Sona MedSpa Has Aversion for Standard Accounting Practices

Posted Fri, 2007/06/22 - 16:36 by Janet Sparks

Sona Advocated Cash Accounting in Lieu of GAAP

Writer's Note: A previous Sona article in Blue MauMau sparked a considerable number of questions regarding Sona MedSpa's accounting methods as shown in its Uniform Franchise Offering Circular. By way of further clarification, I'm contributing to the ongoing discussion by providing Sona's 2003 UFOC and a franchisee interview regarding it. The pdf file that was mostly image was converted by Mr. Blue MauMau to a pdf text file by an OCE text reader to shrink the memory space used. As a result, some of the text has typographical errors, e.g., franchisee can sometimes read franchmee.

FRANKLIN, Tenn. (Blue MauMau) - The UFOC of Sona MedSpa (pdf, 203 pgs) shows how its financial statements were not based on General Accepted Accounting Principles (GAAP), says a franchisee. The franchisee explained that the reason people became enticed by the business concept was that when they looked at the UFOC, they saw financials that were cash based. GAAP observes accrual accounting, in which revenues must be matched in a timely fashion to expenses associated with the delivery of services. He said Sona tells you that 93 to 95 percent of the time it would take five treatments for the hair removal process, which is a very complex medical issue. So when franchisees sell packages of five treatments, they don't fully recognize that it takes 12 to 19 months to deliver those services. He said, "They showed cash-based numbers, so it was very deceiving to even those who had high-level executive backgrounds." He said he knows of two franchisees who were CPAs and they didn't figure it out until they were well into the franchise.

The franchisee explained that Sona tells franchisees that they have to continually promote to get new clients, which is another huge expense, and by doing so you are then able to fund future treatments. But he said you soon realize you are going to run out of money if you continue to operate the way they want you to. Even though Sona knows you will have the expense of supplying the treatment later, he said it takes out its royalties from your upfront money.

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123 Comments

UFOC States Earnings Are Cash Based by Bob Frankman

Submitted by Bob Frankman on Sat, 2007/06/23 - 12:40.

At first glance I don't see Sona Medspa trickery in regards to accounting practice.

The accountant, James Hammond, says on pdf file page 192, "I conducted my audit in accordance with auditing standards generally accepted in the United States of America." The financials of Sona Medspa head office look like they are accrual-based.

Sales, cost and earnings statement for the stores start on pdf page 192. Page 203 specifically says about these center earnings statements, "You should note that the statements are cash flow statements, not accrual statements."

Frankman

Sona stupidity? by Paul Steinberg

Submitted by Paul Steinberg on Fri, 2007/06/22 - 17:12.

[Note:I don't see the attachment (the UFOC) which you reference. Could you please post link to the attachment? Thx.]

when franchisees sell packages of five treatments, they don't fully recognize that it takes 12 to 19 months to deliver those services

How could they not "fully recognize" the time frame. Your doctor says "You will have to come back 5 times to get the procedure completed" and you don't inquire about a time frame??

He said he knows of two franchisees who were CPAs and they didn't figure it out until they were well into the franchise.

If you are a CPA and you don't know the difference between cash and accrual, you shouldn't be a CPA in the first place. And if you know you should be using accrual, but use cash instead, then you reap what you sow.

Sona tells franchisees...get new clients... and by doing so you are then able to fund future treatments.

So, since Client A didn't pay enough to cover the expense of the 5-treatment program, you get Client B and take that money to fund your expense to provide treatments to Client A, and of course Client C pays money to fund the treatments for client B... The franchisor tells you this at the outset, and you still buy?

Not to be mean, but as one who is supportive of franchisees, even I must say these people are some of the dumbest folks I have seen. I am deeply suspicious of Jim Amos, and of the whole concept of medical franchises, and I am not surprised to hear that Jim has bagged a a few more suckers, but... I've got a 3 year-old niece smarter than these franchisees.

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

I would remind everyone..... by Tinker

Submitted by Tinker on Sat, 2007/06/23 - 14:58.

that this SAME issue has been addressed in the past with many of the internet companies having to 'restate' their financials because they posted 'future earnings' as revenues. And yet, the financial giants of wall street and all their experts in the field didn't address this issue with their investors until it hit the fan. It was the SEC that roped this practice in and although it aided in the inevitable deflation of the internet stock bubble, it sent the message loud and clear. A sale isn't a sale until it is EARNED..................to say otherwise is fraud.

I just wanted to remind everyone how easy this very sticky issue can be overlooked by the best of them so we can stop throwing the Sona franchisees under the bus with the blame and name-calling.

Rhino Super Center

Lisha

Rhino Super Center

Paul is hard on Sona Franchisees by Guest

Submitted by Guest on Fri, 2007/06/22 - 18:47.

Paul! Maybe, it was because there was so much money involved and because of the credentials of Jim Amos with the IFA, etc.. and his reputation for developing the MBE Stores and selling them to UPS that these franchisees TRUSTED the franchisor of Sona with their capital. If you read the comments of the plaintiff's in the Sona case that were quoted by Janet Sparks, you understand that it was their trust in Jim Amos as a good Chistian man that put them off guard and made them feel safe in their investment. Not smart ---but understandable and the personal connection is always a part of the scam.

Sona Accounting! by FranSynergy

Submitted by FranSynergy on Sat, 2007/06/23 - 12:55.

After reviewing the 2003 Sona MedSpa UFOC --- it becomes pretty easy to understand why franchisees of that 'generation' were unable to understand their accounting needs ---

Anyone who read that UFOC and then signed that agreement (as is) obviously had far MORE MONEY THAN SENSE. My grandaddy always said:

"When a Man with Money meets a Man with Knowledge -- It is a very short period of time before -- The man with the money has the knowledge and the man with the knowledge has the MONEY!"

This would certainly seem to be applicable in the case of SONA & its early franchisees.

Personally I am not opposed to franchising concepts like Sona, and they can be very lucrative opportunities for the right Zee, IF proper guidelines, franchisee selection, training etc... are in place and strictly enforced. Nor do I believe that Jim Amos or Heather Rose are as bad as they have been made out to be. I will say that ANYONE who signed the above referenced agreement may honest - may be nice - may be a lot of things, but definately NOT the brightest bulb in the chandelier (at least when it comes to understanding a franchise agreement).

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Sona a Very Complex Story by Guest

Submitted by Guest on Sat, 2007/06/23 - 14:59.

First this is an extremely complex story. This is a story, which included a large part franchisor (Jones, Amos, and Rose) appeals to God (Evangelism) and Country as somehow justifying what franchisees were being told. Not only did CPAs get involved here as franchisees; but there were also CEOs of large companies and Doctors (MDs) who bought into the Sona model. Credit must go to the franchisor; who developed this elaborate medically complex charade. Franchisees were told that Sona had a superior methodology for removing all hair with laser hair removal; which would yield a 93% to 97% removal of hair in five treatments no matter what hair color, or skin tone. They were told this was supported by a huge proprietary data base of 50,000 patients. The truth is that none of this was or has been medically proven; and there are actually an indeterminate number of laser hair removal treatments required depending on the individual. This is according to the American Society of Dermatology which has studied extensively the process of laser hair removal. This was reflected in the Coady arbitration result. In the initial sale all numbers were represented to prospective franchisees on a cash basis. In the UFOC (p. 200) you will see cash sales numbers for several existing corporate owned stores and franchisees. On the next page you will see expense numbers for corporate owned stores at various sales levels. Yes, there are warning footnotes; but everyone was told this is what they could expect. Accrual accounting was only mentioned as something you used for tax purposes. During the tenure of Dennis Jones et al and Amos and Rose all that was ever talked about were the cash based sales numbers. Indeed, the royalties came out of these cash based numbers upfront before the services had been rendered. This “purported” superior process called the SonaConcept took 12 to 19 months to complete. Packages of five treatments with a purported 93% to 97% success were sold to consumers. The consumers who complained about lack of results were told by franchisees, which had been told by Sona the franchisor that they really needed to see the process through and be sure that their treatments matched Sona’s known hair growth schedule. By the time 12 months or more had gone by the franchisee found themselves locked in to a huge unfunded consumer liability based on previous five treatment packages sold. In addition, the consumers demanded more treatments, because 5 treatments simply did not work in almost all cases. The only way to fund this mounting liability was to sell more laser hair removal first time clients. There was a chorus of early franchisee complaints (litigation, attorney general actions) against Sona the franchisor. Despite this fact, the Sona franchisor would sell more franchises. Jones, Amos, and Rose made these sales on the recommendations of the seeming “fantastic” cash flow success of “new” franchisees early in their tenure, that is, open less than 12 months. As mentioned Sona the franchisor advocated running the business on a cash basis with little regard to GAAP accepted accrual based accounting where funds would have been reserved for future treatments. Eventually, all franchisees found that the expenses of running the business exceeded both the Cash and of course the Accrual Revenues from the business. There simply was no money to be reserved to cover future services. The only way franchisees supported their businesses was by adding new lasers and in some cases building new centers and by adding more first time clients. Eventually though this deck of cards crashed, as franchisees ran out of money. All Sona franchisees, which made it that far, began to fail soon after their 2nd year in business. This included the Sona’s oldest flagship franchisee in St. Louis, MO. Early on the latter was the St. Louis, MO franchise they pointed to when they sold to other franchisee prospects. Most families lost their entire life savings. All franchisees under the Sona model will eventually fail. Sona the franchisor needed to keep selling franchises though in order to generate more cash from the franchisees and royalties from these new franchisees. Therefore, despite their awareness of franchise failures and increasing litigation; attorney general actions to protect consumers when Sonas failed and did not deliver their promise to consumers; the franchisor (Jones, Amos, and Rose) continued to/continue to (Rose) sell franchises.

Under the Bus. by FranSynergy

Submitted by FranSynergy on Sat, 2007/06/23 - 15:34.

There is a big difference between a publicly traded internet company and a small locally owned and operated franchise business.

You have a background in Accounting!

It's really simple ... here at FranSynergy client can pay us by the month or they can save a little and pre-pay for the year. When they prepay - the pre-payment goes into a a 'reserve' account totally seperate from our operating account. On the first of each month we write ourselves a check from the 'reserve' acount equal to 1/12 of the amount paid times the number of active clients who have pre-paid which is then deposited into the genral account.

You would think that most anyone could figure out that if you get paid $500 in advance for 5 treatments spread over 12 months, and you expect to do this in large volumes --- it might be a good idea to do something similiar. This however is 'poor management' by the franchisee and I'd guess much more of an 'excuse' than anything. If a franchisee had an accountant who let them do otherwise shame on them. If SONA taught otherwise shame on them. Ultimately it is shame on the franchisee for not tending to this aspect of owning and operating a business more effectively.

However the MUCH BIGGER question to me is how anyone could agree to the overall 2003 agreement! So I agree don't throw people under the bus for being a bad accountant, but don't feel too sorry for people who get run over by the bus when they fail to read and understand agreements which they are signing and fail to obtain competent financial guidance.

It should also be noted that in 2003 Jim Amos and Heather Rose were not running Sona MedSpa.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Sona's Misleading Founder by Guest

Submitted by Guest on Mon, 2007/06/25 - 00:10.

The following excerpts are taken from a Bison.com interview of Sona's Founder Dennis R. Jones in 2003: "Sona’s rapid growth is unprecedented in franchise history. Sona started franchising in June of 2002 and currently has 145 centers under contract, making it the largest laser hair removal company in the world. That’s going from zero to 145 in just 17 months!" "The patented Sona Concept determines the timing of the area’s growing phase and then treats that area accordingly. That’s what makes us so very successful in what we do.” "Our profit is through revenue sharing, so we only make money when the franchisee is successful." "Sona Laser Centers operate at 60% gross profit, and all but two franchise centers have had a positive cash flow from the first month of opening." (Note from Guest: Founder, Dennis Jones, and CFO, Tom Noon, advised franchisees that it was a legal and acceptable practice to use the cash flow from deferred revenues for operating capital. Most, if not all, of the franchisees had ever seen a business model whose sales were derived totally from deferred revenues. Unfortunately, the franchisees had relied on the franchisor and his accountant to explain the UFOC document and its Earnings Claim.)

