Commercial Cleaning Franchise Complaints

February 26, 2010

Commercial Cleaning Franchise Complaints
The commercial cleaning gold rush is on, but are franchisees getting the gold mine… or the shaft? Read more

Written by ADMIN · Filed Under ALL POSTS, Cleaning Franchises, SPOTLIGHT 1

ANAGO CLEANING SYSTEMS Franchise Complaints

February 25, 2010

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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COVERALL Franchise Complaints

February 25, 2010

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

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

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

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

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

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

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

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

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

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

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

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Commercial Cleaning Franchises: 10 Reasons to NOT Buy One

February 25, 2010

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Written by ADMIN · Filed Under ALL POSTS, Cleaning Franchises, JAN-PRO, JANI-KING

JANITORIAL FRANCHISE ISSUES

February 3, 2010

Starting a business of buying a really bad job? Read more

Written by author · Filed Under ALL POSTS, Cleaning Franchises

JANI-KING Franchise Complaints

February 3, 2010

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

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

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

Lawsuits allege a cleaning-contract shell game.

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

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

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

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

franchise is a scam

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

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

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

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

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

85 days ago, Rickety Rabbit responded:

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

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

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

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

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

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Written by ADMIN · Filed Under ALL POSTS, Cleaning Franchises, JANI-KING

OCTOCLEAN Janitorial Services Franchise

December 22, 2009

Janitorial franchises have created so many unhappy franchise owners, the FTC and the Maryland Attorney General’s Office issued the FTC Guide to Buying a Janitorial Services Franchise.

One company, Octoclean, claims to be transforming the contentious janitorial segment of franchising. OctoClean claims it currently has 150 unit franchise owners, and is dedicated to franchise owner success.

The OctoClean website claims:

OctoClean’s financial performance clearly demonstrates the viability of the business model and the services the Franchise Owners provide. Having doubled its gross sales between 2003 and 2008, OctoClean has positioned itself as an emerging leader in the janitorial services industry. OctoClean’s business plan calls for continued aggressive growth in both the number of active Franchise Owners and the markets in which OctoClean’s services are offered. Within the next five years, OctoClean will open Franchise Centers in the western United States. The total number of OctoClean Franchise Owners is slated to exceed 500 in California and Nevada.

It claims that “the heart of the company is its Charter which clearly defines OctoClean’s purpose, mission and core values…”

“OctoClean is an enterprise whose purpose is to transform the janitorial industry. We empower and enable people to be successful business owners. We create programs and services that thrill our customers. Our mission is to have the rewards and freedom of successful franchise ownership available to all people.”

However, an unhappy franchise owner (posting on complaint site RipoffReport) claims that OctoClean is guilty of the same tactics that have been levelled against many other companies offering low-cost “buy-a-job” janitorial franchises, including high fees, low profitability jobs and “churning” of janitorial accounts from one franchisee to another.

Commenter “Esmeralda (Fontana California)” left this comment on RipoffReport:

Octoclean starts to tell you about how much money its going to help you make, it talks about you starting with 2,000 dollars minimum a month. How much its going cost you, thats about 22,000 dollars for the franchise, they don’t make this clear, they tell you that you have 4 years to pay it off.

Then you have to buy cleaning supplies only with them, they also make money off of your orders, they say they will have your back and how much they are there to help you, now that a lie.

First chance they get they will come a take the building from you and sell it to the next person. Each and every building is sold at 2.80% for sales and marketing fees, sounds good you might say, ok for example they give you a building that pays 2,000 dollars a month now you pay them 5,600 in payment over the next 11 months and after its yours, still sound like the perfect deal, well once you think about that alot of income right, wrong you have to have employees, pay workers comp. ins.

You have to go on your days off to see your so called clients to see if they are satisfied with your job. You can get a call about a restroom missing hand soap at 9 a.m. after working until 3 a.m. the night before and have to drive to the building to put soap in the restroom that has two dispenser and only one is empty, or pay them a fee to take care of it, they will tell you that they will handle all the complaints, not true thats how they control you, they will never go out to your building to check them out they only go when there is a complaint, and sometimes the complaint is that nail has been behind that desk for a week and they take pictures of it so they have proof when they decide to threaten to (fire you) remove you they claim but its fire.

