such term is defined in Section 17.45(5) of the Texas Business and Commerce Code. Mr. Baker asserts that each of you, as professionals in the commercia l janitorial industry, took advantage of Mr. Baker’s lack of knowledge and expertise in orchestrating this deception. As further example of your unconsciona ble actions  and  course  of actions, upon information and belief you are currently being sued by your business partner, Lincoln Baker, for similar actions related to his investment in Camino Real Ventures, LLC.

 

As a direct result of your wrongful acts and omissions, Mr. Baker and Echo Green Cleaning, LLC has been compelled to retain the services of this law firm to seek redress for the damages they have suffered.

 

Your violations of the DTPA entitle Mr. Baker and Echo Green Cleaning, LLC to the following in damages:

Economic damages: $11,043,262.44 2
Mental Anguish damages: $25,000.00
Reasonable and necessary attorneys’ fees: $10,000.00
Tota l $11,078,262 .44

 

Pursuant to Section 17.505 of the Texas Business and Commerce Code,  please be advised that the legal claim will include a request that additional relief be granted under the  provisions  of Section 17.50 of the Texas Business and Commerce Code. Because your misrepresentations and actions were committed knowingly and  intentionally, Mr. Baker and Echo Green Cleaning, LLC are entitled to receive mental anguish damages and an award of three times economic damages (treble damages) .

 

DEMAND IS HEREBY MADE UPON YOU TO IMMEDIATELY PAY THE TOTAL AMOUNT OF DAMAGES SUSTAINED, $11,078,262.44, TO MR. BAKER  AND  ECHO  GREEN  CLEANING, LLCYOU MAY FORWARD PAYMENT TO MY ATTENTION AT THIS LAW FIRM.

 

This letter constitutes notice pursuant to the DTPA that, unless we receive a certified check, cashier’s check, or money order for such full amount, $11,078,262.44, on or before Friday, November 19, 2013, this law firm has been instructed to assert claims in a lawsuit against each of you and against your company that you have violated the DTPA.

 

In connection with those claims, we are instructed to pursue direct  and  consequential damages in the amount of at least $11,078,262.44, penalties as provided by  the DTPA (treble damages), all attorney’ fees that are incurred through the conclusion of this dispute, pre-judgment and post-judgment interest, and court costs.

 

NO FURTHER DEMAND WILL BE MADE.

 

Be advised that necessary and reasonable attorneys’ fees will continue to accrue as we investigate and pursue this claim. Please pay this claim now or contact me regarding settlement in order to avoid further expense.

 

2 The Franchise Agreement has a term of fifteen (15) years with the right to automatically renew for up to two successive periods of 15-years.  Economic damages are calculated, conservatively with the first two years of net revenues represented plus 13 years multiplied by the represented net revenues for the third year. $107,245 .44 +

$390,542 + (13 * $818,615 = $10,641,995) = $11,043,262 .44.

Sincerely yours,

 

MUNSCH HARDT KOPF & HARR, P.C.

cc:  Client (via email)

 

Via Certified Mail, Return Receipt  Requested Via Email: d.jarrett@stratusclean.com      

Mr. Dennis Jarrett, CEO Stratus Franchising, LLC 1976 lnnerbelt Business Center Drive

St. Louis, Missouri 63114

 

ARE YOU FAMILIAR WITH THE STRATUS BUILDING SOLUTIONS FRANCHISE OPPORTUNITY OR MASTER FRANCHISEE MARK BASHFORTH?
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Tags: Mark Bashforth, Stratus Master Franchise, Echo Green Cleaning, Tom Baker, Stratus Building Solutions, Stratus franchise, janitorial franchise, franchise scam, franchise lawsuits, unhappy franchisee, MUNSCH HARDT KOPF & HARR, P.C.

7-ELEVEN Franchise: Franchisee Sues for Fraud, Labor Violations, Unfair Dealings

September 3, 2013

7-Eleven franchise owners are suing 7-Eleven, Inc. claiming that they were deceptively sold into a franchise scheme that turned them into unclassified, uncompensated employees rather than business owners, were promised training and support they never received, and were terminated after investing nearly half a million dollars.

