CURVES Franchise Lawsuit Settlements

In the Curves International 2010 Franchise Disclosure Document (FDD) issued March 25, 2010, 28 civil actions were disclosed in the Item 3 Litigation section.

5 are individual or group actions by Curves franchisee owners alleging such things as breach of contract, fraudulent inducement, negligent misrepresentation, etc. on the part of Curves International.

7 are lawsuits by Curves members allegedly injured on pieces of equipment or on premises.

5 are by vendors, employees and a competitor (Weight Watchers) against Curves International.

11 are lawsuits by Curves International against its franchisees, most seeking recovery of damages (non-payment of fees) resulting from their alleged “abandonment of the franchise.”

Curves International, Inc. Settlements With Franchisees Who Sued

The mandatory disclosures of litigation in the Curves FDD make public the following “confidential settlements” between Curves International, Inc. and the Curves franchisees who sued them.  For more information on the allegations and court venues, consult the CURVES International 2010 Franchise Disclosure Document (FDD).

Healthy Directions Northwest, Inc. v. Curves International, Inc., George Blaine and Sandy Blaine d/b/a Curves.

“…A confidential settlement between the parties and this case was dismissed by the court on 4/9/09 in which We [Curves International] paid $5,000 in full and complete settlement of all claims.”

Linda G. Woodward, Susan Taylor Harper, Lydia S. Romero, Jeffrey P. Kalbfleisch and Stephanie Kalbfleisch v. Curves International, Inc.

“…We paid $3,500 in settlement of all claims filed by said plaintiff [Woodward], and her claims were dismissed from this lawsuit by the Court on 2/13/08.  Confidential settlements have been reached between the 4 remaining plaintiffs and Us… execution of the settlement documents and dismissal motions are pending.”

Kareen Lay v. Curves International, Inc.

“On 3/20/09, an action was filed against Us by a franchisee seeking recovery of damages in an undisclosed amount for alleged breach of the franchise agreement by an alleged failure to mediate.  As of the date of this Disclosure Document, this case is still pending.”

Kinnie Gibson v. Curves international, Inc.

“On March 9, 2010, an action was filed against Us by a former master franchisee in Germany… regarding the franchise relationship.  As of the date of this Disclosure Document, the case is still pending.

Momentum Sales & Services, Inc., et al. v. Curves International, Inc. and Howard Gary Heavin.

This is the largest group action lawsuit by franchisees against Curves International, Inc.

17 plaintiffs’ claims were dismissed with NO payments being made by Curves International, Inc.

29 confidential cash settlements totalling $204,400 were made by Curves International, Inc. resulting in their claims being dismissed.  The average settlement amount was $8,290.

As of the date of the FDD, the case is still pending with 81 plaintiff groups remaining.

Date Settled	Plaintiffs	Amount CII Paid
2/7/08	Lori Brickel & Jill Kalatucka	3,000
2/7/08	Jo-Ann Garvey	10,000
4/29/08	Jan Santagate	20,000
5/14/08	Diana L. Dahlin, Peggy Matson	20,000
1/13/08	Catherine Maser	20,000
3/20/08	Angeline Bednar	17,500
5/14/08	Carol L. Rooney, Jaclyn A. Rooney	7,500
5/14/08	Jamey Kirchner	25,000
6/11/08	Sheree Corde Carter	5,500
5/8/08	Denise Alabach, Diane Schneck	5,000
6/27/08	Judith Haddad, Tringo, Inc.	10,000
5/13/08	Sandra L. David	3,500
3/11/09	Karen Wilson	7,900
3/11/09	Pauline Snowberger	8,000
5/19/09	Gloriously Fit Inc., Janet & Russell McTier	1,000
6/24/09	Akute LLC, Royce Makil, Gracy James	6,000
6/24/09	Doobly Ventures LLC, Doobly Ventures III LLC, Deborah B. Myers	7,000
11/20/09	Carol Riedel, Marie Fitness Inc.	12,000
1/8/10	Betty J. Boyd	2,500
2/2/10	Geralin Inc., Linda Coughlin, Geraldine McClary	4,500
2/24/10	S&P Wolf Inc., Peter & Sarah Wolf	3,000
3/5/10*	Karen Costner Leighton	24,000
3/5/10*	Melinda Rowe	2,500
3/5/10*	Keeno Lampman	5,000
3/5/10*	Fitness etc. LLC, Yvonne Samuels	2,500
3/5/10*	RM&R Fitness Inc., Mary Stark	2,000
3/5/10*	Elaine & Robert Taylor	2,000
3/5/10*	Sandy Harrington	1,500
3/12/10*	Treetoad LLC, Teresa Soderberg	2,000
	TOTAL	$240,400
	Average	$8,290
* Agreement date. Settlement pending.

