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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

 

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STRATUS BUILDING SOLUTIONS Racketeering (RICO) Complaint Document

December 23, 2012

(UnhappyFranchisee.Com)  Stratus Building Solutions unit franchise owners have filed suit against the embattled franchisor, its Master franchisees and executives alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).

See the press release here:  STRATUS BUILDING SOLUTIONS Sued by Franchisees for RICO Violations

Read the RICO petition here:  RICO complaint against Stratus Building Solutions (PDF)Petition

See all our related posts here:  Stratus Building Solutions

See the list of Defendants and an excerpt from the complaint below.

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MISSOURI

EASTERN DIVISION

JOSE TORRES, GUADALUPE CLEMENTE, LUZ WALKER, CHRISTINA BEITER, and ANTONIO  CARMONA,

Individually and on behalf of all others similarly situated others

Plaintiffs,

VS.

Defendants:

SIMPATICO, INC,STRATUS FRANCHISING, LLC

PETER FRESE, JR.

DENNIS JARRETT

CARMEN GARCIA

DAVID FARRELL

MARISA LATHER

ALEN SULJANOVIC

BOB STAPLETON

PHSCCH SBS, LLC

CHANNEN SMITH

LUPITA GALLEGO

ED NUNEZ

JASON DOWLING

GONZALO MORENO

PETAR VAVAN

MARK BASHFORTH

JAYSON BASHFORTH

AFSHIN CANGARLU

STEVAN R. BUTCHER

JIM PARELL

SAM VALDEZ

MARVIN ASHTON

CHRISTIAN SMITH

TABITHA GOODWIN

EVERT DURAN

JAMES VAN DYKE

JOSHUA FLETCHER

DEBORAH ELGAS

MERT SMITH

JITENDRA KAPUR

J. BECK,

ERIC BROTZ

JEFFREY B. AIBEL

DAVE BOUTWELL

KAREN AIBEL

SCOTT BROWN

ANNIE GONZALEZ

LLOYD STOREY

AARON KAHALOA

MALLY PORCH

ANGEL PASCUAL

LEONARD FAZIO

MICHAEL FAZIOAMY LUNDSTRUM

DEVANG KOTHARI

BILL BLAIR

KEVIN SPELLACY

ROBERT PERRY

KNUTSON/GOLDSMITH ENTERPRISES, LLC

GATOR GREENWILL

PAUL L. KNUTSON

LUIS MORALES

DENISE GUTIERREZ

PAMELLA MARTINS

JEREMY WHETSTINE

TAYLOR STINNETTE

JOSUE RANGEL

STEPHANIE MCDANIEL

SHAUN STECKLER

RINEA BLANCHARD

MIKE NAPOLITANO

ANTHONY NAPOLITANO

JOHN MCDONALD

LORENA ARISTIZABAL

TODD KNIGHT

JASON POTTS

BILL HOLDEN

TONY SMITS

MARIAM HERNANDEZ

BRANDON SMITS

CRAIG BALLARD

CHELLEY BAACK

JIM MORRISON

SHAWN VICK

ARISS ROGEL

D’ANDRE SALTER

SUNSHINE INVESTMENT GROUP, INC.

JEROME WILIAMS

DON GARTNER

ROB SALAZAR

DENNIS SNYDER

RICHARD M. BARAN

KEN CASSERI

CRAIG DONOVAN

MARK LINDAMANVINCE DUNSTON

ZEV BERGLAS

JOEL CRADDOCK

STEPHEN REED

GEORGE SHOAT

ADAM CASSERI

DEWAN BACHAI

MARRS, LLC

MARK STOCKER,

TERRY BEHRLE

TOM GRASSI

TIM TILTON

JON WHITE

JAY ZYTNICK,

KIMBERLY ZYTNICK

TOM WEISS

JOHN COLEMAN

BONNIE COLEMAN

RISA ANGELO

WILLIAM KING

KEVIN GASS

RALPH SIZEMORE

ANGELA CARMAN

DANNY GILLESPIE

DAVID SMITH

ED LEASE

GREG FISHMAN

TOM BAKER

DAWN CAUDILL

STEPHEN SHERIFF

TJM ASSOCIATES, INC

JACQUELYN MOSLEY

THOMAS MOSLEY

ELEAZAR QUINTANA

WILLIAM RAGSDALE

LORI SEALY

SYDDAR, Inc.

SHAUNA SHARPSTEEN

LUCERO FLORES

EMILY THOMAS

SHEA SEALY

CORDELL DEAN

Here is an excerpt/overview of the lawsuit against Stratus Building Solutions, its Master Franchisees and employees:

This is a class action brought by unit franchisees of the Stratus Building Solutions franchise system (“SBS”) arising from the illegal business scheme of SBS and its web of affiliated entities and individuals who control and operate the SBS franchise system (collectively, all the “Defendants”). Through this scheme, Defendants fraudulently induced Plaintiffs and the Class to purchase a cleaning franchise and thereafter exploited their control and economic power in order to extract exorbitant and unjustifiable payments and expenditures from their franchisees. As a result, Defendants reap grossly inflated sales and profits, creating an illusion of corporate growth and business prosperity while causing substantial, permanent, irreparable financial harm to the franchisees.
SBS’s illegal scheme consists of two primary components. First, SBS engages in a policy of fraudulently and deceptively inducing franchisees to purchase SBS franchises by intentionally misrepresenting the true nature of the contractual relationship as well as the financial prospects for the franchisee and their likelihood of success.