(UnhappyFranchisee.Com)  August 29, 2013, attorney Jerry Marks, of Red Bank, NJ-based Marks & Klein, filed a lawsuit in the U.S. District Court, Southern District of New York (Foley Square) on behalf of plaintiffs Michael Governara and Stefanie Governara against defendant 7-Eleven, Inc., a wholly owned subsidiary of Seven-Eleven Japan Co., LTD., a wholly owned subsidiary of Seven and I Holdings Co. LTD. and defendant John Does 1-20 (fictitious persons).

The suit claims that 7-Eleven, Inc. is guilty of fraudulent inducement, breach of the implied covenant of good faith and fair dealing, and violation of New York State Labor Law for misclassifying 7-Eleven franchisees as independent contractors rather than employees.

In addition to seeking compensatory, consequential, punitive damages, and other costs for the first two counts, plaintiff Michael Governera also seeks:

a. An Order declaring and adjudging that Michael Governara and all New York franchisees similarly situated are de facto employees as defined under the New York Labor Statute and are afforded protections under the New York Labor Statute;

b. An Order pursuant to New York Business Corporations Law §630 that 7-Eleven’s 10 largest individual shareholders, once identified, are personally liable to Plaintiff and other New York franchisees similarly situated, for damages associated with the labor violations alleged herein;

c. Compensatory Damages;

d. Recoupment of overtime benefits for the three (3) years preceding the filing of the Complaint this matter;

e. Recoupment for all benefits previously withheld from Plaintiff for the three (3) years preceding the filing of the Complaint;

f. Punitive Damages, attorney’s fees and costs;

g. Any other relief this court deems equitable and just.

MICHAEL GOVERNARA, STEFANIE GOVERNARA vs. 7-ELEVEN, INC.

According to the Governera v. 7-Eleven, Inc. complaint :

1. The instant action involves the fraudulent inducement of Plaintiffs by Defendant 7-Eleven, Inc. (hereinafter “Defendant” or “7-Eleven”) and their agents through the making of material and patently false financial performance representations as to annual gross sales, which were designed to induce Plaintiffs’ substantial monetary investment in a New York, New York 7-Eleven location.

During the time period in which Plaintiff Michael Governara (“Michael” or “Michael Governara”) operated his franchise location, which consistently struggled and performed nowhere near the purported expectations of the franchisor, which were articulated to him numerous times before he signed his franchise agreement and began operating.

2. During this time period Michael was also not provided promised training and support, as his location floundered. Further, like all 7-Eleven “franchisees” Michael was, at all relevant times, an undisclosed employee, and was deprived of minimum wage, FICA and medical benefits and was not afforded benefits under New York law.

The complaint contends that Michael Governera left an $80,000 per year job based on the assurances by a 7-Eleven salesperson Martina Hagler that his location store “should do $2-3M annually but to be conservative use one million, seven hundred thousand dollar to one million, eight hundred thousand dollar ($1.7-1.8M) for purpose of the business plan and budget.”

7-Eleven Franchise: How to Lose Half a Million in 20 Months

7-Eleven logoBased on this representation, Governa wrote 7-Eleven, Inc. a check for $385,400.00 on August 11, 2011.

The 7-Eleven location subsequently had sales of only $1.1M, far less than the $2-3M in sales Martina Hagler allegedly had indicated.

According to the suit, “between January 2012 and December 2012, 7-Eleven representative Meghan Culligan cancelled more than twenty (20) scheduled meetings with Michael with respect to his store performance and the supplemental support from 7-Eleven was dismal…

“In or about August 2013, Michael’s franchise agreement was terminated by 7-Eleven, he was forced to close his location, and he has since lost his entire franchise investment.”

Not only had Michael Governera gone 20 months without a paycheck, investments by his mother Stefanie Governara ($200,000)  and Michael’s cousin, Phil D’Antoni ($140,000) were also lost.

Also read:

7-Eleven Franchise Complaints

7-ELEVEN: How the 7-Eleven Franchise Works

7-ELEVEN to Open up to 21,500 New U.S. Stores

7-ELEVEN Downplays Japanese Ownership

7-ELEVEN Franchise Lawsuits 2013

7-ELEVEN’s Japanese Parent Posts Record Profits… Again

7-ELEVEN Franchise Owner Claims Franchisees Are Being Bullied

7-ELEVEN: Is 7-Eleven a Good Franchise to Own?

