Leiby – Leo Goldberger Background on Franchise Litigation and Criminal and Legal Controversies

Leiby “Leo” Goldberger – Franchise Ventures and Legal Controversies

Disclaimer: this is public AI research pulled for internal use of the HRF companies – we cannot verify that this is 100% truthful although it appears to be and everything has links to the source info and you should do your own research.

Overview: Leiby “Leo” Goldberger is a New Jersey-based franchisor (formerly operating in New York) who over the past two decades has led several home-services franchise brands. These include The Patch Boys (drywall repair), Dryer Vent Squad (dryer vent cleaning), Clozetivity (custom closets), Frost Shades (window tinting), and the umbrella Home Based Franchise Group (HBFG). Goldberger’s tenure in franchising has been marked by a pattern of felony fraud and theft convictions, legal disputes, regulatory enforcement actions, and franchisee complaints, largely tied to failures to comply with franchise disclosure laws and other alleged misconduct. Below is a brand-by-brand breakdown of some of his involvement and the associated controversies. Note: any arbitrations may not be searchable online, indeed, the majority of his cases are hidden from public view.

The Patch Boys (Drywall Repair Franchise)

Background & Goldberger’s Role: Goldberger was a principal and franchisor of The Patch Boys, a drywall repair franchise brand that began offering franchises around the mid-2010sbelforfranchisegroup.com. Under Goldberger’s leadership, Patch Boys expanded to dozens of locations across about 20 statesbelforfranchisegroup.com. In June 2020, Goldberger sold or transferred the Patch Boys franchise system to BELFOR Franchise Group (a large service-franchise conglomerate)belforfranchisegroup.combelforfranchisegroup.com. However, during Goldberger’s tenure as franchisor, Patch Boys became entangled in several legal and regulatory issues:

Summary: Goldberger’s tenure at The Patch Boys culminated in regulatory sanctions (fines and orders in Minnesota and New York) and the quiet resolution of franchisee lawsuits – all revolving around violations of franchise laws (selling unregistered franchises, and failing to disclose the personal legal history of the franchisor’s principal)law.justia.comcase-law.vlex.com. These early issues set the stage for controversies that would follow Goldberger into his subsequent franchise ventures.

Dryer Vent Squad (Dryer Vent Cleaning Franchise)

Background: Dryer Vent Squad is a home services franchise specializing in dryer vent cleaning and maintenance. Goldberger founded Dryer Vent Squad around 2019 and served as its CEOentrepreneur.comentrepreneur.com. The business is part of the Home Based Franchise Group portfolio and began franchising in late 2019, quickly growing to a dozen-plus units across the U.S.entrepreneur.com. Goldberger’s leadership role is confirmed by franchise industry sources, which list him as the Founder/CEO and give the corporate address in Lakewood, NJ (the same address used in Patch Boys filings)entrepreneur.com.

Franchisee Lawsuits and Allegations: In 2022, after Partners Goldberger and Swanson voted out 3rd partner Scott, Dryer Vent Squad became the target of franchisee legal complaints that echo the Patch Boys issues. For example, franchisees Will Farris and Aaron Cotton filed a lawsuit in October 2022 (M.D. Tennessee, Cotton v. Dryer Vent Squad Franchising, LLC et al., No. 3:22-cv-00774) against the franchisor (Dryer Vent Squad), Goldberger, and Curt Swanson (Goldberger’s business partner)dockets.justia.com. Cotton’s complaint alleged fraudulent inducement – essentially claiming that Goldberger and his company misled him by providing an inadequate FDD that concealed material litigation and regulatory history. Indeed, Cotton’s filings included numerous exhibits documenting Goldberger’s past franchise troubles: the Borgen and Anderson Patch Boys lawsuits, the Minnesota consent order, the Patch Boys FDDs from 2018–2021, and the Reliable Check Cashing “bad checks” case, among othersdockets.justia.com. The thrust of the claim was that Dryer Vent Squad’s FDD (prepared under Goldberger’s direction) falsely stated that neither the franchisor nor its principals had any relevant litigation history, when in fact Goldberger had the Patch Boys lawsuits, the state enforcement actions, and other financial/legal issues in his backgroundquarles.comlaw.justia.com. Had these issues been disclosed as required (under Item 3 of the FDD), the franchisee might have reconsidered investing. Cotton and other franchisees contend they were fraudulently induced into franchise agreements by these omissionsquarles.com.

