Sona MedSpa Guilty of Fraud, Investors Liable!
An arbitrator in Atlanta, Georgia has awarded nearly $400,000 to a franchisee who was duped into buying a Sona MedSpa franchise on the basis of “faulty” information about Sona’s hair-removal services. The arbitrator not only held liable the Nashville-based franchisor, Sona MedSpas, and its founder, Dennis Jones, but also a group of prominent investors that acquired the franchisor, but then failed to correct the misleading information. The investors included Carousel Capital of Charlotte, N.C., its Chairman, Nelson Schwab II, Jim Amos, former President of Mail Boxes, Etc., and his daughter, Heather Rose. As a result of the investors’ failure to act on the information, the franchisee not only proceeded with his investment, but also repeated the faulty information to its own clients. “The case is the first of its kind to hold that investors in a franchise company are liable to a franchisee for failing to perform adequate due diligence and to take corrective measures once they discover the fraud,” said W. Michael Garner, attorney for the former franchisee of Sona MedSpa, Kempton J. Coady.
At arbitration, Coady testified that Jones told him that Sona’s laser hair removal system gave its franchisees a “compelling competitive advantage” because it was based upon a unique “patent pending” “Sona Concept” that removed 93-97 percent of a person’s unwanted hair in five treatments; that the hair removal was permanent; and that with Meladine, a proprietary chemical, the lasers could remove all types of hair, whereas competitors could not remove blonde, gray or white hair. After Coady purchased, but before he opened his center, Sona was acquired by Carousel Capital, together with Amos and Rose. The arbitrator found that Carousel, certain of its partners, Amos and Rose knew, through due diligence and information from more experienced franchisees, that the representations that had been made to Coady were false. At the arbitration, Dr. David Goldberg, a leading authority on laser hair removal, testified that the Sona Concept and its claims of superiority were unsupported by medical science and a “fraud.” Even though Carousel, Amos, Rose and the Carousel partners knew the information was faulty, they failed to tell franchisees for months, including the Coadys. As a result, the Coadys went into training and were instructed to repeat the very same statements to their customers that Jones had told them. It was not until a year later, as the five-treatment cycle came to an end, and Coady’s clients still had unwanted hair, that Coady discovered that what he had been told had been false.
The arbitrator specifically found: “I find that Respondents Sona MedSpa International, Inc., Amos, Rose, Carousel Capital Partners II, L.P., Jason Schmidly, Joseph Pitt and Nelson Schwab II were guilty of negligent misrepresentation by:
(1) failing to exercise reasonable care in obtaining reliable evidence about the validity of the Efficacy Information which they allowed . . . Sona MedSpa International, Inc., to teach the Claimants; and (2) failing to exercise reasonable care in clearly communicating to Claimants (who were formally trained after the Carousel, Amos and Rose investment) that the Efficacy Information conveyed to Claimants before and after they signed the ADA and Franchise Agreement was faulty and should not continue to be used in sales efforts to attract customers.”
As a result, Coady was awarded nearly $400,000 for the costs of making good on the promises made to customers. “This case sends a clear signal to investors in franchise companies that they cannot treat franchisees as mere pieces of paper or income streams.” Garner said, “They have a duty to exercise reasonable care in discovering and correcting falsehoods told to existing franchisees.”
The decision capped a long series of disputes between Sona and its franchisees. In February 2006, a federal judge in Virginia turned down Sona’s request to enjoin a franchisee who had left the system from continuing in the hair removal business. The Judge commented that in light of the likely fraud Sona had committed, it was not entitled to relief. In the past two years, 17 of 45 Sona franchisees have gone out of business, changed hands or left the system. At one point, a total of nine (9) litigations or arbitrations were or are pending against Sona for medical or business fraud.
The full decision is posted on BlueMaumau: Sona Med Spa Arbitrators Decision
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Comments
Mr. Coen,
It was brought to our attention that the misinformation recently released via the internet has also made its way to your informative website. Sōna MedSpa would like to request that the factual results of the arbitration be listed in your blog. Following is a press release containing this information.
Thank you,
Alex Bernard, Communications Manager
Sōna MedSpa International
840 Crescent Centre Drive, Suite 260
Franklin, TN 37067
abernard@sonamedspa.com
See the Press release posted here:
http://www.franchiseperfection.com/blog/?p=98
The information here is a gem!