7-ELEVEN Franchise Owners Complain, Allege Churning

7-ELEVEN Franchises Raided by DOJ, Homeland Security

7-ELEVEN Franchisee Tariq Khan: Villain or Victim?

7-ELEVEN: UnhappyFranchisee.Com Invites Views of 7-11 Franchisee Groups

WHAT DO YOU THINK OF THE 7-ELEVEN FRANCHISE OPPORTUNITY? SHARE A COMMENT BELOW.

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TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven lawsuit, 7-Eleven lawsuits, 7-11 franchise, 7-11 lawsuits, 7-11 complaints, 7-Eleven Michael Governa, Stefanie Governa, Governa v. 7-Eleven, 7-Eleven New York lawsuit, franchisees as employees, 7-Eleven litigation, 7-eleven franchise complaints, Marks & Klein law firm, attorney Jerry Marks, SEI, 7-Eleven Inc., Seven and i Holdings Co

LIBERTY TAX Franchise Warning Part 3

August 27, 2013

LIBERTY TAX Franchise Warning Part 2 is a continuation the guest post by a Liberty Tax franchisee, who posts on UnhappyFranchisee.Com as NCHillBilly.

NCHillBilly warns prospective about the downsides of the Liberty Tax franchise opportunity.

In LIBERTY TAX Franchise Warning Part 1, the franchisee warned of a

  • High royalty fee,
  • One-sided franchise agreement,
  • Lack of AD accountability,
  • Unfair dispute resolution,
  • Inadequate tech support
  • Ineffective marketing,
  • Mandatory free returns,
  • Lack of systemwide teamwork,
  • Non-standardized pricing,
  • Lease liability,
  • Higher expenses than expected.
  • Lower income than expected.

In LIBERTY TAX Franchise Warning Part 2, NCHillBilly’s allegations include:

  • With Liberty Tax, you don’t own a business
  • Liberty Tax uses gag orders & noncompete agreements
  • Liberty Tax gets paid before franchisees
  • Liberty’s financing is too good to be true.
  • Liberty Tax gives misleading sales numbers
  • Liberty Tax has a poor customer retention rate
  • The Liberty Tax system is constantly changing and ineffective.

What follows are more opinions of commenter NCHillBilly.  We have added the bolded subheads for readability.

Are you familiar with the Liberty Tax franchise?  Please leave a comment – positive or negative – below.

Part 3: A Warning from a Liberty Tax Franchise Owner

NCHillBilly writes:

Part III: Why I would not recommend Liberty Tax Service

Liberty Tax awards are bogus  When you first meet John Hewitt, you will be highly impressed with his implied knowledge, name recognition and so called celebrity status.

You will be impressed with all of the awards that he has won.

Accounting Today magazine has named Hewitt one of the accounting profession’s top 100 most influential people eleven times.

The International Franchise Association honored Hewitt as its Entrepreneur of the Year in February 2006.

When you investigate how these awards are won, you will discover it is through a voting processing, which John’s employees are instructed to vote for John until he wins the award.

John has no experience in accounting, nor does he hold a college degree.

John Hewitt uses franchisees, then discards them  Until you become a franchisee, John Hewitt appears to be your new best friend making you feel like you are a member of his family.

Once becoming a franchisee you will discover that you do not have direct access to John.

He sells you on idea of becoming a CEO, but there is no direct communication between CEO and CEO.

John Hewitt is a master in deception at every stage from being introduced to Liberty Franchise until becoming a Liberty Franchisee.

John takes full advantage of franchisees for his own personal gain, and once he is done with you he tosses you aside like a piece of garbage.

Tossing individuals aside why not ask about his son, Danny Hewitt that was tossed aside in 2012.

Danny was one of his hard chargers, promoting and marketing Liberty Tax 24 x 7.

Danny was once an area developer and individual store owner and all of this was taken away from Danny.

Liberty Tax sent out a mass email stating that Danny was leaving Liberty Tax to start his own advertising and marketing business.

If Liberty Tax was so great and offered monetary opportunities, what happened here?

Liberty Tax churns franchise territories  Reselling of territories, John Hewitt’s business plan is not about long term franchisee ownership, but a constant reselling of the same territory every three years, and each time the cost of territory continues to go up.

If it is an established territory, the likely prospect will be convinced to even pay more.

This not only applies to territories, but also to area developers.

He is not truly interest in your long term success at all.

