Fetch Pet Care Franchisees Allege They Were Defrauded as Complaints Mount for Phoenix Franchise Brands | Franchise News

• The franchisor “essentially set up a scheme to defraud franchisees in violation of the Michigan Franchise Investment Law,” wrote Bryan Dillon, the attorney representing the Independent Association of Fetch Pet Care Franchisees, in a complaint filed with the state’s attorney general.

• Fetch is one of four brands under Phoenix Franchise Brands, which is facing criticism from franchisees across all its concepts who say Phoenix misrepresented the viability of its models and uses a predatory fee structure to while not delivering on promised support.

Phoenix Franchise Brands is facing a mountain of accusations from franchisees across its four brands who say they were set up to fail by a franchisor interested not in supporting the development of successful businesses but in selling franchises to line the pockets of the company’s owners.

Out front is the newly formed Independent Association of Fetch Pet Care Franchisees, which represents franchisees with more than 70 locations that provide dog walking and other pet care services. Fetch Pet Care, along with Furry Land Mobile Grooming, Spray Foam Genie and Door Renew, is under Livonia, Michigan-based Phoenix Franchise Brands, owned by Greg and Maria Longe.

The association filed a sweeping complaint with the Michigan Attorney General’s Office and the state’s Consumer Protection Division September 12 claiming Fetch uses misleading statements directly and in its disclosure documents to deceive prospective franchisees.

“Fetch has not only been using misleading disclosures and misrepresentations to sell unprofitable franchises, but by collecting large initial payments from selling franchises, which are destined to fail, it may also have created an unlawful pyramid scheme,” wrote Bryan Dylan, an attorney at Lagarias, Napell and Dillon representing the Fetch franchisee association, in the complaint. Dylan noted rather than selling and operating a profitable franchise system that can attract pet owners as customers, “Fetch is making its money by selling franchises that simply can’t succeed.”

At the core of the complaint is a difference in fee structure for legacy owners and those who signed agreements after 2018. The royalty fee for legacy owners was 6 percent of monthly gross sales; in 2018 that increased to 7 percent of weekly gross sales, and a franchise support fee (later called a franchise operations fee) of 15 percent was added. Weekly minimum fees, which increase each year, were also added.

Local marketing requirements have likewise gone up, the complaint noted. In 2020, franchisees were required to spend $2,000 for the first 12 months, $5,000 for the second 12 months and $7,000 for the third 12 months and beyond. By 2023, franchisees were required to spend $3,800 per month for the first target area, another $1,000 each month for a second target area and $500 per month for each additional target area.

“Nearly all franchisees operating under this new structure simply can’t reach revenue levels high enough to avoid paying these minimum fees. As a result, by year three, many are required to pay close to, or even more than, 100 percent of their weekly gross revenue to Fetch,” Dylan wrote in the complaint. “These rates are obviously unsustainable.”

According to the association, the failure rate of new franchisees is around 90 percent by year three under the current fee structure. Fetch’s 2023 franchise disclosure document listed 136 outlets; its website listed 161 locations as of September 30.

Greg Longe, who is CEO of Fetch and Phoenix, declined via email to comment for this story. He did not respond to a request to confirm the total number of open locations. The association, meanwhile, contends numerous locations have closed but that Fetch continues to list those units as open and does not properly disclose shuttered units in its FDD. The company’s most recently available FDD, dated September 7, 2023, lists eight terminations from 2020 to 2022 and 15 units reacquired by the franchisor. The “ceased operations—other reasons” column lists zero.

The difference in fee structure between Fetch’s legacy owners and newer franchisees, which from 2020 onward is not explained in Item 19 of its FDD, is at the crux of what Dylan and the association said amount to misleading performance disclosures. Several franchisees who joined the system since 2020 said they were told numerous owners are profitable and run “million-dollar locations.” They said they weren’t told, however, that those owners are paying far less in fees.

Louis Fiorilla, an attorney at Saxton & Stump who represents Fetch, declined to answer specific questions about the complaint and other claims being made by Fetch franchisees. In an email he said Fetch “denies all wrongdoing as alleged in the association’s complaint to Michigan’s Attorney General and in its parallel California lawsuit.”

“Fetch will vigorously defend the association’s claims but declines to otherwise comment during active litigation,” Fiorilla said. “Fetch looks forward to fully vindicating itself as to the association’s false allegations.”

The California lawsuit referenced was the ex parte application by the independent franchisee association for a temporary restraining order to prevent Fetch, Greg Longe and others from interfering with the association.

