Best Blinds franchise owners Eric & Laurie Wilson certainly think so. They bought a Best Blinds franchise then found out the franchisor Laura Melissa Wall-McMahel had already sold the exclusive territory rights to someone else… and never bought back the rights as promised.

The Best Blinds franchisees sued. When the court ruled in the franchisee’s favor, the blind company franchisor tried to get out of paying the judgement by declaring bankruptcy. See court record excerpt below.

Have you had experience with the Best Blinds franchise or ? Share your experience by leaving a comment below.

From Leagle:

ERIC WILSON and LAURIE WILSON, Plaintiffs,
v.
LAURA MELISSA WALL-MCMAHEL, Defendant.

Case No. 09-05754-8-JRL, Adversary Proceeding No. 09-00231-8-JRL.

United States Bankruptcy Court, E.D. North Carolina, Raleigh Division.

July 22, 2010.
ORDER GRANTING PARTIAL SUMMARY JUDGMENT

J. RICH LEONARD, Bankruptcy Judge

This matter came before the court on cross-motions for summary judgment. On June 28, 2010, the court conducted a hearing on the matter in Raleigh, North Carolina.
JURISDICTION AND PROCEDURE

This court has jurisdiction over the parties and the subject matter of this proceeding pursuant to 28 U.S.C. §§ 151, 157, and 1334, and the General Order of Reference entered by the United States District Court for the Eastern District of North Carolina on August 3, 1984. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2), which this court may hear and determine.
UNDISPUTED FACTS

1. The defendant is the owner of a window dressing business known as Best Blinds. Best Blinds began operations in 1997. Before 2007, the defendant entered into business training agreements with third parties. Such agreements allowed third parties to conduct business as distributors of Best Blinds’ products in exclusive distribution areas.

2. In January 2005, Thomas Christopher Lawing (“Lawing”) and Brandy Hindes (“Hindes”) entered into a business training agreement with the defendant encompassing Johnston, Franklin, and Granville counties.

3. Early in 2007, the defendant formed Best Blinds Franchising, Inc. for the purpose of selling Best Blinds franchises and converting existing distributors to franchisees. Though Lawing and Hindes were given the opportunity to participate in the franchise program they were not required to do so.

4. In March 2007, Lawing, as a distributor, visited the plaintiff’s home with the intent of selling window blinds. While there, the plaintiffs inquired about franchise opportunities with the Best Blinds company. Lawing referred the plaintiffs to the defendant.

5. The plaintiffs contacted the defendant and expressed their interest in becoming franchisees for certain counties including Franklin and Granville. The defendant informed the plaintiffs that Lawing and Hindes already had exclusive rights in those counties, but thought they would be willing to sell their interest.

6. The defendant was aware that in accordance with the January 2005 business training agreement, a written release from Lawing and Hindes was required before the plaintiffs could conduct business in the subject counties.

7. Lawing and Hindes negotiated with the defendant that they would release Franklin and Granville counties for a sales price of $10,000.00. The parties came to a verbal agreement that instead of paying $10,000.00 outright, the amount would be credited against monies owing to the defendant.

8. In July 2007, the defendant mailed a release to Lawing and Hindes along with a franchise agreement. The release was intended to memorialize the verbal agreement. Neither Lawing or Hines signed the release.

9. On August 12, 2007, the defendant presented the plaintiffs with a franchise agreement granting them the exclusive right to operate a Best Blinds franchise in Person, Granville, Vance, Franklin, and Warren counties. The plaintiffs paid a sum of $50,437.11 for the franchise agreement. At the time the plaintiffs executed the franchise agreement, the defendant was aware that the requisite release had not been obtained.

10. On August 30, 2007, the male plaintiff received a call from Lawing who communicated that neither he nor Hindes had signed the release. After receiving the call, the male plaintiff contacted the defendant who assured him the problem was being resolved. The defendant advised the plaintiffs to continue business as usual. Over the course of the following months, the defendant continually reassured the plaintiffs in this manner.

11. On December 10, 2007, having failed to obtain the release, the defendant offered the plaintiffs an option to rescind the franchise agreement. The plaintiffs accepted the offer on December 26, 2007. A termination agreement was drafted by an attorney for the defendant, which included a non-competition clause and obligation for payment of termination fees. On January 18, 2008, the plaintiffs informed the defendant that the proposed termination agreement did not comport with the terms the parties discussed.

12. On February 28, 2008, the plaintiffs initiated an action in the Superior Court for Vance County against Best Blinds Franchising, Inc. and the defendant.

