Thousands of students look for summer jobs each year, but many of them do little to no research on companies they apply to. In the spring of 2003, James Ullyott and another freshly graduated commerce student from the University of Calgary worked as managers under College Canada Painting Co. Within months, Ullyott had lost money, both breached their contracts and each subsequently ended up facing a lawsuit filed by the company.
A scribbled blackboard message about earning up to $15,000 during summer in one of Ullyott's classes caught his eye. He jotted down the details and went on to check out the official website at home. The homepage was beautifully constructed, complete with Flash animation; furthermore, a posting also appeared on University of Calgary's Career Services online job bank--all of which made Ullyott feel comfortable about applying for a manager position.
Similar to other student painting companies, College Canada Painting recruits student managers who will hire and organize their own teams while taking on both residential and commercial projects. Managerial tasks include price estimates, payroll for painters and staff supervision. College Canada Painting vows to provide on-going support and free leads; in return, the company receives 24 per cent of every paint job deal.
After applying through the Internet, Ullyott met with the company's president and co-owner Mike Curran. (According to Ullyott, Curran had partially lured him into signing the contract with what he thought was promise of a free cell phone plan.)
"At the interviews [Mike Curran] told me of a free cell phone plan with one payment of $50," recalled Ullyott. "He also advertised himself as a member of the Better Business Bureau, which made me think he had a good reputation. Both turned out to be false, I later found out."
Curran denied such a cell phone plan had ever existed in all seven years of the company's operation.
"In our agreement we were going to give everyone a discounted cell phone for $50; the company pays for the rest. You get your own cell plan, whatever it is," Curran said. "I have never had one manager tell me that they thought we would pay for the plan and be upset about it."
College Canada Painting's claim of being a member of the BBB appeared on flyers and posters circulating around Alberta campuses. However, the BBB's online profile of the company states that "the business is not a member of this Better Business Bureau and our policies prohibit such a reference."
While the profile also contains other negative comments about College Canada Painting, Curran insisted that initially his company had been in good standing with the BBB. In fact, Curran had applied to become a member of the organization.
"I've applied and sent [BBB] the money with post-dated cheques," Curran explained. "They sat at their office for some reason. I was under the indication that [the paperwork] was in their computer when it wasn't. I actually didn't find out until [one co-worker] phoned me two days after a customer phoned [College Canada] saying 'you're promoting the BBB and you're not even part of the BBB!'"
All members of the BBB are allowed and encouraged to advertise with references to the organization. Curran claimed that under his assumption that the BBB had already approved his business, he printed the organization's name on all his advertisements. This only created negative public suspicion about his company's integrity.
"That was probably the most upsetting thing I've ever occurred." Curran said about the advertisement. "We had done all our portfolios, our business cards, our fliers, every single thing with the BBB. But I didn't find out until after that it was stuck in the office. They ensured me they would get it processed, but they didn't. We're no longer with the BBB."
Under the impression that College Canada Painting was a member of the BBB, Ullyott signed a contract making him what Curran called a "licensee", though the contents of the contract could qualify Ullyott as a franchisee. Generally, a license involves less control and interaction between parent company and those who purchase rights to them. In any case, Ullyott claimed that Curran had verbally promised him that he would be able to start up his own business as a licensee with a guaranteed $5,000 loan from the Business Development Bank of Canada. After signing the contract, Ullyott found out the loan had already been discontinued. Even when it did exist, the loan's maximum amount was only $2,000--less than half the amount of what Ullyott says he was told.
"It was difficult after going to school for the last eight months and four years to have five grand kicking around," Ullyott said. "I didn't have any family to lend me the money and I couldn't get any bank to give me a loan because I haven't had a full-time job for three months."
Ullyott felt he had been misled by the company. Curran, on the other hand, stated the loan had stopped just after Ullyott and others were hired.
"I phoned the BDC and they verified that they had stopped the loan in spring of 2003--right before the worst time." Curran explained. "They stopped this for every student painting company in the industry. So we were all caught with our pants down."
After feeling incredibly helpless and frustrated, Ullyott decided to quit. Part IX (a) of his contract stated that the company would try to replace him, but if this is not possible, Ullyott would have to compensate for business losses. Ullyott claimed he had received reassurance from Curran that the company had found someone else to take his place.