HHMMMM........Maybe you by Guest

Submitted by Guest on Sat, 2007/06/23 - 12:43.

HHMMMM........Maybe you should have contacted the MBE franchisees. We did contact many of you :)

Outrageous Franchise Fees by Bob Frankman

Submitted by Bob Frankman on Sat, 2007/06/23 - 13:39.

The Sona Medspa franchise agreement is on pdf page 71. Of note is the royalty payments on page 78. It says, "You must pay us [franchisor] a laser placement, servicing, marketing and consulting fee equal to 27.5% of LCP Sales". The lower the revenues of the franchisee, the higher it must pay in royalty - up to 27.5%. If you are a franchisee pulling in consistently over $100k/mo ($1.2 million per year), you can pay as low as 17.5%.

Then, of course, the agreements lists all the other franchisor fees to be paid.

How could a prospective franchisee sign such an agreement? And how could a franchisor in good conscience ask it?

Frankman

Tough Love by Paul Steinberg

Submitted by Paul Steinberg on Sat, 2007/06/23 - 14:22.

I agree with Frankman...a bit of tough love is in order. Franchisees must assume some responsibility here; your state regulator is not your momma.

Sona franchisees were (with some exceptions) fairly well-educated, financially successful people. There are a lot of instances of franchisors fleecing vulnerable people, but that doesn't appear to be the case with Sona MedSpa.

To date, the publicly-disclosed documents leave zee-side advocates to wonder how these folks managed to tie their shoelaces, let alone buy an expensive franchise.

As to your thoughts:

Sometimes people assume (mistakenly) that with big money involved, there is greater integrity, true. But that is illogical, and even if the prospective purchaser thinks that way, the purchaser's counsel (tax and legal) are paid to know better.
With regard to Amos, not only was his track record known, but a number of his prospects were actually put off by his "praise Jesus for giving mankind the gift of franchising" bit... and they bought anyway!

It reminds me of Times Square (pre-Disney) where the 3 card monte dealers and "Rolex" salesmen would part gullible tourists from their cash. Much as Jim Amos would cringe at the analogy: a biologist would find such behavior evolutionary adaptive; a fool and his money being parted does have some upside for the species.

If anything, these Sona zees are an argument against franchise legislation insofar as one finds validity in the moral hazard considerations in legislation and jurisprudence.

You can't entirely fault Amos for plucking the ripe fruit.

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

Dale: Yes and No by Paul Steinberg

Submitted by Paul Steinberg on Sat, 2007/06/23 - 15:41.

Yes, one wonders why anyone would sign the agreement.

No, it is not the bigger question. You find it to be so because you don't practice voodo accounting the way the Sona franchisees did. As a result, if you don't provide product to your customers, you can give them a pro-rata refund. On the other hand, the Sona franchisees spent money that they hadn't earned, and then complain that they don't have the money to refund to the customers who paid for these medically-worthless procedures.

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

Franchisors Continue to sell Sona franchises --Complex Old Story by Guest

Submitted by Guest on Sat, 2007/06/23 - 16:22.

In the last paragraph, the Sona guest explains that "Therefore, despite their awareness of franchise failures and increasing litigation' attorney general actions to protect consumers when Sonas failed and did not deliver their promise to consumers' the franchisor (Jones, Amos, and Rose) continued to/continue to (Rose) sell franchises. And, we might add, continue to use PR and the spin on the Arbitration Award for negligent misrepresentation to spin the "value" of the Sona franchise. Just more of the same but some franchisors get special dispensation under the law to sell unviable and unsafe concepts to the public and government turns a blind eye to the practice. If these Sona franchisees didn't come up with the royalties, Sona Corporate would have had an injunction from the courts before you could bat an eye. It appears that some people's money is more important than other people's money and there is an imbalance of power in the franchisor-franchisee relationship that is public policy and supported by the rule of law and the status quo.

Sona: Seeing What We Want To See by Bob Frankman

Submitted by Bob Frankman on Sat, 2007/06/23 - 17:32.

"Yes, there are warning footnotes [that the financial statements were cash-based]; but everyone was told this is what they could expect. Accrual accounting was only mentioned as something you used for tax purposes." - Zee Guest

Written warnings in big blocks ignored. An intelligent buyer (along with his financial advisor?) accepting that accrual accounting is only meant for tax purposes??

Wow!!

Talk about selectively seeing what one wants to see - stars in our eyes over a franchise concept. I understand how doctors might buy into someone with probably a liberal arts background erroneously explaining accounting principles in order to sell a store. But what is amazing is that bright MBAs like the Coadys bit off on such stuff. And according to a guest, CPAs too.

What kind of dispassionate advisor would let this stuff get by them? Over-worked? Ill-informed?

Frankman

Sona frying pan by Paul Steinberg

Submitted by Paul Steinberg on Sun, 2007/06/24 - 14:35.

The dubious medical claims are potentially of use to zee litigants. The problem is that to draw attention to the matter is to go from the frying pan into the fire.

If zees admit in pleadings that Sona is retailing snake oil, the customers will demand their money back and likely commence a blizzard of lawsuits. Since the zees already spent the customer's money, it is in the interest of the zees just to continue giving these "treatments". In addition, highlighting the medical question will make it impossible to sell their outlets.

Dale Nabors says he hasn't seen franchise laws used to hide or deceive. As happens with disturbing regularity on this site, Dale is wrong and I am right ;) (information overload, the FTC disclaimer page pitched as an implicit endorsement at sales meetings, etc), but regardless of whether Dale or I is correct in the abstract, in this specific case there doesn't seem to be an issue of deception on the main point of Sona franchisee discontent.

The main reason the zees are complaining is the high fees paid to the zor. Well, fees are clearly disclosed in the UFOC.
The zees complain that once they realized they would never make money, they engaged in a quest to lure in new public customers to garner sufficient cash to postpone the day of reckoning. Um... that's called a Ponzi scheme. Are franchisees really going to admit to such activity in sworn pleadings?
The zees complain that because the zees chose to immediately spend money for services not yet rendered, they can't give back the customer monies. What chutzpah!
The zees complain that the CPAs and legal counsel hired by the zees didn't stop the zees from using cash basis accounting. If this were one of those cases where the zor mandated the use of a particular accounting firm or software, that would be a valid complaint. But did the zees hire their own accountants? Heck, some of the zees were CPAs!

There are good reasons for the passage of franchise relationship legislation. But nobody on the franchisee-side is going to man the barricades defending these Sona franchisees, because folks like Flanagan, French, or Seid would quite effectively seize upon such defense and ridicule it-- rightfully so.

There are a lot of horror stories that support zee-side advocates. But, much as I would like nothing better than highlighting another example of how Amos suckered hapless franchisees... Sona ain't one of 'em.

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

The Size of a company by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 10:07.

really has no bearring on which accounting method to use. Accrual is the most widely used and accepted method because it is the most 'realistic' when financials are used to demonstrate the health and trends of any business. I too am at a loss as to why SONA's accountants would even set up the business under the cash method especially given the fact that the business model requires prepayment for services that won't be 'earned' for such a length of time. However, I can see the method being used so as to give a false image of profitability which gives me a very low opinion of both the company and their accountants who were involved in this. They have done their profession and the franchisees a great disservice.

Rhino Super Center

Lisha

Rhino Super Center

Tough Love and Sona and Ineffective Regulation by Guest

Submitted by Guest on Sat, 2007/06/23 - 15:04.

It is comforting to know that even those people with great amounts of money are led into a false sense of security by government regulation of franchising. When they and their attorneys(?) looked at the UFOC and the franchise agreement, they apparently thought that the terms of the agreement were not negotiable and that if they wanted to get "in on" making a lot of money, this was the only deal in town. It would be interesting to hear from the Sona franchisees who suffered great losses from the Sona deal! I assume the franchisors of Sona put lots of money in their pockets from the pockets of the Sona franchisees. While you attorneys who post on Blue Mau Mau have seen everything and are suspicious by nature of those who would pick your pocket while they are shaking your hand, the average purchaser of a franchise doesn't come from this position. Frankman isn't an attorney but he is cynical or "realistic" by nature and "street smart.! Come on! Give the Sona franchisees a break. If they were fleeced, they were fleeced by experts.

Cash Flow is King. by FranSynergy

Submitted by FranSynergy on Sat, 2007/06/23 - 15:55.

The reason that I suggest that the signing of THE AGREEMENT is the BIGGER QUESTION comes down to if one does not sign the LAME agreement one is not concerned with the accounting issues.

Bad Agreement = Shame on Franchisor for creating & Shame on Franchisee for signing.

Bad Accounting, spending money not yet earned, not maintaining reserves for future services etc... bad business management by franchisee. Shame on Zor if this is what they taught Zor -- but CASH FLOW is the responsibility of the ZEE.

NOTE: If you're in business Cash Flow is KING. A business can operate way to long with poor profitability, but CASH FLOW WILL GETTCHA QUICK.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Does the tube run directly from the IFA to the FTC by Guest

Submitted by Guest on Sat, 2007/06/23 - 16:25.

One wonders?

A Sona Note: by FranSynergy

Submitted by FranSynergy on Sat, 2007/06/23 - 16:53.

It should be noted that:

Coady testified that Jones told him that Sona's laser hair removal system removed 93-97 percent of a person's unwanted hair in five treatments;
Carousel/Amos/Rose acquired Sona - after Coady acquired the franchise but prior to opening the franchise.
Coady was awarded nearly $400,000 for the costs of making good on the promises made to customers i.e. 93 -97% of hair removed in 5-treatments.

It would seem to me that the Arbitrator simply awarded the cost incurred by Coady in performing the extra procedures required to remove the hair, because SONA had not disclosed the fact that they'd discovered the information to be false.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

commission dependent by Guest

Submitted by Guest on Sat, 2007/06/23 - 17:50.

"What kind of dispassionate advisor would let this stuff get by them? Over-worked? Ill-informed?" One who's commission check depends on a transaction. FRANMASTER

Mr. Frankman the Answer is Simple by Guest

Submitted by Guest on Sat, 2007/06/23 - 19:41.

The franchise laws as they exist were used to mask the truth. No franchisee results we were told could be presented. No accrual results from corporate owned centers were presented as part of the UFOC. In simple fact people were lied to or truth distorted by franchisor representatives with seemingly great credibility.

Tough Love ----False sense of Security UFOC by Guest

Submitted by Guest on Sun, 2007/06/24 - 15:52.

I think Paul Steinberg and the Minister for Industry of the United Kingdom would agree. The Minister has suggested that government regulation might present the appearance of government endorsement and provide a false sense of security for British citizens. The government of the UK does not regulate franchising. Government regulation does, perhaps, present a false sense of security to "marks" and "if anything, these Sona zees are an argument against franchnise legislaton insofar as one finds validity in the moral hazard considerations in legislation and jurisprudence."

Tinker - I agree! by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 10:28.

I agree with you entirely. My reference to the difference between a Public Comany and a small franchised company had to do with your comparison between the Sona situation and the Internet Companies.

I may be mistaken but aren't public companies now required to use accrual as their method of accounting?

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Paul Doesn't Get It by Guest

Submitted by Guest on Mon, 2007/06/25 - 11:32.

All sona franchisees were lied to about the fundamental science of laser hair removal, that is, timing of treatments, number of treatments, and even the types of people that can be treated (for example, lasers do not work on blonde, grey haired people or fine velous hair on darker skin tone facial hair). Did each franchisee need to hire their own Dermatologist to tell them these were falsehoods or wasn't it the responsibility of the Sona franchisor (Jones, Amos, Rose)and Carousel Capital Partners II (Schwabb, Pitt, and Schmidley) to know the truth through their due diligence and to to then the truth to frnchisees?? When one buys a MacDonalds is it their responsibility to check every shipment for rancid meat (Not that I believe this is ever necessary!!). The fraudulent science misrepresented in the financials is what caused the business failures. Mr. Steinberg I admire a person like yourself, who has been able throughout life to always detect those who are lying to him. In this case, the lies were BIG so even suspecting they were lies was hard to fathom, that is, at their corporate centers they were already treating thousands of patients. the problem is even they were new and it took 12 to 19 months to see the problems.