Second, SBS further takes advantage of its franchisees through other illegal, deceptive and fraudulent means, including but not limited to its willful practice of: (a) saturating geographic areas with more franchise than the area could reasonably support, (b) through grossly underpricing the service work to be provided by the franchisees, (c) through the deceptively churning the service accounts between the franchisees, and (d) charging illegal, undisclosed, inflated fees/charges to the franchisees in order to reduce the franchisees‟ income.

The fraudulent intent underlying SBS’s scheme of deceptively luring franchisees to participate in its system and therefore extracting payments, franchise fees, and cleaning contract income is demonstrated by its pattern of behavior when the inevitable franchise failures come to pass. In this manner, SBS suffers no loss. SBS executes the same scheme against the new franchisees to continue the illegal scheme of increasing revenues of the backs of those with no control.

Plaintiffs bring this action alleging violations of: (a) the Racketeer Influenced and Corrupt Organization (“RICO”) Act, 18 U.S.C. § 1962(c). Plaintiffs seek damages to remedy Defendants‟ unconscionable, fraudulent, and unlawful practices in connection with the operation of its franchise scheme.

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STRATUS BUILDING SOLUTIONS Sued by Franchisees for RICO Violations

December 22, 2012

STRATUS BUILDING SOLUTIONS Sued by Franchisees for RICO Violations.

(UnhappyFranchisee.com)  St. Louis-based attorney Jonathan Fortman continued his relentless fight for the unit franchisees victimized by Stratus Building Solutions today by filing suit against the janitorial franchisor for violations of the Racketeer Influenced and Corrupt Organizations Act (RICO).

Readers of UnhappyFranchisee.com are familiar with Fortman’s ongoing campaign against Stratus Building Solutions, a company that allegedly preys upon hardworking Hispanics and other ethnic minorities who are seeking to own a piece of the American Dream.  Both directly and through a tier of “Master Franchisees,” Stratus allegedly collects thousands of dollars from individuals, promising them predetermined “guaranteed” commercial cleaning jobs.  Franchisees allege they either never receive the promised work, they receive work that is underbid to the point that it is unprofitable, or, in some cases, are assigned work that is then taken from them due to phony or exaggerated “complaints” supposedly originating from customers.

These are all common unethical practices in the janitorial franchise industry, in which the principals of Stratus and many of the Masters have years of experience.

Here is the press release from The Law Office of Jonathan E. Fortman:

FOR IMMEDIATE RELEASE

STRATUS BUILDING SOLUTIONS SUED BY UNIT FRANCHISEES FOR RICO VIOLATIONS

 

The Law Office of Jonathan E. Fortman announced today that it has filed suit against Stratus Franchising, LLC, the franchisor of Stratus Building Solutions, and each of its Master Franchisees.

The suit seeks certification of a class consisting of every Unit Franchisee and seeks damages under the Racketeer Influenced and Corrupt Organizations Act (RICO). “Stratus Building Solutions is a franchise system built on fraud,” according to Jonathan E. Fortman, lead attorney for plaintiffs. “We have uncovered numerous instances of blatant fraud as set forth in our federal complaint. The franchisor defrauded the Master Franchisors who, in turn, perpetuated the fraud at the expense of those who invested their life savings into a system destined to fail,” Fortman stated.

“What I find particularly troublesome is the manner in which Stratus manipulated its ranking in the annual Franchise 500© list of Entrepreneur magazine. To many of our clients, that list legitimized this franchise system. However, we now know that the information used to rank this franchise was not based in any fact and was, in fact, fraudulent,” Fortman continued.

“The Master Franchisees had a chance to put a stop to the fraud and protect the franchisees. Instead, the masters chose to look out for their own best interests even after being made aware of this fraud. They have blatantly ignored the devastation experienced by their Unit Franchisees. They made their bed, now they have to lie in it. We look forward to presenting the overwhelming evidence in federal court and are confident that our clients will prevail,” Fortman concluded.

The Law Office of Jonathan E. Fortman, LLC, was established in St. Louis, Missouri, in 1995. It concentrates its practice in the representation of individuals harmed by fraudulent franchise systems. Jonathan E. Fortman is the lead attorney in the case of Handing v. Contours Express, LLC in which he obtained verdicts in excess of $1.3 million for 8 franchisees of the second-largest women’s only fitness chain and has over 60 additional claims pending.

# # #

If you would like more information about this topic, please call Jonathan Fortman at (314)522-2312 or email Jon at jef@fortmanlaw.com.

WE CAN HELP.

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STRATUS BUILDING SOLUTIONS Dropped From Entrepreneur’s Franchise 500

December 18, 2012

Stratus Building Solutions has been the darling of franchise hype-machine Entrepreneur magazine in recent years.

In the 2012 33rd Annual Franchise 500 list, Entrepreneur ranked the janitorial franchise #12 among ALL franchises.

