FRANCHISE THREAT ADVISORY: Stratus Building Solutions

UnhappyFranchisee.com has issued a franchise threat advisory for Stratus Building Solutions unit-level and master franchise opportunities.

Franchise Threat Advisories are issued by UnhappyFranchisee.com when a given franchise opportunity is still being promoted in advertising and editorial media, in franchise rankings, by trade groups, PR firms, sales organizations and franchise brokers as a viable and safe franchise investment, despite strong and disturbing evidence to the contrary.

Overview of the Stratus Building Solutions franchise:  According to Entrepreneur magazine, Stratus has 5,148 master and unit franchises in the U.S.. Stratus master franchisees sell unit franchises and generate commercial cleaning contracts in a designated territory;  unit franchisees pay for a “guaranteed” volume of commercial cleaning contracts, and perform the janitorial duties.

Beware of the Stratus Building Solutions franchise opportunity:

Widespread allegations of fraud by Stratus unit franchisees:  A class action lawsuit has been filed against Stratus Franchising on behalf of more than 100 unit franchisees and another lawsuit of 52 Hispanic franchisees has been filed against a Stratus master franchisee alleging that Stratus franchises are sold using deceptive and fraudulent methods, and that unit franchisees never receive the contracts they pay for.  In a Fox News report, the Stratus franchise opportunity is called a “pyramid scheme.”

Widespread allegations of fraud by Stratus master franchisees:  Master franchisees are claiming that they were defrauded into buying the Stratus franchise through illegal and fraudulent earnings claims, inaccurate and incomplete disclosure documents, and were not provided promised services and support.  At least one master franchise is suing Stratus Franchising and Stratus executives for fraud, while others are refusing to pay royalties and are de-branding from the Stratus system.

Internal instability and franchisee revolt:  Discussions among franchisees, attorneys and other parties on UnhappyFranchisee.com paint a picture of internal strife and instability throughout the Stratus system.  The largest master franchisees are reportedly going independent and forcing their unit franchisees to cease operating under the Stratus brand.  Stratus executives Dennis Jarrett and Pete Frese are battling lawsuits and open hostility from their franchisees.  Increasing press and Internet coverage of the allegations and lawsuits threaten irreparable damage to the brand.  Some think that Stratus could be on the verge of implosion.

A questionable and much-maligned business model:  Stratus Building Solutions shares a master/unit franchisee janitorial franchise business model with competitors Coverall, Jan-Pro, Jani-King and others that has been widely criticized and litigated.  Recently, a Massachusetts federal judge ruled that janitorial franchisees had so little control over their destinies that they are technically employees, not franchise owners.

A franchise industry smokescreen hides and protects bad franchises and bad franchisors

Despite strong evidence that Stratus Building Solutions is a troubled and high-risk franchise, Stratus Franchising continues to promote its franchise with to an unsuspecting public with the the help of  a smokescreen of awards by for-profit advertising providers. Stratus boasts that it has been awarded the 2012 Entrepreneur Franchise 500 ranking of #12 overall franchise, #1 Commercial Cleaning franchise, #1 Fastest Growing franchise, #2 Low Cost franchise, #2 Home-based franchise, #11 Global franchise; Inc. 500|5000 Fastest Growing Companies 2010 & 2011, Franchise Times Fast 55, Black Enterprise Top 40 Best Franchises for African Americans, Poder 360′s Top 26 Franchises for Hispanics and the 50 Top Franchises for Minorities by the World Franchising Network.

Note to prospective franchisees: You are urged to use extreme caution and seek the advice of professional advisors prior to signing any agreement with Stratus Building Solutions or similar janitorial franchise. Visit UnhappyFranchisee.com for more information.

Note to Stratus franchisees:  If you have invested in a Stratus Building Solutions franchise, please share your experiences at UnhappyFranchisee.com, or contact us at UnhappyFranchisee[at]gmail.com.  Help is available.

Note to industry professionals:  Franchise writers, editors, franchise list compilers, brokers, advisors, lenders and bestowers of industry awards are asked to refrain from promoting the Stratus Building Solutions franchise, and are asked to help spread this warning regarding Stratus Building Solutions.

For more information, see the full threat advisory at UnhappyFranchisee.com, or email us at UnhappyFranchisee[at]gmail.com.

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