13. On March 20, 2009, a judgment was entered against the defendant. The court found that the defendant committed an act of unfair and deceptive trade practice. Damages were awarded in the amount of $48,787.11, and were ordered trebled in accordance with N.C.G.S. § 75-16.

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The idea seems to be a win-win for everyone:  Homeowners get a quality, reliable paint job at a reasonable price and students not only earn good money, but gain invaluable business, management and entrepreneurial skills and experience.

According to the College Pro Painters franchise website directed at prospective franchisees:

… no other experience can provide you with the exceptional leadership and management training that helps you stand out now and in life after college. College Pro is the largest and most successful student painting company in North America because it provides a challenging, real-life business experience that inspires excellence. You‘re already working on your education in school, but this summer learn the tools you will need in order to make and manage money, run your own business and gain the self-confidence you will need for any future career…

Each summer we select over 700 driven, enthusiastic young entrepreneurs across North America to run their own business from more than 25,000 who apply. These students employ another 7,000 additional workers. All of them represent a brand recognized throughout North America, so we are particular about who enters the system – and supportive of those we choose. Find out what franchise managers say about how a summer job with College Pro can help you to meet tons of new people, make money to help pay your tuition, and learn new skills that can be applied to your future employment endeavors.

However, there are numerous comments on Internet complaint sites that tell a different story.  On the Pissed Consumer website, a parent whose daughter was in the College Pro Painter franchise program calls it a cultish Ponzi scheme:

…College Pro was cult-ish and is run like a Pyramid Scheme.Think about it. The kids are working their butts off bringing in the CASH while a bunch of slackers at the top are raking in the money. "Bonding Sessions" are common-place. Financially, they took over 30% of the profits. That’s over $25,000 from my kid for her working 4 months.

They charge the Franchisees for EVERYTHING at top prices. They even charge the kids $15.00 for a College Pro T-shirt !!! YOU PAY FOR EVERYTHING! Shame on them. They disgust me. I will NEVER use College Pro. They are NOT good leaders or role models for our youth! It’s a greedy company breeding greed and teaching kids to cheat, not trust their loved ones and to lie about the painting skills they have ( 1 day of training).

If your kid wants to do College Pro, stand by them and know that they will work their butts off. There are a very few that make big bucks, but they are really rare. Help them create books, balances their checkbooks – your kids will need you more than ever. Don’t abandon them. They will not be able to do well unless they get REAL help from those that really care about their personal growth and work ethic.

John Doe writes:

Scammers. I was a franchise manager and I was robbed of all my money. I booked 72k and was on my way to my goal of 80k and my GM told me I was only going to recieve something less then 10k. I was pissed so you mean I worked 12-20 hrs a day and take home less then 10k. Bull ***! I just kept thinking they make 70k and I only make 10k. So I quit and sold my book work to other franchise managers so they can make their goals. I was just lucky not to have to pay anything more back to them for quiting like I read other managers have done. I really didnt have anything to owe them besides not fulfilling my goal. Anyways spread the word to kids that CPP *** and is a scam. Dont do it no matter what they say positive about their company

former CPP franchisee writes:

College pro painters is the worst student scam that is legal… the company lies, misleads, threatens, blackmails and on top of that they steal. True facts: if you sell anything under 75K your going to make nothing. There is NO guarantee of making any money! Example on a 50K business you will make 3000$ for working 70h a week for 6 months (1,78$ per hour). Total SCAM!

It isn’t really 24% royalty its more like 35% with all the hidden cost you pay on each job you book. Think about it 35% CPP charges 35% labour 15% supplies if your lucky you be left with maybe 15% to pay for your car, marketing, equipment. Don’t forget the 6000$ charge for what they call recoverables.

In total on a 50K biz they take 25K. They will take everything you have! If your thinking of becoming a franchisee it will be a mistake of a life time. You have greater chances of making money by starting your own company and make 45-50% of the sale and not 10-15% like with college pro!

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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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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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Geeks On Call Holdings, Inc. – FORM 8-K – October 27, 2009

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________________________________

FORM 8-K  CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

___________________________________________________________________

Date of Report (Date of earliest event reported): October 23, 2009

Geeks On Call Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

(State or other jurisdiction of incorporation) Delaware

(Commission File Number) 333-143931

(IRS Employer Identification No.) 20-8097265

(Address of principal executive offices) 3502 Pacific Avenue Suite 200 Virginia Beach, VA 23451-2874

Registrant’s telephone number, including area code: (757) 466-3448

Formally at 814 Kempsville Road, Suite 106  Norfolk, Virginia 23502

• Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
• Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
• Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
• Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

Current Reporting Obligations

• Completion of Acquisition or disposition of Assets, Including but not Limited to Mergers.
• Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.

