USA MOBILE DRUG TESTING Franchisees Complain to FTC
USA Mobile Drug Testing (USAMDT) franchisees are pissed. Really pissed.
(UnhappyFranchisee.Com ) A group of USAMDT franchise owners hired franchisee attorney Mario Herman, who notified CEO Joe Strom that his clients have been defrauded, are terminating their agreements, and are demanding $635,000 in damages.
(Read attorney Herman’s letter here: USA MOBILE DRUG TESTING Franchisees Rebel, Cry Fraud)
The franchisee group feels that it has been deceived and misled, and want as many people to know about it as possible.
Franchise lead generation and broker network FranNet has reportedly dropped USAMDT from its franchise portfolio because of the controversy.
The renegade group of franchisees has reportedly started a campaign to notify news media, industry suppliers and government organizations.
Last week, the USAMDT franchise owners contacted the Federal Trade Commission (FTC).
They have supplied UnhappyFranchisee.Com with a copy of their complaint letter, reproduced below:
January 9, 2013
Federal Trade Commission
600 Pennsylvania Avenue NW Room 286
Washington, DC 20580
Attn: Craig Tregillus
Dear Craig,
It was nice talking to you today. A group of former USA Mobile Franchisees are requesting an investigation into the Fraudulent and Unlawful Practices that the franchisor, Joseph Strom Jr., CEO, of USA Mobile Drug Testing LLC (USAMDT), 15310 Amberly Drive, Suite 220 Tampa FL 33647, has used and continues to use in selling USA Mobile Drug Testing franchises.
Franchisee complaints include allegations of deceptive sales tactics, improper franchise disclosure, making improper earnings claims and financial representations, trying to keep prospective franchisees from talking to current franchisees, and the misrepresentation of vendors as franchisor employees.
The transgressions include but are not limited to:
1. John Cohen, co-owner of Rhino 7, is listed on the USAMDT organizational chart as the VP Franchise Sales. The email signatures and how they present themselves leads a prospect to believe they are all employees of USAMDT which is untrue. Rhino 7 is a franchise business development company hired by USAMDT for the purposes of selling franchises.
2. Rhino 7 offers prospective buyers pre-recorded validation calls only. A prospect must be extremely insistent in order to get just 1 live validation call set up. The list of franchisees contact information is not available to them during the sales cycle. All pre-recorded validation calls are carefully monitored and mediated by the Rhino 7 sales director.
3. Illegal earnings claims are posted on the Internet stating: “Net Annual Earnings of
$145,745.”
4. Entrepreneur.com states 77 franchises at the end of 2011, the USA Mobile Franchise
Disclosure Document (“FDD”) states 40.
5. Entrepreneur.com states 93 franchises at the end of 2012, USA Mobile website indicates 51 franchises. 8 of those redirect to the corporate 855 phone number because they have been shut down; 43 are operational franchises.
6. The Financial Performance Representation in the FDD is not based on a USA Mobile Drug Testing franchise, but is actually A&B Employer Solutions, Inc. (“A&B”), owned by Aron Galinovsky which operates its drug testing business as an add-on to a previously existing business.
7. A&B did not have to pay a $49,900.00 franchise fee that a new franchisee would have to pay.
8. A&B and Aron Galinovsky did not have to pay 9% royalties on its gross sales, which would amount to $29,630.00.
9. A&B and Aron Galinovsky has paid no royalties, ad fund contributions, or other required expenses that a new franchisee would have to incur. A&B did not have to pay the Roll-Out Advertising of $10,500.00 for its first three months (now mandatory at$19,500.00). This fact should have been properly disclosed, and its purposeful omission is deceptive and fraudulent.
10. Per Exhibit F-1 of the 2012 FDD – Operational Franchisees – Aron Galinovsky is still listed as an operational USAMDT franchisee even though it is stated in the 2012 FDD that Mr. Galinovsky stopped operating all of the USA Mobile Drug Testing products, services and systems at the end of 2011.
11. Per Exhibit F-2 of the 2012 FDD – Former USAMDT Franchisees – Mr. Galinovsky is not listed as a former franchisee in 2011 or 2012.
12. Per the validation tapes still in circulation, Mr. Galinovsky is still used to discuss the profitability of purchasing a USAMDT franchise.
13. On the www.USAMDT.com website – New Haven CT is still listed as a USAMDT franchise.
14. On the USAMDT internal franchisee contact log – Aron Galinovsky is still listed as a franchisee even though he does not know his USAMDT email address or password.
Your prompt attention to this matter is much appreciated.
Sincerely,
Concerned USAMDT Franchisees
One thing that has the group especially upset is that they believe USAMDT and their outsources franchise sales organization, Rhino7, continues to promote the flawed franchise using the same allegedly bogus and misleading earnings claims, as well as misrepresentations regarding the size and health of the USAMDT system.
Adding fuel to the fire is the fact that CEO Joe Strom refuses to address the complaints about the misleading earnings claims, or even confirm how many USAMDT franchises are still in business.
Related reading: USA MOBILE DRUG TESTING Franchise Warning
USA MOBILE DRUG TESTING Franchise Complaints
USA MOBILE DRUG TESTING Strom Spins Franchisee Defection
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