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CURVES International 2010 Franchise Disclosure Document (FDD)

Curves International 2010 Franchise Disclosure has been released.  Here is the PDF version of the Curves FDD issued March 25, 2010, registered with the State of California.  It is separated into 2 parts.

Curves2010FDD.part1 (PDF)

Contains:

Item 1. The Franchisor and any Parents, Predecessors, and Affiliates
Item 2. Business Experience
Item 3. Litigation
Item 4. Bankruptcy
Item 5. Initial Fees
Item 6. Other Fees
Item 7. Estimated Initial Investment
Item 8. Restrictions on Sources of Products and Services
Item 9. Franchisee’s Obligations
Item 10. Financing
Item 11. Franchisor’s Assistance, Advertising, Computer Systems, and Training
Item 12. Territory
Item 13. Trademarks

Curves2010FDD.part2 (PDF)

Contains:

Item 14. Patents, Copyrights, and Proprietary Information
Item 15. Obligation to Participate in the Actual Operation of the Franchise Business
Item 16. Restrictions on What the Franchisee May Sell
Item 17. Renewal, Termination, Transfer, and Dispute Resolution
Item 18. Public Figures
Item 19. Financial Performance Representations
Item 20. Outlets and Franchisee Information
Item 21. Financial Statements
Item 22. Contracts
Item 23. Receipts

Here are most of the required exhibits and attachments that accompany the 2010 Curves FDD.  Missing is the list of locations, which may be added later:

A.CurvesFinancialStatement

B.1.CurvesFranchiseAgreement

B.2.CurvesFranchiseAgreement

C.CurvesPromissoryNote

D.CurvesBankAuthorization

E.CurvesTransferofSvcAgmt

Curves Franchisees Who Left The System in 2009

The file “Curves Franchisees Who Left The System 1″ also contains a partial list of international locations and the list of Agents for Service of Process.  The list of franchisees begins after that.

CurvesFranchiseesWhoLeftSystem1

CurvesFranchiseesWhoLeftSystem2

Also read:  CURVES Franchise Lawsuit Settlements to see the lawsuit settlement amounts Curves paid to franchisees in table form.

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ASHLEY FURNITURE: Failed Franchise Owner Blames Corporate

Ashley Furniture franchise owner Robert Myers says the franchisor for the failure of his three stores in Yuba City, Redding and Chico, CA.

Myers issued a press release through his attorney stating that Wisconsin-based Ashley Furniture Industries "made it impossible for us to continue to operate."

According to franchisee Myers:  "They advised us that they were cutting off our credit line; were not going to fill our current orders; were seizing the existing floor inventory and planned to sell off the furniture, fixtures and equipment via a liquidation agent."

"When AFI asked us to surrender our assets to them, we agreed to do so but only if AFI would provide the products that were not yet delivered to customers," Myers said. "I deeply regret that the closing of my business has greatly affected many loyal customers and valued employees."

Myers claims he has been unfairly accused of wrongdoing:

"Over the last few months I have been accused of many things which have been reported in the press. The facts are: I was trying to keep the stores open to provide for my employees and their families, my creditors and my own family as well, but I simply could not generate sufficient sales in this very bad economy to remain in business."

Is Ashley Furniture franchisee Robert Myers a victim of an unscrupulous franchisor?