Legal Proceedings: Like other cases against Goldberger’s companies, the Dryer Vent Squad case moved to federal court and the defendants (DVS, Goldberger, Swanson) responded by invoking the franchise agreement’s arbitration clause. In late 2022, they filed motions to dismiss the court case and compel arbitration of Cotton’s claimsdockets.justia.comdockets.justia.com. This mirrors Goldberger’s general legal strategy of channeling franchise disputes into private arbitration (as was done in the Frost Shades and Clozetivity cases discussed below). The U.S. District Court (Judge Aleta Trauger) consolidated the handling of these related franchise cases. By May 2023, the court granted in large part the motions to compel arbitration, effectively sending Cotton’s fraud claims to be decided by an arbitrator (consistent with the Federal Arbitration Act)quarles.com. No final arbitration award or court judgment has been reported yet in the Dryer Vent Squad matter; however, the allegations in the complaint and the court’s remarks in related cases strongly underscored the seriousness of the disclosure violations. This case was settled with Cotton and he was allowed to run a competing business.

Additional Franchisee Complaints: Notably, Cotton was not the only Dryer Vent Squad franchise owner to raise concerns. Another lawsuit (Farris v. Dryer Vent Squad Franchising, LLC, No. 3:23-cv-00087 (M.D. Tenn. 2023)) was filed by a franchisee identified as Farris, likewise accusing Goldberger and Swanson of fraud and FDD violationspacermonitor.compacermonitor.com. These complaints consistently reference Goldberger’s undisclosed history with The Patch Boys and other legal issues as evidence of a pattern of concealing material facts from prospective franchisees. In sum, Dryer Vent Squad’s franchising operations under Goldberger have been marred by franchisee litigation alleging misrepresentation. While these disputes are currently in arbitration (and thus largely outside public view), the public court filings already reveal a pattern of complaints strikingly similar to those from the Patch Boys eraquarles.comlaw.justia.com.

Clozetivity (Custom Closet Franchise)

Background: Clozetivity Franchising, LLC was formed in late 2020 as a franchisor of custom closet and storage solution businessesbusiness.cch.com. Goldberger co-founded Clozetivity along with Curt Swanson and Thomas J. Scott as equal partners. plaw.justia.com. The company is organized in Tennessee but, at the time franchising began, Goldberger was a managing member (based in New Jersey) and primarily responsible for franchise sales business.cch.combusiness.cch.com  – Scott rand the training and franchise operations and appears to have left over Goldberger’s misconduct along with the majority of the staff in June of 2022.  Clozetivity started selling franchises around 2021, targeting markets for home organization services.

Franchisee Fraud Litigation: In October 2022, a Kentucky franchisee of Clozetivity – B&P Glass and Mirror, LLC – filed a lawsuit against Clozetivity, Goldberger, and Swanson, alleging fraudulent inducement and related claims (Case No. 3:22-cv-00772, M.D. Tenn.)law.justia.comlaw.justia.com. As with the Dryer Vent Squad case, the franchisee (B&P) claimed that Goldberger’s team provided an FDD that omitted crucial litigation and regulatory history. Specifically, the complaint in B&P Glass & Mirror v. Clozetivity recounted the exact same undisclosed matters – the Patch Boys lawsuits in Minnesota, the Minnesota Department of Commerce consent order, the New York AG’s Assurance of Discontinuance for failure to disclose Goldberger’s felony, and even an earlier lawsuit over bad checks – none of which were disclosed in Clozetivity’s Item 3law.justia.comlaw.justia.com. Clozetivity’s FDD had represented that there was “No litigation… to disclose,” which B&P argued was a false statement given Goldberger and Swanson’s backgroundslaw.justia.com. Relying on that deficient disclosure, B&P invested in a Clozetivity franchise – and later felt deceived when these issues came to light. The lawsuit sought rescission of the franchise agreement and damages for fraud (both for affirmative misrepresentation and for concealment)law.justia.com, as well as injunctive relief under the Tennessee Consumer Protection Actlaw.justia.com.

Court Rulings: Goldberger and his co-defendants again moved to compel arbitration per the franchise agreement’s clauselaw.justia.comlaw.justia.com. In a May 16, 2023 Memorandum Opinion, Judge Trauger agreed in part: the court enforced the arbitration agreement for the core fraud claims, directing those to arbitrationquarles.com. However, the court also denied part of the motion – it refused to dismiss the case outright, instead keeping the door open for certain claims or parties. (The defendants had alternatively asked to join Thomas Scott – the former partner – as an “indispensable party” to the case; the court’s disposition on that issue was nuanced and tied to the specific claims). In essence, the fraud claims in Clozetivity are now being handled in arbitration, but the court’s opinion provided significant commentary on the merits of those claims.

