CleanNet USA litigation history

The franchisor

Pending (1)

• Kenyitta Barber v. CleanNet USA, Inc.

  pending

  Brought by a franchisee · filed 2021-10-28 · U.S. Equal Employment Opportunity Commission and Michigan Department of Civil Rights (cross-filed charge) · EEOC Charge No. 23A-2022-00114C; MDCR Charge No. 621360

  “… EEOC Charge No. 23A-2022-00114C, MDCR Charge No. 621360, filed October 28, 2021. This is a charge of discrimination based on sex and race by a CleanNet of Greater Michigan franchise owner, Kenyitta Barber. Barber owns a Michigan limited liability company named First Prestige Commercial Cleaning, LLC, which company owns the CleanNet unit franchise.”Page 14 of the 2023 FDD, Item 3

  Outcome: “The matter is under investigation at this time. The companies intend to defend the charge vigorously.”

Concluded (9)

• Irma Guerrero and Ariel Cortes Silva v. D&G Enterprises, Inc. d/b/a CleanNet of the Bay Area; CleanNet U.S.A., Inc., CleanNet of Southern California, Inc., and Does 1 through 25

  settled

  Brought by a franchisee · filed 2020-05-13 · Superior Court of Alameda County, California · RG 20062750

  “… (Case No. RG 20062750); Superior Court of Alameda County, California.”Page 18 of the 2023 FDD, Item 3

  Outcome: “The parties engaged in private mediation, which resulted in a settlement of all claims with the following terms: CSC will pay Guerrero $100,000 in damages; D&G Enterprises will pay Silva $92,000 in damages; the PAGA claims are being settled for a total of $925,000 by all Defendants.”

• Luis Castillo v. CleanNet USA, Inc.; D&G Enterprises, Inc.; CleanNet of Southern California, Inc.; Paqnet, Inc.; FCDK, Inc.; and Does 1-15

  settled

  Brought by a franchisee · filed 2017-11-21 · Superior Court of San Francisco County, California; removed to United States District Court for the Northern District of California · CGC-17-562611; 3:17-cv-07277-JCS

  “… (Case No. CGC-17-562611; filed November 21, 2017) in the Superior Court of San Francisco, County, California, removed to United States District Court for the Northern District of California, Case No. 3:17-cv-07277-JCS.”Page 17 of the 2023 FDD, Item 3

  Outcome: “On April 4, 2019, the remaining parties settled the human trafficking claims under California and federal law for a total payment of $105,000.00, with CleanNet of Southern California paying nothing and CleanNet USA having responsibility for half of the amount (co-defendant D&G assuming responsibility for the other half.” (page 18)

• Jose Segovia and Genesis I Cleaning, LLC v. CleanNet USA, Inc.

  settled

  Brought by a franchisee · filed 2015-12-01 · Circuit Court for Fairfax County, Virginia · 2015-15918

  “… (Case No. 2015-15918, in the Circuit Court for Fairfax County, Virginia). On December 1, 2015, this lawsuit was filed by a franchisee against CleanNet. The complaint alleges claims for breach of contract, fraud, unconscionability, unjust enrichment, misclassification of employees as independent contractors”Page 16 of the 2023 FDD, Item 3

  Outcome: “The parties successfully negotiated a settlement prior to mediation, and the matter was resolved with CleanNet paying $20,700 to Genesis I Cleaning, LLC, $2,500 in attorney’s fees, and $849.85 for janitorial services performed.”

• Eddy Torres v. CleanNet U.S.A., Inc., MKH Services, Inc., d/b/a CleanNet of Philadelphia, and CleanNet Systems of Pittsburgh, Inc.

  settled

  Brought by a franchisee · filed 2014-04-10 · United States District Court for the Eastern District of Pennsylvania (on removal from the Court of Common Pleas, Trial Division, for Philadelphia County, Pennsylvania) · 2:14-cv-02818-AB; 140400901

  “… (Case No. 2:14-cv-02818-AB; filed May 16, 2014, in the United States District Court for the Eastern District of Pennsylvania; on removal from Case No. 140400901; filed April 10, 2014, in the Court of Common Pleas, Trial Division, for Philadelphia County, Pennsylvania).”Page 16 of the 2023 FDD, Item 3

  Outcome: “On October 28, 2015, without admitting liability, the parties settled the case. In exchange for mutual releases between Plaintiff and all Defendants, MKH terminated Plaintiff's franchise, forgave any indebtedness remaining on the promissory note between MKH and Plaintiff, and paid to Plaintiff $33,750 of the initial franchise fee and for reimbursement of attorney's fees and costs.”