Is Ashley Furniture franchisee Robert Myers a victim of a greedy and unscrupulous franchisor?  Not according to a report last month by CBS affiliate KHLS TV:

Former franchise owner Robert Myers is accused of bilking hundreds of people out of their money.  Shasta County District Attorney Jerry Benito says he’s investigating more than 200 cases and believes there’s a similar number in Butte County.
        According court documents, a store employee acting as an informant told investigators. the Redding store had been doing poorly since the beginning of the year, but the owners, Robert and Vera Myers, continued to fund their extravagant lifestyle by taking payment for orders they never paid for.  Even buying a new Mercedes for their daughter.
        That same informant says they believe the owners took money with no intention of refunding the customers.
        The myers Chico home is now up for sale for $749,000, and they are no longer in control of the stores.  Denver-based SPCI took over management of the Redding , Chico and Yuba City stores in May.

Many commenters reacting to the franchisee’s claim, some claiming to be ex-employees, had little sympathy for Robert & Vera Myers. 

Ms Reason wrote:

I have NO pity for the Myers. They have operated in a very erratic and under-handed manner. They owe a lot of people refunds they will never see and they have still not completed getting the furniture delivered that was ordered months ago. If they can’t pay the factory, what is the factory supposed to do? They probably were owed a huge sum of money and in an AD article, it stated that they were filling unfilled orders as a courtesy to the consumers and were not getting paid by the Myers. No pity on the Myers!

joyceinyc wrote:

…There is a lot more to this story. When I purchased my furniture they already knew they could not fill the order but that didn’t stop them from taking my cash. There’s no honor in that. I do business too and that’s not how I do business. It’s not like I’m cold hearted but I lost my money, which is not so easy to come by right now. I lost my money

whouwant2b wrote:

What’s funny is hearing this man claim he was trying to provide for his employees. This man could care less about any of his employees that fall outside of his immediate upper management circle. A circle which is comprised of his friends and former co-workers…I’m ecstatic that his empire built on sand is crumbling in the surf. Who I feel sorry for are the former employees, patrons, and owners of these buildings who have suffered from Myers lack of judgment and stupidity.

exemployee1 wrote:

Definately this man knew exactly what he was doing was wrong and now Robert Mike and Richelle are all covering thier a–es with it was the recession and AFI fault. Assume responsibilty cause jail looks good to all your employees for your future. When it goes to court and it will the employees will be the first to testify!!

ARE YOU FAMILIAR WITH FRANCHISE OWNER ROBERT MYERS OR ASHLEY FURNITURE?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

To contact the author or site admin, email unhappyfranchisee@gmail.com.

CERTAPRO PAINTERS CertaPro Sucks: The Movie, The Gripe Site

Unhappy Franchisee – Years ago, Tom dedicated his time, money & energy to becoming a successful CertaPro Painter franchisee.  Now that the money, and his franchise, are gone, Tom dedicates his time and energy to warning others about the franchise investment he calls “the worst and most costly decision” of his life.

Tom has built a number of websites including CertaProSucks.Org, MyFranchiseExperience.com and Franchise-Forum.com.  He posts on Twitter as @FranchiseFraud.  He has even posted an odd but humorous little animated movie on YouTube:

Unhappy ex-franchisee Tom contends that CertaPro Painters has an extremely high franchise failure rate – perhaps as high as 90%.

He accuses the company of “churning” franchises (that is, simply reselling territories again and again after franchisees fail).

Tom writes:

“I believe the vast majority of those who buy a CertaPro franchise risk losing as much as $150,000 or more within a few years and ending up emotionally distressed, saddled with debt or forced into bankruptcy, faced with demands from CertaPro for more money or finding themselves sued by CertaPro.

“In my opinion, CertaPro’s deceptive marketing, combined with its actions which serve to hide information about the many failures, represents an intentional effort to deceive and misrepresent. I believe they must KNOW they are making money at the expense of others and that most new franchisees are probably destined to fail.

“Potential victims of CertaPro’s actions should know about the dark side of the CertaPro franchise.

