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7-ELEVEN: Outspoken 7-11 Franchisee Hashim Syed Gets “Retaliatory” Visit and Warning

April 24, 2014

by Sean Kelly  7-Eleven franchise owner Hashim Syed shared his experience as a franchisee on National Public Radio.  One week later, Syed received a surprise visit from two corporate senior VPs from Dallas and an ominous “letter of notification” from the franchisor.

(UnhappyFranchisee.Com)   According to a follow-up report by WBEZ’s Chip Mitchell (see 7-Eleven warns Chicago franchisee who criticized company), 7-Eleven spokesperson Margaret Chabris claims that Chicago franchisee Hashim Syed has the right to speak out about his experiences and views.

“It’s freedom of speech,” Chabris is quoted as saying. “That’s fine.”

However, when asked whether a surprise inspection of Syed’s North Side Chicago franchise and subsequent “letter of notification” by two Dallas-based senior vice presidents was prompted by his interview with WBEZ, Chabris would not answer.

Jas Dhillon, vice chair of the National Coalition of Associations of 7-Eleven Franchisees, was more direct, stating:

“This is nothing but retaliation.”

“Nothing but retaliation” by 7-Eleven, Inc. Claims Franchisee

Hashim Syed is one of a growing number of respected7-Eleven franchise owners who are speaking out publicly against the practices of 7-Eleven, Inc.

UnhappyFranchisee.Com is reporting on numerous protests and lawsuits waged by 7-Eleven franchisees throughout the U.S. who claim the Dallas-based, Japanese-owned franchisor has reduced them to “glorified managers” (Syed’s words) and takes away their valuable stores at will. (See links to the stories of Dev Patel, Karamjeet Sodhi, Tyrone Carr and others at  Has 7-ELEVEN Declared War on its Franchisees? (Index) )

According to the WBEZ story, Hashim Syed invited two WBEZ reporters to his Rogers Park store for an interview last month.

Syed told the reporters how the 7-Eleven, Inc., a subsidiary of Japan-based Seven & I Holdings Co., had “tightened rules for its franchisees over the years,” and was increasingly “dumping its employment responsibilities on the franchisees.”

The story was broadcast April 8, 2014 (NPR Reports on Franchising & Franchise Problems).

It didn’t take long for the company to send a clear and unsympathetic message to Syed.  According to the WBEZ:

One week later, 7-Eleven officials inspected his store. Syed said the inspection took place without notice. He identified the officials as Bill Engen and Ena Williams, both senior vice presidents based at the Dallas headquarters.

The next day, a 7-Eleven “letter of notification” accused Syed of violating his franchise agreement because some products were out of stock and because he allegedly was not using one of his hot-dog grills as required. The letter was accompanied by 17 photos showing spots on Syed’s shelves where products were sold out. The letter did not mention his statements to WBEZ.

Warning letters from franchisors are not uncommon. The franchisees usually have a chance to fix the problems. But a letter could also lead to trouble, even a 7-Eleven takeover of the store.

7-Eleven Franchisees Refuse to be Silenced

While it’s likely that 7-Eleven, Inc. intends to send a non-reconciliatory message (threat?) to would-be franchisee whistleblowers, it doesn’t seem to be working all that well.

7-Eleven franchisee Jas Dhillon publicly spoke in support of his fellow franchisee, claiming that 7-Eleven was trying to silence a franchisee who won a national award from the company for running “the best store in the country.”

And Hashim Syed does not show signs of going silent anytime soon.  This week, he is reportedly flying to Japan “where he will meet with other 7-Eleven franchisees. He said he is working to strengthen ties between 7-Eleven franchisees around the world so they have more power to stand up to the company.”

More and more franchisees are sharing their stories with UnhappyFranchisee.Com, and new lawsuits continue to be filed.

Dear 7-Eleven:  Here’s a Crazy Thought…

Dear 7-Eleven:  You no doubt have a venerable public relations team, and Ms. Chabris’ wields a “No comment” with deftness and aplomb, however…

One wonders whether the best response to criticism of heavy-handed bullying, intimidation and apparent disregard for the success of franchisees is, in fact, heavy-handed bullying, intimidation and apparent disregard for the success of franchisees.

If you wish to silence unhappy franchisees, perhaps you should give the Iron Fist approach a rest and try something new.

Something crazy.

Something unexpected.

