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Beware the Franchise Follies

June 11, 2012

Alright, I promise: I’ll stop ranting about franchises! This is my last (just kidding. I think I’ve got one more on the way!). I only do it because I want to stop someone, anyone, everyone from being taken advantage of.

Something to think about if you want to make money cleaning offices.“A business model, developed by Jani-King’s founders in 1974 and since copied by competitors, is promoted as a low-cost business opportunity. Each cleaning service franchisor sells off regions of the country to master franchisors who then sell unit franchises to individuals–mostly minorities and immigrants–who pay franchise fees of $2,000 to $5,000, plus “finders’ fees” for a specific amount of monthly business. At Coverall, for example, a franchisee would pay a total of $10,750 for a franchise package that provides $1,500 of commercial cleaning business each month. The Coverall regional franchisor then provides all the training, obtains and distributes all the cleaning contracts, sells required supplies and insurance coverage and does all the billing and collections–services those with a native language other than English might find useful if they want to make money cleaning offices.

But lawsuits have been filed against Jani-King International of Addison, Texas; Coverall Health-Based Cleaning System of Boca Raton, Florida; and Jan-Pro Franchising International of Alpharetta, Georgia.

Lawsuits over misrepresentation and breach of contract are nothing new. According to its 2008 FDD (Franchise Disclosure Document), Coverall has settled 26 such cases in the past 10 years, admitting no guilt, but paying former franchisees settlements of $3,575 to $450,000. Many of the 52 pieces of litigation listed in Jani-King’s FDD also ended in settlement payments. Commercial cleaning franchise contracts are usually written only in English (Coverall has offered a Spanish translation since 2004) and are so complex that the state of Maryland adds a warning page about potential risk factors to their FDDs, said Dale Cantone, Maryland’s assistant attorney general. The Federal Trade Commission distributes a 19-page booklet of cautions for people considering commercial cleaning franchises.”

As published in: Franchise Times – August 2009

Folks, this only reinforces the negative feelings I have about buying a franchise to make money cleaning offices.

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“Shannon Liss-Riordan, an attorney with the Boston firm Lichten & Liss-Riordan, who has filed lawsuits against Jani-King, Jan-Pro and Coverall, said, “It’s heartbreaking to meet immigrants who have put their entire life savings into these franchises thinking they will have businesses to support themselves and their families. Instead, they are buying jobs that are terrible, that pay less than minimum wage. When they do get a check, the franchisor has taken out so many deductions, for royalties, supplies, management fees and bogus insurance policies, that they receive very little. I’ve seen pay stubs that say the franchisee owes the company money.”

I have NOT dealt with any of these companies, and I’m sure there are two sides to every story, but as has been said many times: in business dealings – Let the Buyer Beware! I live a great life since I learned to make money cleaning offices. You can too, and you don’t need a franchise to do it.

 

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