“I believe CertaPro’s motto should be: ‘We put the pain in painting’.”

CertaPro Painters supporters lash back

To his credit, in a response letter CertaPro CEO Charlie Chase wrote to Tom “I, of course recognize that you have the right to express your personal opinion about your experience owning a CertaPro franchise.”

Others criticize Tom’s laying all the blame on CertaPro Painters.  In an email posted on Tom’s site, a fellow franchisee wrote:

You [Tom] blamed CPP for things you didn’t know or things you didn’t do. You hired a bad painter and blamed CPP. You didn’t make the money you wanted, but never thought to share where you overspent or made bad choices. If you would have started your own business why would you think that the same issues wouldn’t have happened? Or even worse?

On ComplaintsBoard.Com, sickofyoubashers writes:

And much can be said about people like you who are disgruntled because YOU FAILED. Perhaps the fault lies behind your own inability to be successful. Unfortunately you can’t accept that fact, which is why you feel the need to place blame on others. So in exchange for the franchise allegedly trying to “silence” you, you feel the best forum is to retaliate by setting up stupid websites to bash them and post negative comments about them all over the web. Seriously? You think this is effective?

What can be learned from franchisee gripe sites like CertaProSucks.org?

Agree with Tom or not, his sites raise a number of issues to be considered by anyone considering a CertaPro Painters franchise, a competing painting franchise, or starting up an independent painting business.  Writes Tom:

In actuality, there can be numerous reasons for failure. Lack of money is, I suspect, a big one.

Another reason is the painter workforce, which can be atrocious (drugs, alcohol, absenteeism, poor work ethic, poor skills).

Then, too, a franchisee is going to have to price his services higher than an independent painter.  There’s more overhead (e.g., franchise fees).

Many markets are, I’m sure, loaded with painters and many homeowners want references. It can take time to become experienced and established–perhaps four or five years or more.

In fact, many of the complaints and warnings on CertaProSucks.org are not exclusive to CertaPro Painters, but voiced by many unhappy franchisees of different systems:

The industrywide deception regarding franchise failure rates.

Bogus “awards,” skewed “franchise reviews,” and timid franchisees painting an unrealistic picture for prospective franchisees.

Understated investment requirements.

An allegedly flawed operational concept.

“No experience necessary” franchisee recruitment when industry experience is necessary.

The list goes on and on.

Tom also dramatizes some of the ways that franchisees compound their losses by pouring money and effort into a lost cause:

Two franchisees I spoke to were struggling or failing and both said the same thing:  They had spent so much money that they hated to walk away from it, and they didn’t want to be “a failure”. When you’ve spent tens of thousands, it affects your objectivity.  The temptation is great to borrow more, charge more on credit cards, and to dig a deeper hole–in the fragile hope things will somehow improve.

The overall message of Tom’s gripe sites:  Do your homework before selecting a franchise.  If you bought into what you know, deep down, is a losing venture, cut your losses and cut’m quick.

ARE YOU FAMILIAR WITH THE CERTAPRO PAINTERS FRANCHISE?  SIMILAR FRANCHISES? WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Opposing opinions and company rebuttals or clarifications are welcome and treated fairly.  You can contact the author or site admin at UnhappyFranchisee[at]gmail.com.

ALL PRO CLEANING SYSTEMS: Another Janitorial Franchise Lawsuit

All Pro Cleaning Systems is being sued for the all-too familiar allegations that the cleaning franchisor sells janitorial franchises to immigrants, then fails to provide the promised jobs.  Also alleged is that All Pro Cleaning Systems misclassifies its employees as independent contractors and makes unlawful deductions from their pay.