• Esther Estrada, Isaac Carrazco and Maria Jacobo, et al. v. CleanNet U.S.A., Inc., D&G Enterprises, Inc., d/b/a CleanNet of the Bay Area, CleanNet of San Jose, CleanNet of Southern California, Inc., CleanNet of San Diego, CleanNet of Sacramento, Mark Salek and Mark Crum

  settled

  Brought by a franchisee · filed 2014-04-18 · U.S. District Court for the Northern District of California; claims arbitrated before the American Arbitration Association (Case No. 02-15-0005-2115) · 3:14-cv-1785

  “… (Case No. 3:14-cv-1785; filed April 18, 2014), in the U.S. District Court for the Northern District of California.”Page 17 of the 2023 FDD, Item 3

  Outcome: “The remaining claimants’ claims were settled with D&G paying each of the claimants $2,000. A stipulation of dismissal was filed by the parties on June 7, 2018. The matter is now dismissed with prejudice.”

• Jose Sanchez v. CleanNet U.S.A., Inc. and CleanNet of Illinois, Inc.

  settled

  Brought by a franchisee · filed 2014-03-26 · U.S. District Court for the Northern District of Illinois, Eastern Division · 1:14-cv-02143

  “… (Case No. 1:14-cv-02143; filed March 26, 2014, in the U.S. District Court for the Northern District of Illinois, Eastern Division). On March 26, 2014, Jose Sanchez (the "Plaintiff") filed a class action complaint against CleanNet and CNI, the regional subfranchisor for Illinois”Page 15 of the 2023 FDD, Item 3

  Outcome: “The parties settled the matter for a payment of $14,000, and $1,975 in mediation and other costs, payable to their attorney of record. The settlement includes a termination and rescission of the franchise agreement.”

• Suad Elmi, Metresse Ali and Elmi's Green, LLC v. CleanNet U.S.A., Inc., TSN, Inc., d/b/a CleanNet of the Northwest, and Paul Nikpour

  settled

  Brought by a franchisee · filed 2014-06-17 · Circuit Court of Washington County, Oregon · C14-3487CV

  “Suad Elmi, Metresse Ali and Elmi’s Green, LLC v. CleanNet U.S.A., Inc., TSN, Inc., d/b/a CleanNet of the Northwest, and Paul Nikpour, (Case No. C14-3487CV; filed June 17, 2014, in the Circuit Court of Washington County, Oregon).”Page 14 of the 2023 FDD, Item 3

  Outcome: “On December 29, 2014, without admitting liability, the parties settled the case. In exchange for mutual releases, TSN, Inc. terminated the Plaintiffs' franchise, forgave a promissory note signed by Saud Elmi in the amount of $800, and refunded $7,546 of the initial franchise fee.”

• Sifredo Sola v. CleanNet USA, Inc.; In Re LP&D, Inc.

  settled

  Brought by a franchisee · filed 2012-03-31 · United States District Court for the District of Massachusetts; United States Bankruptcy Court for the District of Massachusetts (originally filed in Suffolk County Superior Court, Civil Action No. 2012-1267-BLS) · 1:12-cv-10590-JLT; 12-14894-FJB

  “Sifredo Sola v. CleanNet USA, Inc. (Case No. 1:12-cv-10590-JLT), in the United States District Court for the District of Massachusetts and In Re LP&D, Inc. (Case No. 12-14894-FJB), in the United States Bankruptcy Court for the District of Massachusetts. On March 31, 2012, Sifredo Sola ("Plaintiff"), a franchisee, filed a class action complaint in Suffolk County Superior Court in Massachusetts”Page 15 of the 2023 FDD, Item 3

  Outcome: “A settlement between CleanNet and Plaintiff was reached in November 2013 under which CleanNet committed to pay a total of $7.5 million.”