You pay for supplies, employees, insurances, and guess what 15% administration fee and a extra 10% fee, plus what the building cost you end up working for less than minimum wages, or cut clients short to make up the money somewhere. Don’t think they will not remove you from a building, they will not hesitate to remove you, they promise to bring you back and they wont, they will make mistakes on your invoices and then turn around and dock it from your pocket, because they didn’t know that they were over billing for a office that moved out over a year ago and you notified them. They will let you order supplies from them a day before the call you to tell you that you have been removed from the building and turn over keys, and charge you for the supplies when you have no use for them.

They will make promises to you but beware they will screw you and everybody over. Where they make there real money is selling the same building over and over again for sale and marketing fees . If you try to sue them its is nearly impossible because they have a discloser on the contract that is like 80 pages full of words that is not for you and I to understand that state that if you want litigation it has to takes place in Sacramento… Its is to costly for you to pursue this so you end up leaving it alone and they end up with your money anyways. SO BEFORE YOU BUY INTO OCTOCLEAN TAKE THIS INTO CONSIDERATION……………

Janitorial and cleaning franchises that, in essence, sell franchise owners commercial cleaning contracts are one of the most troublesome areas of the franchise industry. Before investing, be sure to read FTC Guide to Buying a Janitorial Services Franchise.

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Written by ADMIN · Filed Under ALL POSTS, Cleaning Franchises, Service franchise

FTC Guide to Buying a Janitorial Services Franchise

December 22, 2009

FTC’s Guide to Buying a Janitorial Services Franchise

Produced jointly with the Maryland Attorney General’s Office.

If you’re thinking about starting your own business and have only a small amount to invest, you may be considering buying a janitorial services franchise. For a fee, a janitorial service company (the "franchisor") typically provides you (the "franchisee") with customers and marketing, billing and collection services.

Every franchisor has success stories to share. Be cautious. While success in the janitorial service industry is possible, it’s not a guarantee.

A glossary of terms commonly used in the franchise industry is included at the end of this brochure.

How Janitorial Services Franchises Work

In a typical janitorial cleaning franchise, you pay the franchisor a fee for a "package" of cleaning accounts. The fee is based on the dollar value of cleaning accounts that the franchisor will make available. The fee usually is about half the gross income the accounts are supposed to generate in a year. For example, for a fee of $10,000, you’ll get accounts worth $20,000; for a fee of $15,000, you’ll get accounts worth $30,000. You also may have to pay ongoing royalty or management fees.

The franchisor may offer you financing. This may sound especially attractive if you have trouble getting credit from traditional lenders.

The franchisor is supposed to offer you cleaning accounts that will produce the level of income represented in the package you purchased. However, several factors can affect that level of income. For example, if you don’t accept an account, the franchisor may not have to offer you a substitute. Or, if you refuse an account because you feel it’s located too far away, you may lose your right to that income. Also, if you lose accounts because you did a poor cleaning job, the franchisor doesn’t have to replace those accounts.

Problems You May Face

The Federal Trade Commission and the Maryland Attorney General’s Office advise you to use caution when thinking about buying a janitorial services franchise, which often appeal to immigrants and others who speak limited English. The franchise agreement you’ll receive from the franchisor may be long and complex. It may be difficult to understand your legal rights and obligations, and the obligations of the franchisor. Consider getting professional advice. Ask a lawyer, accountant or business advisor to review the franchise agreement. The money and time you spend on professional help may save you from a bad investment.

Here are some of the problems you may face:

Accounts offered versus accounts received. There may be a difference between the accounts the franchisor promises to offer you and the accounts you actually receive, as well as the revenue that comes with them. For example, the franchisor may promise to offer you accounts generating $1,000 in monthly billings for the first year. To meet its obligations, the franchisor may offer you more than one cleaning account. But given time conflicts, distance issues or other problems, you may not be able to accept all the accounts the franchisor offers. What’s more, the franchisor may offer the same accounts to several franchisees on a first-come, first-served basis. If you can’t accept an account because you can’t get to the location, or if another franchisee accepts the account first, the franchisor may have satisfied its obligation to offer you accounts. Because the franchisor may not tell you about this policy before you buy the ”package" of accounts, you should not count on receiving all the revenue that the franchisor promised at first.
Rejected accounts. The franchisor may not have to replace an account that you reject.
Franchisor-selected accounts. The franchisor usually selects accounts for you. The size, number and location of the accounts may not be what you expect. For example, the franchisor may require you to service more than one account at the same time, or the job sites may be far apart.
Lost accounts. Most janitorial franchise agreements specify that if a customer cancels the cleaning contract, the franchisor doesn’t have to replace the account for you. In fact, you may have to pay an extra sales and marketing fee for a new account to make up for the lost income.
Integration clauses. The franchise agreement you sign may contain a clause that limits the terms of your agreement to those specifically detailed in the written franchise agreement. This means that any oral claims or promises made by the franchisor are not part of your agreement. This is one reason why it’s so important to get all promises in writing in the franchise agreement.
First year time lag for receiving accounts. The package of accounts you buy will suggest a level of income within a year. But the franchisor may take several months to supply you with the promised accounts. That means you may not earn any income until several months after you’ve purchased the package, so you may not earn the estimated annual income. Therefore, it’s important to have other sources of income during your first few months of operation.
Ongoing fees. The franchisor may charge you a monthly management or service fee. You’ll have to pay the fee even if you don’t have any income from your cleaning business that month. If you finance the franchise fee, you must make the monthly payment on that debt whether or not you’re receiving income from the cleaning business. And although you may find customers without the franchisor’s help, any income from a cleaning account you solicit will be included when the franchisor calculates the royalty and management fees you owe.
Franchisor-owned accounts. The franchisor may own all the customer accounts, including those that you get on your own. This means that if your franchise agreement ends, you will not be able to service the accounts for which you paid a fee, and you won’t be able to service the accounts you got on your own, either.
Training. Get information about the franchisor’s training program before you invest. The franchisor decides the type of training you’ll get. It may involve watching videos and reading books; it may not involve classroom or on-site training.
Contract bidding procedures. The franchisor may not tell you how it bids for cleaning contracts or what specific services you must provide to the customers. The franchisor may only tell you that you should be able to earn $12 to $15 an hour doing janitorial work. However, when bidding for cleaning contracts, the franchisor may offer your services at a lower rate, and you may have no say in whether the amount charged is reasonable. So even though the account is represented as being worth a certain amount of money, it may not be worth that much to you, and you may not be able to make a profit once you pay for expenses like supplies and transportation costs.
Short-term accounts. People who operate janitorial franchises often find that customers rarely maintain an account for more than a year. That’s because customers prefer short-term contracts so they can shop for the best deal. If the franchisor offers you replacement accounts, you may have to pay a new referral or marketing fee.
Performance obligations. You may have to meet minimum monthly performance or growth requirements. If you don’t, you may lose the franchise. Worse yet, you may not have the right to a refund of your franchise fee.
Payment for services. The franchisor collects payment from your customers. If the customer doesn’t pay, you don’t get paid. The franchisor may not be legally obligated to force the customer to pay, but if the franchisor sues for payment, you may have to pay the legal costs.
Personal guarantees. Many franchisors require franchisees to personally guarantee the obligations of the franchise business. This means that if your business assets don’t cover your franchise obligations, you could lose personal assets, like your home or car.
Anti-competition rules. You and your immediate family (your spouse and children) may not be allowed to have an ownership interest or perform services in another cleaning business, even if your family members don’t have an ownership interest in your janitorial franchise. This restriction may continue even after your franchise ends.

The FTC’s Franchise Rule

By law, a franchisor must give you a detailed disclosure document. The disclosure document should include:

the total number of franchises, and the number of franchises terminated or not renewed during the previous year;
the bases and assumptions for any claims about potential earnings or the earnings of existing franchisees;
the cost of starting and maintaining the business;
the names, addresses and telephone numbers of at least 10 franchisees who live closest to you (names, addresses and telephone numbers of at least 100 franchisees is required in some states, including Maryland) ;
the background and experience of the franchisor’s key executives;
a fully audited financial statement of the franchisor;
any lawsuits against the franchisor or its directors by franchisees; and
the responsibilities you and the franchisor have to each other once you’ve purchased the franchise.

