STRATUS BUILDING SOLUTIONS: Should Entrepreneur De-List Stratus From the Franchise 500?
May 29, 2012
Should Entrepreneur De-List the Stratus Building Solutions Franchise Opportunity From Its Franchise 500®?
Should Entrepreneur discontinue advertising of the Stratus Building Solutions franchise?
Read UnhappyFranchisee.com’s letter (UPDATED) to Entrepreneur Editor-in-Chief Amy C. Cosper, and then share your opinion below!
Amy C. Cosper
2445 McCabe Way, Ste 400
Irvine, CA 92614
May 30, 2012
Dear Ms. Cosper:
One of Entrepreneur’s most highly ranked and highly touted franchises is in turmoil, and is facing many serious allegations of fraud and deception.
Stratus Building Solutions, ranked #12 in Entrepreneur’s Franchise 500®, is being accused by both its unit level franchisees and it master franchisees of having engaged in widespread fraud and deception, and having orchestrating what was called on FOX News as a “pyramid scheme.” Yet despite the fact that more than 100 Stratus franchisees are currently suing this franchisor, and a significant number of master franchisees have initiated a royalty strike and have begun to de-brand their operations, Stratus continues to promote its franchise using the claim that it enjoys a #12 ranking and “four Top 10 spots total in Entrepreneur magazine’s 2012 Franchise 500®”
UnhappyFranchisee.com believes that Entrepreneur’s high rankings and praise for a franchise that is clearly in crisis and of dubious character not only calls into question the legitimacy of the Franchise 500®, but endangers Entrepreneur magazine’s general credibility and reputation. We believe that once you look into this current situation and realize that your inclusion of this program in your top franchises list is putting your readers and their families at risk, you will de-list and cease advertising for Stratus Building Solutions, as you did with iSold It in 2007.
We have been here before: iSold It in 2007
UnhappyFranchisee.com has alerted Entrepreneur before, and Entrepreneur took swift action.
Back in 2006, Entrepreneur magazine advertised, hyped and named the iSold It eBay auction store franchise to its “Hot 100” companies:
#17 iSold It LLC
It’s no secret–eBay has become tremendously popular, and strategically positioned right alongside the world-famous online auction site is eBay drop-off store iSold It LLC. Elise Wetzel and her husband, Rick, founded the Pasadena, California, business in December 2003 and started offering franchises just a few months later. They have already sold more than 800 units and expect 2006 gross sales to exceed $100 million. The numbers speak volumes…
Entrepreneur helped fuel the hype and generate leads for the house-of-cards that was iSold It, even stating that the flawed and unproven business concept promised “limitless possibilities”:
The company continues to grow strong with 3,000 franchise applications flooding in every month and recent international expansion to Australia, Canada, Ireland and the United Kingdom. The future promises limitless opportunities…
In 2007, Entrepreneur continued to award ebay auction store franchise iSold It high praise, widespread positive exposure, the #1 Top New Franchise designation and a #110 ranking in the Franchise 500®.
UnhappyFranchisee.com (we were called FranchisePick.com back then) published an internal company memo in which iSold It CEO Ken Sully admitted that nearly all iSold It stores were losing money, stores were closing in droves, and many franchisees had “lost sizable investments, including homes and retirement savings.” Sully added that the company was on the verge of insolvency… yet the company was still recruiting franchisees and holding Discovery Days.
We publicly alerted Entrepreneur magazine, as we are alerting you now, and shortly thereafter iSold It was quietly removed from the Franchise 500® and Top New Franchises listings.
The iSold It franchise quickly disappeared, and with it the investments and savings of the 800 individuals (many of them Entrepreneur readers, no doubt) who were deceived into believing “The future promises limitless opportunities…” with iSold It.
At the time, UnhappyFranchisee.com praised Entrepreneur for its quick reaction and de-listing of a troubled and failing franchise. We hope that we can do the same when Stratus Building Solutions is delisted and dropped as an advertiser from Entrepreneur and Entrepreneur.com.