• In the Matter of CleanNet U.S.A., Inc., Mark F. Salek and Robert L. Kahn

  concluded

  Government or regulatory action · filed 2000 · Securities Commissioner of Maryland (Administrative Proceeding) · 2000-0044

  “… (Administrative Proceeding before the Securities Commissioner of Maryland, Case No. 2000-0044). In October 2000, the Maryland Securities Division (“Division”) commenced a proceeding against CleanNet, Mr. Salek and Mr. Kahn (“Respondents”) by issuance of an Order to Show Cause,”Page 16 of the 2023 FDD, Item 3

  Outcome: “franchise compliance training course; implement procedures to ensure compliance with the Maryland Franchise Law; cease and desist from the offer and sale of franchises in violation of the Maryland Franchise Law; and offer one franchisee the right to rescind its franchise agreement. The franchisee accepted, and CleanNet refunded $8,500 and cancelled the franchisee’s $5,000 promissory note.” (page 17)

Parent, affiliates, master franchisor and subfranchisor

Concluded (3)

• Caldwell Truegrit Cleaning, LLC v. CleanNet of Charlotte, Inc.

  settled

  Brought by a franchisee · CleanNet of Charlotte, Inc. (CNC), regional subfranchisor for North and South Carolina · filed 2014-08-06 · General Court of Justice, Superior Court Division, Caldwell County, North Carolina · 14CVS880

  “… (Case No. 14CVS880; General Court of Justice, Superior Court Division, Caldwell County, North Carolina). On August 6, 2014, Caldwell Truegrit Cleaning, LLC ("Plaintiff") filed suit against CNC, the regional subfranchisor for North and South Carolina, alleging that CNC had breached the franchise agreement”Page 19 of the 2023 FDD, Item 3

  Outcome: “On August 10, 2015, without admitting liability, the parties settled the case. In exchange for mutual releases, CNC terminated the franchise, cancelled the Plaintiff's promissory note in the original amount of $6,200, and refunded $5,000 of the initial franchise fee to Plaintiff.”

• Elaine Ellis v. CleanNet of Charlotte, Inc.

  settled

  CleanNet of Charlotte, Inc. (CNC), regional subfranchisor for North and South Carolina · filed 2014-07-09 · General Court of Justice, Superior Court Division, Mecklenburg County, North Carolina · 13CVS20013

  “… (Case No. 13CVS20013; General Court of Justice, Superior Court Division, Mecklenburg County, North Carolina). On or about July 9, 2014, Elaine Ellis ("Plaintiff") filed suit against CNC, the regional subfranchisor for North and South Carolina, Olga Orozco ("Orozco"), a franchisee of CNC, and Sandra Alzate ("Alzate"), an employee of Orozco,”Page 19 of the 2023 FDD, Item 3

  Outcome: “On January 23, 2015, the parties settled the underlying tort action with Ellis for $15,000 ($10,000 of which was paid by CNC).”

• City Entertainment Fort Worth, Ltd. d/b/a City Streets and Margaret A. Parkinson v. TGK, Inc. d/b/a CleanNet of Dallas-Fort Worth and Robert Davis

  settled

  TGK, Inc. d/b/a CleanNet of Dallas-Fort Worth · filed 2010-11-16 · District Court, 348th Judicial District, Tarrant County, Texas · 348-248459-10

  “… (Case No. 348-248459-10; filed November 16, 2010), in the District Court, 348th Judicial District, Tarrant County, Texas.”Page 20 of the 2023 FDD, Item 3

  Outcome: “The case settled to the parties’ mutual satisfaction on April 17, 2012. The lawsuit was dismissed with prejudice on June 19, 2012.”

Officers and directors (individuals, not the company)

Concluded (1)

• Rachael and Raymond Edwards v. Ed Lugo

  dismissed

  Brought by a franchisee · Ed Lugo, CleanNet's National Director of Franchise Sales & Marketing (sued as CBW's agent) · filed 2015-10-22 · District Court for Maryland, Prince George's County · 050200259982015

  “… (Case No. 050200259982015; filed October 22, 2015, in the District Court for Maryland, Prince George's County). On October 22, 2015, Rachael Edwards and Raymond Edwards sued Ed Lugo, CleanNet’s National Director of Franchise Sales & Marketing.”Page 16 of the 2023 FDD, Item 3

  Outcome: “CBW resolved the dispute with a payment of $277.81 for monthly services provided by Plaintiffs. The case was dismissed by the court on January 8, 2016.”