If a franchisee gets into a dispute with its franchisor, sometimes the only way to get results is through litigation. Everyone can save money if the matter is settled before trial, and each party can probably escape with legal fees of less than $10,000.
Coverall North America was accused of making unfufilled promises to their franchisees.
In late 2006, Coveral settled out of court with plaintiffs that claimed it had deceived 10 Massachusetts residents who had purchased cleaning franchises. Now more franchisees surface with claims:
Awuah [franchisee] said in the suit that he agreed to pay Coverall $14,000 for a franchise in 2005 in exchange for its promise to provide him with $3,000 a month in commercial building cleaning business. However, Awuah said Coverall provided him typically with less than $1,300 a month.
“I kept on complaining that I was not getting as much business as they had promised but they kept telling me to wait, that it’d get better but it never did so I gave it up,” Awuah said.
Promises of national accounts and independent generation of business leads through sources like web sites usually turn out to be a fraction of what was promised. Franchisees need to plan on generating leads and business on their own, and consider any leads from the franchisor to a lucky bonus if it materializes.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