I have to disagree with the following..... by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 11:43.

"You can't entirely fault Amos for plucking the ripe fruit"

If a man stands in front of you with his wallet sticking out his back pocket, some may call him careless, naive or even stupid.................but the man who STEALS that wallet is still a THIEF. The victims naivete or lack of due dilligence does not make his crime any less a CRIME.

Rhino Super Center

Lisha

Rhino Super Center

REMEMBER SONA MED SPA EQUALS... by Guest

Submitted by Guest on Mon, 2007/06/25 - 15:12.

JIM AMOS & DARLING HEATHER ROSE = ANOTHER FAMILY RUN SCAM..THE FAMILY THAT SCAMS TOGETHER PRAYS TOGETHER ISNT THAT RIGHT JIMBO ??

I agree by Tinker

Submitted by Tinker on Sat, 2007/06/23 - 15:15.

Stop blaming the victims as if fraud is somehow minimized if the victim can be portrayed as an idiot. It's just ridiculous how some try to set the bar of responsibility so low for the perpetrators of these frauds. Why are you defending these people at the same time you keep shouting that the franchise industry doesn't need regulations. Don't you realize that these are exactly the people and companies that give the industry a blackeye?

Rhino Super Center

Lisha

Rhino Super Center

Well, with all due repsect how could you buy a Sona? by Guest

Submitted by Guest on Sat, 2007/06/23 - 19:50.

"The franchise laws as they exist were used to mask the truth. No franchisee results we were told could be presented. No accrual results from corporate owned centers were presented as part of the UFOC. In simple fact people were lied to or truth distorted by franchisor representatives with seemingly great credibility." What evidence could you have based your decision on?

Lemmings by Paul Steinberg

Submitted by Paul Steinberg on Sat, 2007/06/23 - 20:20.

There is no indication from the Sona UFOC that the zor was not compliant with GAAP. However:

Even assuming the zor and all of the other franchisees were doing bogus accounting doesn't mean you had to. I don't doubt that the Sona folks were full of bs, but...

Businesses which spend unearned revenue can hardly claim that "the franchise laws as they exist" forced them to spend the money. Businesses who use CPAs that don't know when cash basis accounting is not appropriate (!!!) can not claim that "the franchise laws" excuse them.

There are 2 separate issues here.

the presentation of pro forma data in the UFOC and other sales literature.
the failure of the franchisees to follow proper accounting procedures.

Had the franchisees only spent customer money as they provided each treatment, they would still have gone out of business. True.

But, they spent money which they had not yet earned. Any way you slice it, they took money which was not theirs to take. Even if Sona was cooking the books (and that does not appear to be one of Sona's many shortcomings) that does not mean the franchisees had to follow suit.

Why can't the franchisee victims of the franchisor admit that the public customers who placed their trust (and money) in the hands of the franchisees were victimized in turn.

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

How much can I make? by FranSynergy

Submitted by FranSynergy on Sat, 2007/06/23 - 21:05.

I do not see, nor have I heard where any franchise laws were used to mask the truth.

It does sound as if misinformation was provided initially out of either a lack of varified knowledge or intentionally and that this same false information continued to be spread after it was definately known to be false. This is would be a 'human' act and have nothing to do with the truth being masked. Around here we call it lying, fraud, deceit, and misrepresentation.

I think a lot of franchisors, web designers and even young in-house legal counsel make statements similiar to this one, which I lifted right off of a major food franchisors site just now:

Q: How much can I make as a franchise partner?
A: The Federal Trade Commission will not let us make any earnings claims to prospective franchisees. We rely on our restaurants to supply you information on this subject and with some effort on your part, you can put together a fairly accurate pro-forma. Our offering circular has more information.

Of course most of us here at Bluemaumau knows that this is not "exactly the truth. Any franchise candidate could search on the question and quickly come to that same conclusion.

I personally do not buy into 'Accrual' not being shown in the UFOC or elsewhere. CASH FLOW, ACCOUNTING, BOOKKEEPING these are all the responsibility of the Franchisee .... based on the investment into a SONA and the payment structures I'd think anyone would quickly realize that they need to keep an eye on the money.

You may have been lied to -- the truth may have been distorted --- by people with seemingly great credibility -- HOWEVER TAKE NOTE:
IF YOU ARE GOING TO MARRY SOMEONE OR GO INTO BUSINESS WITH SOMEONE OR ENTER INTO A LONG TERM RELATIONSHIP WHERE YOU ARE GOING TO GIVE THEM A GREAT DEAL OF YOUR MONEY ---- YOU NEED TO MAKE DAMN SURE YOU KNOW THEM -- WELL!

I'm sorry if you were lied to, and if you believed those lies and bought based on those lies. Perhaps you have some recourse, perhaps you do not. However, each franchisee must be personally accountable for their part, and anyone who read the 2003 SONA UFOC and Agreement and then signed that agreement simply was not THINKING. We all learn from our mistakes, some are costly.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

How do you know what Paul Steinberg thinks? by Guest

Submitted by Guest on Sun, 2007/06/24 - 16:26.

I think Paul is capable of posting what he thinks on his own. The Minister for Industry in the UK may or may not agree with Paul on whatever Paul does actually think, and the Minister likely does not plan on posting on Blue Maumau any time soon. Z-Rube stop making things up, speculating on what others might think and putting words in people's mouths.

Ageless Wit & Observation by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 09:51.

"If you don't read the newspaper you are uninformed, if you do read the newspaper you are misinformed."
~ Mark Twain

Suppose you were an idiot. And suppose you were a member of Congress.... But then I repeat myself.
~ Mark Twain

I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.
~ Winston Churchill

A government which robs Peter to pay Paul can always depend on the support of Paul.
~ George Bernard Shaw

A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money.
~ G Gordon Liddy

Democracy must be something more than two wolves and a sheep voting on what to have for dinner.
~ James Bovard, Civil Libertarian (1994)

Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries.
~ Douglas Casey, Classmate of Bill Clinton at Georgetown University

Giving money and power to government is like giving whiskey and car keys to teenage boys.
~ P.J. O'Rourke, Civil Libertarian

Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.
~ Frederic Bastiat, French Economist (1801-1850)

Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
~ Ronald Reagan (1986)

I don't make jokes. I just watch the government and report the facts.
~ Will Rogers

If you think health care is expensive now, wait until you see what it costs when it's free!
~ P.J. O'Rourke

In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other.
~ Voltaire (1764)

Just because you do not take an interest in politics doesn't mean politics won't take an interest in you!
~ Pericles (430 B.C.)

No man's life, liberty, or property is safe while the legislature is in session.
~ Mark Twain (1866)

Talk is cheap...except when Congress does it.
~ Unknown

The government is like a baby's alimentary canal, with a happy appetite at one end and no responsibility at the other.
~ Ronald Reagan

Inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery.
~ Winston Churchill

The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.
~ Mark Twain

The ultimate result of shielding men from the effects of folly is to fill the world with fools.
~ Herbert Spencer, English Philosopher (1820-1903)

There is no distinctly Native American criminal class...save Congress.
~ Mark Twain

What this country needs are more unemployed politicians.
~ Edward Langley, Artist (1928 - 1995)

A government big enough to give you everything you want, is strong enough to take everything you have.
~ Thomas Jefferson

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

My comparison by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 10:43.

had to do with the manipulation of revenue figures to defraud those investors who use the information to make decisions; be it investors or franchisees

There is only one reason for a franchisor to use the cash accounting method................and that is to manipulate and thus defraud.

Rhino Super Center

Lisha

Rhino Super Center

Goose or Goose Egg by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 11:46.

I disagree with you as to Paul Getting it. I think Paul gets it. There were a thousand and one reasons (little red flags) contained in the UFOC that should have caused one to pause - think & question.

In performance of due-diligence one should have said "Okay 12 to 19 months of treatment hmmmm who has been open for 12 - 19 months and provided the full range of treatment to ensure that it works? If it had been my investment my wife would have been posing as a client and asking to talk with Satisfied Customers who had received the full range of treatment.

You do not invest a $1.5 million into a McDonalds if you've never tasted a Big Mac --- or at least least spoken with a non-interested party who has.

It's one thing to invest a million dollars in the goose which lays golden eggs ..... it's entirely different to invest a million dollars in a goose-egg which upon hatching (in a year and a half) is supposed to lay golden eggs.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

No! Only Franchisees are Responsible for Due Diligence by Guest

Submitted by Guest on Mon, 2007/06/25 - 11:53.

The language in the UFOC's very carefully protects franchisors from any intentional misrepresentations made outside of that contract and for negligent misrepresentations made in context with the contract and the "proven" business plan. You see that in arbitration, all that could be proven was that there was unintentional "negligent misrepresentation" of the medical efficacy of the process ----just an honest mistake! The UFOC's and the contracts of adhesion have enabled a new art form for defrauding marks that is not considered fraud under law----in my opinion. Paul Steinberg who is an attorney believes in the law and in contract law but at least he recognizes the consideration for the hazard in government regulation and jurisprudence that is produced for the franchisees. I think!

Ripe Fruit by Guest

Submitted by Guest on Mon, 2007/06/25 - 14:36.

Well put by our Tinker, the thinker, who takes no lip from those who defend the indefensible.

Victims nobody speaks of by Paul Steinberg

Submitted by Paul Steinberg on Sat, 2007/06/23 - 15:55.

I don't defend Sona, and I criticized both Jim Amos and the lack of relationship legislation at some length back in 2004; I also discussed and criticized the use of religion and fictive kinship in the sale of franchises.

The "Sona a Very Complex Story" post is about the best case I have heard for some actionable conduct, but on the medical claims-- not the accounting matters.

I would like to ask Tinker to consider all the victims here.

Nobody has spoken of the public customers who plunked down thousands of dollars for services to be rendered in the future. Some of the Sona franchisees took that money and spent it without rendering all the services promised. Moreover, I would guess that it was spent for the benefit of the franchisee-fiduciaries of those customer monies; on things ranging from the franchisee "draw" to purchasing new franchises.

I hear that Sona told zees to use cash and not accrual accounting. But I can't find any evidence of that in the UFOC, nor can I find any indication that the Sona franchisees (or their CPAs) protested this violation of GAAP (not to mention possible violation of state consumer protection laws).

Few observers would bother to defend Sona, Amos, or Heather Rose. But the franchisees need to step up to the plate and be held accountable.

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

Fleecing the Lambs / the Silence of the Lambs by Guest

Submitted by Guest on Sat, 2007/06/23 - 15:37.

What do the Sona Hair Removal Spas and the Fleecing of the Lambs have in common? Let's hear more bleating from the fleeced lambs and let them NOT be silenced by the death of their investments or smart-ass attorneys who take joy in laughing at the fleecing. Tinker is right on!

The trap of the UFOC and the Franchise Agreement ----Sona by Guest

Submitted by Guest on Sat, 2007/06/23 - 23:23.

