STRATUS Franchise: Are Stratus Master Franchisees Jumping Ship?

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• Wow, it finally sounds like there will be JUSTICE for the people!

• I would not expect to get any official statement from Stratus. They are in total damage control mode now. The collapse we are seeing is pretty amazing considering that just three months ago, Stratus was making it known to anyone who would listen that Entrepreneur had chosen them as the #1 Commercial Cleaning Franchise. So what happened to get us to this point? The answer is that the Master Franchisees learned the truth. The got accurate information, only it was through the allegations contained in our lawsuits and not anything from their franchisor. What's interesting, is that after we filed our lawsuits, many of the Master Franchisees were behind a constant barrage of internet postings publicly attacking me and the Unit Franchisees. However, we knew that the Masters would eventually step back and evaluate the facts set forth in our lawsuits in light of their own experiences and realize that this system is truly a pyramid scheme. Many of them were pushed off dead center after the Fox News story in Kansas City. The Masters now realize that they were sold a bill of goods based on bogus figures. Amazingly, the Masters didn't really start comparing notes with each other until our lawsuit was filed. Stratus had been able to compartmentalize the operation in such a way that all communication went through Dennis Jarrett. His ability to control the flow of information allowed Stratus to isolate the masters. If a master asked about the performance of another master, they were told that such information was not relevant and they just needed to concentrate on applying the system to their own operation. What I find most interesting, is that the Master Franchisees were most upset by the information in our lawsuit that disclosed the Stratus was relatively new as the company had previously been a Master Franchisee of Jan-Pro. The importance of that disclosure is that it proved that Stratus had taken much longer to get the revenue it claimed came after only a few years of operation. That intentional misrepresentation will ultimately lead to Stratus' downfall.
  Now the question becomes what will these new companies do? Will they simply perpetuate the flawed system utilized by Stratus and the countless other franchisors. I would hope they have learned something in this ordeal. They need to understand that the interests of the Unit Franchisees must be considered in their model. Rest assured we will be keeping an eye on their operations. Status quo is not an option. This is not about increasing the propfit margin of the master. it must be based on treating all parties fairly and complying with the obligations contained in the franchise agreements. I am cautiously optimistic that we may see some change. I tend to believe that the Masters were defrauded and are victims also. However, these individuals were in a much better position than the Unit Franchisees to protect themselves.

  The one thing missing from all of this is any discussion of what will be done for the Unit Franchisees who were basically robbed? So far, the talks between the Masters and corporate have not included the Unit Franchisees. The masters must realize that their success will determine whether these new businesses succeed or fail. They will not be able to simply split away, take the Unit Franchisees with them, and just act like nothing's happened. The Unit Franchisees must be given some consideration for what flawed system put them through.

• Let us agree to the following and move on from there......

  a) Dennis Jarrett and Pete Freese, lied, scammed, mislead, committed fraud to the respective Master Franchisors first in order to get literally 200k plus from each and everyone of them in upfront licensing monies and quite literally millions of dollars from them in Royalty Payments, Franchise Notes, Territory Notes etc... Goes to the old saying "Fruit from the Poison Tree"! Without a doubt, they committed civil fraud, only question now because of the obvious violations in the Performa and other documents, the fact that those documents crossed state lines, the fact that those documents were used as the primary basis/proper of Masters all across this country to purchase licensing agreements, sign short/long term notes etc... if criminal charges may apply.

  b) The system as outlined and especially the model that the two of them directly copied from Jan-Pro is flawed on multiple levels.

  c) The Masters of Stratus as a whole and vast majority are good, upstanding, community oriented citizens throughout their respective states and areas. They are the linchpin of what is happening now in the system. They have discovered the truth, they are not taking it on the chin anymore and in fact by doing what they are doing are protecting the long-term rights of the owner-operators or unit franchisees of their respective offices.

  d) The Masters of Stratus were/are victims of fraud committed by the founders of Stratus. They are taking steps by withholding Royalty Payments as outlined previously, filing legal letters and/or lawsuits against Stratus Corp., have broken away/in the process of breaking away as outlined prior and are beginning to discuss things openly and seeing what the next step is to be taken quickly and hopefully uniformally.

  e) Some, I would be surprised if it is not at least 50% of the disgruntled unit franchisees have a legitimate claim of wrong doing....The question is really who is at fault? Master, Stratus Corp., Flawed Model. The other % is simply unhappy, unqualified, uninspired and quite frankly would have failed regardless of the support they got from the Master.

  f) You were attacked and looking back, wrongfully so.......

  g) Unit franchisees/Owner-Operators were attacked, many of them, wrongfully so.....