Something like, maybe, acknowledging that 7-Eleven franchisees built your company and pay your paychecks.

Your franchisees have invested hundreds of thousands of dollars and many have invested decades of their lives to make 7-Eleven the largest convenience store chain in the world.

Perhaps you could at least pretend that you respect their investments, that you regard them as adults, and that you are willing to listen to and consider their grievances without threatening to take away their livelihoods and family businesses?

If you’d like to silence franchisees, try that.

They’ll never see it coming and will be struck, at least temporarily, speechless.

Related reading:

NPR Reports on Franchising & Franchise Problems

UnhappyFranchisee.com featured on NPR’s Franchising: Behind the Burgers

7-ELEVEN Franchise Owners are Glorified Managers, Franchisee Tells NPR

7-ELEVEN on UnhappyFranchisee.Com [UPDATED]

7-ELEVEN Stole Our Store – Dev Patel’s Story

WHAT DO YOU THINK? ARE YOU FAMILIAR WITH THE 7-ELEVEN FRANCHISE & 7-ELEVEN INC.?

PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven protest, 7-Eleven lawsuit, 7-Eleven franchisee, 7-11 franchise, 7-11 Chicago, 7-Eleven NPR, 7-eleven franchise complaints, Hashim Syed, 7-Eleven WBEZ, Seven & I Holdings Co., Bill Engen, Ena Williams

Are THE UPS STORE Franchise Owners Cheating UPS Customers? Franchisee Lawsuit Says Yes.

April 23, 2014

The UPS Store franchise owners in Manhattan claim they were targeted, terminated and ultimately sued because they blew the whistle on unethical and fraudulent practices of other The UPS Store franchisees.

(UnhappyFranchisee.Com) The UPS Store franchisees Robert Hagan, Thomas Hagan and their related entities, represented by the law firm of Stephen J. Savva, P.C. , have filed a countersuit against The UPS Store, Inc., United Parcel Service, Inc. and United Parcel Service of America, Inc. alleging that they were retaliated against by complaining that other The UPS Store franchisees:

  • Lie about the UPS Ground delivery guarantee
  • Misleading customers about guaranteed delivery dates
  • Upselling higher-price shipping options that offer no additional benefits to customers
  • Concealing the existence of cheaper cost shipping services when requested by customers
  • Add inches to the dimensions of boxes
  • Adding weight to boxes
  • Charge customers more than the maximum allowable UPS retail rate
  • Charging customers for “accessorial” charges they did not request.

Read the Answer with Counterclaims and Third Party Complaint here:  The UPS Store Franchise Lawsuit Counterclaims

Read the press release issued by the law firm of Stephen J. Savva, P.C. below:

Law Firm Files Counterclaims Against UPS and The UPS Store, Inc. on Behalf of 11-Store Franchise Owner; Allegations Include “Massive Fraud Perpetrated Upon the Public”

On April 16, 2014, the law firm of Stephen J. Savva, P.C. filed papers in the U.S. District Court for the Southern District of New York alleging that UPS and its affiliates presided over a fraud

perpetrated upon the public that generated millions of dollars in additional revenues for UPS, royalties for The UPS Store, Inc. and incentives for those franchisees who willfully

participated.   UPS, Inc. et al. v. Hagan, et al. (U.S. District Court, SDNY)(14-cv-1210-WHP).
New York, NY (PRWEB) April 21, 2014 — According to recently filed court documents, the two owners of a 20% market share of “The UPS Store” franchise locations in Manhattan have responded to a lawsuit filed by

The UPS Store, Inc. (“TUPSS”), United Parcel Service, Inc. and United Parcel Service of America, Inc. (collectively “UPS”) with counterclaims and a third-party complaint seeking more than $50 Million in

damages, plus punitive damages, costs, attorneys’ fees and other relief. The papers were filed on April 16, 2014 in New York Federal Court in lower Manhattan in the action entitled, The UPS Store, Inc., et al. v. Robert Hagan, et al. (S.D.N.Y., 12-cv-1200-WHP).
The federal civil action was initially commenced by UPS on February 25, 2014. According to the complaint on file, UPS seeks money damages and other relief against Robert Hagan, Thomas Hagan and each of their jointly owned corporate entities. The Hagans’ responded last week by filing court documents denying all claims and asserting counterclaims against UPS and TUPSS for breach of contract, fraud, retaliation, tortious interference, unfair trade practices and multiple violations of consumer protection laws in New York and California. The court documents also include detailed allegations of alleged unethical business practices observed at other “The UPS Store” locations in Manhattan and California between October 2013 and January 2014.
According to the court-filed counterclaims, at the heart of the Hagans’ counterclaims is an alleged November 12, 2013 meeting at TUPSS’s corporate boardroom in San Diego.