This is Liberty’s major income source selling and reselling territories, not just royalties or marketing fees that are taken from franchisees.

Franchisees are responsible for Liberty Tax’s mistakes  Liberty’s 100% SATISFACTION GUARANTTEE, beware Liberty Tax as whole does not honor this guarantee; it is the franchisee responsibility.

It does not matter if it is a preparer error or even Liberty Tax software, the franchisee becomes totally responsible.

This guarantee not only includes the interest and penalties being imposed by the IRS or State, but it also means refunding the cost of the return and if it was a bank product that includes all of the bank related fees involved.

Once the franchisee honors Liberty’s 100% SATTISFACTION GUARANTEE, the franchisee will not receive any royalty or marketing credits for honoring Liberty’s guarantee.

Liberty’s in house tax preparation software, Liberty Tax does not accept any responsibility for software errors in determining incorrect refunds or balances owed.

The franchisee accepts all of the responsibility.

Often the franchisee is not aware of this mistake within the software, until 2 – 3 years later when the IRS or State does a computer audit of the return and catches the mistake.

Also read: LIBERTY TAX SERVICE Franchise Complaints (2600+ comments)

LIBERTY TAX Franchise Warning Part 1

LIBERTY TAX Franchise Warning Part 2

LIBERTY TAX JTH Holding, Inc. Receives NASDAQ Notice of Non-Compliance

LIBERTY TAX Leaked Email Exposes Sleazy Sales Tactics

LIBERTY TAX: Are Liberty Tax Franchise Owners Living Their Dreams?

Are LIBERTY TAX SERVICE Franchise Owners Happy?

ARE YOU FAMILIAR WITH THE LIBERTY TAX FRANCHISE OR JTH HOLDING INC.? SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

Tags: Franchise churning, John Hewitt, JTH Holding Inc., Liberty Tax, liberty tax complaints, Liberty Tax Franchise, Liberty Tax franchise complaints, Liberty Tax franchise costs, Liberty Tax franchise warning, Liberty Tax sucks, Nasdaq: TAX

LIBERTY TAX Franchise Warning Part 2

August 26, 2013

LIBERTY TAX Franchise Warning Part 2 is a continuation the guest post by a Liberty Tax franchisee, who posts on UnhappyFranchisee.Com as NCHillBilly.

NCHillBilly warns prospective about the downsides of the Liberty Tax franchise opportunity.

Also see LIBERTY TAX Franchise Warning Part 1.

Liberty Tax founder John Hewitt has stated “It is our goal to continue to offer an affordable chance at the American dream of business ownership to all enterprising persons who are ready to embrace our proven Liberty operating system, and be aggressive competitors in this industry.”

However, Liberty Tax franchise owners tell us a much different story – stating that the Liberty Tax franchise provides more burdens and impediments to success than benefits.

In a series of comments left on our LIBERTY TAX SERVICE Franchise Complaints post,  NCHillBilly warned of a misrepresentation of Liberty Tax as business ownership, use of misleading sales numbers used to sell territories, gag orders and non-compete agreements, poor sales and retention rates, and a system that is ineffective and ever-changing.

What follows are the opinions of commenter NC Hill Billy.  We have added the bolded subheads for readability.

Are you familiar with the Liberty Tax franchise?  Please leave a comment – positive or negative – below.

A Warning from a Liberty Tax Franchise Owner

NCHillBilly writes:

Part II: Why I would not recommend Liberty Tax Service:

Liberty convinces you that you are purchasing a business. That is far from the truth, let’s look at what you are being told that you purchased.

Liberty TaxWith Liberty Tax, you don’t own a business

You do not own the customers, if you decide to leave before your contract is up, Liberty wants your processing equipment and any customer lists that you have.

They provide no deed or document that says you physically own a territory. If you sell your business to someone outside of the Liberty system, Liberty will come after you, like a big dog.

You are basically leasing a system for a fixed period of time. You are purchasing a very expensive lease.

Liberty Tax Gag Orders & Noncompete Agreements

Not only are you banned from talking about Liberty Tax Service for a minimum of 2 years when you leave. You are prohibited from filing taxes within 25 miles of the territory you once owned. Don’t expect the right to work laws to protect you, because they will not. If you are caught doing taxes, be ready to pay some steep fines and be prepared to go and visit the federal judges in Norfolk, VA. This also means that you cannot own or operate a business doing taxes within 25 miles.