Did you believe that the UFOC and the Franchise Agreement were in any way negotiable? The attorneys and Mr. Nabors of this site always say the same thing ------why did you sign the contract? i.e. you contributed to your failure because you didn't conduct efficient due diligence and you could have not signed the contract or negotiated a better contract with the franchisor, etc.. Why were you such a dummy? And yet, these same people are against any really effective government regulation of franchising. If franchising were regulated as well as securities, probably "Sona" would be out of business by now or maybe they wouldn't have been permitted to sell this concept to begin with. I can see by your comments that you thought the UFOC as required by law was the bottom line and that these disclosures and terms were not negotiable, etc.. The attorneys and Mr. Nabors indicate that they are negotiable to a point -----but how would one know this? Apparently, while franchisees believe they are signing a standard contract that applies to all franchisees who are in the same relationship with the franchisor, this isn't true? These contracts can be negotiated, they say! It appears, however, that the franchisors are allowed to lie and misrepresent outside of the contract because when you sign the contract, you are indicating that only that which is within the four corners of the contract is legally enforceable, etc... The franchisors never indicate that their franchise agreements are in any way negotiable and the franchise agreements, while unconscionable, are legal until proven otherwise. amd after you have been ruined financially, how can you prove "otherwise?" The UFOC's are actually just a license to steal for predatory franchisors. I'm sorry you had to find out the hard way. I hope you will complain to your State Representatives and Senators and ask them to investigate the fraud that is perpetuated and condoned under current disclosure laws.

That was a quote from Paul Steinberg! by Guest

Submitted by Guest on Sun, 2007/06/24 - 21:32.

For you who are deaf and dumb, that was a quote from Paul Steinberg's post!

Tinker is Right On ----The truth by Guest

Submitted by Guest on Mon, 2007/06/25 - 10:51.

I believe Tinker tells the truth. The "cash" was blinding and was meant to be ----"to defraud those investors who use the information to make deisions; be it investors or franchisees." But, "technically" they cover themselves in the UFOC's under disclosure law.

Morality and the Law by Guest

Submitted by Guest on Mon, 2007/06/25 - 12:11.

Moral franchisees set themselves up because they believe that the rule of law is always moral, which, of course, it isn't! Franchising and its immoral practices that are legalized under contract law needs to blame the franchisee by way of blaming them for not doing due diligence to uncover the legalized fraud.

We did all of these steps! by Guest

Submitted by Guest on Mon, 2007/06/25 - 13:10.

We did do all of the things you suggest, that is, sent the Wife out to check, etc. All seemed right. But we were being told lies about the fundamentals of the business. Sona was/is a master con done by the best. I will give them credit for that fact. You did not know things were wrong until the 5 treatments did not work or patients complained after 12 to 19 months. By then you were deeply invested in a business. Trust me there were brilliant business and other people involved here as franchisees, that is, two very high level former MacDonald's executives, former CEOs and heads of major corporations, CPAs, and MDs. Many of early franchisees brought these failings to the attention of Sona the franchisor (Amos, Rose, Jones) and Carousel Capital (Schwabb, Pitt, and Schmidley). As they came in individually they were told that they simply were not operating right. Yes, we feel foolish being conned; but we were conned!! My real sorrow is with former MBE, current Quiznos, and other franchisees without the wherewithal to see the truth and to fight for their rights under the currnet franchise laws.

Easy Pickings by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 14:48.

Guest, although Tinker's analogy was a good effort --- it's not apples to apples.

There is a difference between a man who takes your wallet, against your will, without you knowing, and

a man who takes your money because you're chomping at the bit to give it to him, even after he's given you a big thick document (that to many said "you might not want to do this") and then made you wait 10 days before accepting your money.

I'm not defending BAD FRANCHISORS, but simply pointing out that there is a different set of precautions which must be taken, and in the eyes of the law it is very different as it should be.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Dale This is Where There Should be More Laws by Guest

Submitted by Guest on Mon, 2007/06/25 - 19:58.

The public and franchise industry does need new laws (not more government) to protect them against people like Jones, Amos, Rose and Carousel Capital Partners II (Schwabb, Pitt, and Schmidley)current owners of Sona. Why is this any different from fraud in the stock market? If you assume each Sona franchisee invested $1 million in their Sona franchise and 18 out of 45 are no longer Sonas. Isn't this an $18 million fraud. Didn't Ken Lay and Jeff Skilling of Enron get convicted of committing a felony and receive jail time (Ken Lay died of course!!). Franchising is a huge ~$2 trillion industry and Sona is symptomaatic of a much larger problem (UPS, Quiznos, Others). What is the difference between stock fraud and what happened in this case. The answers exist and just need responsible members of the franchise industry to implement them. A model exists throught the Securities and Exchange Commission (SEC) for substantially preventing the medical fraud and negligent misrepresentation conducted by Carousel Capital Partners II and Sona MedSpa and other franchisors and their funding partners. All SEC fund raising documentation whether private place, public offerings or other known SEC based fund raising vehicles require primary evidence for all operational or business statements made. The law firms who help create these fund raising documents are required to receive evidence that all statements made in the document are true. For example, in this case the company and their legal counsel would have been required to get outside medical experts (likely dermatologists) to verify the medical claims being made. In a similar fashion the company and their legal counsel would also have been required to show substantial evidence (from franchisee and owner based centers)that the business claims (financial returns, etc.)were true. The SEC has already laid out the map for conducting due diligence correctly. Why doesn't the franchise industry follow this SEC map??? Likely the Sona MedSpas and Carousel Capital Partners II would not exist if these types of requirements were in place.

Z-Rube Stop making things up! by Guest

Submitted by Guest on Sun, 2007/06/24 - 08:12.

Z-Rube Comment - "If franchising were regulated as well as securities, probably "Sona" would be out of business by now or maybe they wouldn't have been permitted to sell this concept to begin with." Z your abvementioned quote is patently untrue since their are plenty of "pink sheets" thinly traded and illiquid stocks sold under securities laws. Securities laws offer little additional protection as compared to State and FTC Rules. Z-Rube Comment - "I can see by your comments that you thought the UFOC as required by law was the bottom line and that these disclosures and terms were not negotiable, etc.. The attorneys and Mr. Nabors indicate that they are negotiable to a point -----but how would one know this? Apparently, while franchisees believe they are signing a standard contract that applies to all franchisees who are in the same relationship with the franchisor, this isn't true? These contracts can be negotiated, they say!" Z your abvementioned quote is just more trite crap. All contracts are negotiable. Some franchisors will negotiate their agreements and with many franchisors the agreement is what it is. Sona's business terms were beyond the pale and only a fool would not have questioned the business model and their agreement. Z-Rube Comment - "It appears, however, that the franchisors are allowed to lie and misrepresent outside of the contract because when you sign the contract, you are indicating that only that which is within the four corners of the contract is legally enforceable, etc... The franchisors never indicate that their franchise agreements are in any way negotiable and the franchise agreements, while unconscionable, are legal until proven otherwise. amd after you have been ruined financially, how can you prove "otherwise?" Z your abvementioned quote is just more crap. Franchisors are not allowed to lie and misrepresent. The contract is the contract. Why should a franchisor say here is my agreement, it's negotiable, mark it up and we can negotiate it, why would they do it? Z-Rube Comment - "The UFOC's are actually just a license to steal for predatory franchisors. I'm sorry you had to find out the hard way. I hope you will complain to your State Representatives and Senators and ask them to investigate the fraud that is perpetuated and condoned under current disclosure laws." Z your abvementioned quote is simply untrue. UFOCs are a disclosure mechanism and they provide a tremendous amount of information. UFOCs make all franchisor's franchise agreements, financials and organizational structure public. People ignore this information and proper due diligence at their own peril. Z-Rube you are out of line, disingenuous and a prevaricator.

Z-Rube should learn how to post and attribute quotes by Guest

Submitted by Guest on Mon, 2007/06/25 - 09:07.

Where and when did Steinberg post the alledged statement? If you want to quote someone post the quote in "quotations" and don't make people play "Where's Waldo". By the way there is a difference between a quote and a paraphrase.

Where is the FTC in All of This? by Guest

Submitted by Guest on Mon, 2007/06/25 - 11:04.

Where is the FTC who protects the consumer?

Entire Agreement by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 12:16.

Oh come on ...

Even the most MUNDANE of Agreements include language similiar to:

Entire Agreement. This Agreement and its Exhibits (each of which is hereby incorporated in this Agreement by this reference) constitute the complete and exclusive agreement between the parties with respect to the subject matter hereof, superseding any prior or contemporaneous agreements and communications (both written and oral) regarding such subject matter. This Agreement may only be modified, or any rights under it waived, by a written document executed by both parties.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

What about immoral franchisees? by Guest

Submitted by Guest on Mon, 2007/06/25 - 12:54.

What do they believe?

Current franchise laws not an impediment by Guest

Submitted by Guest on Mon, 2007/06/25 - 13:31.

You do not need addtional franchise laws to go after someone for fraud. There is no protection under state and federal law for franchisors to commit fraud.

Genius/Idiot by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 13:31.

I am sorry that you lost money - and it's even worse if you were in fact 'conned'. If you did all that I suggest, why when talking to consumers who'd had all 5 treatments performed over a 12 to 18 month period was it not discovered that the program did not work, as promoted?

When you read that you had to purchase 'office supplies' from SONA and that they'd be shipped to you AND that you'd pay a 20% mark-up what did you think? Did you not think, hmmm I can buy these items at my local Office Depot/Office Max/Staples for less? FranSynergy Subscribers buy office supplies for 30 to 50% off list price NOT for plus 20%

There's no need for you to feel 'foolish'. If you made bad business decissions, learn and move on. If civil or criminal crimes were committed take the appropriate actions. You say that 'brilliant business people' became involved and lost money, to which I'll remind you "We are all Geniuses, We are all Idiots --- just on different subjects". If one does not have sufficient knowledge to perform their own due diligence (and few do) they should find someone to help them. Never think that you are smart enough to play someone elses game, unless it is your game too.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

The Art of the Con is Enabled by Gov. Regulation by Guest

Submitted by Guest on Mon, 2007/06/25 - 13:32.

The Art of the Con is perfected and enabled under current government regulation of franchising. It really makes me wonder if regulation came about to stop the more obvious frauds or whether it was a mechanism to legitimize the less obvious frauds that are possible under Government regulation and the very carefully and artistically designed contracts of adhesion that are designed by the largest and most expensive law firms of our nation. There is art in the artful use of the law to produce profits for your clients ---and good art costs money. I really can't understand why the FTC condones the sale of Sona franchises and the sale of The UPS Store and Quiznos franchises.

Ten Days for the Money ---Still ripe fruit by Guest

Submitted by Guest on Mon, 2007/06/25 - 15:10.

Again! more appearance that the government is really working for the franchisee and that the UFOC is required under disclosure laws to protect the consumer franchisee. You know from reading Anne Fisher's Article, Risk/Reward, Fortune Small Business, CNNMoney.com, January 19th, 2006, as well as other articles and the posts on Blue Mau Mau that prospects very often don't even look at the UFOC's because they believe the UFOC and the franchise agreements are NOT negotiable anyway, and that these franchisors aren't going to "fool with the government." The FTC knows this as well and Item 20 is just a DEAL and the real risk of the franchise investment is obscured and not disclosed under the Rule or the UFOC's. The Item 20 charts provide deniability for the FTC because they really have no actual knowledge that Item 20 is hiding the failure of first generation franchisees to the benefit of the franchisors. The ripe fruit have not given their informed consent to be picked because they have not been informed of the true risk under the law but the ripe fruit feeds public policy and the status quo and they are out there for the "pickin!" and the operation is almost always successful for the franchisor, even when the franchisee dies a premature death.

Less Gov, less Reg's by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 20:14.

Personally I believe we need less government and less rules & regulations and more enforcement of that which already exists, but we've been through this before.

You can take wrap a few pages of disclosure documents around your business plan call it a PPM, pay a fee, claim an exemption and start selling stock (with certain limitations).

The SEC has many of the same caveats. You say what you want to say, and then you throw in a disclaimer that says "well this may or may not happen". If we were having this discussion about the SEC the positions would be the same as they are here.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

The Lie of Disclosure Laws ----Sona Franchisees Misled by Guest

Submitted by Guest on Sun, 2007/06/24 - 11:57.