You should receive the disclosure document at least 10 business days before you pay any money or legally commit yourself to buying a franchise. Ten business days should give you enough time to review the document, get answers to your questions, talk to franchisees and get advice from an attorney, accountant or business advisor.

Protect Yourself

Buying a franchise is a big decision. Before you commit, take the following precautions:

Read the company’s disclosure document. Review it carefully to learn more about your obligations, the litigation history of the franchisor and failure rates. This information will help you decide whether franchisees are dissatisfied with the franchise.
Talk to other franchisees. Don’t rely only on the information the franchisor gives you. Talk to current and former franchisees about their experiences with the franchisor. Their names, telephone numbers and addresses should be in the company’s disclosure document. The franchisor may refer you directly to franchisees who are known to be successful. Don’t rely on references the company selects.
Contact your state franchise administrator. If you live in California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota or Virginia, your state has an office that regulates the offer and sale of franchises. Contact your state franchise administrator before you invest. Ask if the franchise you’re considering is registered to offer franchises in your state. If you live in Maryland, call the Maryland Attorney General’s Office at (888) 743-0023, or visit www.oag.state.md.us. If you live outside of Maryland, you can find the name of your state franchise administrator, by calling the North American Securities Administrators Association at (202) 737-0900 or visit www.nasaa.org. You also may contact your state Attorney General (www.naag.org) or Better Business Bureau (www.bbb.org) for more information.
Get all promises in writing. If a salesperson tells you that the franchisor will give you accounts near your home, but the written agreement defines the geographic area more broadly, it’s what’s in the written agreement that counts. If a provision in the agreement is different from anything you discussed with the salesperson, demand that the written agreement be changed. If a salesperson tells you that you should be able to make $12 to $15 an hour, make sure that prediction is included in the disclosure document. If the salesperson or franchisor won’t agree, walk away from the deal.
Review the franchise agreement carefully. It’s important to understand all the conditions of the agreement. It controls your relationship with the franchisor. Make sure the agreement spells out the details so there are no surprises.
Understand your obligations. As a franchisee, you may have to pay royalties and other fees. Find out exactly what types of fees you’ll have to pay, how much you’ll pay and how often.
Investigate claims about potential earnings. The estimated value of the package of accounts you buy may not reflect the income you’ll earn from servicing those accounts. Find out how the company assigns a value to the accounts. Ask how many franchisees made the represented income and where those franchisees are located.
Be cautious when financing. While financing your purchase through the franchisor may seem appealing, the terms of the financing agreement may not be the best deal for you. For example, you may have to sign a note to secure the debt and agree to terms that could make it tough for you to sue the company if you wanted to cancel your agreement. Before you agree to franchisor financing, be sure you understand all the terms of the deal.
Consider getting professional advice. Ask a lawyer, accountant or business advisor to review the disclosure document and franchise agreement. The money and time you spend on professional help may save you from a bad investment.

For More Information

The FTC also publishes a series of consumer brochures on franchising and business opportunities. For free copies, contact the Consumer Response Center, Federal Trade Commission, Washington, DC 20580, 1-877-FTC-HELP (1-877-382-4357), TDD: (202) 326-2502, www.ftc.gov.

The State of Maryland also publishes investor brochures about franchises and business opportunities. For copies, or for more information about Maryland’s requirements regarding the sale of franchises and business opportunities, contact the Office of the Attorney General, Maryland Securities Division, 200 St. Paul Place, Baltimore, MD 21202, (410) 576-6360, www.oag.state.md.us, email: securities@oag.state.md.us.

Glossary of Terms

Disclosure Document – A written document that outlines the general franchise offering, including background information of the franchisor, a summary of the franchise agreement, and a list of current franchisees.

Franchise Agreement or Franchise Contract – The written document that spells out the legally binding obligations between the franchisor and the franchisee.

Franchise Fee – The purchase price for the franchise.

Franchisee – Any person who buys or invests in a franchise.

Franchisor – Any person who sells a franchise.

Management or Service Fee – A fee paid the franchisee for extra or ongoing support, such as providing additional or substitute accounts.