Court records state that the Hagans allege they notified senior TUPSS executives about questionable business practices they discovered while trying to improve their own business operations. According to the pleadings, the business practices allegedly reported by the Hagans involved franchisees “lying about the UPS Ground delivery guarantee”; “misleading customers about guaranteed delivery dates”; “upselling higher-price shipping options that offer no additional benefits to customers”; “concealing the existence of cheaper cost shipping services when requested by customers”; “adding inches to the dimensions of boxes”; “adding weight to boxes”; “overcharging customers more than the maximum allowable UPS retail rate”; and “charging customers for accessorial charges they did not request.”
According to the Hagans’ lawsuit, they claim that in the weeks and months following the San Diego meeting, no action was taken by TUPSS or UPS to investigate and stop the questionable practices and instead, the

Hagans became the target of retaliation and selective enforcement, which they believe ultimately destroyed their business. According to the Court documents, on February 5, 2014, UPS terminated the Hagans’ franchise agreements and directed them to cease operations at each of their eleven locations.
According to the Hagans’ attorneys Mark L. McKew and Stephen J. Savva, “good faith attempts to avoid litigation were exhausted with UPS’s counsel prior to filing the counterclaims and third-party action.” The

attorneys further state that “because this is a matter of public concern with the potential to impact a large number of consumers, a press conference will be scheduled shorty to share additional details about the evidence collected by investigators.” Consumers are encouraged to confirm pricing and delivery guarantees online, keep detailed records of all shipping transactions and promptly report cases of potential consumer fraud to the appropriate agencies.

For further information please contact Mark L. McKew, Esq. or Stephen J. Savva, Esq.

Also read:

THE UPS STORE Franchise Complaints

THE UPS STORE: Overview

THE UPS STORE Franchise Warning: It’s a Scam Claims Franchisee

Are THE UPS STORE / MAIL BOXES ETC. Franchise Owners Happy?

THE UPS STORE: How Much Do UPS Store Franchise Owners Make?

THE UPS STORE Franchise Owners Lose MBE Lawsuit

UPS STORE, MAIL BOXES ETC. Franchisees File Class Action Suit

 

ARE YOU FAMILIAR WITH THE UPS STORE FRANCHISE AND UPS STORE FRANCHISE OWNERS? ARE THEY CHEATING CUSTOMERS?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: The UPS Store, The UPS Store franchise, UPS franchise, UPS cheating, UPS rip-off, The UPS Store lawsuit, The UPS Store franchise lawsuit, The UPS Store complaints, The UPS Store problems, The UPS Store fraud, The UPS Store cheats, The UPS Store rip-off, The UPS Store scam, The UPS Store sucks, The UPS Store franchise complaints, Mark McKew, Stephen Savva, Robert Hagan, Thomas Hagan, UPS scandal

DICKEY’S BARBECUE PIT Makes an Unhappy Franchisee Happy

April 22, 2014

UnhappyFranchisee.Com believes in giving credit where credit is due, and Dickey’s Barbecue Pit deserves credit for stepping up to the “plate” and getting the Johnson City, TN franchise open.

We’re pleased to report that Dickey’s Barbecue Pit franchise owner James Neighbors is tired, but happy.

After UnhappyFranchisee.Com posted James Neighbors’ complaints about lack of corporate assistance in getting his Johnson City, TN Dickey’s Barbecue Pit franchise open (read  DICKEY’S BBQ Is Dickey’s Overselling its Franchise Opportunity?), we emailed top management at Dickey’s about his frustrations.

We’ve learned that Dickey’s management contacted James Neighbors, listened to his concerns and frustrations, and vowed to work with him to get his Dickey’s Barbecue Pit restaurant open.

As financing the new venture was a major concern, Dickey’s helped Neighbors negotiate more favorable payment terms with his contractor, Venator .

