Kevin Longe, Greg Longe, Rhino7 Sued for Fraud, Embezzlement

On the heels of initiating an arbitration complaint against the franchisor (as required by the terms of their franchise agreement), Spray Foam Genie franchisees Tim & Lisa Jamil have filed a lawsuit in U.S. District Court against all those not protected by the mandatory arbitration clause.  The complaint (included below) alleges fraud, common law embezzlement, breach of contract, and more.  The Jamil’s claim the deceptive and predatory franchise sales scheme of Kevin Longe, Greg Longe and Rhino7 et al cost them more than $1.3M in a little over a year.  By Sean Kelly

(UnhappyFranchisee.Com)  If the highly experienced and savvy sales pros of Phoenix Franchise Brands and Rhino7 banked on their franchisees going away quietly with their heads down and their tails between their legs, they’ve been getting a rude awakening.

The compilation of franchisee complaints we’ve been building is nearly 200 pp. long

(Support the Phoenix Franchise Brands Franchise Truth Report here).

We’ve been republishing & indexing the complaints of Fetch! Pet Care, Spray Foam Genie & Furry Land pet grooming franchisees here:

FETCH! Pet Care Franchise Complaints (Index)

We compiled the video complaints franchisees submitted to the FTC in a YouTube playlist here: 

Phoenix Franchise Brands, Greg Longe Franchise Investigation

SPRAY FOAM GENIE Franchise FTC Complaints (Video)

And now we’ll be following the important litigation filed in the U.S. District Court of Eastern Michigan, Jamil v. Longe et al

Complaint Alleges Fraud, Embezzlement, Misrepresentation & Breach of Contract

Kevin Longe, Greg Longe & Rhino 7 Consulting Company dba Rhino7 Franchise Development Company , Inc. are being sued in U.S. District Court,, Eastern District of Michigan for Breach of Contract, Violations of the Michigan Franchise Investment Law, Common Law Conversions and/or Embezzlement, Fraud and/or Misrepresentation.

Named in the suit are:

• Kevin Longe
• Greg Longe
• Maria Longe aka Maria Shinabarger
• Chris Ryan
• Keith Ryan
• Shelly Chavez
• Steven Longe aka Steven McEntire
• Riley McEntire
• Rhino 7 Consulting Company dba Rhino7 Franchise Development Company , Inc.
• Longe Acquisitions LLC, and
• Spray Foam Genie Managed Services, LTD

The Plaintiffs are Spray Foam Genie franchisees Tim Jamil, Lisa Jamil, and TL Jamil LLC of West Palm Beach, Florida.

The Jamils are being represented by attorneys Benjamin M. Low, Mark L. Kowalsky of Taft Stetinius & Hollister, LLP of Southfield, MI and Josh Brown and Manny Herceg  of Taft Stetinius & Hollister, LLP of Indianapolis, IN.

In the suit, the Jamils allege that the Defendants made numerous misleading and fraudulent representations to deceptively sell them two Spray Foam Genie franchises (Palm Beach, FL & Washington, D.C.) as a semi-absentee, “Investor Model” opportunity.

Since signing the Spray Foam Genie franchise agreement in March, 2023, the Jamil’s have allegedly lost more than $1,300,000.

The Jamils have a separate arbitration action against the franchisor Spray Foam Genie International, LLC (SFG).

We purchased the Complaint from the public PACER online database.

You may read & download the complaint here (our gift to you!): 

Spray Foam Genie Lawsuit Jamil v Longe et al

New Revelation:  Spray Foam Genie International, LLC (SFG) is “Partly Owned by Rhino7”

The suit alleges:

22. SFG is also, partly, owned by Rhino7, which owns numerous franchise brands.

23. Not only is SFG owned by Rhino7, but Rhino7 helps to operate SFG and its franchise operations with its franchisees.
24. SFG is also associated with Rhino Linings, a company which provides sprayed-on bed lining for vehicles and uses Rhino Lining’s products in its offerings to its franchisees.
25. SFG is also owned and operated by Kevin [Longe], Chris [Ryan], Keith [Ryan], and Gregory [Longe], who are the officers of SFG.
26. Gregory [Longe] also operates Phoenix with Maria [Longe].

