COVERALL Franchise Complaints

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• The last time I went to a janitorial supply store I met a man that had a cleaning franchise with coverall. He said it was the worst mistake of his life and that his accounts were paying less than minimum wage. He also told me about another man that he knew who had lost his house because of Coverall.

• Please read the following article that came out in the New York Times David Segal The Haggler 12-27-2009

  The Haggler
  In Search of Work, but at What Cost?

  By DAVID SEGAL
  Published: December 26, 2009

  STILL in holiday peace-and-goodwill mode? Aww. How sweet!

  Just a quick bit of advice: Read something else.

  Seriously, beat it, O.K.? Because Christmas is so two days ago, and in this episode we are going to dive into the dark heart of the janitorial franchise world — which turns out to be really, really dark.

  Q . I am writing on behalf of my housekeeper, Jagoda Walczak, a Polish immigrant who has been cleaning homes for years. She thought she could find new clients by investing in a franchise called Coverall Cleaning.

  She borrowed $17,600 from her brother and friends to cover the franchise fee, and Coverall guaranteed that it would send her $5,000 worth of commercial cleaning business — basically janitorial services for offices — every month. They assure people that they can make $18 to $20 an hour with these accounts. More than three months later, she had been offered less than $2,500 worth of business, and the monthly payments for these jobs were so low that, calculated at an hourly rate, they were minimum wage.

  She tried to get her money back, but Coverall will not send her a refund. Is there any way the Haggler can help?

  Channa Steinberg

  New York City

  A . The commercial cleaning franchise world is a new one to the Haggler, but it’s been around since the mid-1970s, and Coverall is just one of several national players.

  It works like this: You give Coverall a big fat check and it provides training, some start-up supplies and initial leads to companies in need of cleaning service. The goal is steady income from cleaning gigs that are serviced, ideally, with your own employees.

  In theory, it’s not a bad idea, and the company, which is based in Boca Raton, Fla., says it has 8,000 franchisees servicing 50,000 customers in the United States. It also has a pretty lengthy record of settling lawsuits brought by former Coverall franchisees — more than two dozen suits since 1998, according to its 2008 franchise disclosure document, with one settlement as high as $450,000. In every instance, the company denies wrongdoing.

  Read through a summary of the complaints, and themes emerge. Again and again, franchisees allege that Coverall presented them with a job at a set fee that required so much time and/or additional employees that the income, per hour, was a pittance.

  Shannon Liss-Riordan, a lawyer in Boston who has filed a class-action lawsuit against Coverall, says that this is standard operating procedure.

  “Companies like Coverall are competing for commercial cleaning contracts against regular janitorial companies that pay their workers as employees, which means they pay worker’s compensation and have to abide by minimum-wage laws,” she says. “Using the independent contractor model, Coverall doesn’t have to worry about any of that, so they underbid for contracts and obviously the person who gets hurt is the worker.”

  Ms. Walczak says she was offered a job cleaning a Vidal Sassoon salon — six nights a week — for just over $1,300 a month. A Coverall manager gave her a tour of the premises and said the whole job should take two and a half hours an evening. It took five hours, minimum, Ms. Walczak said she discovered. After three weeks, she told Coverall that the job was financially unfeasible.

  When she demanded her money back, Coverall refused and suggested that she sell her franchise. Ultimately, she was paid less than $700 for all of her Coverall-related work, including the three weeks at that Sassoon salon.

  A spokeswoman for Coverall, Jacqueline Vlaming, sent a lengthy e-mail message in response to the Haggler’s inquiries about Ms. Walczak. In it, Ms. Vlaming says that the company doesn’t guarantee $5,000 worth of cleaning jobs a month, but instead promises an initial set of jobs worth that sum of money, after which you’re basically on your own.

  She also said that Ms. Walczak declined nine perfectly good cleaning gigs — worth $7,000, altogether — and that the Sassoon salon is now serviced by another Coverall franchisee for the same fee that Ms. Walczak found inadequate.

  “Ms. Walczak was difficult to work with from the outset,” Ms. Vlaming wrote. “We tried repeatedly to explain to her the methodology inherent in bidding commercial accounts. She simply did not want to hear it.”

  For a competing perspective, we turn to Steven Cumbow, a former chief financial officer at Coverall who has left the company and was recently deposed by Ms. Liss-Riordan as part of her class-action lawsuit.

