Sona Medspa, A Franchisee’s Tale
With $400,000 Awarded To Franchisee, Franchisor and IFA Try To Spin Awardings As Insignificant
As a party very interested in assuring that the truth is told about Sona MedSpa and my Arbitration case I have written the following response to comments of an arbitration “win” from Heather Rose.
Heather Rose, CEO of Sôna MedSpa stated, "This case was one of a string of cases brought against us. The coordinated attack on our business has utterly failed. We are pleased with the result of this arbitration, and even more pleased that our franchise partners are enjoying prosperity in their Sôna MedSpa businesses." - BusinessWire, June 7, 2007
I also want to respond to what Matthew Shay said in Franchise Times, June 2007 about the Sona arbitration. Mr. Shay is the chairman of the International Franchise Association (IFA), a position that Jim Amos of Sona Medspa fame has once shared and an organization he is active in.
“Based on the Arbitrator’s decision which overwhelmingly ruled against the plaintiffs, there is nothing the IFA deems worthy pursuing. To call one minor finding anything other than insignificant could frighten away other potential equity investors whose financial support provides the capital resources necessary for franchises to continue expanding and providing opportunities for prospective new investors. That could have a directly opposite effect and harm the very people some observers claim they are trying to protect --- franchise investors.”
Sona MedSpa is a true American tragedy, where many families lost their entire or a substantial part of their life savings. The losses are well in to the millions of dollars that these various families lost. It is about an imperfect if not actually fraudulent franchise model which simply did not work against any known medically proven concept. The business model was based on at best a deceptive cash based financial model.
This is a story about highly professional people (CEOs, JDs, MBAs, CPAs, MDs and other Professionals), who bought in to a “turn key” concept with a high cost of entry and then over time failed.
My name is Kempton J. Coady, III and I was one of the litigants against Sona in the recent Arbitration against them. Sona and Carousel did not overwhelmingly win in fact the Coadys “Won.” The following quote is from Mr. Garner of Dady & Garner, PC, attorney for the plaintiffs.
"We prevailed on negligent misrepresentation and recovered money ($400,000 not a small amount!). Sona, which had counterclaims against the Coadys originally in the range of $7 million dollars, (later trimmed down to somewhere between $1 and $2 million dollars) recovered 'nothing.
On my scorecard, that’s a win for my team and a goose egg for the other side. You don’t say that the team that wins the game by one run was the losing team. It was the winner, and win we did.”
It should be noted also that Jones, Wilson, Amos, and Rose of Sona and Schwabb, II, Schmidly, and Pitt of Carousel were found “personally liable” for the monetary damages.
Here are the facts about Sona, what happened and the terrible effects on the families of its franchisees.
Heather Rose
I see it is Like father , like daughter. Heather Rose is falling right in her father, Jim Amos' footsteps. Both are a disgrace to the franchise system.
Call It Insignificant So As To Not Scare Buyers
Another strange quote. This time by the IFA Chairman, Matt Shay, in the article above:
The quote calls the award insignificant because otherwise if it were big news it could frighten away equity investors of franchise chains (since they now have been ruled as fiscally liable).
The quote is an interesting window to a mindset.
Did $28,000,000 in losses contribute to local economies SONA
Did the $28,000,000 in losses contribute to the local economies and where did the money go?
Thank you Mr. Coady for sharing SONA MED SPA Mess
Thank you Mr. Coady for sharing your experience with Sona Med Spa and for having the courage and the moral fortitude to try to get your story out to help others.
I know it must gall you to know that these people are still selling this concept to others who will be injured with impunity and immunity under our laws.
It is hard to stand up in public and admit that you have been "had" and it takes a good man to share a bad experience with the view of doing good.
We hope that others will share their experiences with Blue Mau Mau and work to change the laws so that franchising is regulated at least as well as Securities are regulated by the SEC. The FTC describes franchising as an investment but ineffectively regulates franchising in the interests of stimulating the economy.