Filed July 10 in a California Superior Court (Fetch is incorporated in California), the suit alleged that shortly after the association’s formation, Fetch and Longe “began a concerted effort to derail the association by intimidating franchisees from joining and interfering with their ability to freely associate.”

Greg and Maria Longe, according to court filings, in June began removing from the company’s OurFetch forum franchisees known to be a part of the association. Greg Longe, the suit stated, “repeatedly disparaged” the association and “made it clear that Fetch will not recognize or

interact with the IAFPC and that anyone joining will not have a voice with the system.”

While a judge denied the request for a temporary restraining order, Dylan said the association may pursue an injunction but “we have other priorities now and the association is focused on getting relief and rescission” from Fetch and Phoenix Franchise Brands.

Dylan sent rescission letters October 1 to Fetch and Greg Longe on behalf of at least 35 Fetch franchisees who combined have more than 50 locations. Those franchisees seek to effectively cancel their contracts, and the letters cite grounds for rescission that are similar to those laid out in the Michigan complaint. Franchisees seek to recover their initial franchise fees, along with other startup costs, royalties and accruing operating losses.

‘They’re criminals, and they should be stopped’

John Neu purchased his Fetch Pet Care franchise in 2021 and by January 2023 he said he had no other choice but to give the North Carolina territory back to corporate.

“It’s all set up for them to take these back after people have built up the business but just can’t afford the royalties,” said Neu. Through the franchise sales process, Neu said he was shown “mind-blowing numbers” but never told the franchisees achieving those numbers were operating under a different fee structure. 

Neu said he was also sold on a robust support structure and assistance with lead conversion that in reality didn’t exist. As detailed by Neu and more than a dozen other franchisees interviewed for this story who requested anonymity because they feared retaliation by the franchisor, support of franchisees is severely lacking, and the brand’s sales and marketing center, or SMC, is ineffective.

“I’d put all my trust into the SMC,” said Neu of what amounted to a call center through which customer inquiries were routed. “I had 100 percent faith in the call center, that they would be converting leads to clients.”

Instead, said Neu, customer calls often weren’t answered, there was no follow-up action on leads and thus no conversions. When he brought his concerns to his regional leader or Heather Bir, Fetch’s vice president, and requested help to generate customers, “the response was always just, ‘You have to spend more on marketing,’” said Neu.

Neu said he got into massive credit card debt—he still owes more than $120,000—as he tried to keep his location afloat. The financial stress “basically ruined my marriage,” he said and in going through a divorce while grappling with the failure of his business, his mental health suffered.

“I was so depressed, I literally could not function,” he said, before he ultimately checked into an inpatient therapy program. “That literally saved my life.”

Of the business he gave up, Neu said with the agreement he signed he would have received 75 percent of the profit if his location sold within 12 months; if it sold within the second year, he’d get 50 percent of the profit. Now more than a year and half after signing that agreement, he said he hasn’t received a single update, nor any indication the franchisor is trying to sell the territory.

“And I don’t expect they will sell it,” Neu said. “They take these back, sit on them for two years and then sell them for double.”

Of the Longes, Neu was blunt: “They’re criminals, and they should be stopped.”

Sandy Ellis, a Fetch franchisee who operates in Monrovia, California, said from the moment she opened in March 2021, “it’s been a headache.”

“Corporate told us: Give us one year, invest in everything we tell you, and you’ll be a success,” said Ellis, who comes from a corporate sales background. “By the next year, I refused to pay for the call center, the additional marketing. Literally everything they wanted me to invest in, I refused to do.”

In using the company’s sales and marketing center, “I have a zero percent conversion rate,” she said. “Maybe half a percent. Basically, anything they touch never gets converted.”

Ellis instead handles all her own marketing, customer calls come to her business cell phone and she controls her territory’s social media presence. She hired a dog trainer and started offering private and group training classes, and said only by building her own team has she been able to find some success.

“The only way we’ve been able to survive this long is to do the complete opposite of everything they told me,” Ellis said. “I count my success as not being in the red.”

Like Neu and other franchisees interviewed, Ellis said she was shown performance indicators for legacy owners and didn’t know about the different fee structure. She said she was also discouraged from calling other existing operators on her own, but instead directed only to certain franchisees during her due diligence phase.

“It was after I signed that I started calling other owners and found out they were so unhappy,” she said.  

Dylan in the complaint to Michigan’s attorney general called out Fetch’s practice of preventing prospective franchisees from contacting current or former owners. “The phone numbers listed for current and former franchisees do not go to the franchisee, but instead go to Fetch’s call center where, for lack of a better phrase, any inquiries go to die,” he wrote.