The 2024 Spray Foam Genie Franchise Disclosure Document (FDD) does not disclose ownership by Rhino7, does not disclose an affiliation with Rhino Linings, and does not disclose any Rhino7 executives as part of the SFG management team.

The only mentions of Rhino7 in the Spray Foam Genie FDD are that 1) Doug Schadle & his son Joe Schadle of Rhino 7 are sellers of the Spray Foam Genie franchise, and 2) that Rhino7 and Doug Schadle are named in the arbitration complaint filed by the Jamils.

This revelation, if true, raises the question: Does Rhino7 have an undisclosed ownership stakes in other Phoenix Franchise Brands offerings as well?

In the Fetch! Pet Care franchise (also under fire)?  In Furry Land?  In Door Renew?

(We discovered another potentially major misrepresentation in the Spray Foam Genie FDD we presented here:

Is Steel Coated Floors Owned by Phoenix Franchise Brands?)

Spray Foam Genie Claimed its Initial Investment was $243,200 to $299,200.  Actual Cost Alleged: $1M+

The lawsuit alleges that the initial investment claimed by Spray Foam Genie was severely understated.

It states:

Defendants intentionally hid the amount of money it would take to launch the Franchise and how much money the Franchises would make in order to induce franchisees, like Plaintiffs, into entering into Franchise and Management agreements with them.

For example, the FDD stated the initial cost of a trailer rig was to be $20,000 to $30,000.

Actual cost, according to the suit:  $30,000 – $50,000.

The Plaintiffs allege that the insurance cost was represented in the FDD as $8,000 to $10,000.

Actual cost:  $40,000

In total, Plaintiffs allege that the total investment represented to be $243,200 to $299,200 exceeded $1,000,000

The Investor/Absentee Model is a Lie, Plaintiffs Allege

The allegations that Phoenix Franchise Brands & Rhino7 are selling the promise of a “semi-absentee/Investor model franchise” that they have no intention of delivering is echoed in the dozens of franchisee complaints recently submitted to the FTC.

The Jamil complaint states:

Plaintiffs purchased the Franchises under SFG’s Investor/Absentee model, which according to the Brochure and all related representations required Defendants to provide managed services and to operate the Franchises for Plaintiffs.

67. Defendants, further, represented that under the Investor/Absentee model Plaintiffs would not have to manage the Franchises, but that they would only have to provide the initial capital for the Franchises.
68. Under this model, Defendants represented that Plaintiffs would only have to meet once a month to go over financials for the Franchises.
69. Accordingly, Plaintiffs purchased the Franchises from Defendants and entered into the Management Agreement with SFGM.
70. Defendants’ representation proved to be false, as Plaintiffs were forced to work 40-50 hours per week on the Franchises, even though they were paying Defendants to manage most of the business, as Defendants failed to perform the work that they agreed to and were being paid for.
71. Defendants had no intention of providing the management services for the Franchises that they represented they would, and Plaintiffs were required to run the Franchises, and all of their operations, from day one.
72. Under the Management Agreement, SFGM was required to provide numerous services to Plaintiffs…
74. Instead of providing the services that it represented it would in the Management Agreement, SFGM took its significant fees and left Plaintiffs to fend for themselves.

Spray Foam Genie / Rhino7 Accused of Making Fraudulent Earnings & Profitability Claims

The West Palm Beach franchisees claim that the franchisor and Rhino7 misrepresented both the total revenue and the profitability they could reasonably expect.

According to the complaint:

96. Upon information and belief, Defendants also misreported and misrepresented the total revenue that they received from their spray foam operations.
97. Furthermore, Defendants misrepresented the profitability of its already existing franchises, which were owned by Defendants, by intentionally removing and/or omitting costs

Spray Foam Genie Kevin Longe & founder Chris Ryan allegedly promised the franchisees great returns and significant wealth, according to the complaint:

Kevin Longe and Chris Ryan met with the Jamils on Zoom several times before they executed any agreements for the SFG franchise and promised the Jamils they would be
millionaires.

Phoenix Franchise Brands and Rhino7 are facing similar allegations regarding Fetch! Pet Care earnings claims, as highlighted here:

Does Greg Longe Make Deceptive Earnings Claims?