Liberty Tax gets paid before you do

Liberty’s financing sounds too good to be true. Read the fine print, Liberty has a very aggressive fee intercept program. What this means that they intercept you bank product fees first. This means that when you do a bank product for a client, “Refund Anticipation Loan/Instant Cash Advance” or “Expected Refund Check” your fee will be intercepted and applied to your debt. The big issue with this concept, a large percentage of your income in first 6 weeks of tax season is from bank products, so instead of receiving any income from the work you are doing to help continue operations and increase your marketing efforts. Instead Liberty intercepts your fees and extremely limits you’re the remainder of your tax season. Liberty gets paid first.

Liberty Tax gives misleading sales numbers

Your will be mislead on what are the number of returns your competitors are doing within the area that you are considering purchasing.

The reason Liberty uses these numbers is it helps sells territories.

John will stand in front of you and will tell you that 40% of tax customers are always on the move, looking for a new tax preparer. I guess John needs to explain where these 40% clients were this past tax season, as Liberty only grew by 15000 clients in the brick and mortar stores. This averaged out to 3.75 new clients per office.

Liberty Tax has a poor customer retention rate

Retention is a key factor in growing any type of service business. Just ask a financial, insurance, real estate agents and many more service industries. Liberty offices have a very poor retention rate. If 40% tax clients are on the move that means the industry retention rate is around 60%. There may be a couple of offices that have a good retention, but the majority of Liberty offices have retention rates in the 40’s.

The Liberty Tax system is constantly changing and ineffective.

When you do not meet your inflated projected budget, it is quickly determined that you are not following the system. Liberty does not have a defined system. It is constantly in flux, depending on what hot item is working at the moment. John has conference calls, but he says very little. It is usually some Zee that has been selected and they will tell you what they are doing and suddenly it is the new system. That is Liberty’ advantage of owning a living document, their system was originally designed on low income, cheap rent areas, but most or all of these territories are gone.

The Liberty system is not designed for middle income America.

Also read: LIBERTY TAX SERVICE Franchise Complaints (2600+ comments)

LIBERTY TAX Franchise Warning Part 1

LIBERTY TAX JTH Holding, Inc. Receives NASDAQ Notice of Non-Compliance

LIBERTY TAX Leaked Email Exposes Sleazy Sales Tactics

LIBERTY TAX Service Fiscal 2013 First Quarter Results

LIBERTY TAX IPO: Fiscal 2012 Full Year Results, OTC Trading

LIBERTY TAX: Are Liberty Tax Franchise Owners Living Their Dreams?

Are LIBERTY TAX SERVICE Franchise Owners Happy?

ARE YOU FAMILIAR WITH THE LIBERTY TAX FRANCHISE OR JTH HOLDING INC.? SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

Tags: John Hewitt, JTH Holding Inc., Liberty Tax, liberty tax complaints, Liberty Tax Franchise, Liberty Tax franchise complaints, Liberty Tax franchise costs, Liberty Tax franchise warning, Liberty Tax sucks, Nasdaq: TAX

LIBERTY TAX Franchise Warning Part 1

August 26, 2013

A Liberty Tax franchisee, who posts on UnhappyFranchisee.Com as NC Hill Billy, warns prospective about the downsides of the Liberty Tax franchise opportunity.

The Liberty Tax franchise website claims “Liberty Tax provides you with a proven marketing plan, operating guidelines and training. All of our years of experience have laid the foundation, but we don’t stop there.

“Liberty Tax has already gone through the learning curves and created the secrets of success for the tax preparation industry.

“That ultimately helps you to minimize risk and gives you the best possible chance to succeed.”

However, Liberty Tax franchise owners tell us a much different story – telling us that the Liberty Tax franchise provides more burdens and impediments to success than benefits.

In a series of comments left on our LIBERTY TAX SERVICE Franchise Complaints post,  NC Hill Billy warns of a high franchise failure rate, high royalty fee, ineffective marketing, high expenses, low income, being forced to to tax returns for free, an unfair, one-sided franchise agreement, and more.

What follows are the opinions of commenter NC Hill Billy.  We have added the bolded subheads for readability.

Are you familiar with the Liberty Tax franchise?  Please leave a comment – positive or negative – below.