  I believe that there will be much more information coming openly and honestly in the coming days/weeks/months. At least give some credit to the Masters, this is a major/gutsy move, that to date, has not happened in the respective systems of Jani-King, Jan-Pro, Coverall to this extent.

• Reasoned Source, I certainly agree that the Masters have shown incredible courage in taking these steps so swiftly. There will be rough times ahead. If all parties can work work together to develop a system that allows input from all stakeholders, it could help the industry regain some credibility.

• Jon Fortman writes "Now the question becomes what will these new companies do? Will they simply perpetuate the flawed system utilized by Stratus and the countless other franchisors."

  The bullying, demanding, threatening tone of the letter from Paladin BS, Pro Squared or Pro2 or whatever they call themselves to the unit franchisees certainly doesn't indicate that a kinder gentler franchisor is being borne.

  The Master franchise defection reminds me of those creatures in mythology, where the hero cuts off one head and two more emerge. Instead of Stratus snakes, now there will be multiple brands of snakes across the US. Aren't these Masters the guys who did the deceptives franchise sales, the bogus terminations and the sleazy account swapping in the first place?

  Now they are morally outraged and indignant at the franchisor? Such chutzpah! If the masters are "good, upstanding, community oriented citizens," like Reasoned Source says, who did the scamming in their territories? Someone please explain this to me.

  Another thing I find puzzling is that this Paladin, Jeffrey Aibels, Casseri, etc. can demand that unit franchisees who were sold a STRATUS BUILDING SOLUTIONS franchise can be forced to throw out their logoed work clothes, destroy chemicals and business cards, change company names, debrand vehicles, modify equipment BY THE SAME PEOPLE who sold them on the Stratus brand and sold them those things in the first place! For these franchisees to be given two weeks under the threat of non-payment and termination is unconsionable.

  Unit franchisees are treated like indentured servants or slaves in this process. Pro Squared is certainly treating them like property. Too bad that the rebellion against Stratus just means "Masters" (or Massas - that sure is the right name for them) get to run their own plantations and keep all the plunder for themselves.

• I see a cycle of bad behavior, practice and ethics having the opportunity to continue.. If the court doesn't come in and shut down this "model" that Stratus has pioneered nothing is really getting accomplished. Pro2 and the others that have branched off can't possibly think their intentions are any better. They picked up bad habits that they are gonna enhance on. Pro2 and the others need to just pay their Unit Franchisees as what they have always been, EMPLOYEES, BUT at the decent wages they desreve.

• Guest, There are a couple of points that I would like to make that I believe may/may not answer all of your questions....Possibly Mr. Fortman could weigh in.

  a) My guess is the letter from Paladin was actually crafted by Stratus Corp. and had to be delivered to the Unit Franchisees as a final act of seperation under the terms and agreement between Paladin and Stratus Corp. Though I have no direct knowledge, I can honestly state for the record that Jeff Aibel is a good person, what was said in public is sometimes one thing, what is said as the letter was delivered by the management team of Paladin very well could be another.

  b) As stated prior, most/vast majority of the "Masters" in the Stratus Brand are good, honest, hardworking, family men/women.....I don't think but a very small % may have actually gone in with the idea of "fleecing the sheep", most went in with bright eyes and bushy tails and sold the system they were taught and believed in until Major Problems started happening with business owed not being filled, the Fortman lawsuits being filed, the flaws in the model were exposed etc....

  Finally, I think it is important to not only applaud but necessary to support these Masters in their endeavor, but let me remind all of you, that Stratus is a relatively new company in terms of age. Most of the Masters you are talking about have actually been in business as a Stratus Master for 4 Years or Less! Let us look at the respective ages of the "Big Three" for comparison and how long they have been in business, using the same model and how few if any, Masters have risen up against the Fraud, the Lies, the Model and the System Owners such as Dennis Jarrett and Pete Freese.