"[Curran] had called me on May 8,  to tell me that a replacement had been found," Ullyott said. "[Two days later] he told me the company is suing me for breach of contract."
Curran denied he had ever informed Ullyott that he had found a replacement.
"Contradictory to what he said, I had asked him on more than one occasion to rethink his decision," Curran said. "I just wanted him to follow what he said because I was following what we told him we would do for him. He chose not to, so obviously we were left with no other option but to file a civil claim, to sue for what money we had lost."
"What we lost was prespecified in our agreement," he added. "They know in advance if they quit, they are going to have to pay money to the company for lost income."
Ullyott almost ended up paying $7,500 of compensation during his trial. In order to justify this possible fee, the court ordered Curran to produce receipts as evidence for lost income. According to Ullyott, Curran only produced evidence of a $50 fee paid to Canada Post for dropping off some flyers.
The court's decision was made in Ullyott's favour, based largely on the fundamental differences between operation details between a license and a franchise. In the judge's view, Curran's tie to Ullyott was that of a franchisor, even though the contract stated otherwise.
"The Franchise Act of Alberta protected people like me," Ullyott explained. "One of the clauses states that [the parent company] needs to provide a disclosure statement to any potential franchisee within a number of days of signing a contract. If they don't, the contract would be cancelled."
The disclosure statement mentioned must include financial statements from past years and a list of all past franchisees who had previously terminated their positions. Because Curran never produced any of this to Ullyott, the court ruled the agreement null and void.
"It was deemed by a technicality that our licence agreement was in fact a franchise agreement," Curran said. "It's a legal hair to split, it's up to the judge. There was no misconduct--it was deemed a legal technicality and that's the end of it."
Unfortunately, Ullyott was not the only one who ended up being sued. Another person who wants to remain anonymous also faced a similar situation. This person claimed that Curran had misled her the same way he did Ullyott. The only difference in their circumstances is that she actually used her own start-up capital and operated for a short time as a "licensee" of College Canada Painting.
"I was pretty confident because Mike [Curran] is a pretty convincing guy," she said. "He took each one of us out to dinner and seems sincere. But he did talk the entire time I was trying to read the contract. Naively, I didn't clue in to that."
This person had gone through three screening interviews with the company, so she felt flattered when Curran wanted to hire her. She worked under Curran for a few months until she realized certain problems.
"Mike [Curran] would book the jobs too low, it didn't matter how low it was for us, or that we wouldn't make any money" she recalled. "He got 24 per cent of the gross. In essence, he would always profit, but after paying labour, paint, and all that, we basically pay out of our own pockets to paint these houses."
She claimed that Curran had constantly made decisions about painting projects without first discussing them with the district managers. Curran claimed his company would never trick their managers that way.
"We're a team--College Canada only makes money when [managers] make money and do their jobs," he said. "They're only going to get money if we support them and get people calling their cells. I need them for the full four to five months. I'm not going to upset people so they're unhappy with their jobs."
Most managers did quit that year, including Ullyott and the anonymous person.
"I quit near the end of July," she said. "[Curran] didn't have much problem with me quitting. I didn't hear from him for a while, but four months later he told me I owed him a mythical amount of money."
She then heard that Curran intended on suing her for breach of contract. Her court date is approaching soon. Curran is also in the process of appealing Ullyott's case.
Because of incidents like these, Peggy Valentine, director of U of C's Career Services, advises all students to do their research before applying for any job, even the ones posted on the Career Services' website.
"I think students have to be conscious of what a job entails," she said. "They can go on the internet and there are all sorts of resources such as the Better Business Bureau. Look up the company's values because you want to make sure that's what you want to work for. You have an obligation to be informed about a job."
With regards to Ullyott's situation, Valentine said she hasn't received any complaints about College Canada Painting. However, the company has not paid for their advertisement from 2003. Furthermore, the manager position requires a start-up and training fee; both violate Career Services' posting rules.
"We do not accept job postings that require students to purchase supplies and pay for training," Valentine added.
Curran claims that it is all a matter of miscommunication.
"I wasn't aware of any outstanding balances," he said. "I have contacted them and we're in the process of figuring out whether I owe them money or not."