A Warning from a Liberty Tax Franchise Owner

NC Hill Billy writes:

I would not recommend the Liberty Franchise to anyone.

Lets address some facts.

High royalty fee: 5 years, royalty fees 14% marketing fees 5%. Right off the very beginning you pay 19% of your revenue to Liberty JTH Holdings. Before I forget, there is a minimum royalty fee beginning at $8000.00 1st year and the amount increases to $11500.00 beginning the 2nd year.

One-sided franchise Agreement: is a living document for the franchisor not the franchisee. When you originally sign this agreement, you have no input at all, it is very one sided. This means that JTH Holdings can change this agreement at anytime without you having to sign a thing and you still have to be responsible for the changes in this living agreement. Liberty constantly changes this not to protect you but to protect Liberty themselves.

liberty tax logoLack of AD accountability:  In the franchise agreement the area developer is not responsible for anything they do. So if you are provided some bad advice by the area developer. Too bad they are not responsible for anything they do. Most AD’s do not care about your success at all.

In the franchise agreement you sign away your rights to mention or speak about Liberty Tax Service for a minimum 2 years after your contract ends. If you are terminated then it is for life. Pretty hard to explain to your future employer what your have been doing for the past 5 years, almost like being in jail.

Unfair dispute resolution:  In the franchise agreement you agree that any legal case will go through the federal court system in Norfolk Virginia. This puts you at a great disadvantage, especially when you live outside of Virginia. You will have a difficult time finding an attorney that can represent you in Norfolk or is familiar with the federal judges.

Tech Support: Liberty promises you the sun, wait until you have to request tech support, and you quickly discover how poor the support is.

Ineffective Marketing:  Liberty Tax maybe a franchise, but it does not automatically draw in clients..   You pay 5% advertising fee, very little of that money is spent into your territory. Instead Liberty wants you to spend your money and time advertising. Depending on where your territory is you will quickly learn that Liberty’s marketing techniques do not work. There marketing techniques are aimed for low income areas and bank product type clients (not ones that have their refunds directly deposited into their own bank accounts), instead clients that are talked into getting bank loans at extremely high interest rates, bank fees, transmitter fees and much higher preparation fees. Liberty’s practice is to prey on the low income clients, similar to vultures on dead carcasses.

Mandatory free returns:  Franchise agreement requires you to do 200 free returns. If you fail to do 200 free returns then Liberty threatens you with failing to follow the system. They will also keep any bank product refunds that you may be eligible for and reverse royalties.

Lack of Teamwork:  Liberty does not promote teamwork amongst franchisees. Instead you use one franchisee against the other. Each Liberty office is totally independent, you will quickly learn that other Liberty offices do not work or market together.

Pricing not standardized:  Return pricing there is no standard pricing between offices. Instead you may have a Liberty office offering deep discounts and you are expected to offer the same. Deep discounts do not work, instead of helping you to grow they actually destroy your business. Just carefully watch the “Closing the Sale video” or attend the Fanatical University and you will learn differently.

Lease liability:  After signing your 5 year contract, Liberty will encourage you to sign a 5 year plus lease on a space. Even if you terminate your agreement with Liberty early this does not necessarily mean that you can terminate your contract with your landlord. Which now leaves you on the hook to continue to pay the rent until your contract has expired or until the landlord finds a new tenant.

Higher expenses/Lower income than expected:  If the reasons I have listed or all of the previous posts do not convince you to stay away from Liberty. Then sign on, however you will most likely will loose your life savings, retirement plans, cash value in your life insurance policy and maybe your own home. The failure rate is extremely high or the expected income is far less and the expenses are far higher than expected.

Also read: LIBERTY TAX SERVICE Franchise Complaints (2600+ comments)

LIBERTY TAX JTH Holding, Inc. Receives NASDAQ Notice of Non-Compliance

LIBERTY TAX Leaked Email Exposes Sleazy Sales Tactics

LIBERTY TAX Service Fiscal 2013 First Quarter Results

LIBERTY TAX IPO: Fiscal 2012 Full Year Results, OTC Trading

LIBERTY TAX: Are Liberty Tax Franchise Owners Living Their Dreams?

Are LIBERTY TAX SERVICE Franchise Owners Happy?