“The outcome I would like to see is for them to release us as franchise owners,” said Ellis. “They don’t deserve to be called a franchise. These are our livelihoods, people’s hard work and investment that they’ve worked years to build.”

Allegations of fraud, deception across Phoenix

Greg Longe acquired Fetch Pet Care from Harry Loyle and Cybeck Capital Partners in March 2020 when it had about 50 units. Among his roles earlier in his career, Longe served as president of Molly Maid, co-founded and was CEO of Dryer Vent Wizard as part of his AFS Group of Companies, and before buying Fetch did a short stint as CEO of British Swim School.  

He followed the purchase of Fetch with the addition of mobile grooming concept Furry Land in March 2021. Door Renew, a door refinishing and refurbishing concept, came in June 2021, and home and commercial insulation brand Spray Foam Genie was acquired in spring 2022, all now under Phoenix Franchise Brands.

Franchisees in each of those systems described problems similar to those experienced by Fetch owners, and many called out a “managed service” franchise model that Phoenix sold to them as an absentee investor option that was anything but.

Chris Galea was a Furry Land franchisee for just 18 months and relinquished his business at the end of July. Galea, who lives in Michigan, said he was sold on the managed service option to run a Furry Land territory in Florida after being told by Greg Longe that an entity called Furry Land Managed Services would handle all operations, with Galea as a passive investor.

“I was flat out lied to,” said Galea. “He told me things that never happened.”

A Furry Land Managed Services agreement reviewed by Franchise Times listed several management company responsibilities. Among them: “acquiring the van” for the mobile grooming business; “developing and implementing a business plan for the Franchised Business and managing the operational workflow of the Franchised Business;” “providing office management for the Franchised Business;” and “recruiting, training and scheduling Franchised Business staff of the Franchised Business.”

Instead, Galea, who said he paid $185,000 as an initial franchisee fee to secure a designated market area of 2 million to 2.5 million people, had to obtain and lease his vans and get them outfitted, and found himself spending dozens of hours each week on the business with no help from corporate. He took out loans in an effort to keep the business afloat but said with the high fees—in addition to a 6 percent royalty and the local advertising requirements, another 5 percent of gross revenue was charged as a management fee—meant he could never get close to breaking even.

“Never, not one month did we have that I didn’t have to continually put money in,” said Galea as noted he lost about $400,000 total.

Other franchisees who spoke to Franchise Times on the condition of anonymity because they feared retribution recounted similar experiences. Still more have gone on record with the Federal Trade Commission.

During an open FTC meeting September 19, thirteen franchisees from across Phoenix’s brands spoke during the public comment period. The agency is continuing its examination of the franchise model, and this summer issued new guidance that was critical of franchisors’ growing use of extra fees charged to franchisees.

Jem McBride, a Furry Land franchisee since August 2022 who bought into the managed service model, told the commission she’s lost more than $350,000 because of the deceptive practices of Phoenix.

“Phoenix has a predatory fee structure, which along with the initial buy-in of $135,000 … makes it impossible to earn any income,” said McBride as she described attempts to “reason” with Greg and Maria Longe. She said they “refused to make changes to the structure or to deliver on their promised services. I believe Phoenix is engaged in predatory and fraudulent practices designed to lure in franchisees and line Phoenix’s pockets.”

Utah resident Krystal Neumayer purchased a Spray Foam Genie franchise territory in Orlando, Florida, that opened in July 2023. In July 2024 “we ended up closing our doors and walking away from our investment of over $700,000,” she told the commission. Prior to opening, she and her husband invested more than $400,000 in their franchise “without any progress being made on behalf of Phoenix Franchise Brands.

“We were assured they would handle real estate, hire employees. Materials indicated we would be leasing equipment from Phoenix Franchise Brands, such as spray foam trailers. To our surprise, we found out we needed to end up securing financing for this equipment, which we weren’t prepared for.” They paid another $197,000 for a trailer, “just marking the start of our trouble.”

Another Spray Foam Genie franchisee, Matthew Underwood, told the commission he thought with his expertise gained during 15 years as a financial adviser he “would be protected from buying into a fraudulent entity.”

“However, it appears that Greg and Maria Longe and Phoenix Franchise Brands have fraudulently authored every single document and cooked the book, so to speak, and made every piece of information that they provide to franchisees is false, fraudulent and incorrect,” Underwood said as he noted his current loss is more than $500,000.

“It’s not just that we’re coming to you telling you these businesses are unprofitable,” he continued. “They are ruining our financial lives.

Franchisees in the Furry Land, Spray Foam Genie and Door Renew systems are considering formation of their own franchisee associations, and some are looking to pursue individual legal action.