While it appears that some of the regulars are trying to scare the Sona posters away by calling them fools and chastising them because they were "taken in" by the appearance of government regulation of franchising and "respectable" franchisors with impressing credentikals from the IFA and God, himself, I hope these Sona posters will stay with us, and won't leave in disgust. It almost looks like the insiders here want the Sona posters to leave because, of course, this was just "franchising as usual" and they should have known better and done their due diligence with experts, like them! . You Sona posters have to realize that the status quo serves all the parties involved, the franchisors, those who surround franchising, the government, etc.. very well ----except those franchisees who are cheated and led to financial ruin. Most of those cheated and led to financial ruin by franchisors are silenced in failure, and fade away into the American scene. I thank you and I know many of our viewers of Blue Mau Mau thank you for sharing with us -----because your experience will help to warn others out there who may be taken in for the same reasons you were taken in. Those who chastise you here on Blue Mau Mau have not walked in your steps and will do nothing to prevent others from walking down that same path. In retrospect, it is always easy to know and easy for other people to tell you what you could have done differently. The fact remains, however, that most people trust their government and they believe that their government is regulating the industry to protect them. They, therefore, transfer that trust to the franchisor whom they assume is being regulated by the government to protect the investor. The attorneys know that franchising is a dirty and rough game and that it isn't really the intention of the government to protect the prospective franchisees from the great risks involved and not disclosed under the law. Franchising is regulated to favor the franchisors and this is public policy and the status quo that only the Congress can change. UFOC's are a license to steal for those inclined to steal and who have insulated themselves from franchisee recourse under contracts of adhesion. Just as the lenders were permitted to manipulate the sub-prime mortgage markets by very questionable means until things fell apart, apparently we will need a big scandal in franchising to raise the consciousness of the Congress who, hopefully, may be moved to pass legislation that will effectively protect the American public from predator franchisors who use the capital of others and abuse this trust to maximize their profits while destroying their franchisees. The big lie is that the UFOC is disclosure. In reality, it is just a license for the franchisor to sell the so-called "proven business model" to the public.

The Moral Hazzard of the UFOC and Jurisprudence by Guest

Submitted by Guest on Mon, 2007/06/25 - 09:25.

Evidently Sore-ZOR who calls me Z Rube doesn't want to discuss the moral hazard of the UFOC and Jurisprudence. Who knows? Maybe Minister Hodge of the UK does look in on Blue Mau Mau. She wants to try to avoid moral hazzards and jurisprudence that would come about through UK regulation of franchising that would perhaps give British subjects a false sense of security.

That's a good question. by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 11:44.

I am rather surprised that the FTC doesn't require the same across the board accounting methods within the franchise industry. It's such a simple think to implement and would close a forseeable loophole.

Rhino Super Center

Lisha

Rhino Super Center

Takes one to catch one! Immoral franchisees? by Guest

Submitted by Guest on Mon, 2007/06/25 - 13:08.

Yes! I'm sure you are right. Immoral franchisees would do better due diligence because it takes "one to catch one" and maybe they would be looking for those flying under the radar. We tend to judge and deal with others by how we would behave in the same circumstances. The Sona franchisees weren't looking for a "scam" and were misled by the appearance of the legality and the profitability of the Sona concept that was regulated by their government. It is because most Americans do trust their government and don't "fool" with the government that they believe the UFOC's are bottom line protection for the franchisee investor. I realize that you, who don't trust government and know that government is controlled so often by the highest bidder, think that those people who do trust the government are foolish, misguided, and dumb.

FTC Does not approve the sale franchise concepts by Guest

Submitted by Guest on Mon, 2007/06/25 - 13:36.

Z-Rube "I really can't understand why the FTC condones the sale of Sona franchises and the sale of The UPS Store and Quiznos franchises." Show me where the FTC has condoned the sale of any franchise concept! Z-Rube stop making things up!

Sona, UPS, Quiznos by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 13:47.

SONA - May or may not be a good franchise concept - However it needs to be sold under the right terms, to the right franchisee who is properly funded, and has access to the right staff.

The UPS Store - is a concept with many built in challenges, and the business model itself must be improved to create a sustainable concept.

Quiznos is a VIABLE concept, that has had a troubled past. Quizno's is working to correct the problems of the past. Although some past decisions made on the corporate level may not have been in the 'best interest' of the ZEE, it does appear as though Quizno's is working to correct those issues.

It is not the 'JOB' of the FTC to ELIMINATE bad investment options and terms from the market.

The FTC pursues vigorous and effective law enforcement; advances consumers’ interests by sharing its expertise with federal and state legislatures and U.S. and international government agencies; develops policy and research tools through hearings, workshops, and conferences; and creates practical and plain-language educational programs for consumers and businesses in a global marketplace with constantly changing technologies.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Sona Franchisees were not Idiots! by Guest

Submitted by Guest on Mon, 2007/06/25 - 13:56.

The unfortunate truth about Sona's UFOC is that it documented that no franchisee would ever make a reasonable profit regardless of sales volume. However, the SONA franchisees were not idiots and represented some of the more successful and more educated business people in this country. Furthermore, Jim Amos, perhaps one of the most successful franchisors in the nation, also purchased the franchise system. Founder Dennis Jones had blinded everyone with his puffery, false claims, and unethical disclosures of information. Jones had everyone focus on the cash flow basis of the business not the accrual. During my due diligence even the existing franchisees told me they believed they were making money through their “cash flow.” The UFOC was ancient history in the sales room. Sona was setting new sales records monthly; all but two franchise centers have had a positive cash flow from the first month of opening; the owners of the flagship affiliate have over a $1 million in the bank; Sona is the fastest growing and largest laser hair removal company in the world; the new skin rejuvenation program will more than double existing sales. There was no end to the number of superlatives Jones used to sell a franchise. All was done in the name of God and his “faith-based” company. Who would have doubted someone who had built more than 2,500 church buildings for poor Christians around the world?

Genius/Idiot ----The Art of the Con by Guest

Submitted by Guest on Mon, 2007/06/25 - 14:02.

I think Dale means well but he knows that part of the con is indicating that you will make so much money that you will not mind enriching your franchisor who is making your riches possible. With FranSynergy, it has, always, to be your failure to be smart enough to do your due diligence and the "con" is overlooked as salesmanship. But Dale is honest when you push him in the corner. He did indicate that if he were UPS, he would stop selling franchises until the business plan was fixed. He would do the same with Sona if you showed him the figures that indicate that the Sona Franchisor is the only one who is making any money or who will make money in the future with the concept, and that new franchisees are being put at risk. He doesn't come down hard on Quiznos because he knows that those who have already failed and are out of the game can't be saved and that if those Quiznos units that are up and standing can be saved, this is the most important issue for those franchisees, the franchisor, and for franchising.

then why does it matter? by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 15:16.

First the UFOC has no 'negotiable' qualities to it. It's a disclosure document.

Secondly, if as you say NO ONE bothers to read it --- WHY would it matter what is or isn't in it?

I've handed out lots of UFOC's and I've told every single person to - take it - read it - highlight it - and call me with any questions they have about it. I've NEVER had anyone buy a franchise who did not read the UFOC and ask questions about that which is included in it.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

The Art of The Con by Guest

Submitted by Guest on Mon, 2007/06/25 - 17:42.

This is not a hard question to answer. Think about it. There is the FTC, the law firm of DLA PIPER, that is very involved in Franchise Law and lobbying in favor of the IFA. DLA Piper is legal councel to the IFA. These 3 entities combined create quite a powerful force for some poor franchisee who has been taken to bankruptcy and back again to go up against. I know from personal experience. Why is the FTC not stopping any of the franchisors who are stealing the money of innocent people? I have dealt with Stephen Topporoff and can tell from my experience that he could care less. The tax payers should scream at the top of thier lungs for the insult of paying this man a penny We could all get just as far by painting his face on a paper bag and sitting it on his desk and closing his office door. No one would be the wiser. It would be the same effect we have now. With that being said, he would be missed if the IFA were not able to reach him.

We Disagree!!! by Guest

Submitted by Guest on Mon, 2007/06/25 - 20:55.

There should be better laws controlling franchising and felony penalties for what people like Jones, Amos, Rose and Carousel Capital's Schwabb, Pitt and Schmidley did to innocent people. There needs to be more legal controls on franchisors. Many people lost their entire life savings on this Sona deal.

Z-Rube you have cornered the market on prevarication by Guest

Submitted by Guest on Sun, 2007/06/24 - 12:42.

You offer a bankrupt ideology of government paternalism. You offer nothing in the way of solutions; only vitriol, and specious arguments for more government intrusion into all of our lives. People must take responsibilty for their actions as consumers of franchisees. Business is not risk-free. Going into business, franchise or independent requires careful planning and individual responsiblity. Business people can't take credit for their business success without also taking responsibilty for business failure as well. Z-Rube promotes the idea that somehow government can protect us from ourselves and while that populist premise may seem appealing it is a red herring. Finally why would anyone take the advice of Z-Rube, a failed UPS Store franchisee that can't even articulate the reason for his franchise failure. Stop making things up Z-Rube.

I am a franchisor and I do not lie...I do take offense to Z by Guest

Submitted by Guest on Sun, 2007/06/24 - 12:49.

Z's broad and sweeping generalization are sad and untrue. Franchise buyers should take care and commit to proper due diligence.

The Lie? by FranSynergy

Submitted by FranSynergy on Sun, 2007/06/24 - 13:26.

GUEST:

None of the "regulars" are trying to 'scare' any SONA POSTERS away. Personally I appreciate that they've shared their experiences. For the most part their posts have been thorough and without over-generalization. I've read nothing posted by "regulars" or anyone else that called a SONA FRANCHISE a 'fool' or that 'chastised' them. There's a big difference between being a FOOL and doing something which might be considered FOOLISH. Reading the 2003 UFOC and signing the 2003 agreement (as is) was FOOLISH.

Government Regulation or lack thereof had nothing to do with SONA Franchisees signing what was a BAD AGREEMENT. As for the 2003 UFOC and Agreement it was 'franchising as usual' and the UFOC and Agreement should have been MORE THAN ENOUGH to cause one to pause.

Yes, I do agree that the "insiders" here on BlueMaumau do believe that Franchise Candidates should seek knowledgable counsel. Nothing is wrong with this, many of us here are in the business of HELPING francchisees and franchise candidates. I can only speak for myself, but I'm sure that there are others who would also say "If you are interested in retaining the services of me and my company/firm please feel free to contact me, otherwise contact SOMEONE".

The 'status quo' is what we have, and one must work with what one has to work with. There is room for improvement, however the ultimate decision of becoming a franchisee, and of what system is up to the franchisee. Each and every franchisee must take personal responsibility for the success or failure of his or her business. When you own a business it is up to YOU. I'm sure you've heard the saying, "the buck stops here". "Financial Ruin" is not caused by any "Franchisor, but rather by the individual business owner who: 1.) Invests more than s/he can afford to lose. 2.) Fails to perform, or cause to be performed proper due diligence. 3.) Fails to properly manage his or her business. 4.) Has unrealistic expectations.

GUEST, you fail to understand that the way to prevent others from making the mistakes made by the SONA posters is to discuss what caused the failure. In safety training you learn that every accident is preceeded by an unsafe act and/or condition. If you want to eliminate accidents, you must first eliminate the unsafe acts and/or conditions. The same is true in business, if you wish to eliminate the potential for failure you must first eliminate the acts and/or conditions which contribute to business failure.

Guest, you are correct - hindsight is 20/20. The very reason why a franchise candidate should seek experienced and qualified counsel is because experienced counsel has seen it all before. It's real simple, it's called learning from the mistakes of others.

The UFOC is not as you suggest a license to steal, but rather the best form of disclosure we have at this time. Predator and predatory is not terms which accurately represent the vast majority of franchising. Franchisors do not succeed (live) by killing and 'eating' franchisees. Franchisors succeed by helping their franchisees to succeed. Is every franchisor equally qualified to do this ---- NO! How do you determine which franchisors are best qualified to help you achieve your personal and professional goals and aspirations? By performing proper due-diligence!

Again the UFOC is disclosure, is it as 'good' as you think it should be? Obviously not, but by reading it, understanding it and investigating the information contained in it - most anyone can gain the insight they need to make an informed educated decision about a particular franchise system. And again, the "proven business model" means the 'business model' has been proven it does not mean that it has been proven that you can be successful with that model.