ARE YOU FAMILIAR WITH THE LIBERTY TAX FRANCHISE OR JTH HOLDING INC.? SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: Liberty Tax, Liberty Tax franchise, Liberty Tax franchise warning, Liberty Tax complaints, Liberty Tax franchise complaints, Liberty Tax sucks, John Hewitt, JTH Holding, Inc., Nasdaq: TAX, Liberty Tax franchise costs,

BUDGET BLINDS Franchise Horror Story: Franchisee Lost $85,000+

August 26, 2013

Budget Blinds franchise horror story:  A former Budget Blinds franchisee tells how he invested $65,000 initially and poured tens of thousands more to try to keep his business afloat.

His business plummeted when a local news station did a series of scathing exposes on another Budget Blinds franchisee in the same market.

The franchisee alleges that not only did the Budget Blinds franchisor fail to assist him with his PR nightmare, they threatened termination if he did not catch up with his overdue royalties by a particular Friday.

When the funds for his payment didn’t clear until the following Monday, the franchisor allegedly kept the payment but terminated him anyway.

The former franchisee believes that Budget Blinds was eager to terminate him so they could collect new fees when they resold his territory (an unethical practice known as franchise churning).

According to the Franchisee:  “The bottom line after all of this is Budget Blinds will not support their franchisees when they run into difficulty even when it is not the franchisee’s fault. Their support is nonexistent and they are only interested in selling franchises, not supporting them to ensure their success…

“If you are considering buying a Budget Blinds franchise, my advice is to run away as fast as you can.”

What do you think?  Are you familiar with the Budget Blinds franchise?  Please share a comment – positive or negative – below.

Budget Blinds Franchise Horror Story

Here is the Budget Blinds franchise horror story:

I am a former Budget Blinds franchisee.

I purchased my franchise in November, 2003 and was terminated in May, 2006.

I lost the $65,000 investment in my franchise and tens of thousands of additional money I invested in the business just to keep it going.

In early 2005 a franchisee in the same city ran into financial problems and was not able to fulfill customer orders. However, he continued to accept deposits on new orders of up to 75% of the total sale and would use that money to fulfill orders for customers who ordered blinds several months earlier. He ended up on a COD basis from almost all his suppliers because he was not paying them on time. This situation went on for months and got worse.

Budget Blinds franchiseFinally, a large number of irate customers, probably 40 or 50, contacted the local television stations and they began running stories every week on their prime time newscasts. At that time, my phone literally stopped ringing, except for the other franchisee’s customers calling me demanding that I fulfill their orders. In the meantime the other franchisee filed for bankruptcy protection and as a result, Budget Blinds was not able to terminate his contract.

I asked Budget Blinds corporate for help and all they would do is waive my royalty fees for a three month period. The value of that was a few thousand dollars, a drop in the bucket considering the financial losses I was now dealing with. The TV stations called the Budget Blinds corporate office and they would not even respond to their inquiries. They also refused to assist in fulfilling customer orders, saying that they were not responsible for the actions of franchisees. In the meantime, my business suffered huge losses and even after the bad publicity was over (about a year later), the damage was done and I was unable to recover financially.

I asked the corporate office of Budget Blinds for assistance, asking for a representative to come to my city and help me rebuild, but the answer was no. I reached the point where I was several months behind in royalty payments and was given a deadline of Friday to get caught up on royalties or else I would be terminated. I made arrangements to borrow money from a relative in another state, so I sent a $10,000 check to pay the royalties by the deadline of Friday. However, I did not receive the funds in my bank account until the following Monday. Budget Blinds corporate called my bank on Friday to see if the funds were available, and of course they were not, so they terminated me.

On Monday, however they deposited my check and it was paid, but they still refused to cancel the termination. While all this was going on, another new franchisee purchased the territory that the other franchisee owned after he was terminated. I had a verbal agreement to sell one of my territories to the new franchisee the same week that I was terminated and the corporate office was aware of this. I can’t prove it, but I believe that Budget Blinds corporate told the new franchisee not to buy my territory because they were about to terminate me. This way, Budget Blinds could sell the territory themselves.

The bottom line after all of this is Budget Blinds will not support their franchisees when they run into difficulty even when it is not the franchisee’s fault. In my opinion, their support is nonexistent and they are only interested in selling franchises, not supporting them to ensure their success. Everything that has been written on this post previously is true. Budget Blinds’ failure rate according to the SBA is 37%, but if you consider the failed franchises that did not borrow on a SBA loan (like me) the failure rate is much higher.