UnhappyFranchisee.Com Helps Franchisee Get Franchise Assistance

According to the Johnson City, TN Dickey’s Facebook page, James Neighbors’ store opened Thursday April 10, 2014 at 11:00 am.

Although there were some customer complaints regarding long lines, long wait times and some mistakes by the rookie staff, Neighbors characterizes the launch of his Dickey’s Barbecue Pit as a success.

The previously unhappy franchisee says that Dickeys is working with him to provide the support he needs.

Dickey’s Barbecue Pit franchise owner James Neighbors writes:

Dear Sean,

I want to update you on my issues with Dickey’s and the Franchise itself.

I have had a few conversations with representatives from Dickey’s and they are working with me to resolve all of my issues that I have previously complained about.

When I made the post I reacted out of anger, fear and lack of professionalism on my part.  We have came to a mutual agreement and understanding and are working out the issues we have between us.

Our restaurant is open and we are doing Great!  Dickey’s has shown interest in us and has made genuine attempts to help us through our troubled times and make up for any misunderstanding or communication issues.

I would like to remove my post or have this letter added to the post and show that it is resolved.

Our restaurant is serving "The Best" barbecue in Johnson City, TN and our numbers prove it.  Our customers are happy and we are on our way to becoming very successful.

Dickey’s has shown support for us and is encouraging us in every way with training, advice and recommendations to help us reach our full potential.

I appreciate their response and hope we have a long lasting and successful relationship.

Sincerely,

James L. Neighbors

April 18, 2014

UnhappyFranchisee.Com does not remove comments, complaints or posts, but we have updated the prior post to reflect that the issue has been resolved with Dickey’s. 

Furthermore, we plan to keep in touch with Mr. Neighbors to chronicle the growth of his Dickey’s Barbecue Pit franchise in Johnson City, Tennessee.

Also read:

DICKEY’S BBQ Is Dickey’s Overselling its Franchise Opportunity?

DICKEY’S BARBECUE PIT Franchise Complaints

ARE YOU FAMILIAR WITH THE DICKEY’S BARBECUE PIT FRANCHISE OPPORTUNITY?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com


TAGS: Dickey’s Barbecue Pit, Dickey’s Barbecue Pit franchise, Dickey’s franchise, Dickey’s Barbecue Pit franchise complaints, Dickey’s Barbecue Pit failures, Dickey’s Barbecue Pit closed, Dickey’s complaints, Jerrel Denton, Dickey’s Johnson City TN, James Neighbors

NPR Reports on Franchising & Franchise Problems

April 15, 2014

CLEANNET USA Franchise is a Scam, Attorney Claims

April 7, 2014

The CLEANNET USA franchise is a scam, warns Chicago attorney Christopher Williams.

Williams contends that the claim that those who pay Cleannet USA vast sums for the privilege of cleaning toilets and mopping floors are business owners is a cruel ruse.

Williams has filed a class-action lawsuit against Cleannet USA, claiming the company misclassifies its janitorial work force as franchise owners rather than employees in order to duck such employer obligations as unemployment insurance, workers-comp, social security and payroll tax obligations.

He claims that Cleannet USA franchisees “need public assistance because they’re making so little money. They can’t afford health care. If they get injured on the job, they have no workers compensation insurance.”

Are you familiar with Cleannet USA franchise?  What do you think?  Is it a scam?  Share a comment below!

Class Action Lawsuit Attorney Calls Cleannet USA Franchise a Scam

A National Public Radio (NPR) news report from radio station WBEZ in Chicago by Chip Mitchell and Shannon Heffernan (Bigger than burgers and fries, franchising blamed for low wages) features both Christopher Williams comments as well as the sad story of a Cleannet USA franchisee with the pseudonym Gloria Pérez:

As franchising has spread, some industries have pushed the model to the extreme. In commercial-cleaning franchising, the customers that need the service usually come through the franchisor. They also make their payments to the franchisor. The franchisee gets just a portion of the payments in periodic checks from the franchisor — after deductions for insurance, royalties, management and so on.

In Chicago, the commercial-cleaning franchisees include hundreds of Mexican immigrants. One of them is a woman we will call Gloria Pérez. We agreed not to use her real name because she fears retribution from her franchisor. Pérez entered the commercial-cleaning business four years ago.

Back then, she and her husband were both unemployed, they had three kids at home and a mortgage, and they were burning through their savings. Pérez saw a newspaper ad placed by CleanNet of Illinois, part of CleanNet USA, based in McLean, Virginia.