Why Entrepreneur should de-list and cease promotion of the Stratus franchise
100+ unit franchisees are suing the Stratus franchisor
Dozens upon dozens of Stratus franchisees allege the same thing: they never receive the guaranteed cleaning accounts they paid for. There are countless sad stories of hardworking entrepreneurs who have lost and are losing their investments through Stratus. Attorney Jon Fortman calls the Stratus franchise an outright scam. Read about it here: http://www.unhappyfranchisee.com/stratus-building-solutions-franchise-scam/
50+ Franchisees are suing Stratus in CA; lawsuit details how Stratus allegedly scams minorities and immigrants
A separate lawsuit by 52 Stratus franchisees alleged they were targeted via Spanish language ads but coerced to sign English franchise agreements they could not read. They also allege they never received cleaning contracts they paid for. Read http://www.unhappyfranchisee.com/stratus-building-solutions-goldeneye-holdings-franchise-lawsuit/
CA Master franchisee is suing Stratus Franchising for fraud, breach of contract & unfair business practices
Orange County master franchisee Goldeneye Holdings is suing Stratus Franchising for allegedly providing fraudulent earnings claims, for providing a franchise disclosure document with multiple misrepresentations and omissions, and for intentionally undermining its relationship with and employee and its unit franchisees. Read: http://www.unhappyfranchisee.com/goldeneye-holdings-stratus-franchise-lawsuit/
Stratus master franchisees are jumping ship, refusing to pay royalties
Stratus master franchisees contend the Stratus franchisor used deceptive and illegal tactics in the franchise sales process, including providing fraudulent sales figures and omitting required disclosures. Some have initiated de-branding from Stratus in their territories. Read: http://www.unhappyfranchisee.com/stratus-master-franchise-jumping-ship/
Stratus was called a “pyramid scheme” on FOX News and UnhappyFranchisee.com
Fox News provided an excellent overview of the franchisee complaints against Stratus that I would urge your franchise evaluation staff to review (http://www.unhappyfranchisee.com/stratus-franchise-pyramid-scheme/).
Also, there are many complaints by Stratus unit and master franchisees posted to UnhappyFranchisee.com: http://www.unhappyfranchisee.com/stratus-building-solutions-franchise-complaints/
Please act before more hardworking Americans (& Entrepreneur readers) are hurt
Entrepreneur can demonstrate its commitment to its readers
By publicly de-listing Stratus Building Solutions, Entrepreneur can demonstrate that it is committed to providing the best, safest and most stable opportunities to its readers, and that when a given opportunity obviously ceases to be viable, Entrepreneur will stop promoting it to its readers.
Entrepreneur can demonstrate its commitment to its advertisers
There are 488 franchise companies ranked lower than Stratus in the Franchise 500. When they see an obviously troubled and dubious franchise concept like Stratus ranked above their own, they question whether Entrepreneur is serious about preserving the reputation of their listing.
Entrepreneur can provide a leadership role in responsible media
UnhappyFranchisee.com is calling upon business and franchise media, associations, advertising portals and other advertising sellers to begin self-regulating by refusing to promote the most obviously non-viable franchise concepts and companies. Entrepreneur can provide an example by refusing to contribute to the tragic results and circumstances being created through the Stratus Building Solutions franchise.
Please act before more hardworking Americans are hurt
The people you read about in these lawsuits and complaints are the same people who buy Entrepreneur magazine, who browse the Entrepreneur.Com website, who pore over your articles professing that franchising is the gateway to the American dream of business ownership, a chance to be in business for themselves but not by themselves.
You and I both know that this is true for the right franchise under the right conditions. We also know that the wrong franchise in the wrong conditions leads not to the American Dream, but to the kind of nightmare that Stratus Building Solutions franchisees are reporting. Please don’t contribute to further exploitation by Stratus Building Solutions.
In conclusion, we understand the difficulty that excluding a profitable advertiser can present, but we are confident that exercising more diligence in maintaining your franchise rankings and pool of advertisers will enhance the Entrepreneur’s attractiveness to legitimate franchisor advertisers. We are willing to assist Entrepreneur in vetting and weeding out the most objectionable and troubled franchise concepts before they are promoted through Entrepreneur listings.
Please let us know whether you will be de-listing Stratus Building Solutions so that we can share the news with our readers. UnhappyFranchisee.com appreciates your consideration and response, and welcomes future collaborations and communications.
All the best,
[Editor's note: The 2013 34th Annual Entrepreneur Franchise 500 does not include a listing for the Stratus Building Solutions franchise. It's unclear as to whether Entrepreneur de-listed the troubled company or if Stratus failed to submit the necessary paperwork.]
SHOULD ENTREPRENEUR DE-LIST AND STOP PROMOTING THE STRATUS FRANCHISE OPPORTUNITY? WHY OR WHY NOT? SHARE A COMMENT BELOW.