Royalty Fee – A specific payment made by the franchisee for the right to use the franchisor’s trademark. In most instances, the franchisee pays this fee throughout the term of the agreement, regardless of anything else the franchisor may or may not do.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Originally issued in 2001

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Written by ADMIN · Filed Under ALL POSTS, Cleaning Franchises, Service franchise

FTC’s Janitorial Franchise Buyer’s Guide

October 14, 2009

Interested in Janitorial or Commercial Cleaning franchises? The FTC and the Maryland Attorney General’s Office jointly produced the Buying a Janitorial Services Franchise guide reproduced below. While it was published in 2001, it is just as valid today. Also read:

JAN-PRO: Janitorial Franchise Warning

JAN-PRO Franchise Complaints

CHAMPION CLEAN Using Bogus Franchise Statistics

_______________________________________

Buying a Janitorial Services Franchise

Produced jointly with the Maryland Attorney General’s Office.

If you’re thinking about starting your own business and have only a small amount to invest, you may be considering buying a janitorial services franchise. For a fee, a janitorial service company (the “franchisor”) typically provides you (the “franchisee”) with customers and marketing, billing and collection services.

Every franchisor has success stories to share. Be cautious. While success in the janitorial service industry is possible, it’s not a guarantee.

A glossary of terms commonly used in the franchise industry is included at the end of this brochure.

How Janitorial Services Franchises Work

In a typical janitorial cleaning franchise, you pay the franchisor a fee for a “package” of cleaning accounts. The fee is based on the dollar value of cleaning accounts that the franchisor will make available. The fee usually is about half the gross income the accounts are supposed to generate in a year. For example, for a fee of $10,000, you’ll get accounts worth $20,000; for a fee of $15,000, you’ll get accounts worth $30,000. You also may have to pay ongoing royalty or management fees.

The franchisor may offer you financing. This may sound especially attractive if you have trouble getting credit from traditional lenders.

Problems You May Face

Here are some of the problems you may face:

Accounts offered versus accounts received. There may be a difference between the accounts the franchisor promises to offer you and the accounts you actually receive, as well as the revenue that comes with them. For example, the franchisor may promise to offer you accounts generating $1,000 in monthly billings for the first year. To meet its obligations, the franchisor may offer you more than one cleaning account. But given time conflicts, distance issues or other problems, you may not be able to accept all the accounts the franchisor offers. What’s more, the franchisor may offer the same accounts to several franchisees on a first-come, first-served basis. If you can’t accept an account because you can’t get to the location, or if another franchisee accepts the account first, the franchisor may have satisfied its obligation to offer you accounts. Because the franchisor may not tell you about this policy before you buy the ”package” of accounts, you should not count on receiving all the revenue that the franchisor promised at first.
Rejected accounts. The franchisor may not have to replace an account that you reject.
Franchisor-selected accounts. The franchisor usually selects accounts for you. The size, number and location of the accounts may not be what you expect. For example, the franchisor may require you to service more than one account at the same time, or the job sites may be far apart.
Lost accounts. Most janitorial franchise agreements specify that if a customer cancels the cleaning contract, the franchisor doesn’t have to replace the account for you. In fact, you may have to pay an extra sales and marketing fee for a new account to make up for the lost income.
Integration clauses. The franchise agreement you sign may contain a clause that limits the terms of your agreement to those specifically detailed in the written franchise agreement. This means that any oral claims or promises made by the franchisor are not part of your agreement. This is one reason why it’s so important to get all promises in writing in the franchise agreement.
First year time lag for receiving accounts. The package of accounts you buy will suggest a level of income within a year. But the franchisor may take several months to supply you with the promised accounts. That means you may not earn any income until several months after you’ve purchased the package, so you may not earn the estimated annual income. Therefore, it’s important to have other sources of income during your first few months of operation.
Ongoing fees. The franchisor may charge you a monthly management or service fee. You’ll have to pay the fee even if you don’t have any income from your cleaning business that month. If you finance the franchise fee, you must make the monthly payment on that debt whether or not you’re receiving income from the cleaning business. And although you may find customers without the franchisor’s help, any income from a cleaning account you solicit will be included when the franchisor calculates the royalty and management fees you owe.
Franchisor-owned accounts. The franchisor may own all the customer accounts, including those that you get on your own. This means that if your franchise agreement ends, you will not be able to service the accounts for which you paid a fee, and you won’t be able to service the accounts you got on your own, either.
Training. Get information about the franchisor’s training program before you invest. The franchisor decides the type of training you’ll get. It may involve watching videos and reading books; it may not involve classroom or on-site training.
Contract bidding procedures. The franchisor may not tell you how it bids for cleaning contracts or what specific services you must provide to the customers. The franchisor may only tell you that you should be able to earn $12 to $15 an hour doing janitorial work. However, when bidding for cleaning contracts, the franchisor may offer your services at a lower rate, and you may have no say in whether the amount charged is reasonable. So even though the account is represented as being worth a certain amount of money, it may not be worth that much to you, and you may not be able to make a profit once you pay for expenses like supplies and transportation costs.
Short-term accounts. People who operate janitorial franchises often find that customers rarely maintain an account for more than a year. That’s because customers prefer short-term contracts so they can shop for the best deal. If the franchisor offers you replacement accounts, you may have to pay a new referral or marketing fee.
Performance obligations. You may have to meet minimum monthly performance or growth requirements. If you don’t, you may lose the franchise. Worse yet, you may not have the right to a refund of your franchise fee.
Payment for services. The franchisor collects payment from your customers. If the customer doesn’t pay, you don’t get paid. The franchisor may not be legally obligated to force the customer to pay, but if the franchisor sues for payment, you may have to pay the legal costs.
Personal guarantees. Many franchisors require franchisees to personally guarantee the obligations of the franchise business. This means that if your business assets don’t cover your franchise obligations, you could lose personal assets, like your home or car.
Anti-competition rules. You and your immediate family (your spouse and children) may not be allowed to have an ownership interest or perform services in another cleaning business, even if your family members don’t have an ownership interest in your janitorial franchise. This restriction may continue even after your franchise ends.