Geeks On Call Holdings, Inc. has been served notice of default and foreclosure from a senior creditor on a note secured by  substantially all the assets of the corporation.  The Geeks On Call Holdings, Inc. Board of Directors, acting with regard to their obligation under the security agreement of the promissory note in default, passed a resolution to surrender the assets upon the request of the secured creditor. As a result of the foreclosure and surrendering of substantially all of the assets of the corporation the Board of Directors has determined that the Company can no longer continue operations.

· Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

The Board of Directors has accepted the resignations and termination of the Employment Agreements of Mr. Robert Crabb Secretary and Chief Marketing Officer, Mr. Keith Wesp, Vice President of Finance and Assistant Secretary and Mr. Richard Artese, Executive Vice President and Chief Operating Officer. The termination of these agreements is effective upon the surrender of the assets. On October 23, 2009 Mr. Robert Crabb tendered his formal resignation from the Geeks On Call Holdings, Inc. Board of Directors.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: October 27, 2009

GEEKS ON CALL HOLDINGS, INC.

By:  /s/ Richard Cole

Name:  Richard Cole

Title:  Chief Executive Officer

Read more: http://www.faqs.org/sec-filings/091027/Geeks-On-Call-Holdings-Inc_8-K/#ixzz0Vzw27ImT

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Our recent post 15 Worst Franchises by SBA Loan Defaults listed the franchise concepts that Infopedia claimed had the highest rate of SBA loan defaults for 2008.

Infopedia, in a post on Yahoo!, claimed the U Build It franchise was listed as the 9th worst franchise for SBA loan defaults.  According to Katie Adams of Investopedia:

9. U Build It

Seeking to grab a share of the market that made Lowe’s and Home Depot household names the U Build It franchise offers owners an opportunity to serve as “construction consultants” for DIYers interested in building or renovating their own homes.

But when the housing market collapsed, it shouldn’t come as a shock that 27% of their franchisees reneged on their SBA loans.

We received a rather terse email from a Marie Krez, who we assume is in the marketing department of U Build It:

Misleading and false article on 15 Worst Franchises by SBA loans. Confirmed by SBA that out of only 11 UBuildIt franchises, only 2 defaulted. 27% sounds like a lot but when it is 27% of 11, which is 2…where was that info?  SBA surprised at this and wondered why UBuildIt was on the list.  Get facts straight

So we got a copy of the original report, entitled 2009 Franchise Coleman Report SBA 7(a) and 504 Failure and Charge-Off Data dated February 9, 2009.

Turns out Ms. Krez also did not have her facts straight.  Out of 11 SBA loans disbursed to U Build It franchise owners, 3 (not 2) have defaulted, resulting in a 27%  default rate.  That’s more than twice the 2008 average franchise default rate of 13.4%.  Not to mention that a failure rate of nearly 1 in 3 seems hardly worth defending with such an indignant tone.

However, after reviewing the Coleman Report it seems that the Infopedia article listing U Build It as the 9th worse franchise default rate IS incorrect.  Sadly, a 27% default rate doesn’t even warrant inclusion in a “Worst 30″  list, much less a “Worst 15″ list.  We apologize for repeating the erroneous listing.

ARE YOU FAMILIAR WITH THE U BUILD IT FRANCHISE OPPORTUNITY?  SHARE YOUR THOUGHTS BELOW.

Geeks on Call news, rumors, opinions and comments continue to come in regarding the downward spiral of this once-promising franchise company.  The comments below appeared recently on Franchise Pick blog posts Geeks On Call (GOCHE) Troubles Deepen and GEEKS ON CALL: Franchisee Geeks Squeal on Papa Geek.

Do you have any insights or opinions on the Geeks on Call franchise or company?  Share it below.  Also read Geeks on Call Franchisees Sue Struggling Franchisor & Geeks On Call Franchisees Allege Their Franchisor is Breaking Law.

On October 12, 2009, Geek Expert wrote:

Has anyone heard that Geeks on Call has left their offices of 10 years and now have a virtual office in some building while their dispatchers answer the phones from their own home? They have also co-located their IT infrastructure and customer records with some other IT company. They say they are doing it to provide better services to their franchise owners but say nothing about the lawsuit against them for not paying their rent.