  “Coverall has built its business around charging individuals — many of whom are non-English speakers — thousands of dollars in exchange for a promise that it will provide paid cleaning work,” a court document says, paraphrasing Mr. Cumbow’s deposition. “Instead of supplying this business, however, Coverall utilizes a ‘churning’ model whereby it offers business to workers who, Coverall knows, will be unable to accept or to adequately service the account, or revokes business for pretextual reasons.”

  Ms. Vlaming called Mr. Cumbow a “disgruntled terminated employee with a grudge.”

  The Haggler spoke to Ms. Walczak last week, and she described her struggles to make a living and provide for two teenage children. “I called the company and I just cried,” she said. “I told them: ‘You lied to me. You said I could make money and I can’t and now I’m borrowing money and I’m in a worse situation than before.’”

  See? The Haggler warned you that this is not a feel-good story. But in the e-mail message, Ms. Vlaming said Coverall would be willing to discuss Ms. Walczak’s situation with her and to “work toward a solution.” The Haggler will follow those discussions and report on their outcome in a forthcoming column.

  E-mail: haggler@nytimes.com. Keep it brief and family-friendly, and go easy on the caps-lock key. Letters may be edited for clarity and length.

  http://www.nytimes.com/2009/12/27/your-money/27haggler.html?_r=1

• I have been in the janitorial industry for over ten years. I have heard many similar complaints. I always feel sorry for someone when they are wronged by a franchise. It seems that all the franchises have problems. Good Luck.

• Coverall has took my money and didnt find me any accounts. and i went and paid for additional accounts. Is there anyway i can get a refund? Dont buy a franchise from coverall they dont help you when you need help.

• I have been in the janitorial industry for over ten years. I have heard many similar complaints. I always feel sorry for someone when they are wronged by a franchise. It seems that all the franchises have problems. Good Luck.

• I read the following article and thought I would share it . The Coverall Trial begins in May. Lets all say a prayer so that all of those people who got Ripped-off and hurt by Coverall finally get Justice.

  Federal Judge: Franchising Sounds Like Ponzi Scheme
  Posted Thu, 2010/04/01 - 19:12 by Corbin Williston
  Is franchising "a modified Ponzi scheme?" Last week, a federal judge said it might be.

  Janitorial franchises have long been a source of embarrassment for the franchise industry, and frequently attract purchasers with few assets and poor command of English.

  A 2001 report by the GAO on FTC enforcement of the Franchise Rule found that from 1993-2000, Coverall violations had affected 2591 investors, and JaniKing violations affected 900 investors.
  A 2005 news article in the NY Times noted complaints by Brazilian immigrant franchisees of Coverall in Boston, and a settlement of Coverall litigation in Los Angeles in which franchisees alleged fraud.
  An August 2009 interview with Franchise Times quoted Coverall making this claim:
  Jacqueline Vlaming, Coverall’s general counsel, said, “Every franchise owner who runs it like a business can make money.”

  In the most recent lawsuit, Pius Awuah and 10 other franchisees relate similar stories:

  1.They paid Coverall North America a "franchise fee" in exchange for which
  2.They were promised a minimum dollar amount of client accounts to service each month.
  3.Coverall entered into the contract with the clients and billed the clients.
  4.Coverall assigned the franchisees to clean the client premises, and
  5.Coverall would remit money to the franchisees after deducting various charges.
  The franchisees alleged in their Complaint that they were never given the amount of business they had been promised, and that the degree of control which Coverall exercised over them meant that as a matter of Massachusetts law that they were really employees of Coverall.

  After filing suit, the franchisee attorneys uncovered damaging information and Coverall moved to seal court documents. In an interlocutory appeal, a 3 judge panel of the 1st Circuit Court of Appeals said in October 2009:

  Coverall has been charged--it has not been found liable in this case--with activities that could be viewed as highly unattractive[cite omitted]

  It is not necessarily the disclosure to competitors that makes the district court's order a matter of concern. Others, including enforcement agencies and potential plaintiffs, may find the disclosures of interest in ways that would not serve Coverall's interests. [emphasis underlined in original]

  The lawsuit continued and on March 23, 2010 the District Court ruled in favor of the "franchisee" plaintiffs, holding that they are in fact employees.

  What has attracted attention within the franchise community is the Judge's comments about Coverall's assertion that its business was actually the sale of franchises. Traditionally industry trade groups such as the IFA have maintained that franchising is not an industry but rather a business model (although the IFA has on other occasions defined franchising as an industry).