If you are considering buying a Budget Blinds franchise, my advice is to run away as fast as you can.

Also read:

BUDGET BLINDS Franchise Complaints

ARE YOU FAMILIAR WITH THE BUDGET BLINDS FRANCHISE OPPORTUNITY?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: Budget Blinds, Budget Blinds Franchise, Budget Blinds franchise complaints, Budget Blinds franchise horror story, blind cleaning franchise, Budget Blinds complaints

CHEM-DRY Franchise Warning

August 24, 2013

CHEM-DRY franchise warnings submitted by a self-described 15-year Chem-Dry franchise owner include oversaturated franchise areas, price wars between franchisees, franchisee failures, an indifferent, greedy private-equity franchisor, and little-to-no franchise resale value.

Are you familiar with the Chem-Dry franchise?  Please leave a comment – positive or negative – below, or on the Chem-Dry complaint post:  CHEM-DRY Franchise Complaints.

According to the Chem-Dry franchise website, Chem-Dry gives would-be owners tremendous advantages over independently owned carpet cleaning businesses:

“Chem-Dry is the largest carpet cleaning business in North America, with more than 2,000 franchise units in the United States and Canada.

“Our franchisees clean 7-8% of all carpet in the United States, which is twice as much as our nearest competitor.

“Even though ChemDry is large, there is a lot of room to grow. Carpet cleaning is a highly fragmented industry, with about 75% of the industry made up of independent carpet cleaners that pop up thanks to relatively low startup costs, then disappear due to a lack of skills, business experience or marketing savvy.

“ChemDry provides franchisees more than the tools they need to succeed — we also provide training and ongoing support to help you win customers, understand and master your business finances, market yourself effectively and boost profits.”

Chem-Dry Franchise owner: “Just say NO!”

An UnhappyFranchisee.Com commenter warns that their Chem-Dry franchise experience was like “bad job from Hitler,” and that they have done much better as independent carpet cleaners than they did as franchisees.

Yianni wrote:

My brother and I spent a combined 30 years of our lives doing everything they told us to do, running up costs while they kept making more and more demands out of us. The whole time they just built their profitability into the constantly changing franchise agreements.

Chem-Dry franchiseIt was like renting a bad job from Hitler with no benefits.

They over saturated franchise areas, created price wars among franchisees, were responsible for franchisee failures, and even competed against franchisees by selling repossessed franchises on the cheap to keep their revenue stream from being interrupted, making it very difficult for a franchisee to resale their franchise for a decent price.

Return on investment = an F grade.

The owner sold us out on two occasions to privately held venture capitalists while keeping a good share for himself. They are basically unregulated so they just kept the ripoff going.

…The original founder and his dad are part of the Mormon church (the dad being a Bishop)… The founders showed little empathy for the franchisee and seemed to focus only on the money, why would this situation be any different. Profiting from others is what venture capitalists do.

We have been out of it for nearly 10 years now since I’ve gone independent. I cut my costs dramatically, have received Angie’s List Super Service Award 7 Times and from this large metropolitan area which at one time had 50 Chem Dry Franchises, and this year is the first year a Chem Dry has made the list.

Save your money, your health, your back, your dignity, your family’s future and just say no to Chem Dry!

They do not care about you!

I knew a gentleman who had his franchise for about 10 years, when he was diagnosed with a heart condition, he tried to sell it. He could not sell it so he just gave it back to them and walked away. He went on a heart transplant list and shortly thereafter died while waiting for a transplant. He was not able to leave anything to his family as a result of the 10 years he invested, the blood, the sweat, and the hope he had put into the position of being an owner of a chem dry franchise.

It is Bad, they are immoral, and most of you will Lose more than I can say.

Also read:

CHEM-DRY Franchise Complaints

ARE YOU FAMILIAR WITH THE CHEM-DRY FRANCHISE OPPORTUNITY OR PARENT BAIRD CAPITAL?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: Chem-Dry, Chem-Dry franchise, Chem-Dry franchise complaints, Chem-Dry franchise failures, Chem-Dry franchise warning, Harris Research, Baird Capital, carpet cleaning franchise, low-cost franchise

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