  You cannot protect the majority of the current owner-operators by simply having everyone go to court against one another, you cannot stop people like Dennis Jarrett and Pete Freese, now or in the future, by "swatting at knats" from the outside as the current cases on the books in numerous states have failed in actually stopping the Coverall's, Jani-King's, Jan-Pro's and others..... This Revolt is Real, this Revolt is the Master Franchisors actually Joining the Disgruntled, Lied Too, Disenfranchised Owner-Operators and stating for a fact that NO MORE will this type of Model, Behavior, Fraud be allowed to be committed in this industry...... The true way to Stop this Mess once and for all is to show a path for Master/Regional Directors of other so-called "brands" that if this can happen to Stratus, it can/will happen to you.

• I can also assure you that Pro2 Facility Services nor the rumored Co-op that is in the works have any intention of utilizing the unit franchisee model. The Co-op being discussed is completely removed from the unit franchisee and "business owed" model that Stratus currently, Jan-Pro, Jani-King, Coverall is utilzing.

  You need to understand the true "flaws" in the model in order to understand how this all came about and what is really about to happen to Stratus and hopefully this model as a whole.

  Be patient, Be supportive and I can almost guarantee you, the Fraud Artists that are currently in charge at Stratus will not be in this model/position much longer....

• Good points, Reasoned Source.

  Many of the most successful scams, historically, are those that make the victim enough of a partner in the fraud that they are reluctant to speak out or fight back, knowing their hands are soiled too. I think that's what makes the Master franchise relationship so diabolical, not just here but in health club, & other industries as well.

  Masters put up big upfront money with the only way to recoup their investments being to sell franchises. What happens if they realize that most unit franchises are not going to be viable? What happens if they realize the franchisor is a liar and a crook? They can't expose or even fail to defend the franchisor without kissing their chances of selling franchises goodbye. They have to find a way to justify selling franchises they know will fail. Maybe they are good people, or were, but their families come first, they've got loans to repay, perhaps some from friends and family, so they find themselves doing some unsavory things.

  What a great con game, for franchisors with no conscience.

  So if Pro2 and the other brave Masters (and I'm not being entirely sarcastic. They do finally have the balls to say enough is enough) want to change the game and do things on the up and up (unlike every franchise competitor, it seems), how are they planning to do that? I'm sure they are reading this blog by now. Are they willing to share the strategic model they are going to use that will stop this con game?

  I agree with Ex Stratus Franchisee. These unit franchisees are not business owners and shouldn't be classified as such. What business owner is forbidden from having a direct relationship with their customers? What business owner can be stripped of their company name and told to wear unmarked clothing? MA is right. They are employees.

  The challenge these Masters are going to face is kind of like what domestic manufacturers face competing with overseas sweatshops. Can a company treating its people fairly compete against those who abuse their employees (or franchisees) in a price-sensitive market?

  It would be great if these Masters shared how they proposed to do that. If they are sincere, it might make the legal attacks on them by their franchisees a little less intense.

• Guest, be patient and you will need to trust that what I am saying is true.....Not everything can be revealed at this time and certainly not in a "public forum" such as this. However, it won't take long....The Masters of Stratus have taken action, are taking action and will continue to take action until Pete Freese and Dennis Jarrett are either out of this business/brand or if needed, put in jail.

  The fraud that they committed is outrageous and does not solely rely on the false Performa given to the Masters in presentations all across this country and in Missouri. Those that are still supporting Dennis and Pete are dwindling in numbers literally by the hour. The financial costs that they would incur by fighting additional Masters, Fortman and other attorney's is taking a tremendous toll on them and they have a choice to make and very soon....They do not have the pockets of Coverall, Jan-Pro, Jani-King and the fraud that Dennis and Pete committed was in the beginning, was put in writing, was talked about to literally hundreds of potential Masters and the current Masters.

  These men committed Fraud in the most outrageous form, they did it in the beginning, did not change their FDD, did not see/did not care to see the EVIL position that they put good, honest, family men/women that are current Masters.

  Only real question left, do they leave in time, are they too stubborn to see the end, are they really willing to potentially go to jail?

  Time is of the essence for them and the brand as a whole.