Phoenix Franchise Brands Had no Intention – Or Ability – To Make Good on Their Promises

What’s striking about the suit’s allegations is its contentions that the Longes and the Ryans not only didn’t make good on their promises and obligations, it appears they never had any intention to do so.

This is evidenced by the fact that they didn’t have the staffing, programs or resources in place to fulfill their obligations even if they wanted to.

For example, the call center did not have the capabilities to make good on the promised services:

173. Defendants’ call center also does not have any dedicated sales people and/or estimators, as they represented it had; their management company did not provide the services they represented it would; and they
did not have the safety equipment and materials packages that they represented they had.
174. Defendants required Plaintiffs to pay $2,000 a month for the call center, which could not perform the functions they represented it would…

176. Defendants made their misrepresentations in order to induce Plaintiffs to enter into the Franchise Agreement and the Management Agreement with SFG and Defendants.

Franchisee Plaintiffs Seek Rescission, Damages in Excess of $1M, Costs, Interest & Attorneys Fees

The suit states:

Under the MFIL, the Officers, Rhino7, Phoenix, and the Franchise Sellers are jointly and severally liable for SFG’s actions and are liable to Plaintiffs for damages or recession, with interest at 12% per year plus reasonable attorneys’ fees and court costs.

146. Plaintiffs have been damaged in an amount to be determined at trial, but in excess of $1,000,000, exclusive of interest, costs, and attorneys’ fees by Defendants’ fraudulent inducement and violations of the MFIL.
WHEREFORE, Plaintiffs respectfully request entry of a judgment in their favor and against Defendants, jointly and severally, in an amount to be determined at the trial, enter a judgment rescinding the Franchise Agreement, and enter a judgment granting Plaintiffs interests, costs, and attorneys’ fees, together with such other and further relief that is just and appropriate under the circumstances.

Kudos to the Jamils, Josh Brown & Taft Stetinius & Hollister, LLP for Arbitrating AND Filing a Public Lawsuit

Open Justice, the legal rule that requires courts to conduct their proceedings in public, is vital for preserving justice and should be near-absolute in a democratic society.

Maintaining transparency and access to civil proceedings involving the franchise relationship is especially important in providing prospective franchisees information they need to make informed investment decisions.
This is the reason the FTC Franchise Rule mandates both disclosure of litigation and the inclusion of franchisee contact information in the FD
However, bad actors in franchising and their highly paid lawyers have become increasingly adept at hiding franchisee discontent through forced private mediation and arbitration, NDAs and good old-fashioned threats & intimidation.
As a result, bad actors continue to act badly and more law-abiding citizens, Veterans and military families go unwarned and unprotected.
Kudos to the Tim & Lisa Jamil, Josh Brown and the legal team at Taft Stetinius & Hollister, LLP for refusing to litigate their dispute in the shadows.
And kudos to the brave and principled franchisees of Fetch! Pet Care, Furry Land and Spray Foam Genie for refusing to be silenced and refusing to let future potential victims go un-warned.
A special shout-out to the AAFD and the Legacy Fetch! Pet Care owners of the IAFPC who put themselves on the line for the newer owners with oppressive contracts.

Invitation:  Please Share Your Opinion of Experience (Anonymity Assured)

Are you familiar with Greg Longe, Maria Longe, Phoenix Franchise Brands, or Cybeck Capital Fund?

Please leave a comment below or email us, in confidence, at UnhappyFranchisee[at]Gmail[dot]com.

Franchisors:  The franchisor, its employees and agents are invited to submit correction, clarifications, rebuttals or other opinions for immediate consideration.

UnhappyFranchisee.com is not associated with this or other franchise company or seller.

Tags:  Sprayfoam Genie, Spray Foam Genie, Sprayfoam Genie franchise lawsuit, Phoenix Franchise Brands lawsuit, Greg Longe fraud allegsations, Kevin Longe fraud allegations, Rhino7 fraud allegations,Greg Longe, Maria Longe, Rhino7, Chris Ryan, Keith Ryan, Shelly Chavez , Steven Longe, Steven McEntire, Riley McEntire, attorney Josh Brown