(UnhappyFranchisee.Com)  Yes, Entrepreneur ranked (what some have called) a thinly veiled Ponzi scheme out of St. Louis right up there with McDonald’s, Hampton Hotels, Pizza Hut and Subway.

It ranked the little-known Stratus higher such household names as KFC, Dairy Queen, Hardee’s, and Papa John’s to name a few.

In fact, in 2012, Entrepreneur positioned Stratus Building Solutions as the only top franchise that most people could afford.

Less than a year later, Stratus Building Solutions no longer appears on Entrepreneur’s Franchise 500.

What happened?

Entrepreneur Has Unashamedly Promoted  the Stratus Franchise Scheme

Bad franchise companies like Stratus Building Solutions rely on seemingly legitimate publications like Entrepreneur to provide them with the phony credibility they need to sell lots of franchises.

Here’s the list of accolades Entrepreneur has heaped on Stratus Building Solutions since 2009 [source:  Entrepreneur.Com]:

Franchise Ranking History [Stratus Building Solutions]

Franchise 500®: #12 (2012), #20 (2011), #13 (2010), #38 (2009),

Fastest-Growing: #1 (2012), #1 (2011), #3 (2010), #4 (2009),

Low-Cost: #2 (2012), #5 (2011), #5 (2010), #7 (2009),

Top New: #1 (2010), #3 (2009),

Top Home-Based: #2 (2012), #6 (2011), #4 (2010), #6 (2009),

America’s Top Global: #11 (2012), #18 (2011), #11 (2010), #33 (2009),

In addition, Entrepreneur has published the unsubstantiated and highly unlikely claim that Stratus Building Solutions had 5,131 franchises in 2011.

In court documents, Stratus execs didn’t claim anywhere near that number.  Where did Entrepreneur get its inflated numbers?

UnhappyFranchisee.Com Protested Stratus’s Franchise 500 Ranking

Since May, 2012, UnhappyFranchisee.com has been urging Entrepreneur to stop promoting the Stratus Building Solutions franchise in their widely publicized rankings.

We sent them a detailed letter documenting the damage Entrepreneur was doing by promoting this troubled and troubling franchise:

STRATUS BUILDING SOLUTIONS: Should Entrepreneur De-List Stratus From the Franchise 500?

We sent them links to the myriad horror stories and lawsuits caused by Stratus Building Solutions:

STRATUS BUILDING SOLUTIONS Franchise Complaints

STRATUS BUILDING SOLUTIONS: Goldeneye Holdings v. Stratus Franchising Lawsuit May 30, 2012

STRATUS BUILDING SOLUTIONS: Franchisees v.Goldeneye Holdings Lawsuit May 29, 2012

STRATUS BUILDING SOLUTIONS: Open Letter From Unit Franchisees May 23, 2012

STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship? May 18, 2012

STRATUS Franchise Called “Pyramid Scheme” on FOX News May 10, 2012

STRATUS BUILDING SOLUTIONS Franchise is a Scam, Attorney Claims March 6, 2012

LA FRANQUICIA DE STRATUS es una Estafa, Acuerdoa Abogado March 6, 2012

STRATUS BUILDING SOLUTIONS Franchise Class Action Lawsuit Filed August 13, 2011

STRATUS BUILDING SOLUTIONS Franchise: Are Stratus Franchisees Successful? November 9, 2011

STRATUS BUILDING SOLUTIONS Franchise Lawsuits Ahead? February 1, 2012

STRATUS BUILDING SOLUTIONS: Markeeta Rivera’s Franchise Horror Story February 1, 2012

STRATUS BUILDING SOLUTIONS Franchise: Guadalupe Clemente’s Horror Story February 2, 2012

We tried to appeal to Editor-in-Chief Amy C. Cosper and President Ryan Shea by sharing comments like this one:

Zurab Kvantrishvili  Submitted on 2012/06/07 at 9:39 pm

Before I bought this franchise I researched information everywhere, and one of the reason we paid $17 000 for it was that Entrepreneur ranking. If Stratus didn’t had such a high ranking I would never trusted them with all my life savings. When I spoke to John Coleman (one of the master Franchisor in Philadelphia Stratus Building Solution) and asked him to return my money back or I would take him to the court, he laughed at my face and this is his exact words: ”Please, who’s going to believe you? we are ranked as number #1 cleaning franchise by entrepreneur nationwide. You will waste more money on the lawyer” . I really want to believe that Entrepreneur will take Stratus Building Solution out of their ranking. Please, don’t let them scam more hard working people!

None of that swayed Editor Amy Cosper or President Ryan Shea from continuing to promote this toxic franchise opportunity for another 7 months.

Amy Cosper responded:

We have looked into this and until Stratus Building Solutions is found guilty in a court of law, we will not be de-listing them. Also, please note disclaimers throughout the listing.

Thank you for your feedback.

Amy Cosper  VP/Editor in chief

Entrepreneur President Ryan Shea wrote:

We publish the franchise 500 Rankings every year in January so we will take the lawsuits against them into account when we calculate and create our 2013 Franchise 500 rankings.