In retrospect, I know you realize that the UFOC is nothing more than a license for franchisors to operate and to sell their product, good or bad, to the public. It is not disclosure that protects franchisees. Instead, it does lull franchisees into a false sense of security, thinking that our government wouldn't allow scam franchisors to operate so freely and openly in our nation.
Amos goes on!
Amos & co. (Equity company) keeps going on and on with the many other equity companies stealing the retirment funds etc.
Former Mail Boxes Etc. chief takes Tasti D-Lite stake
Nashville Business Journal - February 21, 2007
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James Amos, the former Chairman and CEO of Mail Boxes Etc., has bought a stake in the Tasti D-Lite frozen dessert chain and will become the chief executive officer of the company.
Joining Amos on the purchase is SPG Partners LLC, a New York-based private equity firm.
The co-ownership amounts to an acquisition of the New York City-based Tasti D-Lite brand, which features a low-calorie, low-fat frozen dairy dessert. The chain has 34 retail locations throughout New York City and another 10 retail locations in Texas, New Jersey, Connecticut and Florida.
Amos, who moved to Franklin in 2002, wants to expand the company to 500 retail outlets within the next five years.
HEATHER & JIMBO
WHAT DO YOU REALLY EXPECT FROM THE AMOS CLAN....HONESTY...NOW THATS VERY FUNNY
ENRON
Most of the money was invested in high flying common stock issued by Enron just before it collapsed. Inasmuch as many of the Enron conspirators did their plotting and scheming at Muldoons Saloon in Houston (see "Smartest Guys In The Room"), much of the SONA franchisees' lost money went to Muldoons. That is the great unwritten story ofwhat happened to bible thumpin Jim Amos' money. In the divine justice of our almighty Creator, the fruits of his evil were lost to a greater evil (Enron) and redeemed at Muldoons.
Had SONA franchisees just gone and had a grand time at Muldoons instead of buying SONA franchises, the result would have been much better. Their bar tabs would have been slightly less than their franchise investment losses and they would have had a grand time and many stories to tell their grandchildren about their adventures in Houston.
See here for the full story
SEAMUS IGNATIUS MULDOON
www.FranchiseRemedies.com
Matt Shay and the IFA Line and SonaMedSpa
More of the same from the IFA who will never admit that there is such a creature as a flawed business plan. They work hard with PR to obscure the true risk of investment in franchises and, unfortunately, ZORS can succeed with profits when ZEES fail because the ZOR has no capital investment in the units that bear the brand name and the ZOR reaps profits in royalties from the gross sales when the owner is operating at a loss, breakeven, or at profit. ZEES are expendable under our laws because it is the ZOR success that feeds the economy in terms of jobs and revenue and taxes for government.
A proven business plan sold as a franchise may, in reality, be proven to only work 30% to 40% of the time but it must be remembered that all of the time the ZEES are out there attempting to prove the proven concept and operating at a loss, the ZOR is getting royalties on the gross sales and selling new franchises to replace the ones that fail and/or acquiring the benefit of the assets of the failed franchisees for pennies on the dollar. It can be said that the franchise is a proven money maker for the franchisor from the first day the door of the business is open.
Of course the IFA and Ms. Rose didn't want the mainstream Press to pick up on the SonaMed story and scare investors away. Of course, Ms. Rose would spin it as a victory for Sona Med, and, of course, Michael Seid was in here on Blue Mau Mau, defending the IFA and Sona and criticizing Janet Sparks for bringing the story to Blue Mau Mau and claiming it as a victory for the ZEE, Mr. Coady.
What is wrong with our laws? Why isn't franchising regulated at least as well as securities? Why is our government wearing blinders? Is Franchising really so risky that government is afraid to effectively regulate the franchisors?
Is this an unspoken policy of the Congress/FTC wherein government doesn't really care about the individual franchisee investors of SonaMedSpa who lost $24,000,000 because this $24,000,000 is circulating in the economy?
It was put in a lottery and I won it!