The ad said she could have her “own business.” Pérez, interviewed by WBEZ in Spanish, said it seemed like “a good opportunity because we did not have any other work.”

Pérez went in for an appointment. CleanNet gave her more than 150 pages of legal disclosures — all in English, she said. She did not understand much except some numbers on a chart the company gave her. “It said I could make $6,000 a month if I bought a franchise for $21,000,” she said.

After a discount, Pérez said, she managed to put in $19,000. Since then, she says, she has never come close to earning the monthly $6,000. “Every month they take out 20 percent of what I earn,” Pérez says, and she does not get enough assignments within driving distance.

“It’s a scam,” said Chicago attorney Christopher Williams, who filed a class-action lawsuit against the company in March for janitors such as Pérez. “CleanNet is trying to say, ‘We have no unemployment obligation to them. We have no workers-comp obligations to them. We do not pay payroll taxes. We are not their employer. And these are people who need public assistance because they’re making so little money. They can’t afford health care. If they get injured on the job, they have no workers compensation insurance.”

If a customer falls behind on its payments, CleanNet warns it could deduct that money from paychecks too.

Another way CleanNet makes money off its janitors is by loaning them money when they cannot afford the franchise fee — the upfront payment from the workers. Paying off that loan means yet more paycheck deductions.

“All they’re left with after that agreement is debt,” Williams said.

The suit against CleanNet, filed in federal court, claims hundreds of the company’s Illinois janitors are not franchisees but employees. It accuses the company of violating state and federal laws regulating wages and work hours.

CleanNet officials did not respond to our requests for comment about the suit. When janitors in Massachusetts filed a similar claim against the company, CleanNet denied any liability or wrongdoing. It did settle with those janitors last November, agreeing to pay out $7.5 million.

In Illinois, CleanNet is among at least eight commercial-cleaning firms registered to offer franchises, according to the state attorney general’s office. The biggest is Jani-King International, based in Addison, Texas….

…In the cleaning industry, it is not just the “franchisees” who are vulnerable to wage-and-hour violations. Those workers often bring other people to help them with jobs. Pérez gets part-time help from her husband, a son and a neighborhood friend. “I can’t afford to pay them minimum wage,” she said.

Also read:

Janitorial / Commercial Cleaning Franchise Issues

CLEANNET USA Franchise Complaints

ARE YOU A CLEANNET FRANCHISE OWNER OR FRANCHISEE?  ARE YOU FAMILIAR WITH THE CLEANNET FRANCHISE OPPORTUNITY?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

NOTE TO CLEANNET USA: Our policy is to invite all companies and individuals and companies discussed here to provide clarifications, corrections, rebuttals and/or company statements for publication.  Feel free to post comments below or email us at UnhappyFranchisee[at]gmail.com.

TAGS: Cleannet USA, Cleannet USA franchise, Clean Net USA, Clean Net USA franchise, Cleannet USA lawsuit, Cleannet USA scam, Cleannet USA complaints, Cleannet USA class action lawsuit, janitorial franchise, commercial cleaning franchise, Unhappy Franchisee

7-ELEVEN Franchise Owners are Glorified Managers, Franchisee Tells NPR

April 7, 2014

The plight of 7-Eleven franchisees has reached National Public Radio (NPR).  An NPR news story on the problems in franchising feature Chicago 7-Eleven franchisee Hashim Syed.  

7-Eleven franchise owner Hashim Syed joined the bought the rights to operate his 7-11 convenience store Chicago’s North side in 1990 – nearly 25 years ago.

He says that 7-Eleven, Inc. gradually exerted more and more control over every aspect of franchisee’s operations to the point that they are now just “glorified managers,” rather than owners.

A NPR news report from radio station WBEZ in Chicago by Chip Mitchell and Shannon Heffernan (Bigger than burgers and fries, franchising blamed for low wages) features the not-uncommon plight of franchisee Hashim Syed:

In Syed’s nearly quarter century as a 7-Eleven franchisee, he has worked brutally long hours, his profits have fallen far short of his expectations, and the Dallas-based chain has imposed tighter rules on how he runs the store.

Something else that steams Syed is his role as an employer. He says all of those 7-Eleven rules limit his ability to cut costs and free up resources to treat his workers better. “When I lived in Bombay,” Syed said, “this is not what I thought they meant by the American Dream.”