2009/10/12 at 5:52pm

Om October 14, 2009 “Dick Artese” wrote:

Looks like the GOC corporate offices are no longer at their 814 Kempsville Rd location. A big moving truck came in the darkness of night and moved all the stuff out of there.

Calls to the call center and asking for a mailing address they will still provide the 814 Kempsville Rd address, but when pressed will admit that they are no longer at that location.

 2009/10/14 at 10:03am

October 12, 2009, X Geek Stockholder wrote:

What has happened is that GOCA management forced these owners into bankruptcy by continuing to take their large royalties and advertising fees and did not provide the services or the TV ads the owners were being told every month they were getting.

GOCA put the owners in Phoenix, Portland, KC, Boston, DC and Chicago out of business so they could take over their revenues and all of the hard work they did in building a customer base that was loyal by using top of the line techs.

Since GOCA controlled the phone number and email addresses and our bank accounts they decided to put their largest owners out of business and to put ONforce techs in our place for what their 10Q called “a more profitable 3rd party tech model”. Instead of getting 11% royalty for each invoice GOCA is now able to pay these non certified, inexperienced 3rd party techs a small fee per call and keep the rest for themselves. Most of these Onforce techs do not have background checks and none of them have to drive company cars.

GOCA let us build the regions with our monies and sweat then forced us out of business to take over the good will and brand we were able to hold on to through their myriad of bad decisions and brand changes.

As they say what comes around goes around and the lawsuits against GOCA are not over and are just beginning once the other owners across the country find out that Richard Cole was working with one of their largest franchise owners to buy up failed franchises to keep them off of the UFOC and to hide their failing business from them and and prospective investors.

The Geeks on Call system did not work from the beginning and this was a constant concern of many but GOCA kept selling franchises to unsuspecting investors and then their stock which is selling for less than a penny per pink sheet the last I checked having been delisted.

 2009/10/12 at 10:40am

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United We Geek filed a complaint with Virginia’s Division of Securities and Retail Franchising regarding Geeks on Call America, Inc.
Reston, VA December 23 2008.  They issued this press release:
United We Geek, the Independent Owners Association of Geeks on Call America, Inc. franchisees is pleased to announce that more than 30% of all franchise owners have joined the Association representing roughly 50% of the active territories. United We Geek was incorporated in September 2008 to provide Association members with a voice and to address Geeks on Call America, Inc.’s ineffective advertising, inadequate systems, deteriorating business processes, and also a distinct lack of urgency in addressing the franchisee’s needs.
Patrick Blasz, general counsel for United We Geek, learned that in 2008, Geeks on Call America, Inc. abandoned efforts to renew its franchise registration with the State of Virginia. Concerned that Virginia Geeks On Call franchises would no longer be salable, Mr. Blasz filed a formal complaint with the Virginia Division of Securities and Retail Franchising alleging Geeks On Call America, Inc. was entering into new franchise agreements while failing to comply with the registration requirement imposed on all franchisors by the Virginia State Corporation Commission. Mr. Blasz further drew the agency’s attention to the faltering financial condition of Geeks on Call America Inc.
Geeks on Call America, Inc. is a wholly owned subsidiary of Geeks on Call Holdings (Ticker: GOCH), Inc. United We Geek, the Independent Franchise Owners Association is the first such association in the company’s 10 year history.

A total of 10 Geeks on Call franchisee groups filed lawsuits in federal court in Norfolk, alleging that the Geeks On Call America Inc. company breached its contracts and engaged in fraud.

According to a news report by The Virginian-Pilot, each of the suits contends that “Geeks On Call took business away from franchisees by operating a competing online repair service. Meanwhile, the installation of a new system for routing customers to specific franchisees has hampered their customer service and ability to communicate with Geeks On Call, the plaintiffs said.”

The franchisees also contend that the company abandoned its Geeks On Call trademark for the brand 1 800 905 GEEK, creating brand confusion and deflating the value of their franchises.

Seven of the plaintiffs are seeking $1 million for damages that they said they suffered; the other three plaintiffs are asking for damages of $1.4 million, $4 million and $5 million.

The franchisee lawsuits hit at the worst possible time.  Earlier this month, Geeks On Call Holdings Inc. reported a net loss of $4.96 million on revenue of $5.24 million for the fiscal year ended Aug. 31.

What do you think about the Revenge of the Geeks? Share a comment below.