The FTC’s Franchise Rule

By law, a franchisor must give you a detailed disclosure document. The disclosure document should include:

the total number of franchises, and the number of franchises terminated or not renewed during the previous year;
the bases and assumptions for any claims about potential earnings or the earnings of existing franchisees;
the cost of starting and maintaining the business;
the names, addresses and telephone numbers of at least 10 franchisees who live closest to you (names, addresses and telephone numbers of at least 100 franchisees is required in some states, including Maryland) ;
the background and experience of the franchisor’s key executives;
a fully audited financial statement of the franchisor;
any lawsuits against the franchisor or its directors by franchisees; and
the responsibilities you and the franchisor have to each other once you’ve purchased the franchise.

Protect Yourself

Buying a franchise is a big decision. Before you commit, take the following precautions:

Read the company’s disclosure document. Review it carefully to learn more about your obligations, the litigation history of the franchisor and failure rates. This information will help you decide whether franchisees are dissatisfied with the franchise.
Talk to other franchisees. Don’t rely only on the information the franchisor gives you. Talk to current and former franchisees about their experiences with the franchisor. Their names, telephone numbers and addresses should be in the company’s disclosure document. The franchisor may refer you directly to franchisees who are known to be successful. Don’t rely on references the company selects.
Contact your state franchise administrator. If you live in California, Hawaii, Illinois, Indiana, Maryland, Minnesota, New York, North Dakota, Rhode Island, South Dakota or Virginia, your state has an office that regulates the offer and sale of franchises. Contact your state franchise administrator before you invest. Ask if the franchise you’re considering is registered to offer franchises in your state. If you live in Maryland, call the Maryland Attorney General’s Office at (888) 743-0023, or visit www.oag.state.md.us. If you live outside of Maryland, you can find the name of your state franchise administrator, by calling the North American Securities Administrators Association at (202) 737-0900 or visit www.nasaa.org. You also may contact your state Attorney General (www.naag.org) or Better Business Bureau (www.bbb.org) for more information.
Get all promises in writing. If a salesperson tells you that the franchisor will give you accounts near your home, but the written agreement defines the geographic area more broadly, it’s what’s in the written agreement that counts. If a provision in the agreement is different from anything you discussed with the salesperson, demand that the written agreement be changed. If a salesperson tells you that you should be able to make $12 to $15 an hour, make sure that prediction is included in the disclosure document. If the salesperson or franchisor won’t agree, walk away from the deal.
Review the franchise agreement carefully. It’s important to understand all the conditions of the agreement. It controls your relationship with the franchisor. Make sure the agreement spells out the details so there are no surprises.
Understand your obligations. As a franchisee, you may have to pay royalties and other fees. Find out exactly what types of fees you’ll have to pay, how much you’ll pay and how often.
Investigate claims about potential earnings. The estimated value of the package of accounts you buy may not reflect the income you’ll earn from servicing those accounts. Find out how the company assigns a value to the accounts. Ask how many franchisees made the represented income and where those franchisees are located.
Be cautious when financing. While financing your purchase through the franchisor may seem appealing, the terms of the financing agreement may not be the best deal for you. For example, you may have to sign a note to secure the debt and agree to terms that could make it tough for you to sue the company if you wanted to cancel your agreement. Before you agree to franchisor financing, be sure you understand all the terms of the deal.
Consider getting professional advice. Ask a lawyer, accountant or business advisor to review the disclosure document and franchise agreement. The money and time you spend on professional help may save you from a bad investment.