(Also Read:  Commercial Cleaning Franchise Complaints, JANITORIAL FRANCHISE ISSUES, JAN-PRO Franchise Complaints)

According to a story in the News Telegram, the civil lawsuit has been filed by Boston attorney Shannon E. Liss-Riordan on behalf of Plaintiff Leila Munik of Lowell.  However, Ms. Liss-Riordan said there are about 10 All Pro franchise owners who want join the case. If a judge certifies the case as a class action, according to Liss-Riordan, it would cover all of All Pro’s franchise owners

The lawsuit alleges that All Pro Cleaning Systems sells franchises, mostly to immigrants, to whom it guarantees a certain level of cleaning accounts  per month. The suit alleges that All Pro is guilty of what so many other commercial cleaning franchises have been sued for:  Not providing the promised level of work and taking away accounts from one franchisee to sell to another.

Last March, a judge ruled in U.S. District Court in a case against Coverall North America established that employees who purchased franchises from that company were in fact employees of the company rather than independent contractors.  The lawsuit alleges that All Pro Cleaning Systems also misclassified their franchisees as independent contractors (rather than employees), which made charging workers for jobs and making other deductions from pay unlawful.

Ronald Showalter, president and chief executive officer for All Pro, said franchises are sold in accordance with federal guidelines and denied that the company has treated franchise owners unfairly.

Showalter denies the franchise “churning” allegations, stating that his company has never taken an account away from one franchise to sell to another.  He also said allegations in the complaint that franchise owners aren’t allowed to seek their own accounts are false.

Despite the fact that all of the All Pro Cleaning Systems franchise owners seem ready to join the suit, CEO Showalter claims “We satisfied our franchise owners, that’s we how got here.”

ARE YOU FAMILIAR WITH ALL THE PRO CLEANING SYSTEMS FRANCHISE?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Email the author or site admin at unhappyfranchisee[at]gmail.com

EDIBLE ARRANGEMENTS: Franchisee Lawsuit Alleges Unfair Practices

Unhappy Franchisee – Edible Arrangement franchise owners are suing their franchisor, alleging that its unfair practices are threatening the survival of many of its franchisees.

(Related Reading:  EDIBLE ARRANGEMENTS, Tariq Farid Franchise Complaints)

Here is the press release issued by EA (Edible Arrangements) Independent Franchisee Association:

“Franchisee Association Files Lawsuit Against Edible Arrangements Claiming Unfair Practices

“NEW HAVEN, Conn., Sept 20 /PRNewswire/ — A lawsuit was filed today in the United States District Court for the District of Connecticut by the EA Independent Franchisee Association against New Haven-based franchise company Edible Arrangements and several affiliated companies. 

“The complaint alleges that Edible Arrangements has altered the business arrangement with its franchisees over the last several years, to the detriment of the Association’s members and all other franchisees in the franchise system, in violation of its contractual obligations and general principles of fairness.  In addition, the complaint charges that Edible Arrangements has unfairly implemented several system-wide mandates, has enforced new mandates on a discriminatory basis and has failed to disclose necessary and required business information to its franchisees in violation of franchise disclosure rules and regulations. 

"’The EA Independent Franchisee Association has been forced to take this action after efforts to discuss these serious business issues with the company were summarily rebuffed,’ said Justin M. Klein, a franchise attorney at the Red Bank, N.J. law firm of Marks & Klein, LLP representing the Association. ‘The Association represents a strong contingent of Edible Arrangements franchisees located throughout the United States who simply want a fair chance at making their businesses as successful as possible. The recently implemented and threatened mandates from Edible Arrangements create a huge obstacle toward that goal for the franchisees.’"

"’We want a fair shot at success and an open line of communication with the company about the decisions it makes that affect our business and our lives,’ added Sherri Vertorano, a North Carolina-based franchisee and EA Independent Franchisee Association Member.  ‘Edible Arrangements makes the best product, offers great customer service and a memorable customer experience.  However, the recent mandates enacted or threatened by the company are making it far more difficult for franchisees to run a profitable store. Ultimately, if the franchisee is not happy, the experience for the customer will suffer as well.  We hope that Edible Arrangements understands that and that this lawsuit can lead to better relations between franchisee and franchisor, which, in the long run, benefits the customer.’"   

SOURCE EA Independent Franchisee Association

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When Bad Things Happen to Good Franchises

When Bad Things Happen to Good Franchises
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