Are you that dense? Money invested resulting in a loss or gain goes back into circulation. Now if you want to get cute you can post how this natural market occurence is somehow a government/IFA/Congressional/SBA/AARP/FRANData plot to grow the economy on failed business development.
Go ahead make our collective days with some more of your ridiculous rantings.
GOOD POST
Thanks for keeping track of Amos. We need to warn folks where these crooks go. One day I hope the crooks will have a registry, just like sex offenders have - here on BMM, so we can track 'em.
Richard Solomon
www.FranchiseRemedies.com
Heather Rose
Hi, recently attended an IFA function where I sa Mrs. Rose in action. She was hanging off the singer in the band, drinking and partying. I know that she is a married woman but the didnt seem to matter to her. She is a disgrace to the board and can only imagine that she is on there because of her fathers influance. She was the talk of the event which left many of us embarassed. Maybe she could organize a college party but I doubt her ability to operate even a small company. There is a lack of leadership and ethics. I was ashamed to be a woman in franchising.
JT
So predictable...You just can't help it can you?
Guest writes - "Is this an unspoken policy of the Congress/FTC wherein government doesn't really care about the individual franchisee investors of SonaMedSpa who lost $24,000,000 because this $24,000,000 is circulating in the economy?"
Why yes there must be a government sponsored economic conspiracy to pump up the economy by promoting failed business development. Yes of course, why didn't I think of it? It was so obvious!
Are you mad?
Private Equity (PE) should buy Muldoons.
Muldoons seems to be a good profitable business so we should get a Private Equity co. to buy them and then where would Richard go to drink when they have bled all the profit away..If you think the money lost with SONA, Quizno'$, and many others is costly wait until many of the PE franchise purchases go belly up you should invest in mortuaries. God Bless Amos, IFA and Bush etc.
SBA/FTC pushing vehicles for fraud to VETS
Yes, I am predictable! I am still worried that the government, in an effort to stimulate the economy and produce jobs, is going to enable ZORS with unviable business plans to ruin my brothers and my sisters who served their country in uniform. Richard Solomon has told us that many bad ZORS are working the franchise community already and fraud is increasing.
You cannot deny ---you have to admit --- that there will be vehicles for fraud on the SBA Registry who will offer VA/Fran-Vet discounts to veterans who will be financiaslly and emotionally destroyed by the purchase of a proven business plan that is, in reality, a recipe for personal dissaster.
The risk of these franchise opportunities will continue to be obscured with the full help and cooperation of the regulators. THE PATRIOT EXPRESS LOAN Initiative may have been approved to honor those who have served their country in uniform, but you cannot deny that it is only the VET franchisee or his spouse who will bear the risk and the loss in failure. The initiative will be good for the banks and good for the ZORS as long as the collateral of the VETS supports the initiative.
If sophisticated and highly educated and successful people like Mr. Coady can become a victim of SonaMedSpa and fast-talking con artists, veterans who have had no business experience will be easy marks for the predator ZORS.
The FTC will continue to permit the ZORS to hide the risk in the interests of promoting a good economy and the States will continue to support the federal policy and status quo that protects the ZORS in their interests of stimulating business in their states to provide jobs for their constituents.
In the two or three or four years a ZEE is working to bring a business to breakeven, the economy will be fed, jobs will be provided, and local, state, and federal taxes will be paid. If the ZEE fails, maybe a second ZEE will take over the business for nothing and the cycle will continue.
Does the end justify the means?
ACQUISITION OF MULDOONS
I can absolutely guarantee that, working through me, there will be no problem getting Hart-Scott-Rodino clearance on the acquisition of Muldoons.
There are some intangibles that almost defy evaluation, though.
The Muldoonian Seminars program, for example, enables social interaction at a level beyond belief and usually thought of as beyond the capabilities of mere mortals. Our manual on getting along famously in any saloon setting, for example, is a priceless work of effective sociology in and of itself.
http://www.seamusmuldoon.com/fresh_meat.htm
Richard Solomon
www.FranchiseRemedies.com