You should be rewarded
Here’s more of Sona’s spin: http://www.medicalspamd.com/the-blog/2007/6/11/sona-medspa-spin-paying-400k-is-great.html
I was a client of a Sona Medspa location in Alpharetta, Georgia, and of course did not receive the promised relief from hair growth that the location promised. I paid nearly $2000 for my treatments, and have just as much hair all over my back now as I did prior to the treatments. Is there anything that I can do at this point? My final treatment was in the fall of 2005.
Your best recourse maybe Small Claims Court.
[...] It was reported here at Let’s Talk Franchising on May 26th, 2007 that Sona MedSpa Was Guilty of Fraud, Investors Liable! In that case an arbitrator in Atlanta, Georgia awarded nearly $400,000 to a franchisee who was duped into buying a Sona MedSpa franchise on the basis of “faulty” information about Sona’s hair-removal services. The arbitrator not only held liable the Nashville-based franchisor, Sona MedSpas, and its founder, Dennis Jones, but also a group of prominent investors that acquired the franchisor, but then failed to correct the misleading information. The investors included Carousel Capital of Charlotte, N.C., its Chairman, Nelson Schwab II, Jim Amos, former President of Mail Boxes, Etc., and his daughter, Heather Rose. As a result of the investors’ failure to act on the information, the franchisee not only proceeded with his investment, but also repeated the faulty information to its own clients. [...]
[...] It was reported at Let’s Talk Franchising on May 26th, 2007 that Sona MedSpa Was Guilty of Fraud, Investors Liable! In that case an arbitrator in Atlanta, Georgia awarded nearly $400,000 to a franchisee who was duped into buying a Sona MedSpa franchise on the basis of “faulty” information about Sona’s hair-removal services. The arbitrator not only held liable the Nashville-based franchisor, Sona MedSpas, and its founder, Dennis Jones, but also a group of prominent investors that acquired the franchisor, but then failed to correct the misleading information. The investors included Carousel Capital of Charlotte, N.C., its Chairman, Nelson Schwab II, Jim Amos, former President of Mail Boxes, Etc., and his daughter, Heather Rose. As a result of the investors’ failure to act on the information, the franchisee not only proceeded with his investment, but also repeated the faulty information to its own clients. [...]
[...] It was reported at Let’s Talk Franchising on May 26th, 2007 that Sona MedSpa Was Guilty of Fraud, Investors Liable! In that case an arbitrator in Atlanta, Georgia awarded nearly $400,000 to a franchisee who was duped into buying a Sona MedSpa franchise on the basis of “faulty” information about Sona’s hair-removal services. The arbitrator not only held liable the Nashville-based franchisor, Sona MedSpas, and its founder, Dennis Jones, but also a group of prominent investors that acquired the franchisor, but then failed to correct the misleading information. The investors included Carousel Capital of Charlotte, N.C., its Chairman, Nelson Schwab II, Jim Amos, former President of Mail Boxes, Etc., and his daughter, Heather Rose. As a result of the investors’ failure to act on the information, the franchisee not only proceeded with his investment, but also repeated the faulty information to its own clients. [...]
Heather is not qualified to operated a large business unless her Dad (Jim Amos) gives her the position. I have seen and heard of her actions at IFA events. She has no character. She acted as if she was not a married woman (great board member) she divorced her husband because he found out about her affairs. She didnt care about the franchisee only in the next one coming down the pike. She has no medical background, did not understand the procedure but she knows big words. Everwhere she goes there are lawsuites that follow. I bet Joe Pitt could not wait to get her out of there. She hires the same cronies where ever she may land. What a shame great looks but no brains. Well in view anyway. Sona was a scam but Dennis Jones and Jim Amos seem to have landed on their feet. Car allowances, bonus and stock payouts plus the wife of Mr. Jones also recieved a vechicle. Wonder where the monies went?