  Judge Young stated:

  Describing franchising as a business in itself, as Coverall seeks to do, sounds vaguely like a description for a modified Ponzi scheme – a company that does not earn money from the sale of goods and services, but from taking in more money from unwitting franchisees to make payments to previous franchisees.

  The Judge went on to say that he believed that in fact Coverall was in the business of janitorial services and that under Massachusetts law the "franchisees" were really employees of Coverall. But the use of the term "Ponzi scheme" and the interlocutory ruling have caused this case to gain wide attention.

  An interesting issue raised by franchise law firm Nixon Peabody is the impact of the Massachusetts statute and case law on post-term non-compete clauses.

  The IFA issued a press release criticizing the ruling as a threat to franchising in Massachusetts. As far back as 1998, the IFA took the (then) unheard-of step and filed an amicus brief opposing a janitor who filed for unemployment after being fired from his job at West Sanitation Services. (Matter of Francis, 688 N.Y.S.2d 55)

  A bigger threat to Coverall might be the bad publicity which has caused it to lose contracts with Boston-area clients such as Legal Sea Foods and Cheescake Factory (NASDAQ: CAKE). Both restaurants paid Coverall, but the mostly Hispanic cleaning staff did not get paid.

  Coverall said it had properly sent money to the Boston "franchisee" and that it bore no responsibility for seeing that the workers were paid. After media reports, Coverall paid the wages. Legal Sea Foods terminated Coverall due to concerns about worker mistreatment, Cheescake Factory terminated Coverall due to a number of concerns, and the Massachusetts Attorney General is investigating the janitorial industry, according to the Boston Globe.

• It looks like a new Lawsuit has been filled against coverall.

  This also looks like its another class action.

  Laguna V coverall

  It was filled in San Diego, California in late 2009

  I think this lawsuit has 50 people in it.

• 1st amendment: Well let's hope Liz and her crack pot team of lawyers that screwed "aiwah" and attempted to "down play" their loss as a "test case" don't cause these people to lose 200K. Don't you feel at least a little "guilty" I mean, its really on your head as you continued to "pimp your attorney" all over the internet and their first big "decision" is a 200K flop!!!!!

  Way to go "guest" and 1st amendment, with friends like you, bankruptcy judges throughout the country as well as "attorneys" everywhere will be screaming your names from the tallest mountain!!!!

• To jerry who is working for the cleaning franchisors and getting paid alot of money $$$

  I just went to this website and saw over 25 Lawsuits against coverall.

  Something has to be very wrong if a company has that many Lawsuits.

  I wonder how many more got settled under the table that we never heard of.

  I wonder how many people got ripped-off and never got justice.

  I will post there lawsuits in order here is the first one.

  Jesus H, Castro and Herschand Co. v. The Kover Group. Inc. dba Coverall of South Florida. Mauro R. Guerra. individually, and Management Risk Group.iFinancial Corp.. (Circuit Court of the 11th Judicial Circuit in and for Dade County, Florida, Case No. 97-8090-CA21), filed April 11, 1997. Plaintiffs allege breach of contract, rescission of contract and fraudulent misrepresentation. They claim they purchased a franchise and were not provided the appropriate amount of business. The plaintiffs claim damages in excess of $100,000. We have denied all allegations of wrongdoing. The plaintiffs filed an Amended Complaint in November 1997. The case was settled on August 24, 2007, and Coverall agreed to pay the Plaintiffs $20,000.

• 1st amendment: Never said that Coverall was perfect. No company is perfect. Of course you don't understand any of that, nor do you want to. You've been "in the business" for less than a year. You think you know everything about this business, point of fact, YOU DON"T.

  You can "hate" Jan-Pro, but you have no business speaking on any other issue, most of your issues at Jan-Pro have been disproven by me and verified by others. Problem with you and "guest" you just start "spewing" and until recently, no one countered what you are "spewing".

  You still claim that I'm being paid by Jan-Pro now all of a sudden, I must be being paid by Coverall and Jani-King as well. Well, here it is again, I"m not, no one is paying me to "post" on this site, no one is paying me "review" on this site, no one is paying me anything in regards to this site. Just doing what needs to be done, giving the "other side" of the argument. FREE of CHARGE and without being part of any of the "Big 3".