So the collapsing Stratus Building Solutions got to enjoy another 7 months as Entrepreneur’s 12th highest ranked franchise, even as its Master Franchisees fled the system and shed the Stratus name like a snake sheds its skin.

Stratus Building Solutions is MIA From the 2013 Franchise 500. 

So did Entrepreneur finally do the responsible thing and remove Stratus Building Solutions from its Franchise 500 rankings?

Or was Stratus Building Solutions too exhausted from fighting lawsuits and waving goodbye to its Master Franchisees to submit the necessary paperwork?

We asked Entrepreneur President Ryan Shea, who replied:

We are not going to comment either way.
Ryan Shea , President, Entrepreneur Media, Inc.

Actually, we don’t blame Ryan for not answering.

If word ever got around that Entrepreneur was starting to penalize franchisors simply because their franchisees were failing, that lawsuits were flying, and their Master Franchisees were de-branding and walking away from their investments in disgust, Mr. Shea might risk offending a very lucrative and highly valued segment of Entrepreneur advertisers.

Without them, he might have to rename his big moneymaker the Entrepreneur Franchise 75.

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STRATUS Lawsuit Alleges Janitorial Franchise Fraud

July 29, 2012

Stratus Building Solutions franchisees in Indiana have filed a Class Action Complaint and Jury Demand against Stratus master franchisee Shamrock Building Services, Inc.,  Kevin Spellacy, Jerry Wenger, and Pamella Martins,and Stratus Building Solutions franchisor Stratus Franchising, L.L.C..

The case was filed June 8, 2012 in Marion Superior Court on behalf of the defendants by Paul B. Overhauser, attorney, and Kathrine Jack, of Counsel, of the law firm of Overhauser Law Offices:

Read the full complaint here:

Nidia Martinez, et. al. v. Shamrock Building Services, Inc., Stratus Franchising, L.L.C., Kevin Spellacy, Jerry Wenger, and Pamella Martins

Nidia Martinez, Maria Manriquez, Elsa De La Cruz, Eni Cruz Rodriquez, Victor Garcia, Laura Andolon, Ronny Funes, Theresa Escobedo, Lorenzo Rodriguez, Faustina Negrete, Yolanda Alvarez, Jose Leon, on behalf of themselves and others similarly situated,

Plaintiffs,

vs.

Shamrock Building Services, Inc., Stratus Franchising, L.L.C., Kevin Spellacy, Jerry Wenger, and Pamella Martins,

Defendants.

Indiana Franchisees Allege Stratus Master Franchise Scam

According to the franchise complaint:

“This case involves unscrupulous Defendants who ignore these laws, and instead oppress hundreds of American workers just to make themselves richer.

“Their unscrupulous strategy is to label their workers ‘franchisees,’ and have them sign a ‘franchise agreement.’

“Using the misguided and illegal strategy, they have evaded the consumer and worker protection laws that form the foundation of American society.  Instead, they pay their workers a fraction of the minimum wage, make illegal deductions from payments to their workers, and evade taxes owed to the Indiana and Federal governments.”

The complaint alleges that the franchise system used by Stratus Building Solutions and its master franchisee Kevin Spellacy is essentially a scam that promotes an oppressive and illegal scam that defrauds would-be business owners out of their life savings.  The lawsuit contends:

“Defendant Stratus is a janitorial services company that contracts with owners of commercial buildings to clean offices, schools and medical clinics.  Because janitorial work is often an unattractive occupation, Stratus needs to offer incentives to prospective workers.

“Unlike legitimate businesses, who would simply offer a higher wage to attract workers for an undesirable job, Stratus uses a different scheme.  It offers prospective workers a ‘guaranteed business’ and ‘guaranteed financing’ and the prospect of making thousands of dollars.

“To make matters worse, when hiring cleaning workers, Stratus makes them first pay a ‘franchise fee’ to purchase a ‘franchise.’  These ‘franchise fees’ often represent a worker’s entire life savings;  yet they get nothing in return, other than the right to be subjected to further exploitation by Defendant’s illegal scheme.”

Read more hereJanitorial / Commercial Cleaning Franchise Issues

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

July 8, 2012

Dear Lathrop and Gage: Lighten up & enjoy your lucre before you make yourself look any sillier.  Regards, Unhappy Franchisee

In the post, LATHROP AND GAGE: Lighten Up & Enjoy Your Lucre (Part 1), we stated how the silly it is that Lathrop and Gage (a law firm with 280 attorneys and $138M in yearly revenue) is claiming that their adversary Fortman Law (a law firm with 1 attorney and 1 paralegal) is unfairly tipping the scales of legal justice in favor of Fortman’s clients (lower-income individuals who paid for janitorial cleaning contracts they never received).

Lathrop and Gage has filed a Defendant Motion for Sanctions and a Defendants Motion for Protective Order (on behalf of their clients) against Fortman, their opposing counsel in the case of Markeeta Rivera, et al., Plaintiffs, vs. (alleged sleazedog scammers) Simpatico, Inc., Stratus Franchising, LLC, et al., Defendants.

Reason #2 Lathrop & Gage Should Lighten Up & Enjoy the Lucre: They Look Silly

White, upper-class attorneys of a mega-law firm who bill at $500 (or so) an hour claiming that their millionaire clients aren’t getting a fair shake in the American legal system?

