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Independent business owners in Louisiana are being targeted by a new franchise scheme, one that is well-orchestrated by an industry veteran with a checkered past. Donald S. Boroian, founder and principal of the troubled Francorp Inc., a 40-year old franchise development firm that works with start-up franchisors is the culprit.
This time around Boroian is using a hired agent, Rocky P. McMillian of RPM Enterprises, to do the job for him instead of employees. The firm's mission, to pressure unsuspecting companies to franchise their businesses by making false promises and charging hefty upfront fees.
Two business owners who were caught up in the alleged scheme, SnoWorld and Vino! Piano Bar, are now being represented by Robert Einhorn of Zarco Einhorn Salkowski & Brito. The attorney sent the first "demand letter" to Boroian on January 23, 2017, stating that his firm "thoroughly investigated the sales practices of Francorp" and asserts that Rocky McMillian "fraudulently induced" his SnoWorld client to enter into an agreement with Francorp, signed on July 24, 2014. He said because the agent has since breached that agreement, the law firm is demanding rescission of the agreement and the immediate return of its $50,000 payment.
The letter states, "Specifically, SnoWorld, whose owners had no intention of franchising the concept before Mr. McMillian's aggressive sales pitches over the course of two years, agreed to enter into the agreement with Francorp based on the representation that Francorp had identified four buyers who sought to enter into franchise agreements with SnoWorld, and that the agreement with Francorp was necessary for those transactions to proceed." Attorney Einhorn said since the time that the agreement was signed and Francorp received SnoWorld's $50,000 deposit, SnoWorld has learned that the supposed buyers never even existed. He added that his client has not been able to sell a single franchise.
As a result of these latest alleged scams, victims are considering asking law enforcement officials to intervene, to stop the destructive pattern in which Rocky P. McMillian is soliciting business for Francorp, under Don Boroian's guidance. Another victim stated in a letter that he is considering filing a complaint in St. Charles Parish and the Louisiana Attorney General's Office. He is seeking restitution in civil court for all fees attained and personal investment loss "from this fraudulent Ponzi scheme totaling $31,485."
Boroian has previously captured prospects through its Francorp website, showing big name brands such as Hallmark, Ace Hardware, Holiday Inn, Century 21, Buffalo Wild Wings, Bridgestone, John Deere, Hershey Foods, Shell Oil and Jimmy John's restaurants as clients. Boroian had also sold his franchise consulting services at franchise expos, trade shows and conventions. Eventually, because of his disparaging sales practices, litigation and bad press he was banned from some of the events, including that of the International Franchise Association.
Francorp's website also features Ed Rensi, the former president/CEO of McDonald's Corporation singing his praises for Boroian, aiding Francorp's ploy to bring in paying clients. Rensi's glowing affirmation states, "Anybody that's a perspective franchisor or franchisee would be cheating themselves if they didn't engage Francorp. It's a one-stop shop that understands franchising better than any firm I've ever experienced. The quality of work, the dedication to deadlines is extraordinary." Rensi explains that there are a lot of pitfalls in franchising and if you don't have the best minds helping you to deal with those complex issues you can get yourself in a lot of trouble in a hurry. He asserts, "My recommendation is, sign them up, because at the end of the day it's about making money."
Recently, Bloomberg issued its online profile of Donald Boroian and his Francorp firm. It states that Boroian is a "published author, noted speaker and expert legal witness," and that Boroian is one of the world's most sought-after consultants in the field of franchise strategy and business expansion. The Bloomberg profile adds, "As an arbitrator and mediator of the American Arbitration Association, he is in great demand as an expert witness in franchise litigation."
Donald S. Boroian should have another credential added to his resume. On July 27, 2006, he surrendered to the Duluth Federal Prison Camp, to serve one year and one day for tax evasion. The franchise consultant was charged with failing to report $388,752 in income and $108,850 in taxes from Francorp. While imprisoned, he also attempted to fleece prison officials by conducting business out of his cell, even holding business conferences, a violation of federal law. When he was caught, Boroian was put in solitary confinement.
Since he was released from prison in 2008, Boroian has been embattled in legal disputes with clients, franchisor and franchisee, and accused of the unauthorized practice of law, blatantly promoting his firm as a one-stop-shop services in handling all facets of franchise development, including legal work. He has also struggled to pay federal and state tax liens and a $400K judgment brought against him by South Beach franchisee clients.
As of today, the Cook County, Illinois Recorder of Deeds, searching under Grantor/Grantee, lists numerous IRS federal tax liens and state liens against Francorp and Boroian totaling approximately $2 million, which does not include the South Beach judgment of $403,834. A telephone call to the clerk confirmed that if the amounts do not state "release," they are still active.
