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Lawsuits seek to challenge franchisor business model

August 27, 2009
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BOSTON — Although numerous success stories abound, class-action lawsuits are being sought to challenge the business model of commercial cleaning franchisors Jani-King International Inc., Coverall North America Inc. and Jan-Pro Franchising International Inc., according to Franchise Times.
According to the story, there is a contention that franchisees have so little control over their livelihoods that they should be re-classified as employees of the janitorial franchisors and, therefore, entitled to minimum wages, overtime pay, unemployment benefits and worker''s compensation.
Some are calling the lawsuits "witch hunts" and contend that there is no merit them, which will eventually shine through the haze of litigation, the story stated.
Jacqueline Vlaming, Coverall''s general counsel, said: "Every franchise owner who runs it like a business can make money. Ninety-nine percent of the people who buy a Coverall franchise are committed to it."
The lawsuit claims 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 and instead 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, the story noted.
Coverall has settled 26 cases over misrepresentation and breach of contract, never admitting guilt, but paying former franchisees settlements of $3,575 to $450,000, the story added.
The Federal Trade Commission distributes a 19-page booklet of cautions for people considering commercial cleaning franchises and encourages them to fully understand what they are getting into.
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