Notably, in analyzing Clozetivity’s situation, the judge underscored that franchisors have a legal duty to disclose prior litigation and regulatory orders involving the franchisor or its principals, and that failing to do so can constitute fraud. The court pointed out that the FTC’s Franchise Rule and state laws impose this duty, and thus “the federal duty to make certain disclosures in an FDD may form part of the foundation of a state fraud claim”quarles.com. Goldberger’s and Swanson’s prior troubles (Patch Boys lawsuits and consent orders) were exactly the kind of material facts a prospective franchisee would expect to be told. The defendants’ argument that some lawsuits didn’t “count” because they occurred after Goldberger supposedly sold his interest in Patch Boys was flatly rejected – since Goldberger and Swanson were named defendants, the obligation to disclose remainedquarles.com. Likewise, the claim that the New York Assurance of Discontinuance didn’t need disclosure (because it was under a state law rather than the FTC rule) was refuted by citing the Franchise Rule’s requirement to disclose any currently effective restrictive order involving franchise lawquarles.com. The judge noted that, given Goldberger’s extensive franchising experience, he should have understood the importance of these disclosures to potential franchiseesquarles.com. This strong language from the court signals that Clozetivity (and by extension Goldberger) was likely in breach of franchise disclosure laws – providing important context even though the case moved to arbitration.

Status: As of mid-2025, the Clozetivity franchisee dispute is in arbitration, and no public award has been announced. However, the regulatory scrutiny has arguably already occurred in the form of the judge’s opinion and the underlying facts: the case brought to light the pattern of nondisclosure carried over from Goldberger’s Patch Boys era into the new HBFG franchiseslaw.justia.comquarles.com.

Frost Shades (Window Tinting Franchise) Now Defunct.

Background: Frost Shades Franchising, LLC is a franchisor of residential and commercial window-tinting businesses. Like Clozetivity and DVS, Frost Shades was launched in late 2020 by Goldberger, Swanson, and Scott law.justia.com. Frost Shades (formed as a Tennessee LLC and administratively dissolved in 2023) sells territories for window film installation services, and Goldberger was one of its managing members and sales directors. By 2021–2022, Frost Shades had franchisees in multiple states. In 2019-2020, Goldberger operated this franchise business by himself as a NJ LLC, Frost Shades LLC. This company has not ocnnection to the later TN company.

Franchisee Complaint – Fraud and Lack of Support: In October 2022, Andrew Lunt, a Frost Shades franchisee in South Carolina, filed a lawsuit against Frost Shades, Goldberger, and Swanson (Lunt v. Frost Shades Franchising, LLC, No. 3:22-cv-00775, M.D. Tenn.)dockets.justia.com. Lunt’s case has become emblematic of the troubles in Goldberger’s franchise system. The core allegation was again fraudulent inducement: Frost Shades’ FDD failed to disclose the prior litigation and regulatory actions involving Goldberger and Swanson (the Patch Boys lawsuits, the Minnesota consent order, and the New York AOD)quarles.comcase-law.vlex.com. In Item 3 of its 2021 FDD, Frost Shades falsely stated that “No litigation is required to be disclosed”case-law.vlex.com, despite the multiple relevant matters in Goldberger’s history. Lunt asserted that he relied on this clean bill of health when investing. Soon after starting operations, however, he discovered (through the falling-out between the owners, discussed below) that Goldberger’s past franchise litigation and sanctions had been concealed from himcase-law.vlex.com.

Additionally, Lunt’s complaint detailed that Frost Shades provided very little of the promised support to its franchisees post departure of Scott. He claimed the franchisor failed to deliver a brand standards manual, adequate training, or technical support – leaving him to “learn how to run [the] franchise business on [his] own”case-law.vlex.com. This lack of support, coupled with the undisclosed history, led Lunt to seek legal relief: he sued for rescission of the franchise agreement and for damages, and he also sought a preliminary injunction to free him from the franchise’s non-compete clause so that he could operate a similar business with a competitor immediatelyquarles.comquarles.com.