That’s the stuff of Saturday Night Live parody.

In their motions, Lathrop & Gage seems to be claiming that they are being put at a legal disadvantage because Jonathan Fortman, many of whose clients in the suit are Hispanic, Bosnian or African-American janitorial workers, publicly expressed his opinion that Lathrop & Gage attorneys are using stall and delay tactics on behalf of their greedy, con-men clients.

In our opinion, Lathrop & Gage attorneys should just lighten up and enjoy their lucre, since nothing sounds sillier than overpaid white guys claiming they’re not getting a fair shake.

Reason #3 Lathrop & Gage Should Lighten Up & Enjoy the Lucre: They Look Sloppy & Inept

Lathrop and Gage attorneys expressed outrage that Fortman publicly described their advocacy as “ridiculous,” “lame,” “ill-advised,” and “all about the delay.”

Yet, in their motions for sanctions and a protective order, Lathrop and Gage attorneys seem dead-set on demonstrating that they are ridiculous, lame, ill-advised and all about the delay.

Example #1:  Counting to six.Lathrop and Gage Law Firm

In the Defendant Motion for Sanctions, Lathrop and Gage attorneys wrote:

5.  Although Plaintiffs’ counsel makes reference to six different subpoenas being served (Counsel represents subpoenas were served on Dennis Jarrett, Bob Stapleton, Marisa Lather, Farrell and Blair), Plaintiff’s counsel did not serve a single notice, either informal or formal, of these subpoenas being served.

I’m not a highly paid attorney, nor a mathematician, but I’m pretty sure that adds up to five, not six, different subpoenas (Jarret – 1, Stapleton – 2, Lather – 3, Farrell – 4, Blair – 5).  Or does Lathrop and Gage have their own creative math system?

Granted, such creative accounting could come in handy when creating client invoices.

Example #2:  Major factual error

Four Lathrop and Gage attorneys (Scott J. Dickenson, Mathew A. Jacober, John D. Ryan, Emily E. Kiser – referred to collectively as the “poodles” in the discussion at STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship?) are listed on the Defendant Motion for Sanctions.

The motion asserts that Jon Fortman publicly posting information and opinion on “his” blog, UnhappyFranchisee.com [emphasis ours]:

“8. …Mr. Fortman States in his blog…”

“12. What makes Mr. Fortman’s conduct more abhorring is his willingness to post his actions on his self-serving blog…”

With 280 attorneys and an army of paralegals and secretaries, could no one at Lathrop and Gage alert them to the fact that UnhappyFranchisee.com is NOT Jon Fortman’s blog?

Jon Fortman has no ownership nor editorial control over this website whatsoever.

The poodles, it seems, had an accident.

Example #3:  Lame attempt at turning the judge against Fortman

In the poodles’ Motion for Protective Order, the crack Lathrop and Gage legal team assert that the most egregious professional sin of Jon Fortman is that he voiced “his opinion of the Judge presiding over this litigation.”

Uh-oh!  What terrible, disparaging statement did Fortman make about the Judge?

Here’s Fortman’s shocking statement:  “…I have appeared before the judge assigned to this case many times.  She is not going to tolerate any tactics used for the sole purpose of delay…”

That’s it?  The statement that the poodle’s characterize as “most shocking” is, in fact, a compliment by Jonathan Fortman that she’s a no-nonsense judge who will not tolerate delay tactics and other nonsense?

Seriously, such frivolous poodlery and shoddy legal work almost make me feel sorry for Defendants Dennis Jarrett and Pete Frese.

If I were them, I would check the hours billed for the Motion for Sanctions and Motion for Protective Order very carefully.

I would also assign someone to check the math on every Lathrop and Gage invoice.

Judging from the Motion for Sanctions, this is a law firm that believes 1+1+1+1+1 = 6.

And Stratus Franchising, LLC and their gang should keep their legal costs under control so they’ll be able to pay out the inevitable settlements that will (hopefully) be due to the victims whose savings they took.

Read more here:  Janitorial / Commercial Cleaning Franchise Issues

ARE YOU FAMILIAR WITH LATHROP AND GAGE?  OR THE STRATUS BUILDING SOLUTIONS FRANCHISE?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

Disclaimer:  The assertions and personal characterizations in this post are personal opinions and should be interpreted as such.  They are opinions – Witty, bold & insightful opinions – not statements of fact. In fact, we could be wrong about everything ;)

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

July 8, 2012

Dear Lathrop and Gage:  lighten up and enjoy your lucre. Regards, Unhappy Franchisee

Lathrop & Gage, the powerhouse law firm, is tattling to mommy that Jonny Fortman said bad things about them on UnhappyFranchisee.com.

Lathrop and Gage has filed a Defendant Motion for Sanctions and a Defendants Motion for Protective Order (on behalf of their clients) against Fortman, their opposing counsel in the case of Markeeta Rivera, et al., Plaintiffs, vs. Simpatico, Inc., Stratus Franchising, LLC, et al., Defendants.

Lathrop & Gage is defending the alleged sleazedog scam artists (note that I said alleged, counselors) known as Stratus Franchising, LLC and Simpatico, Inc., headed by Dennis Jarrett and Pete Frese.