Business owners speak out
Darren Kraemer, owner of Vino! Piano Bar in Houma, Louisiana, an upscale jazz and wine bar, patronized by an older crowd, said he originally opened his jazz and wine establishment in November 2011. Kraemer knew Rocky McMillian as a friend of his brother in school and recently met up with him again. The Francorp agent convinced not only him, but also his family, who were helping to finance the establishment, that contracting with the franchise development firm would help him expand through franchising. When he brought him the agreement to sign, Kraemer said he didn't have the funds to pay it. Kraemer had to work at his day job for the past 13 years just to keep his business running. McMillian then convince the business owner to apply for loans, which eventually lead to his financial ruin.
Not only did Kraemer lose all of his money, and his family's money, he also had to close down his Vino! Piano Bar business because of what he says was the deceitful tactics of Francorp. Kraemer said he is now in the process of filing for bankruptcy, that he had lost $240,000 as a direct result of his dealings with Rocky McMillian. He breaks it out like this:
"As a direct result of Rocky McMillian's direction, advice and persuasion, I spent over $100,000 directly on expenses for architect design work, a trip to Francorp headquarters, and the interest on loans I used to finance it all, as well as other items he required. To pay the interest on that money and the additional money I borrowed as a buffer in case I needed more, I borrowed approximately $200,000. That was a result of the Francorp agent instructing me in my business.
After reaching the point of the money being gone from using it to pay the monthly note (small high-interest loans, 21 to 29 percent), I borrowed approximately $40,000 from friends and family. My total debt then, as a direct result of Rocky McMillian, was just under $240,000. Although I had some prior business debt, $60,000, the grand total I now owe for the business, after getting involved with Francorp, is approximately $300,000.
Now that his business is closed, Darren Kraemer said he now has about $200,000 of total business debt that is coming at him personally from lawsuits and demands. "I had personally guaranteed some of the loans I took out, and I definitely want to try to repay my friends and family. So, as a result of getting involved with Rocky, I have to declare bankruptcy," he explained.
That is not the end of his story. Darren Kraemer's son has been dealing with a serious problem with his heart, a chronic condition that he has to live with. Because it is vital that he gets further treatment at the Mayo Clinic, Brooke Carrere, owner of SnoWorld, and other business owners are helping him. Because Kraemer has to drive to the Minnesota medical facility, they are organizing a benefit and "go-fund-me" to help with his expenses.
Brooke Carrere wants people to know she had no intention of franchising her business when she was encountered by Rocky McMillian, she said it was a business she had been in for 24 years. After being pressured for four months, she began considering McMillian's offer, thinking it could be exciting to expand and share her product with others outside her area. "But it turned into a nightmare." Before she got involved with Rocky McMillian and Francorp she had no debt. She exclaimed, "Now I'm $175,000 in debt. I'm not going to close my company but now I have to refinance it to pay these new bills, because Francorp never came through." She said she is now involved in that process.
Carrere feels the money Don Boroian is getting off these scams should be seized by the government. "He shouldn't even have a valid bank account to clear those checks. All of his accounts should be frozen." She expressed that it isn't just about the money she's out because of Francorp and McMillian. It's also about the stress, physically and mentally, going through it for the past two years. "If this is what franchising is, I don't want to be in that world."
Paradis, La. 70080
RE: Fraudulent Case (Rocky McMillian) RPM Enterprise
In 2015, I was approached by the above mentioned business for purposes of franchising a company called Brooke’s SnoWorld here in Luling, La. He promised 100%financing for the entire project from the start. He was on point for creating and financing a package deal that would break ground, turnkey process. During the process, he asked that I secure a lot to show his undisclosed investors I was serious about pursuing this project build. An investor for a Mr. Ronnie's Donut shop and I picked out a lot on Hwy. 90 for the build because we were going to break ground with a dual build project. He is also involved with being scammed by Rocky. Together, we put a down payment on the lot for $15,000.00 paid to a Nanette Vial (Real-estate Agent). After securing the lot, Rocky then approached me again and mentioned that I would need to pay for an architect (Architects Plus), a partner of Rocky's, in Baton Rouge to try preparing the lot for build. Architects Plus had me sign with them a contract and pay $5000.00 for Schematic Design and Construction Documents. Site adaptation invoiced was $2,460.00, also subdivided the lot invoice was $1000.00. Rocky also worked with another surveying company called Quality Engineering & Surveying, LLC.I was invoiced for Construction plans, Drainage Analysis, and DOTD Permitting totaling $8,025.00. With all of this invested, I was promised by Rocky full reimbursement as soon as his investors financed my project. After putting my name on all of this and being billed for all of this, Rocky has disappeared and has not come through with his financing obligations. In fact, after contacting other investors, they too have not had any luck with Rocky's plan.
Remainder of Letter Redacted
|RME to Boroian Re. Miss Bee's Sno World 1.23.17.pdf||61.08 KB|