Hashim Syed’s complaints against 7-Eleven are an all-too-familiar one at UnhappyFranchisee.Com, as we have posted numerous profiles of struggling franchisee (See 7-ELEVEN on UnhappyFranchisee.Com [UPDATED]).

In the news report, Syed laments that he could not afford to give an employees paid time off to care for his dying father, nor to pay his employees more.

He blames the 7-Eleven franchise restrictions for keeping him from making changes that would increase his profitability and pay for himself and his employees.

Last year, the 23rd in his store, Syed took home less than $54,000.

The news report on franchising states:

Syed says he bought his 7-Eleven franchise in 1990. “I was very excited,” he said. “I could buy everything from where I wanted to.”

After a while, however, Syed decided that being a franchisee was not all it was cracked up to be. It was not just the long hours. The company allowed another 7-Eleven to open just a few blocks away. Then it changed the terms of his franchise agreement.

Franchisees learned they had to buy 85 percent of supplies from approved vendors. “Now everything will be controlled by 7-Eleven Company,” Syed said. “They will decide what to buy, where to buy.”

Other franchisees complain that 7-Eleven goes as far as to remotely control the temperature in their stores, even the volume on their televisions.

Many of 7-Eleven’s rules do help protect the brand. And the company has reasons to make franchisees purchase supplies from an approved vendor. For one, 7-Eleven can use the collective buying power to keep costs down, a company official said.

Something 7-Eleven does not control are employment decisions, including the amount Syed pays his workers. Syed said one of his half-dozen employees, the manager, makes $10.50 an hour. He said the rest earn less — in a state where the minimum is $8.25.

Syed said he can hardly blame employees who are upset about the pay, but he insisted he is not getting rich either. Last year, his 23rd at the store, Syed took home $53,866, he said. That was one of his best years, he added.

To Syed, the whole franchise model feels like a setup. “We are as much of a victim in it as the workers are,” he said. “We are nothing more than a glorified manager.”

UnhappyFranchisee.Com was interviewed by NPR for the WBEZ story, and the story includes a link to this website.

Also read:

7-ELEVEN on UnhappyFranchisee.Com [Index of posts]

7-Eleven Franchise Complaints

7-ELEVEN Stole Our Store – Dev Patel’s Story

7-ELEVEN Franchise Owner Claims Franchisees Are Being Bullied

WHAT DO YOU THINK? ARE YOU FAMILIAR WITH THE 7-ELEVEN FRANCHISE, 7-ELEVEN INC. AND 7-ELEVEN FRANCHISE COMPLAINTS?

PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

Companies and individuals discussed on UnhappyFranchisee.Com are invited to provide clarifications, corrections, rebuttals or other statements by sending us an email or posting a comment below.

TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven lawsuit, 7-11 franchise, 7-11 franchise chicago, 7-Eleven litigation, Hashim Syed, 7-eleven franchise complaints, Seven and I Holdings, 7-Eleven NPR story, 7-Eleven WBEZ story, 7-11 NPR story, 7-11 WBEZ story

7-ELEVEN Franchise Lawsuit Alleges Stalking and Harrassment of 7-11 Franchisee

March 19, 2014

(UnhappyFranchisee.Com) by Sean Kelly A successful, multi-unit franchise owner who was the 2008 Franchisee of the Year is suing 7-Eleven, Inc. for stalking, harrassment, intentional infliction of emotional distress, and for running him down outside a CVS Pharmacy.

[It’s the 2nd lawsuit of the day filed against 7-Eleven.  Also see 7-ELEVEN Patel Franchise Lawsuit Alleges 7-11 “Storm Trooper” Tactics]

Adnan “Andy” Khan has been a well-respected 7-Eleven franchisee for nearly 34 years.

He owns the rights to and operates five California 7-Eleven franchises in South El Monte, West Covina, Baldwin Park, El Monte, and Pomona.

Andy Khan’s accomplishments are impressive and numerous:  Founding member and Past President of the 7-Eleven Political Action Committee.  An active member and past board member of three Franchise Owners Associations (FOA).  Franchisee of the Year.  A Certificate of Achievement and Champion Retailer designation from 7-Eleven.  A Certificate of Congressional Commendation.