Attorney Jonathan Fortman is representing more than 100 alleged victims, many of whom turned over their life savings to the defendants and their master franchisees for “guaranteed” janitorial jobs, and received little to nothing in return.

Lathrop & Gage is being paid huge sums for their team of lawyers (Scott J. Dickenson, Mathew A. Jacober, John D. Ryan, Emily E. Kiser - referred to collectively as the “poodles”** on UnhappyFranchisee.com),  presumably from the life savings of many of the plaintiffs.

Attorney Jonathan Fortman is working on contingency, since what little savings his clients amassed was seemingly stolen from them in the Stratus Building Solutions franchise scam.

Lathrop & Gage has 281 attorneys and is the 150th largest firm in the United States*.

Jonathan Fortman has Jonathan Fortman… and a single paralegal (the formidable Kelly Spann).

Lathrop & Gage has gross revenues of $138,000,000, revenue per lawyer of $475,000, and profits per partner of $465,000*.

When Jonathan Fortman wins a big settlement, as he did on behalf of the defrauded franchisees of Contours Express, he uses his portion to finance representation of those who can’t afford representation, like the janitorial franchisees of Stratus Building Solutions.

Lathrop & Gage is Mr. Potter chiding George Bailey for “playing nursemaid to a lot of garlic-eaters.”

Attorney Jonathan Fortman is George Bailey, sticking up for clients others take advantage of, then discard.

Lathrop & Gage is like the redcoats, insisting on lining up in the open and firing from proper formation… using $1000 dollar bullets paid for by their clients.

Jon Fortman is like the minutemen, firing musket loads of grapeshot from behind trees, rocks and bushes.

Lathrop & Gage brags it was founded in 1873 “on the heartland principles of honor, service, trust and value.”

Jonathan Fortman personifies honor, service, trust and value in the present day.

Jonathan Fortman was described as being like a “junkyard dog”** on a conference call conducted by Lathrop and Gage attorneys.

Lathrop and Gage attorneys Scott J. Dickenson and Mathew A. Jacober were described as “poodles” by the Stratus insider on the same call**.

Now the poodles have their fluffy coats in a bunch because the junkyard dog has expressed opinions in a public, unpaid forum (ee-gad)… and that, yap the poodles, is unacceptable and just not FAIR!

Reason #1 Lathrop & Gage Should Lighten up & Enjoy the Lucre: Partner Profits

Lathrop and Gage should put aside its hurt feelings and remember the ultimate goal:  to get that profit-per-partner up to $500,000.

Without a bogeyman, kids’ nightlight manufacturers would be out of business.

In the movie Hook, remember how miserable Captain Hook was without Peter Pan to battle?

Predatorial franchisors have gotten snug and secure, hiding behind their well-constructed corporate entities, behind their clever structures where they can use individual master franchisees as scapegoats, and mountains of one-sided agreements that favor them.

But we all know the big, big partner profits are not in creating corporate entities and master franchise agreements.  The BIG, big partner profits come when enraged corporate con-men and thieves come running to a law firm like Lathrop and Gage, waving their checkbooks, because somebody has the audacity to publicly call them con-men and thieves.

Corporate con-men and thieves have invested in a system they believe will protect them from being outed as con-men and thieves.  When that protective veil of polite discourse and “professional conduct” is broken, money is no object – they will pay whatever it takes to defend their fictional honor.

So, Lathrop and Gage should not work so hard to silence the voices that enrage the con-men and thieves.

After all, it is that outrage and indignation that transforms con-men and thieves from really good clients into GREAT clients.

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

Read more here:  Janitorial / Commercial Cleaning Franchise Issues

ARE YOU FAMILIAR WITH LATHROP AND GAGE?  SCOTT DICKENSON AND MATHEW JACOBER?  STRATUS BUILDING SOLUTIONS?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

* Source:  The American Lawyer

** The actual nicknames “junkyard dog” and “poodles” were coined by UnhappyFranchisee commenter and Stratus insider Reasoned Source.

Disclaimer:  The assertions and personal characterizations in this post are personal opinions and should be interpreted as such.  They are opinions – Smart, well-reasoned and clever opinions – not statements of fact.

STRATUS BUILDING SOLUTIONS Amended Petition Adds Master Franchisees to Lawsuit

July 2, 2012

Attorney Jonathan Fortman, on behalf of Stratus Building Solutions unit franchisees, has filed an Amended Class Action Petition for Declaratory Judgement to the Circuit Court of St. Louis County, State of Missouri.

The amended petition claims that the Stratus franchisor and it master franchisees deceptively sold janitorial franchises to individuals nationwide, that the defendants knew that they could not deliver the janitorial contracts promised to the franchisees, and that they engaged in “churning” of accounts in order to callously cheat the plaintiffs out of their life savings.

The amended petition names the specific regional Stratus Master franchisees for the first time, and asks the court recognize the class and to declare (among other things) that Stratus Franchising, LLC and Simpatico, Inc. “may be jointly liable to Plaintiffs and members of the putative class for conspiring to utilize Master Franchisees to commit fraud against Plaintiffs and the putative class.”

