Pandemic blamed for crippling Jan-Pro NM, forcing shutdown - Albuquerque Journal

Pandemic blamed for crippling Jan-Pro NM, forcing shutdown

Copyright © 2021 Albuquerque Journal

When Bob and Sophia Guido shut down Jan-Pro of New Mexico in June 2020, the commercial cleaning master-franchise operators allegedly failed to pay tens of thousands of dollars owed to local franchisees for cleaning services rendered that month.

They also never publicly explained why they closed shop, leaving local franchisees confused and scrambling to persuade customers who they previously served under the Jan-Pro brand to allow them to continue providing service as independent cleaning businesses.

The Guidos declined to be interviewed for this story.

But Journal research has revealed that the Guidos blamed the pandemic and ensuing public health orders for pushing Jan-Pro of New Mexico into financial crisis, forcing them to shut down their master franchise operation. Their economic problems were discussed in a lawsuit that Georgia-based Jan-Pro Franchising International filed last year in U.S. District Court of New Mexico against Jan-Pro of New Mexico.

Jan-Pro International is the parent firm that sells regional master franchising licenses to operators like the Guidos, who then oversee all sub-franchised businesses in their service territory.

The parent firm sued Jan-Pro of New Mexico in June 2020 for breach of contract and trademarks, allegedly because the Guidos attempted to set up an independent operation that month called 505 Cleaning Services. Jan-Pro International claimed the regional master franchise agreement with the Guidos prohibited Jan-Pro of New Mexico’s owners from competing with the corporate firm for two years after shutdown.

According to the lawsuit, the Guidos had agreed to close Jan-Pro of New Mexico in May 2020 because their regional operation became insolvent during the pandemic. In a May 1, 2020, letter to Jan-Pro International, Bob Guido told the parent firm that after Gov. Michelle Lujan Grisham ordered a statewide business lockdown starting in March 2020, local demand for commercial cleaning services plummeted.

“Regretfully, the COVID pandemic has created a non-recoverable position for our company,” Bob Guido wrote in the letter. “Our governor continues to keep 30% of our customers closed with her ongoing stay-at-home order. Our financial liabilities continue to increase and we have been unable to secure any loans.”

Lawsuit filed

Jan-Pro International learned in June 2020 that the Guidos were planning to open their own 505 Cleaning Service less than a month after closing Jan-Pro of New Mexico, leading the corporation to sue the Guidos for breach of contract.

In fact, the Guidos stated their intentions in numerous emails sent to local franchisees interviewed by the Journal. The emails said Jan-Pro of New Mexico would cease operations but that the Guidos would continue to manage all business administration of cleaning services rendered by franchisees for local customers. The previous franchisee arrangements would remain the same as before, the emails said, but under the new brand of 505 Cleaning Services, rather than under the Jan-Pro brand.

The Guidos halted those plans after Jan-Pro International filed its lawsuit in mid-June 2020. At that point, the Guidos informed all franchisees that they would completely shut down at the end of June, with no explanation offered.

The court dismissed the Jan-Pro International lawsuit in December 2020, after the Guidos agreed not to compete with the corporation for at least a year, until December 2021.

It’s now unclear whether the Guidos intend to relaunch their business this December under 505 Cleaning Services. A Journal search in September confirmed that 505 Cleaning remains registered as a legally incorporated entity with the New Mexico Secretary of State’s Office, with Sophia Guido as president and Bob Guido as vice president.

Guidos file for bankruptcy

In August, the Guidos filed with the U.S. Bankruptcy Court in New Mexico for a Chapter 7 dismissal of their personal debts.

In the filing, the Guidos listed a $462,000 debt to Will and Laurel Parker, the former owners of Jan-Pro of New Mexico who sold the business to the Guidos in 2015.

The filing omits any mention of potential liabilities with Jan-Pro of New Mexico’s former franchisees, many of whom told the Journal the Guidos never sent them their monthly net paychecks due for cleaning services rendered under the Jan-Pro brand in June 2020.

It seems unlikely that the franchisees could seek recovery through the Guidos’ bankruptcy case, because the court filing seeks dismissal of the couple’s personal debts, not debts allegedly owed by Jan-Pro of New Mexico, a company that no longer exists.

In fact, a lawsuit filed by one longtime franchisee, Ashley Pepe, to recover $3,225 she alleges is owed to her for cleaning services she provided in June 2020 was dismissed last year by the court for being filed improperly, apparently because she sued the Guidos directly. She said she was told that the case was between her and Jan-Pro of New Mexico but that because the business had shut down it didn’t owe her any money.

And Pepe, who has no legal training, represented herself in the lawsuit. Dealing with the courts was both confusing and stressful, she told the Journal.

Legal limbo

It’s unclear what, if any, legal options exist for franchisees to recover income they said was unpaid from June 2020, much less losses from customers who declined to sign new contracts after the Jan-Pro shutdown, said longtime franchising industry expert Joel Libava, owner of The Franchise King consultancy in Ohio.

“This is very unusual,” Libava told the Journal. “I’ve never heard of a situation where a master franchiser closes shop and then doesn’t pay the franchisees.”

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