I do not go through all of this with you again and again, to try and change your mind, because we both know that will not happen, but for those who may be reading this the guest who wrote the above post claims to have lost money in a franchise and seems to be very bitter toward not only that franchisor but of ALL FRANCHISORS.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Disagree with Tinker by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 11:51.

I disagree.

It is one thing to require 'Honesty in Accounting' it disclosure of the accounting methods and assumptions used.

It is a horse of a differnt color to for the Government to dictate the accounting methodology to be used.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Accounting Method? by jd

Submitted by jd on Mon, 2007/06/25 - 12:04.

Which accounting method would you recommend that everyone use then?

In my mind, cash basis is the easiest for most franchisees that don't have a business background, but then you would have a situation like Sona where financials look better than they really are. Plus, it's probably more advantageous for tax purposes to use this method.

With accrual basis, you run into the case where franchisees don't understand the rules, and then their accounting books are all messed up, and they don't know if they are making money or not.

Aside from your complete idoicy and illogic by Guest

Submitted by Guest on Mon, 2007/06/25 - 13:28.

I believe that the vast majority of franchisors and franchisees are honest. I also believe "That government is best which governs least." - Thomas Paine.

UFOC presents Appearance of Approval of Concept by Guest

Submitted by Guest on Mon, 2007/06/25 - 13:48.

You will admit, won't you, that a UFOC presents the appearance of the government approval/recognition of the franchise that they indicate they are regulating under law to protect the buyer. The government wouldn't be in the position of regulating illegal opportunities, would they?

Profits from Royalties by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 14:12.

Thank you!

In the case of SONA, all one must do is read the 2003 UFOC to quickly see that the revenue earned by SONA is not in the best interest of the franchisee.

SONA was attempting to make a profit on EVERYTHING much of which had little if anything to do with the success of the franchisee.

Ray Kroc had made it a policy that McDonalds ONLY made money based on the retail sale of FOOD by the franchisee. GOOD POLICY.

Franchisors have the right to make money even on a franchisee who fails to make money. However, that money should be made off of the royalty AND every franchisor should use the buying power of the network to reduce cost to the franchisee, not to generate additional profit centers at the expense of the franhchisee.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Then, why do attorneys indicate that UFOC is not read? by Guest

Submitted by Guest on Mon, 2007/06/25 - 15:29.

I guess Paul and Michael on this site and those other attorneys who commented to Anne Fisher that prospects often don't read the UFOC's are in error, Dale!

franchise basics by mom

Submitted by mom on Mon, 2007/06/25 - 18:26.

The reason folks buy frnachises is that they are lead to believe that the franchisor has a PROVEN BUSINESS MODEL. You can read these 3 little words over and over in every Entrepaneur magazine and franchisor sales pitch.

At a minumum, the FTC should have the responsibility for setting a standard for "proven". Over and over you point out that the FTC has no approval authority. Well, who does? If I want to develop a franchise system that I know will be based on phoney numbers, misleading medical claims, unsubstantiated medical research and lies about having 'exclusive, trademarked' procedures, shouldn't I be stopped? If not the FTC, then who? Due diligence is NOT possible when the material in the FOC cannot be substantiated. If you think that the lack of substantiation should be a red flag to potential franchisees, then you are back to blaming the victim. The FOC, espically in the case of Sona, should require that the research proving the treatment is successful be clearly references and avail. If there is a patent, the #'s should be listed. See where I'm going? Franchisors hide behind the veil of the FTC as proof that their concept is viable. Thus there is NO protection. Perhaps we do agree, but for very different reasons.

The analogy has been made repeatedly that this kind of smoke and mirrors would never be allowed if they were selling stock instead of franchises. I don't buy a stock with a 10 year contract that keeps me in debt and unable to sell. If I don't find the stock to be what it was purported to be I can sell it. Yes, I risk my investment while I hold the stock. A fradulant franchise concept ( whether based on phoney medical claims or phoney financials) is just that:a fraud. If my franchise's business model is fraudulant, and I cannot make any money, how can I sell it?

There has to be accountability for fraud. No, it is not in the court system. That is a playing field controlled by the sharks with the big bucks. So, if not the FTC, then who?

What moral hazard and what about jurisprudence? by Guest

Submitted by Guest on Mon, 2007/06/25 - 18:59.

I know it's tough for you Z-rube but you'll have to be specific regarding the morality and jurisprudence issues you have with UFOCs.

The Fact that the FTC does by Guest

Submitted by Guest on Mon, 2007/06/25 - 20:30.

The Fact that the FTC does nothing to stop the franchisor from selling a flawed concept is the green light to continue. The people who demand to see in writing that the FTC condones selling a flawed concept is a person who beleives in Santa. The question is, why is the FTC allowing this to go on.

Thankfully your draconian franchise laws will never happen! by Guest

Submitted by Guest on Mon, 2007/06/25 - 21:00.

The franchisors of the world are united against the forces of the Z-Rube. Z-Rube will never prevail!

So you think SEC is wrong by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 12:03.

for requiring the acrural method be used?????

I'm afraid you are misinformed if you don't think government agencies dictate accounting methodology. Just check out your tax forms and you will see that any business with inventory is REQUIRED to report earnings, etc with the acrural method.

Rhino Super Center

Lisha

Rhino Super Center

Accounting Method by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 12:13.

If the business has product inventory, there is no choice but to use the acrural method. Once a method is established, the acrural method is no more burdensome than cash. In fact, it actually makes year-end adjustments, future projections, etc......much easier. While years ago, it could be argued that cash basis was easier for novice business owners, that just isn't the case anymore. With the low cost software programs out there (such as QuickBooks) all the work is pretty much done for you. If those programs are still too intimidating for you, it's probably best that your CPA do your accounting for you and I'll bet 99% of them will use the acrural method anyway.

Rhino Super Center

Lisha

Rhino Super Center

Introduce you to the term: "Conservatism" by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 12:30.

What this means in accounting standards is clear......................when choosing between two solutions, the one that will be least likely to overstate assets and income should be picked.

Sona's 'intent' is obvious and all the arguments about methodology choice are moot.

Rhino Super Center

Lisha

Rhino Super Center

Guest, May I ask? by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 13:56.

I would NOT, but you didn't ask me. However, let me ask you

Do think that the average Franchise Candidate is better off receiving a UFOC (as it is today) OR do you think they'd be better off receiving nothing at all?

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Why - Who Knows? by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 15:41.

I can not comment on their experiences, but simply on mine. I have 'sold' many franchises. I have consulted with many people 'buying' a franchise. I've NEVER known anyone to NOT read the UFOC, --- reading vs. understanding are two very different issues.

I would also guess that because I instruct people to READ IT could skew the numbers - I'd also guess attorneys run accross people who say "I don't know I didn't read it, I JUST SIGNED IT".

AND THEN THERE'S COMMON SENSE! Do you really think people invest SIGNIFICANT PERCENTAGES of their personal assets, SIGN long term agreements, PERSONALLY GUARANTEE loans, without reading what is perhaps the 2nd most Important document in the transaction AND which contains the MOST important document THE AGREEMENT? I don't think so!!!

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Proven Business Model by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 18:49.

Proven Business Model: MEANS that Business Systems, Operational Systems, Marketing Sytems, the Marks, the Concept have been created and proven to work to some degree of success by someone, somewhere.

Proven Business Model: DOES NOT MEAN that the business has been proven that it will work for you, in your market there are no guarantees.

If you want to be a FRANCHISOR all you need is a UFOC and a franchise agreement, nothing else!

If a FRANCHISOR commits FRAUD it is FRAUD. If a franchisor creates a BAD concept and then wraps that BAD concept into a legal and properly prepared UFOC and franchise agreement and then finds someone to BUY that bad concept ... the franchisor may be unethical, and immoral, but that does not mean that they've committed a CRIME. Therefore it is important very important that the buyer make informed, educated decisions.

The analogy of Franchcisees to Securities does not hold water. Much of the regulation regarding stocks does little more than make it harder and more costly for the small business owner to raise capital through the sale of stock. It does little to prevent an investor from being conned.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Thanks MOM ---The FTC is out to lunch! by Guest

Submitted by Guest on Mon, 2007/06/25 - 19:34.

I think the tube from the IFA runs directly into the FTC and Congress turns its back. This has been public policy for so long and a few articulate and cheated ex-franchisees who are still standing don't stand much of a chance of changing the status quo. Those who get to the courts have to hope that they have the resources to play the game the big law firms control. Again, because only the franchisees lose under this public policy, and most of them are silenced in failure, the status quo serves all of the others who profit from the present status quo. It is really revealing how those pro-franchisor people come out and defend the Sona franchisors and their UFOC while chastising the Sona franchisees for not recognizing the very troublesome aspects of the Sona concept that was misrepresented to buyers by the franchisors who earn their profits on the capital investment of the franchisees. Apparently, the FTC, who pretends to regulate franchising in the interests of the consumers will not use its power to stop franchisors from selling unviable business opportunities. Is this because they don't have the power to do this or the interest? I'm sure that the FTC must know that research considering the success statistics of franchising and franchisors ignores the failures of franchisees who contribute to the success of franchisors through churning and turning of first-generation franchisees. Does Item 20 of the UFOC insulate the regulators from knowledge and does this insulation then provide deniability that translates to inaction by the FTC.

Are you out of your mind? by Guest

Submitted by Guest on Mon, 2007/06/25 - 20:43.

Go ask the FTC yourself!

Moral hazard considerations and jurisprudence --Paul Steinberg by Guest

Submitted by Guest on Mon, 2007/06/25 - 20:43.

I'm sure Paul Steinberg who posted on this will be happy to explain what he meant when he has time. It would be unfair of me to interpret his remark. It has been posted before on Blue Mau Mau that maybe no regulation would be better than (ineffective) regulation. The UK doesn't regulate franchising because their Minister of Industry believes that government regulation would, perhaps, present a "false sense of security" to British subjects. Minister Hodge didn't clearly articulate her thoughts on the American system. Our Rule and the UFOC's are just a license to steal for those who are inclined to steal----my opinion!

Thank you, Sore-Zor, for calling attention to my Posts! by Guest

Submitted by Guest on Mon, 2007/06/25 - 21:15.

There is great power in rhetoric and there is great power in truth ---that fights its way to the surface. You see in the Coffee Beanery Franchisees the great power of the spirit to fight for justice against all odds. This unquenchionable thirst for justice is inborn in human beings and this is what sustains healthy democracies whose citizens aren't afraid of taking on a status quo that is controlled by powerful interests.

Yes by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 12:09.

Yes, I think the SEC and many other governmental agencies over regulate a lot of different things -- making consumer goods more expensive, taxes higher, and progress difficult.

For clarification I did not say that don't dictate, I said that in my opinion they should require 'honesty in accounting' and disclosure, but SHOULD NOT dictate the methodology used.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Actually Tinker by jd

Submitted by jd on Mon, 2007/06/25 - 13:23.

Have you ever looked at other franchisee financial statements other than your own? I have and sometimes it's not very pretty, because items are everywhere within the trial balance. On a good amount of them, the franchisee thought they were using accrual, but from year to year the inventory numbers stayed the same.

While I understand that Quickbooks can do a lot of things, I doubt many franchise owners understand how to value inventory on an accrual basis (lower of cost or market). In the franchise system I was a part of, only about 20% of the franchisees were doing inventories throughout the year. We stressed the importance of doing inventories, but most of them wouldn't listen.

And I understand that you should use your CPA to help you in these matters, but to do a clear full blown yearly audit would probably be in the range of $3-4k/year, and I doubt too many franchisees would like to pay that cost to get their books right on an accrual basis each year.

Good Question --Is no regulation better than ineffective by Guest

Submitted by Guest on Mon, 2007/06/25 - 14:11.