Are you familiar with the Stratus Building Solutions? Please share a your perspective below.

Scroll down for the full list of Stratus Plaintiffs, an excerpt from the petition, and a link to the full legal document.

Case Number: 12SL-CC00339

MARKEETA RIVERA, And GUADALUPE CLEMENTE,

Both for themselves and as representatives

Of a class of similarly situated others.

Plaintiffs,

-vs-

SIMPATICO, INC, Division: 13

And

STRATUS FRANCHISING, LLC,

And

PHSCCH SBS, LLC, (Serve: Agent: Channen Smith 9531 E Nora Circle

Mesa, AZ 85207) )

And

Stratus Building Solutions of Arizona, Inc.,

Goldeneye Holdings, Inc.,  d/b/a Stratus of Orange County [CA],

Mark Bashforth d/b/a Stratus Building Solutions of San Diego[CA],

Jayson Bashforth d/b/a Stratus Building Solutions of San Diego[CA],

Afshin Cangarlu, d/b/a Stratus of Los Angeles [CA],

Stratus Building Solutions of Northern California, LLC, d/b/a Stratus of Sacramento [CA],

Jim Parell d/b/a Stratus of Ventura County [CA],

Colorado Cleaning Partners, Inc, d/b/a Stratus Building Solutions of Southern Colorado [CO],

Channen Smith, d/b/a Stratus of Denver [CO],

Jitendra Kapur, d/b/a Stratus of Stamford and Westchester [CT],

Raynal Enterprises, Inc., d/b/a Stratus of Miami [FL],

Stratus Building Solutions of Tampa St. Pete, LLC, [FL],

Paladin Building Services, LLC, d/b/a Stratus of Jacksonville, [FL] [Jeffrey B. Aibel],

Paladin Building Services, LLC d/b/a Stratus of Atlanta [GA] (Serve: Agent: Jeffrey Aibel )

Kukamaehu, Inc., d/b/a Stratus of Honolulu, [HI],

Iowa Building Solutions, LLC, d/b/a Stratus of Iowa (Serve: Agent: Leonard R. Fazio ),

DPK Investments, Inc., d/b/a Stratus of Chicago [IL] )(Serve: Agent: Devang Kothari ),

Shamrock Building Services, Inc., d/b/a Stratus of Indianapolis [IN] (Serve: Agent: Kevin G. Spellacy )

Stratus Building Solutions of Kansas, LLC (Serve: Agent: Peter Frese )

Shamrock Building Services, LLC, d/b/a Stratus of Louisville, [MO],

Stratus Building Solutions of Lafayette, LLC [LA](Serve: Agent: S.D. Steckler )

Stratus Building Solutions of Minnesota (Serve: Agent: Kevin Spellacy or Lorena Aristizabal),

TTK Investments, Inc., d/b/a Stratus of Concord, [NC] (Serve: Agent: Ernest Kraft ),

TTK Investments, Inc., d/b/a Stratus of the Triad [NC] (Serve: Agent: Ernest Kraft ),

TTK Investments, Inc., d/b/a Stratus of Charlotte [NC] (Serve: Agent: Ernest Kraft ),

Stratus Building Solutions of Omaha [NE],

Stratus Building Solutions of Nebraska (Serve: Agent: Channen Smith ),

Joy Community Development Corporation d/b/a Stratus Building Solutions of Central New Jersey, (Serve: c/o D’Andre Salter ),

Stratus Building Solutions of Long Island, Inc [NY] (Serve: Agent: Richard M. Baran ),

Impressive Cleaning Solutions, Inc., d/b/a Stratus of Buffalo [NY] (Serve: Agent: Kenneth A. Casseri),

MARRS, LLC d/b/a Stratus Building Solutions of Cincinnati [OH] (Serve: Agent: Mark Stocker )

Stratus Building Solutions of Oregon, Inc., (Serve: Agent: Jon A. White ),

Z3 Enterprises, LLC, d/b/a Stratus Building Solutions of Pittsburgh [PA],

HolBon Holdings, LLC, d/b/a Stratus Building Solutions of Philadelphia  [PA],

TTK Investments, Inc., d/b/a Stratus of Columbia [SC] (Serve: Agent: Ernest Kraft ),

Kevin Gass, d/b/a Stratus of Columbia, [SC],

Ralph Sizemore d/b/a Stratus of Upstate Carolina, [SC],

D&E Holdings, LLC d/b/a Stratus Building Solutions of Nashville [TN],

Stratus Building Solutions of Northern Utah (Serve: Agent: Lori Sealy),

SYDDAR, Inc. d/b/a Stratus Building Solutions of Salt Lake [UT] (Serve: Agent: Shauna Sharpsteen ),

Afshin Cangarlu, d/b/a Stratus of Inland Empire, [CA],

J. Beck, d/b/a Stratus Building Solutions of Wilmington [DE],

Jason Potts, d/b/a Stratus of Raleigh [NC],

Don Gartner, d/b/a Stratus of Northern New Jersey,

Rob Salazar, d/b/a Stratus of Albuquerque [NM],

Quail Run Enterprises, Inc., d/b/a Stratus Building Solutions of Las Vegas [NV] (Serve: Agent: Tamara Kyllo ),

Craig Donovan, d/b/a Stratus Building Solutions of WNY, [NY],

Mark Bashforth, d/b/a Stratus Building Solutions of Houston [TX],

Jayson Bashforth, d/b/a Stratus Building Solutions of Houston [TX],

Jacquelyn Mosley d/b/a Stratus of Northern Texas,

Thomas Mosley, d/b/a Stratus of Northern Texas,

Greg Fishman, d/b/a Stratus of Austin [TX],

Cordell Dean, d/b/a Stratus of Richmond [VA],

Defendants.