Court Findings and Injunctive Relief: The federal court’s handling of Lunt’s case produced a significant ruling in May 2023. As with the other cases, the defendants moved to compel arbitration – and the court did compel arbitration for the fraud claims, meaning Lunt’s ultimate damages claim will be decided outside of courtquarles.com. However, Judge Trauger granted Lunt’s request for a preliminary injunction in part, recognizing that Lunt had a strong likelihood of success on the merits of his fraudulent inducement claimquarles.comquarles.com. The court applied New Jersey law (per the franchise agreement’s clause) but noted that New Jersey and South Carolina law both treat nondisclosure as fraud when there is a duty to disclosequarles.com. Critically, the court held that violations of the FTC Franchise Rule and state disclosure laws can form the basis of a fraud claim by a franchiseequarles.com. Frost Shades’ omission of the Patch Boys-related litigation and orders was almost certainly unlawful: the company even admitted one civil case was “inadvertently” omitted, an excuse the judge found unpersuasive given that Goldberger and Swanson were defendants in itquarles.com. The judge reasoned that if one lawsuit should have been disclosed, all associated actions (like the Minnesota consent order and the second lawsuit) also needed disclosurequarles.com. The attempt to downplay the New York AOD was similarly rejected – the court pointed out that the Franchise Rule explicitly requires disclosing any injunction or restrictive order from any state or federal franchise law enforcementquarles.com. The court remarked that a prospective franchisee in Lunt’s position would absolutely consider Goldberger’s prior legal troubles to be material, and that Frost Shades’ principals should have expected as muchquarles.com. Lundt settled for a $250k personal judgement against Goldberger and Swanson for wrongdoing on their part.

Finding that Lunt was likely deceived and would suffer irreparable harm if forced to sit out of business (due to the non-compete) until the case concluded, the court enjoined Frost Shades from enforcing the post-termination non-compete and from interfering with Lunt’s operation of a competing window-tinting businessquarles.comquarles.com. In other words, Lunt was allowed to immediately start a new, competing business free of Frost Shades’ constraints while the legal dispute proceeds. This outcome was a notable legal ruling in favor of a franchisee: the court recognized the public interest in preventing the enforcement of franchise agreements that were arguably procured by fraudquarles.comquarles.com. The balance of equities, the judge noted, tipped toward Lunt – he had been misled, whereas the franchisor (which itself caused the problem) would only lose the benefit of an ill-gotten contract for the time beingquarles.comquarles.com.

In summary, the Frost Shades case illustrated both regulatory scrutiny and judicial skepticism toward Goldberger’s practices. A federal judge explicitly found that Goldberger’s failure to disclose his checkered past in the FDD was likely fraudulent and granted relief to the franchisee even before final adjudicationquarles.comquarles.com. This adds to the pattern of controversies surrounding Goldberger’s franchising activities.

Home Based Franchise Group (HBFG) and Internal Dispute

Formation of HBFG: In May of 2022, Goldberger, along with Thomas Scott (a Tennessee-based franchise marketing executive) and Curt Swanson, formed Home Based Franchise Group, LLC to serve as a potential and future holding company for their new suite of franchisorslaw.justia.com. HBFG was set up as an affiliate entity providing centralized administration and support to the individual franchise brands – Dryer Vent Squad, Frost Shades, Clozetivity, and a short-lived venture called Magnetainment (a magnetic marketing franchise)law.justia.comlaw.justia.com. Goldberger, Swanson, and Scott were equal owners and officers of all the franchise brands and the affiliate HBFG. law.justia.com. At the time, Scott was unaware of Goldberger’s checkered history with The Patch Boys; Goldberger did not disclose (to his business partner or franchise attorney) the prior criminal history, franchise lawsuits or the consent orders from Minnesota and New Yorklaw.justia.com. It was only in June-2022, one month after formation, after HBFG had been selling franchises that Scott discovered Goldberger and Swanson’s past legal/regulatory issues via his own researchlaw.justia.comlaw.justia.com.

Internal Whistleblowing and Fallout: Upon learning of these undisclosed matters in June 2022, Scott grew concerned that HBFG was continuing to sell franchises while withholding material information required by lawlaw.justia.comlaw.justia.com. A dispute then erupted between Scott and his co-founders. Scott’s marketing firm (Brand Journalists, which had been providing services to HBFG) ceased its work due to a payment dispute and Scott’s loss of trust in Goldbergerlaw.justia.com. In retaliation, Goldberger and Swanson used their majority to vote Scott out of any management roles in the franchises and HBFGlaw.justia.com. In August 2022, Scott filed a lawsuit against Goldberger and Swanson in Tennessee state court, accusing them of wrongful acts including breach of fiduciary duty, defamation, and civil conspiracy to cover up their past and violate franchise regulationslaw.justia.comlaw.justia.com. Scott was locked out of his own company after July 8th, 2022 and gave back shares in OCT/NOV before starting his new ventures. Scott’s complaint specifically alleged that Goldberger and Swanson knew they were violating franchise disclosure laws – they had intentionally concealed the Patch Boys litigation and government orders when preparing the FDDs for Frost Shades, DVS, Clozetivity, etc., and even made unlawful oral financial performance representations (earnings claims not included in the FDD) to prospectslaw.justia.com. In essence, Scott positioned himself as a whistleblower trying to alert franchisees and authorities about ongoing fraud by Goldberger.