This is a good question and one that the UK is struggling with today and have not yet answered. Can government effectively regulate franchising to protect consumers without inhibiting investment activity in the economy? If not, is ineffective regulation that provides a false sense of security to investors better than no regulation at all? ---or is this a disservice to the consumers who will not understand that the risks of the investment will not be disclosed under government rule and that they can lose everything?

But Dale! they do exactly what you describe in last paragraph! by Guest

Submitted by Guest on Mon, 2007/06/25 - 15:58.

But, Dale! Many people do exactly what you describe in the last paragraph because they believe that they must believe to succeed and their confidence in their franchisor and the franchisor's outstanding credentials, and the visibility of the concept, etc.. and their conficdence in government who is regulating franchising in their interests all leads them to believe that success is theirs when they sign that contract. Normal and moral human beings believe in success and believe in the American Dream and believe that those with famous brand names are not thieves and they are led to slaughter. I think you know this! All this talk about accounting -----Readers should look at the Minnie Pearl franchise meltdown that occurred because they sold stock based on uncollected franchise fees and got in trouble with the SEC who put them out of business. UPS appears to sell their stock based on their ROI on their investment in MBE and yet the actual The UPS Stores on which they made their ROI seem to be in serious trouble financially. Will this get UPS into trouble eventually?

Z-rube did the cow jump over the moon? by Guest

Submitted by Guest on Mon, 2007/06/25 - 19:53.

Was Chicken Little crushed by the sky falling down? Do you really expect anyone to take you seriously? Your posts are reckless and irresponsible.

Does Sona's Bad Concept Equal Fraud? by Guest

Submitted by Guest on Mon, 2007/06/25 - 20:02.

SONA Founder Dennis R. Jones lied in the 2003 UFOC saying the "SONA Concept" was patent pending when, in fact, he had never filed for a patent: "SONA Laser Centers combine the APOGEE laser technology with our proprietary patent pending process called the "SONA Concept," which allows the procedure to be performed in less time with better results and at fees that are affordable to the general public" (SONA-KAI-038870). Later, on the Bison.com website, Jones stated the "SONA Concept" was patented. Doesn't his false claims in the UFOC and his false advertising on Bison.com constitute fraud?

Hogwash! by Guest

Submitted by Guest on Mon, 2007/06/25 - 20:47.

Z-Rube Quote "Our Rule and the UFOC's are just a license to steal for those who are inclined to steal----my opinion!"

Z-Rube how is the new owner of your old UPS Store doing? by Guest

Submitted by Guest on Mon, 2007/06/25 - 20:55.

Did he get a good deal? Is he making money where you could not?

You wouldn't recognise the truth if bit you on the ass! by Guest

Submitted by Guest on Mon, 2007/06/25 - 21:21.

All you want is a risk-free existence and to blame others for your failures.

Mercedes airbags by Paul Steinberg

Submitted by Paul Steinberg on Sun, 2007/07/01 - 14:58.

A friend of mine used to drive like a maniac, and explain to ashen passengers that "the car has front and side airbags."

To the extent that people can shift risk of loss to a third party, rational insureds will engage in riskier behavior. Viz franchise regulation, there is a balance between preventing zor overreaching versus encouraging zee overexuberance.

There was a serious debate back in the 90s where Sam Crawford (then legislative director of the AFA) made a case for the abolition of franchise regulation on the basis that it was not only ineffective but counterproductive in that it encouraged a false sense of government imprimatur and continuing oversight where none existed. As such, it created the worst of both worlds: akin to someone believing their Mercedes had airbags when it did not.

Crawford brought up the argument not because he entirely believed the argument, but because it does illuminate some of the issues which society must address when implementing any statute purporting to be prophylatic.

BTW: Don't pay attention to Steinberg's arguments. I've known him a while, and half the time he doesn't know what he's talking about.

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

Six of One by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 12:18.

Half a Dozen of the other..........

You're arguing semantics there.

If one method allows for manipulation and dishonesty, and the other one provides the most accurate and honest report than the regulating authority has the right and responsibility to dictate the HONEST method, thus requiring 'honesty in accounting'

Rhino Super Center

Lisha

Rhino Super Center

First of All...... by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 14:16.

Inventory is based on COST............NOT market value. Second, it isn't necessary to do a physical inventory throughout the year, because if your inventory is set up, when you sell it, it is expensed through COG sold..............again, Quickbooks and similar software programs will do this for you. And last, having a CPA do your year end financials does NOT require a full blown audit at $3-4,000. But rather making year end adjustments to inventories, asset amort/depreciation, prepaid accounts etc.

Again, I believe you are trying to make a mountain out of a molehill here.

Rhino Super Center

Lisha

Rhino Super Center

Mama, always said: by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 16:15.

I do not believe that. Most people are at first cautious and skeptical - up until they sign the agreement, and then it's like this big weight has been taken off of their shoulders - they become very relaxed and open - AFTER ALL THEY'RE PART OF THE FAMILY NOW! Which is all well and fine and the way it should be.

You are not going to convince me that MOST PEOPLE invest 100's of thousands of dollars or more into a franchise without reading the UFOC and the Franchise Agreement. If anything I think they read it and 'think they understand it' and therefore falsley believe that they DO NOT need to utilize the services of an Attorney, Accountant, Banker or Franchise Consultant.

But just in case: ATTENTION! MAY I HAVE YOUR ATTENTION PLEASE! PEOPLE DO NOT I REPEAT DO NOT INVEST IN A FRANCHISE WITHOUT READING & UNDERSTANDING THE UFOC & MOST IMPORTANTLY THE FRANCHISE AGREEMENT. AS SOON AS YOU'VE READ IT, SO MANY TIMES THAT YOU KNOW YOU UNDERSTAND IT, TAKE IT TO THE APPROPRIATE EXPERTS AND HAVE THEM CONFIRM WHAT IT IS THAT YOU UNDERSTAND!

Just for the record, the above advice is just as valid toward a lease, purchase, sale, or any other legally binding agreement, that's why MAMA, ALWAYS SAID "Don't sign anything without having your attorney read it FIRST".

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Patent Pending by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 20:22.

'Patent Pending' is a term used by a manufacturer or seller of an article to inform the public that an application for patent on that article is on file in the United States Patent and Trademark Office. The law imposes a fine on those who use these terms falsely to deceive the public.

If what you say is correct, and if you can convincingly say that you based your decision on the 'Pending Patent' you might have a case. Being that I'm not an attorney I'll leave that for our Legal Eagles & Beagles to determine.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Too soon to tell whether new UPS owner is making money! by Guest

Submitted by Guest on Mon, 2007/06/25 - 21:05.

We don't blame this new owner who got a couple of hundred thousand dollars in built-up sales and our new store and assets for very little ----but we do blame UPS for selling us a flawed business model upon which we only realized losses from the beginning until the end. Our American Dream was a Nightmare!

Airbags and the UPS Store Franchise by Guest

Submitted by Guest on Sun, 2007/07/01 - 16:10.

This brings up, again, the recent debate in the UK about the regulation of franchising. (See political activism thread on Blue Mau Mau) The UK doesn't regulate franchising for precisely the reasons Paul Steinberg indicated above. Crawford was an honest man and told the truth about the ineffectiveness of government regulation but it is apparent that ineffective government regulation favors others. Obviously, the Congress and the FTC wanted to continue with the UFOC that does encourage Zee Overexuberance because it is good for the Franchisors, good for the banks, good for the private lenders, good for government revenues and only bad for those first-generation franchisees who buy flawed business plans -----because the franchisors can hide first-generation failures in the transfer columns of the UFOC's. The truth of franchise failure and success is vital to the assessment of the risk in the investment but it is so obvious that it is hidden in 200-page UFOC's that tend to "lull prospective franchisees into a sense of security, as so wisely noted by the Minister of Industry of the UK. This is not to say that there aren't good franchisors who have viable plans and who treat their franchisees like co-investors and partners, but the ineffective regulation allows bad franchisors with bad motives to canabalize first-generation franchisees to provide visibility to suggest viability of their failed business plans, or to use their franchisees through encroachment of territories to maximize their profits. Government abets these bad practices when they pretend to require the franchisors to disclose the risks of the franchised business plan and then permit franchisors to hide the failure rate of these plans to the original franchisees in the UFOC's. How disgusting that Mr. Kolman of MBE-UPS legal was invited to provide a testimonial for the SBA Registry by the SBA/Fran-Data people and that he agreed to write this testimonial knowing that the failure rate of The UPS Store Franchise is not reflected in the SBA Default rate on The UPS Store Franchise. or in FranData, and knowing, personally, that the actual and true failure rate of the UPS Store Franchisee for first- time and second -time franchisees is hidden in the transfer columns of the UFOC's, and that the true risk of the investment in The UPS Store Franchise has not and will not be provided to Veterans, Reserves and National Guard members returning from Iraq under the Patriot Express Program.

Success Rates ---Failure Rates ----Pizza Guy by Guest

Submitted by Guest on Sun, 2007/07/01 - 17:54.

The reason, of course, the franchisors don't advertise their success rates is because they would have to determine their failure rates to determine the success rates of their business plans What does that tell you, Pizza Guy? The Red Herring of Item 20 is all that imprecise information about expansion and contraction of the network that permits franchisors to promote the visibility of their networks through discounted stores (failures) that count as successes for the network. Those franchisees who have been silenced with confidentiality agreements, or, perhaps paid, as the government suggests, for good references are supposed to be provide essential information on which to judge the risk of the investment. Such dishonesty. They invade the privacy of ex-franchisees who have no legal obligation to talk to new franchisees about their private business, etc... and this is supposed to be disclosure that allows prospects to assess the risk. Part of the model, no doubt! Flawed business models and flawed laws provide the Silence of the Lambs who are quickly dispatched in failure to the franchisee graveyards that are out of view of the public.

75 MPH by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 12:30.

I am not trying to be argumentative, however ...

With the exception of a very small amount of road in Montana the maximum speed limit in the U.S. is 75MPH; slower speeds have been proven to be safer and to conserve fuel ---- HOWEVER I do not think that the government should now require automakers limit the speed of a vehicle to 75MPH.

Nor would I want the govenrment to require automakers to install a breathalizer system into every vehicle to prevent driving under the influence.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Again Tinker by jd

Submitted by jd on Mon, 2007/06/25 - 14:47.

You understand accounting. There are a lot of people that don't.

Isn't inventory based on the lower of cost or market (so that company financial statements are overstated)? Not too mention LIFO, FIFO, average cost basis. There are lots of different ways to value items correctly.

Some franchisees don't have inventory set-up in their computers and they have no intention to. Again, I'm going based on my experiences and when you see inventory values the same year in year out, they obviously don't care about their books.

Personally, I'd love to see how franchisees in the Sona system recorded their procedures under accrual accounting (it's probably something Quickbooks would've been able to handle). Obviously they had deferred revenue associated with each of their clients, with revenue recognized each time their clients came in for a procedure. Also, I would assume that a valuation would also have had to have been set-up to account for people that took more than 5 visits. Just like I'm sure you had a warranty accrual set-up in your line of business.

STOP the MADNESS by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 16:35.

Once again, the conversation reverts back to faulting the franchisee for signing the agreement. This is just ridiculous.

It goes without saying..........people need to read what they sign..............people need to get professional opinions on legal and financial documents

Now with that said, if reading the document and obtaining professional opinions does not prevent the more savy franchisor from ripping someone off...............than for GOD's sake, stop blaming the victim. It's either a warped justification or diversionary tactic.

Rhino Super Center

Lisha

Rhino Super Center

Ingenuity by RichardSolomon

Submitted by RichardSolomon on Sun, 2007/07/01 - 18:52.

These and other ambiguities present due diligence issues for which methods are developed by the competent to prevent being misled. When you think of who works for the government, and to whom they suck up in hopes of post government service employment, you have to be rather thick to expect regulation that is effective. It is the competent resources of the private sector that develop the tactics for countering the deceptions. Anyone who has ever been a student of regulation knows that the regulated are always regulated by their "friends" who hope and expect to be rewarded for keeping the level of regulation to merely theatre.