HERE IS AN EXCERPT FROM THE STRATUS PETITION:

DECLARATORY JUDGMENT

1. This class action seeks declaration of liability on behalf of all persons who purchased franchises through Master Franchisees of Defendants in the United States of America.

2. This action arises from Defendants utilizing Master Franchisees as their agents to:

(a) fraudulently induce Plaintiffs to enter into franchise agreements by failing to disclose all costs associated with the franchise;

(b) fraudulently withhold the identities of all franchisees who had there franchises terminated;

(c) violate the disclosure requirements of the Federal Trade Commission;

(d) provide fraudulent earnings claims to the class without proper documentation; and

(e) prevent potential franchisees from learning the turnover rate of its franchises.

3. Plaintiffs allege that Defendants, through the Master Franchisees, engaged in “churning” in which the franchisor cancels the franchise agreement or accounts of the Unit Franchisee without just cause, making the conditions for accepting accounts or servicing accounts so untenable that the Unit Franchisee will decline or abandon an account. These actions are taken by Defendants for the sole purpose of providing accounts to new Unit Franchisees thus obtaining more initial franchise fees.

4. Plaintiffs allege that Defendants were aware that the Stratus system first implemented by Defendant Simpatico was fatally flawed in that the limited number of available accounts and the competition in the market required the franchisor to continue selling Unit Franchises even though there were not enough accounts to permit the Franchisor to comply with its obligations under the various Franchise Agreements.

5. As a direct and proximate result of the actions of Defendants, both directly and through its Master Franchisees, many of the Unit Franchisees lost their life savings.

6. Plaintiffs further allege that Defendants have improperly misclassified the Plaintiffs as independent contractors, and thereby denied them various benefits to which they are entitled to as employees under the wage laws, including minimum wage, overtime pay, other wage protections, and other benefits of employment, such as eligibility for unemployment and workers compensation.

7. Plaintiffs’ right to declaratory relief stems from Missouri Revised Statute Section 527.010, et al., and Rule 87 of the Missouri Rule of Civil Procedure.

8. Plaintiffs and the putative class are in a position of uncertainty as to the enforceability of the Master Franchise Agreement and whether the Master Franchisees are independent contractors or agents of Defendants for purposes of vicarious liability.

9. Plaintiffs and the putative class have an immediate personal interest in having this adjudicated in such manner because the Master Franchise Agreements require application of Missouri law and this Court is best suited to determine the nature of the relationship between Defendants and the Master Franchisees.

10. As a matter of judicial economy, and in the interest of uniform application of Missouri law, this Court should determine the status of the relationship to avoid having other state and federal courts apply Missouri law. Otherwise, there is a potential for conflicting decisions of foreign state and federal courts applying Missouri law.

11. Plaintiffs and the putative class members lack an adequate remedy at law.

12. Plaintiffs are entitled to an attorney’s fees for under the Missouri Declaratory Judgment Act, as the circumstances surrounding the filing and prosecuting of such Petition constitute “unusual circumstances” justifying an award of attorney’s fees.

13. The questions posed by Plaintiffs are ripe for judicial resolution, as all Plaintiffs, Defendants and interested third parties are represented in this action.

WHEREFORE, Plaintiffs pray this Court enter an Order and Declaratory Judgment, ordering:

a. Certification of a class of individuals who are identified as those who have purchased a franchise from the Defendants through Master Franchisees.

b. That an Order/Judgment issue declaring that Defendant Stratus is the principal of the Master Franchisee for purposes of vicarious liability under the laws of the State of Missouri and/or that Defendants may be jointly liable to Plaintiffs and members of the putative class for conspiring to utilize Master Franchisees to commit fraud against Plaintiffs and the putative class.

c. Order that Notice be disseminated to individual class members pursuant to Missouri law

d. any and all other relief as the Court deems just and proper.

Respectfully submitted,

LAW OFFICE OF JONATHAN E. FORTMAN, LLC

READ THE FULL PETITION:

Rivera v Simpatico – Amended Petition – Declaratory Judgment final

Related reading:

STRATUS BUILDING SOLUTIONS Franchise Complaints

STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship?

STRATUS BUILDING SOLUTIONS Franchise Class Action Lawsuit Filed

STRATUS BUILDING SOLUTIONS: Markeeta Rivera’s Franchise Horror Story

STRATUS BUILDING SOLUTIONS Franchise: Guadalupe Clemente’s Horror Story

ARE YOU FAMILIAR WITH STRATUS BUILDING SOLUTIONS AND ITS MASTER FRANCHISEES? PLEASE SHARE A COMMENT BELOW.

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