For More Information

Glossary of Terms

Franchise Agreement or Franchise Contract – The written document that spells out the legally binding obligations between the franchisor and the franchisee.

Franchise Fee – The purchase price for the franchise.

Franchisee – Any person who buys or invests in a franchise.

Franchisor – Any person who sells a franchise.

Management or Service Fee – A fee paid the franchisee for extra or ongoing support, such as providing additional or substitute accounts.

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Written by ADMIN · Filed Under ALL POSTS, Cleaning Franchises, JAN-PRO

JAN-PRO: Janitorial Franchise Warning

October 14, 2009

In response to an Unhappy Franchisee.com post on the Jan-Pro commercial cleaning franchise (JAN-PRO Franchise Complaints), we received the following tips from a janitorial franchise insider. Many commercial cleaning (janitorial) franchise opportunities work the same way (they market, bid and sell the cleaning jobs then provide them to franchisees to clean) and generate the same types of warnings.

On 2009/10/13, Former Jan-Pro Employee wrote:

As a former Employee of a Master Franchiser (company like Jan-Pro) I would like to say I feel your pain. I only knew of 2 franchises and worked for 1 of them. The one I worked for was not honest at all. However, they made sure they did nothing illegal. Now we’re talking ethics…

They had me make franchisees sign TT’s or Troubled Transfers before the franchisee (saw the building) agreed to it. Most accounts they offered were very underbid. Their commissions are based to where the sales person has no choice…also, the sales persons I delt with had no experience. I have many years of janitorial experience.

It’s very sad to see people sold a dream, this is all of the money they have and the promise made to them was broken. They make promises to their employees that they broke, myself included. I know there must be Master Franchisers out there who are honest.

Remember this, do as much research as you can. This is your money!!! Tell them you want to talk to 50 franchisees before you make up your mind. Do not sign anything until you have shown the contract to a lawyer. When they say they will meet your designated business fulfillment it means 180 BUSINESS DAYS, not consecutive days!!!!!!! This is longer than 6 months!!!!! Do not agree to any account unless it meets your standards. They twist your arm and threaten you with the fact that if you deny business they are free of their obligation to give you what you paid for in 180 days this is why it is so important to know the facts before you sign!!!!! So remember to ask them if Your Master Franchiser or any representative has been cleaning this account (another franchisee) before you and were there problems that caused you to be the new cleaner.

You have the right to know how many cleaning days, how many hours they bid it at and whether or not it’s a brand new account for the company. Refer to the contract before you sign it, know what your rights are. They are bound by Franchise Laws, they know them!!! You should too!

One of their bidding numbers years ago was $15 hour. So if it took 2 hours it would be $30 per cleaning. Now, you need to factor in GAS per trip, Cleaning Supplies, Franchise Fees, Insurance, Payments on the account if any, Employees + Burden if any…Suddenly, $15 isn’t $15 anymore?????? You are responsible once you sign…remember that!

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Written by ADMIN · Filed Under ALL POSTS, Cleaning Franchises, JAN-PRO