Richard Solomon
www.FranchiseRemedies.com

Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

Your analogy is flawed..... by Tinker

Submitted by Tinker on Mon, 2007/06/25 - 12:35.

in more ways that I have the patience to address..................however the most obvious is that in a car, WE are the drivers and our choices, good or bad, are our choices. In a franchise, we are not the only driver.

Rhino Super Center

Lisha

Rhino Super Center

Madness is by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 16:56.

I think you make the point, IF you read the document, understand the document, obtain COMPETENT professional counsel AND follow the advice of that cometent advisor - AND then FOLLOW the system AND use good business practices AND FAIL --- YOU MIGHT BE A VICTIM.

If you sign a 10-year agreement and invest several hundred grand, and DON'T DO THE ABOVE ---- YOU MIGHT BE A __________________ and "Here's your sign!"

If you do the above and the information contained in the UFOC and/or the Franchise Agreement are FALSE or IF, the franchisor fails to perform their obligations as outlined in the AGREEMENT --- YOU'RE A VICTIM.

Tinker: Madness is failing to accept personal responsibility for our own failures.

SPECIFIC TO the 2003 SONA UFOC & Agreement: If you got what you bought (per agreement) you are not a victim!

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Dale, You're Mistaken! by Guest

Submitted by Guest on Mon, 2007/06/25 - 17:07.

Dale why do want to pin the blame for everything on the SONA franchisees who signed the UFOC? If franchisees were as smart as you (and I'm not impressed) no one would ever get burned. Remember that Jim Amos and the experts at Carousel Capital also bought into SONA. Do you believe they were idiots too? Or maybe your're proctecting them. Which is it? Some SONA franchisees were professionals and other used professionals to review the UFOC. The SONA business model was so unique that no one knew what to make of it except what Dennis Jones and Tom Noon had told them.

Tinker by Bubba Sparky

Submitted by Bubba Sparky on Mon, 2007/06/25 - 18:39.

It's been said that many people do not read the UFOCs and FAs - which is admittedly stupid. For those that do read them and receive competent legal and financial counsel, yet still get screwed...well that's a separate ball of wax. I would seriously look at the quality of the counsel I received and see if I was not warned about these issues. The problem with the Sona concept is that it is predicated on extremes: extremely high royalties, extremely expensive equipment, extremely nebulous long-term viability and medical efficacy (was there any success for anyone with these treatments?), extreme concept (seemed to be some sort of amalgam between a dermatological concept and spa of some sort that should have had some sort of required regulatory oversight, especially given the medical context it was hyped in). A competent attorney or financial advisor should have told them these dangers and advised them against it; HOWEVER, if they then chose to proceed forward, knowing full well these risks, its hard to shift the blame to the franchisor, regardless of how ridiculous the concept. My impression is that these franchisees had too much of an emotional component involved - they wanted it to work out, they wanted this "dream" to come true, despite evidence to the contrary plainly in front of them. It's not that I don't feel for them, because it is sad, and I can understand the gray ethical cloud that surrounds Amos and company certainly played a part, but I either don't see adequate due diligence or due diligence that was ignored simply because it was the franchisee's "dream." Here it seems to fall back on the franchisee.

My hat is off to Richard by Guest

Submitted by Guest on Sun, 2007/07/01 - 20:34.

Richard I could not agree with you more. The regulators are being regulated by someone or something other then the absolute law. We are going to post our walk down the legal lane with everyone on BMM. This walk will include what Maryland has done up to this point since they sanctioned CB and then allowed them to amend the first UFOC registered after entering the Order with Maryland. We finally received a letter of acknowledgment from the Securities Commissioner in relationship to our complaints for the violations of the Consent Order. We will also post our response back. Having nothing left to lose can give you an amazing sense of freedom.

Buying and Selling Regulation --High Level Corruption by Guest

Submitted by Guest on Sun, 2007/07/01 - 22:52.

The pity is that most of the career people who work for government are good people who try to do their best and it is the big wheels at the top who sell their offices and who keep the revolving door going between government and private industry and they are the ones who make the really big dollars in and out of government on top and under the table. The Congress knows that franchising is weakly regulated to subsidize the franchisors and the FTC could not have made this DEAL with the franchising industry without approval and cooperation at very high levels of government, at pay grades outside of the career civil service. The career civil service like the career military are encouraged not to be political and are servants of policy made at the top of the agencies of government. Those at the top of the agencies are political animals and the revolving door gives them access to corporate riches when they go back and forth between the corporate sector and the high-level government jobs.

I'll remain mistaken! by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 17:46.

Guest Writes: Dale why do want to pin the blame for everything on the SONA franchisees who signed the UFOC?

I don't 'pin the blame' for everything on the SONA franchisee. I do say that ULTIMATE RESPONSIBILITY falls to the franchisee.

Guest Writes: If franchisees were as smart as you (and I'm not impressed) no one would ever get burned.

I would certainly hope that most franchisees are far smarter than I am, because I'm not very smart. I am however pretty good at what I do, and if more franchise candidates would eliminate emotion, and make sound business decisions they'd do a lot better. Anyone can 'get burned'. I have seen no evidence that anyone got 'burned' in the case of the 2003 Sona UFOC. I've seen evidence that many were given FALSE or INACCURATE information, and that some people may have made their investment decisions based on that False or Inaccurate information - UNFORTUNATELY they signed an agreement waiving their right to depend on that information. Regardless of misleading information the 2003 SONA UFOC a BAD DEAL all the way around, but just how bad it was - was fully disclosed in the disclosure document.

Guest Writes: Remember that Jim Amos and the experts at Carousel Capital also bought into SONA. Do you believe they were idiots too? Or maybe your're proctecting them. Which is it?

I do not know the terms of their investment, however we can all see that their deal has worked out for them very differently than has the deals being discussed here on BlueMaumau. No I do not think they are idiots. No I am not protecting them.

Guest Writes: SONA franchisees were professionals and other used professionals to review the UFOC.

Because one is a 'professional' does not mean that they are a professional at acquiring a Lasar Hair Removal Franchise. As for the use of other profesionals - I usually prefence professional with the term competent professional. There are many attorney's who inaccurately believe that because they attended a 2-day franchise workshop that they're now qualified to advise clients on franchise related issues. Furthermore, reviewing the UFOC is but one piece of the necessary due-diligence required to make an informed, educated decision regarding the purchase of a franchise.

Guest Writes: The SONA business model was so unique that no one knew what to make of it except what Dennis Jones and Tom Noon had told them.

Investing in a 'business model that is so unique tha no one knows what to expect' is CRAZY. I'm quite sure you've heard of this guy named Warren Buffet, head of Berkshire Hathaway, an investment guru and one of the world's richest men. Buffet has many pieces of advice for investors but the top two which would serve all franchise candidates well are:

Be Patient in your investments.
Stick to what you know. Here's a good Buffet quote: "I don't worry about what I don't know — I worry about being sure about what I do know."

Thank you for your comments, and I'm sorry that you're obviously offended by the fact that I believe in personal responsibility.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

Regulators' motivation by Paul Steinberg

Submitted by Paul Steinberg on Mon, 2007/07/02 - 11:00.

Guest writes:The regulators are being regulated by someone or something other then the absolute law.

Guest specifies Maryland, which would be Dale Cantone, who has been in his job a long time and shows no indication of being one of those "revolving door" public officials such as are often seen at SEC or Justice. Moreover, Cantone has a long track record of being a regulator who bases his actions on the narrowest possible basis. Such a philosophy is, in my opinion, not only the best practice but is in keeping with a democratic (small "d") state.

As to Toporoff at the FTC, while he is perhaps a bit friendly with the franchisor lobby, his arguments as to the limitations on Section 5 authority are plausible and while I disagree with the position that the FTC took during the GAO audits, I don't see that there is anything fishy about his pro-zor bias; he believes that if the zees don't read the UFOC that is the zees problem, and if Congress wants to give the FTC a broader mandate, Congress should speak directly as to what that mandate should be.

Certainly one might argue that Toporoff could take a more active stance under Chevron. But under both Republican and Democratic administrations and legislatures, there has been no consensus as to expansion of franchise regulation. If franchisees actually got up off their butts and contacted their Senators and Congressman, this might change.

Paul Steinberg, Franchisee Attorney, New York City, Ph: 212-529-5400

You Remain Mistaken! by Guest

Submitted by Guest on Mon, 2007/06/25 - 18:48.

Dale you have replied with wise advice to anyone wanting to buy a franchise. Your belief in the personal responsiblity for the decision to buy a franchise resting with the franchisee is well understood. There is no question about that. However, where is your outrage that someone in the franchise community committed misrepresentation or fraud? You seem more critical of those who believed them. The SONA 2003 team is in business again selling a medspa program to physicians.

Motivation by Guest

Submitted by Guest on Mon, 2007/07/02 - 11:07.

What is the explanation for such a limited recission and why is Maryland allowing CB to amend a UFOC that is in violation of The Order. Better Yet, after an Order of this nature has been entered into, how could the very first UFOC have been registered? This UFOC should have been gone over to insure that the mandated disclosure was in fact as per The Order

Call Me Mistaken! by FranSynergy

Submitted by FranSynergy on Mon, 2007/06/25 - 20:01.

I'm extremely outraged by any CRIMINAL who commits a CRIME, especially a CRIMINAL who disguises their criminal activity as 'legitimate franchising'.

I also recognize I can have a much larger impact in educating buyers, than trying to prevent criminals from selling franchise opportunities. Criminals follow the easy money. If you reduce the easy money, you dramatically reduce the amount of criminal activity in franchising. I also recognize that the selling of a flawed business model is BAD but NOT necessarily criminal.

Having been involved with many franchisors and franchisees I recognize that most 'failed' franchisees blame their franchisor for their failure. I could count on my fingers the number of failed franchisees with whom I've spoken who said "I blew it, I messed up, I failed to follow the system, I failed to manage my finances, etc...". Therefore in the absence of any 'real' evidence that a franchisor has committed a crime, it is 'statistically' more probable that the franchisee failed in either: the performance of due diligence or in running the business.

If a franchise candidate is reading a Franchise Agreement and they read 'X', but were told 'Y' they need to say 'Whoa wait a minute'. If they were told 'A-B & C' but only 'A & C' are addressed in the franchise agreement they must say "Whoa, what about 'B'."

FranSynergy is in the business of helping existing franchisees to Thrive - Grow & Prosper in their franchise. We also offer some services to the franchise candidate. Our work with ex-franchisees is limited to those who are looking to 'Do-It-Again'. Some of these past franchisees left their previous franchise under favorable terms and others left under less than favorable terms. The one thing they all have in common is a strong desire to Do-It better this time around.

I hold every franchisor responsible for the failure of every franchisee -- I hold every franchisee responsible for his or her own success or failure.

Specifically in the case of Sona vintage 2003, franchisees were provided with false information relative to the number of treatments required to achieve 93 to 97% hair removal. This was bad. Sona should not have speculated on the number of treatments required, and should have withheld such statements until they had the facts. This would be considered a flawed system. The franchisor should have proven the technology before trying to sell the franchise using the technology. Proper due diligence would have prevented a franchise from buying into this flawed system.

Once the facts were known, those involved should have immediately retracted their previous statements, and immediately provided true and accurate information to existing and prospective franchisees. Not doing so would appear to be criminal.

One could easily read and interpret from the 2003 UFOC that SONA was charging far to much on totally unnecessary items. This is not illegal. It is however a very good reason for saying NO to the deal.

Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
www.fransynergy.com

As Usual -----Law but no Enforcement Capabilities on UFOC's by Guest

Submitted by Guest on Mon, 2007/07/02 - 11:20.

Why would the regulators enforce the provisions of the UFOC's when, apparently, they don't even read them. I think UFOC's are only looked at and enforced when members of the public complain to the azuthorities that the law has been broken and then the authorities are forced to look at the UFOC's. The lack of enforcement capability at both the State and the Federal level is part of the subsidy of the franchisors.

Sona MedSpa Has Aversion for Standard Accounting Practices

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