This case shows that some franchisors will still disregard federal rules and go to any lengths, including falsehoods and misleading statements, to make a buck from unsuspecting and innocent franchisees.
Minneapolis, MN (PRWEB) September 07, 2012
W. Michael Garner, P.A., a law firm representing franchisees, announced that a former franchisee of Maid-Rite Corporation, a franchisor of diner-style restaurants featuring “loose meat” sandwiches, has sued the franchisor, its Chief Executive Officer, Bradley L. Burt and his wife, Tania M. Burt, Executive Vice President and Director, alleging fraud, negligent fraud, violation of the Missouri Merchandising Practices Act and breach of contract in connect with the sale of a franchise in Maryville, Missouri. The Plaintiffs are seeking in excess of $500,000 in damages. The case was filed in Federal District Court in Kansas City, Mo. and is entitled Maryville Maid-Rite LLC et al v. Maid-Rite Corporation, et al., Case No. 4:12-cv-01030-BWC.
Eric and Faith Willoughby, and their corporation Maryville Maid-Rite, LLC, claim in the lawsuit that Maid-Rite and the Burts induced them to purchase a Maid-Rite restaurant by presenting them with an outdated Franchise Disclosure Document or FDD. The FDD, required by the Federal Trade Commission, must provide purchasers of franchises with accurate and relevant information about the franchisor and the franchise system. Instead, the suit alleges, the Burts and Maid-Rite gave the Willoughbys an FDD that was nearly 2 years old and that concealed important facts showing the decline of the Maid-Rite system.
In particular, the suit claims that the defendants concealed the fact that Maid-Rite had lost a dozen stores in the prior two years, that Maid-Rite’s finances had worsened substantially with losses skyrocketing from $100,000 to $650,000, and that individual results at restaurants had nose-dived, with the average “per ticket” revenue for dinner plummeting by a full $1 between 2008 and 2010. The suit alleges that Maid-Rite had a current FDD, with the damaging information, on hand when it gave the Willoughbys the outdated one. The Willoughbys also claim that to close the sale, Burt gave them an elaborate, written business plan, for use in applying for a bank loan, that contained detailed projections showing substantial and increasing profits. The suit alleges these projections violated federal regulations.
The Willoughby’s restaurant opened in Maryville in May 2011 and lasted less than a year. “This case shows that some franchisors will still disregard federal rules and go to any lengths, including falsehoods and misleading statements, to make a buck from unsuspecting and innocent franchisees. The Willoughbys are hard-working people who put their savings and heart and soul into this venture. Had they been told the truth about Maid-Rite’s declining fortunes, they never would have made this investment.”
W. Michael Garner, P.A., based in Minneapolis, MN, devotes its practice to assisting franchisees, dealers and distributors in their disputes with franchisors. Mr. Garner has won verdicts or settlements in excess of $235 million dollars against franchisors, has written the leading legal treatise on franchise law, and has testified before Congress in favor of franchisee rights.
For further information call 612-259-4800.