Wonder how much money Heather recieved wheb she left Sona? Did Amos recive money when he left? Bet they were well compensated. It amazes me that the cycle will continue. The lawsuit stated they they duped franchisee’s into buying a product that did not work. I like the fact that they put forth this principal that they are Christians, Heather Rose even held prayer meetings in the office (scary) but it was a facade. When the chips are down it is everyone else’s fault (the model was not followed). Most of the franchisee’s were professional people to include Doctors and other highly regarded professions. I choose to believe that with everything that has been posted that there is a great deal of truth to the character and ethics that has been presented about Heather. I am sure that she learned everything she knows from Amos. I have worked on project’s with Heather and I can assure you that her ego is as large as her father’s. She presents this holy image and in the same turn exhibits little of the character that she preachs. What a joke. She has the photos of her and her husband in her office but she is always at events with other men.(There were rumors at MBE as well) It is insulting to the people in franchising who truly attempt to repersent themselfs in a positive and professional manner and it does not make Woman in leadership positions look very professional. This is most likely not the forum to go with this. I liked Heather but you can see right through her. It seems that it’s politics as usual. How did she get on the board (bet it was her dad). Maybe she should have had to make her own mark in franchising instead of being given the positions that she has held. This is just my view and I am happy that there is a forum to express it. We need to police ourselfs and present positive and professional character and ethics. I am sure that Ms. Rose has learned a great deal from the Sona experience, maybe she will will reinvent herself and get some distance from dear old dad.
Heather Rose will is not qualified for a leadership position much less as CEO. To call a $400,000 loss a victory leaves most folks dumbfounded. The franchisees are the one’s who lost. They did not recieve the promised services, the product seems less than promised. Byron and Joe can turn this around and will be ethical in treatment and can rebuild faith and trust. I am also sure that they will invest the effort and money to insure the product works as promised. I am sure that Heather is off to a new venture and that we will soon be hearing the same thing again. Pa Amos is retirement age (70’s?) but has groomed Heather to take over his role.
I am a client of Sona Medspa and recently finished 6 treatments for laser hair removal. I have olive toned skin and dark brown hair. I am very satisfied with the results after 6 treatments. After the 6th treatment, the laser technician told me to call back in two months if I think that I may needed another treatment. In the begining, I paid a flat fee of about $800 for my treatment and so far I am satisfied with Sona Medspa.
Heather Rose (Amos) is to be stayed clear of. She had an STD prior to her last marriage. Has had numerous affairs while married (Matt’s) while at MBE. He was an international franchisee. She had this affair while at the MBE family reunion (I would call that one hell of a family reunion). Everyone there knew what was going on. She also had affiars while at Sona (Chad Bradford) lounge singer she picked up while at the IFA Board meeting in Jackson Hole, what a wonderful presentation for the IFA board. She thought Joe Pitt and Byron were stupid and spoke that way of them. She also thought that her dad was out of touch with franchising and wanted only to isolate himself in his office surrounded by Eagles and the several books he has written. She thought a 400,000 loss was a victory? The only important thing to her is position and money. She does not treat people honestly and will rob you if she can. She thought that the franchisees were at fault. She is on the IFA board because her Dad arrainged for that to happen. She will not accept blame for her actions and the damage that she has caused.
I met her several times, seems like a real deal. I have several friends that know her very well. I hear that she keeps horses, she also keeps a stable of men.
Heather Rose is a cruel, mean and a woman without character. I know people who will not even sit at the same table with her. She is a disgrace to fanchising. Her dad and the good ole boy set her up on the IFA board. Everyone knows it is a big joke. They do not care about franchisees, they have no idea of what a Zee goes through on a day to day basis. They keep their fat butt’s behind a desk surrounded by their personal shrines tring to figure the next angle. The sole purpose is to sell franchises and give you all the up front bullshit. Heather will tell of her high christian values, her morale compass. It’s really just a bunch of bullshit. Ever see her slam down a bottle of champagne? Ever notice who she leaves with at IFA events. It is not her husband. She is known as the easy girl in franchising. I went through the entore Sona experience and i can tell you that I would not purchase anything that she is involved in. I worked with Sona from the begining and I can state with fact that she never gave a good damn about any franchisee, only in trying to grow the brand with a failed product. Dennis Jones was at least making a profit under his tour. I pray that she leaves franchising but i am sur Bubba (JIM) will find her a position through his contacts. Reminds me of american politics, we are all just sick of it. Stay away from Ms. Rose she is bad news.
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