After Scott began informing franchisees of the situation – contacting several franchise owners and posting a copy of the public lawsuit on Brand Journalists’ public website – Goldberger and Swanson (and HBFG) sued Scott and his family in responselaw.justia.comlaw.justia.com. In late 2022, they filed a civil action alleging that Scott’s communications were defamatory and damaging to the business, accusing him of “business disparagement,” interference with franchisee relationships, and breaching his duty of loyalty to the companylaw.justia.comlaw.justia.com. They even obtained a temporary restraining order to try to silence him from “disparaging” them to franchiseeslaw.justia.com. Scott countered by invoking the Tennessee Public Participation Act (TPPA), the state’s anti-SLAPP statute, arguing that Goldberger’s lawsuit was an improper attempt to punish him for speech on a matter of public concernlaw.justia.comlaw.justia.com.

In July 2024, the Tennessee Court of Appeals issued a notable decision on this internecine dispute. The appellate court found that Scott’s statements about Goldberger’s failure to disclose franchise litigation and regulatory actions were indeed communications on a matter of “public concern” – specifically concerning goods or services in the marketplace and compliance with franchise lawslaw.justia.comlaw.justia.com. The court noted that Scott had publicly exposed that Goldberger and HBFG were marketing franchises without sharing information mandated by the FTC Franchise Rulelaw.justia.com. This, the court held, is precisely the type of speech the anti-SLAPP law is meant to protect, as it relates to consumer protection and legal compliance in commercelaw.justia.comlaw.justia.com. The appellate judges reversed the trial court’s earlier refusal to dismiss Goldberger’s lawsuit, thus handing a victory to Scott on the TPPA motionlaw.justia.comlaw.justia.com. In practical terms, this means Goldberger’s claims against Scott will likely be dismissed, and Scott is entitled to recover his legal fees. The decision underscored that Goldberger’s pattern of nondisclosure had risen to a level of public significance, beyond a private business spat, because it implicated the legal rights of numerous franchisees and the integrity of franchise sales to the publiclaw.justia.comlaw.justia.com.

Conclusion: The HBFG chapter of Goldberger’s career reveals internal controversy that mirrors the external franchisee complaints. A co-founder accused Goldberger of fraudulent practices, and attempts to silence those accusations were deemed an affront to public interest by the courtslaw.justia.comlaw.justia.com. This episode not only resulted in further litigation, but it also aired out in public record the full scope of Goldberger’s past franchise troubles (through Scott’s published complaint and the court opinions). It shows a pattern: whether raised by franchisees, regulators, or a business partner, the central controversy has been Goldberger’s failure to abide by franchise disclosure laws and fair dealing.

Patterns and Regulatory Outlook: Across all these brands, a consistent pattern emerges: Goldberger’s franchises grew rapidly but were built on incomplete or inaccurate disclosures, leading to a cycle of franchisee distrust, legal disputes, and regulatory intervention. State regulators in Minnesota and New York have already sanctioned Goldberger for disclosure violations in the Patch Boys caselaw.justia.comcase-law.vlex.com. Subsequent franchisees (of Frost Shades, Clozetivity, Dryer Vent Squad) have brought forth strikingly similar allegations of being misledquarles.comlaw.justia.com. Federal and state courts, in turn, have recognized the gravity of these claims – granting injunctions or allowing fraud cases to proceed despite arbitration clauses, and characterizing the nondisclosure of prior litigations as actionable fraudquarles.comquarles.com.

As of 2025, Goldberger remains based in New Jersey and involved in franchising, but he operates under the shadow of these controversies and is a known bad actor in franchising. The legal record over the past 20 years – from a felony fraud conviction in 1999, to a check-kiting lawsuit in 2009, to franchise law violations in the 2010s, and franchisee lawsuits in the 2020s – suggests a repeat pattern of non-compliance. Both franchise purchasers and regulators have taken notice. Going forward, Goldberger and any companies he leads are likely to face heightened scrutiny from state franchise regulators (and potentially the Federal Trade Commission, which enforces the Franchise Rule) if the patterns continue. The franchise brands he’s associated with have already suffered reputational damage from these public legal disputes. In summary, Leiby “Leo” Goldberger’s franchising ventures over the last two decades have been fraught with legal challenges, including civil litigation by franchisees, state enforcement actions, and internal disputes, all revolving around allegations of misrepresentation and failure to meet legal obligations in the franchising processlaw.justia.comcase-law.vlex.com.

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