However, the lawsuit filed on Andy Khan’s behalf in U.S. District Court for the Central District of California alleges that the profitability of Andy Khan’s high-volume stores, along with his active and influential role in the 7-Eleven franchisee community, has made him a target for forced expulsion from the 7-Eleven franchise system.

The lawsuit alleges that the Asset Protection division of 7-Eleven is actively trying to drive out franchisees like Andy Khan – influential leaders with valuable locations – so that they can seize and resell their franchise rights to third parties for millions of dollars in additional revenue.

Andy Khan maintains that he and his Operations Manager are being subjected to intense and terrifying surveillance, via GPS tracking through their cell phones and physical “tailing” of them by a mystery man who regularly switches vehicles.

The lawsuit, Adnan Khan v. 7-Eleven, Inc., filed by law firms Marks & Klein LLP and Schindler Law Group, alleges Violation of the California Unfair Business Practices Act, Violation of California’s Anti-Stalking Statute, and Intentional Infliction of Emotional Distress.

It demands a trial by jury and judgement against 7-Eleven that includes a prohibition against private investigations in connection with Khan, his family, stores, employees and associates, compensatory,  consequential and punitive damages, attorneys fees, court costs and more.

7-Eleven Franchisee Harrassed by a Mystery Man

7-ElevenThe mysterious stalker in a white vehicle is usually associated with pedophiles or the serial killers on TV shows like Dexter or Criminal Minds.

If Andy Khan is correct, you can add 7-Eleven Loss Prevention Specialists to the list of slow-driving creepers.

According to a Police Report Andy Khan filed with the Baldwin Park Police Department (BPPD), his stalker is a Caucasian male, approximately 5’7” to 5’9” tall, 180 – 220 lbs. with a bald head, short neck, round face, stocky build and a small beard or goatee.

Both Andy Khan and his Operations Manager Pauline Skyler have documented numerous occasions when they were followed and or spied upon by the usually-white-vehicle-driving stalker.

They noticed that they could only evade the stalker when their cell phones were turned off, leading them to believe he was empowered with a GPS-tracking device.

Andy Khan has complained several times to 7-Eleven representatives, including Field Consultants Dennis Urrutia and Michelle Moore, about the stalker, who he believes is an employee or private investigator hired by 7-Eleven to harrass him.

Khan and Stryker claim to have photographed the vehicle and tried to confront the stalker, once physically chasing him on foot.

Andy Khan claims that once, when attempting to confront the mystery stalker/driver in a CVS parking lot, the stalker drove straight at Andy and knocked him to the ground.

7-Eleven’s Motives for Allegedly Harrassing Franchisee Andy Khan?

According to the lawsuit, “7-Eleven is trying to ensure that Andy is removed from the 7-Eleven system – either by choice or force…”

“…7-Eleven is using similar tactics against other franchisees, which tactics include, but are not limited to, stalking, illegally gathering personal information, and fear-invoking maneuvers.”

Why would a corporation take such drastic measures against its own franchisees?

The motive, according to the lawsuit, is greed:

7-Eleven’s efforts to terminate franchisees and take back stores has been tremendously profitable for 7-Eleven.

Upon information and belief, the amount received by 7-Eleven in reselling taken-back stores is in excess of ten million dollars.

Read the complaint here:

Adnan Khan v 7-Eleven Inc. [Complaint]

Also read:

7-ELEVEN on UnhappyFranchisee.Com [Index of posts]

7-Eleven Franchise Complaints

7-ELEVEN Patel Franchise Lawsuit Alleges 7-11 “Storm Trooper” Tactics

7-ELEVEN Stole Our Store – Dev Patel’s Story

7-ELEVEN Franchise Owner Claims Franchisees Are Being Bullied

WHAT DO YOU THINK? ARE YOU FAMILIAR WITH THE 7-ELEVEN FRANCHISE, 7-ELEVEN LOSS PREVENTION AND 7-ELEVEN LAWSUITS?

PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

Companies and individuals discussed on UnhappyFranchisee.Com are invited to provide clarifications, corrections, rebuttals or other statements by sending us an email or posting a comment below.

TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven Asset Protection, 7-Eleven Loss Prevention, 7-Eleven lawsuit, 7-11 franchise, 7-11 CA, 7-Eleven litigation, 7-eleven franchise complaints, Adnan Khan, Andy Khan, Marks & Klein, Jerry Marks, Mark Stinde, Pauline Skyler, Dennis Urrutia, Michelle Moore, Joe DePinto, Seven and I Holdings

7-ELEVEN Patel Franchise Lawsuit Alleges 7-11 “Storm Trooper” Tactics

March 19, 2014

(UnhappyFranchisee.Com) by Sean Kelly  A lawsuit filed against 7-Eleven, Inc. yesterday in the U.S. District Court for the Central District of California alleges that the convenience store giant is using “storm trooper” tactics to illegally seize valuable franchise rights from its franchisees in order to resell them for millions of dollars.

The lawsuit, filed by Marks & Klein, LLP of Red Bank, NJ and Schindler Law Group on behalf of long-time 7-Eleven franchisees Dilip and Saroj Patel, alleges that 7-Eleven’s aggressive Asset Protection/Loss Prevention team seized the Patel’s Riverside, CA franchise without warning as “part of a wider, nationwide 7-Eleven scheme to improperly intimidate and terminate long-term franchisees, with the goal of acquiring their successful stores.”

According to the lawsuit (Dilip Patel, Saroj Patel, and Saroj Patel, Inc., v. 7-Eleven, Inc., a wholly-owned subsidiary of Seven Eleven Japan Co. LTD, a wholly-owned subsidiary of Seven and I Holding Co., LTD.), “the sole purpose of acquiring these stores – albeit through illegal means – is to ‘take back’ the stores, at no cost, with the intent to ultimately re-sell the store, for a fee, to a third-party purchaser.”

“7-Eleven’s efforts to terminate franchisees and take-back stores have been tremendously profitable for 7-Eleven,” the suit alleges.

“…the amount received by 7-Eleven in reselling taken-back stores is in excess of ten million dollars.”

[Read more about the Patels here:  7-ELEVEN Stole Our Store – Dev Patel’s Story]

[Read about the stalking & harrassment lawsuit filed the same day as the Patels' suit here:  7-ELEVEN Franchise Lawsuit Alleges Stalking and Harrassment of 7-11 Franchisee]

Complaint Recounts the Patel’s Harrowing Ambush by 7-Eleven “Asset Protection”

According to the complaint, Dilip and Saroj Patel have been the popular, community-involved franchise owners of the Riverside, CA 7-Eleven for nearly 19 years.

Their 27-year-old son Dev has been the hands-on manager of the store in recent years.

The suit alleges that on December 4, 2013, the Patels received a phone call that 7-Eleven wanted to meet with them at 10 am the following day to go “over some financials.”

On the morning of the meeting, Plaintiffs Dilip and Saroj, and their son, Dev, found that they had been lured to the meeting under false pretenses.

The suit alleges:

[The Patels] were met by 7-Eleven’s market manager for Market 2171, William Halverson.

Dilip and Saroj were then taken to a small room where they were surprised to meet 7-Eleven Asset Protection interrogators, Kevin New (“New”) and Steve Kellison (“Kellison”)   (collectively, the “Asset Protection Interrogators”), who immediately accused of them of fraud and wrongdoing with respect to couponing.

…Specifically, the Asset Protection Interrogators told Plaintiffs that the fraud being perpetrated  in  the  store  involved  the  excessive  use  of  Slurpee  coupons  and  that  Plaintiffs’ franchise, which they had for eighteen years, was being terminated and that 7-Eleven would be taking their store away that very day.

 

Further, the Asset Protection Interrogators told Dilip and Saroj that 7-Eleven would not give them an opportunity to sell the store.

This would result in Dilip and Saroj losing their store, which they had for more than eighteen years, as well as the goodwill associated with their well-run store.

When the Patels sat down at the table, Kellison’s first words were threatening in nature.

Specifically, Kellison stated that one of two things would happen that day:

  1.  the Patels would give up the store, including their equity, and pay 7-Eleven $100,000; or
  2.  7-Eleven  would file a federal lawsuit against them, individually and/or collectively, for $250,000.

The Asset Protection Interrogators further “advised” Plaintiffs that should they leave the interrogation room, that the lawsuit would be filed immediately.

The interview conducted by the Asset Protection Interrogators lasted nearly eight hours and was conducted using “Third Degree Tactics.”

7-Eleven Allegedly Refused to Furnish Proof or Allow Franchisees to Consult Legal Counsel

7-Eleven Patel LawsuitAccording to the complaint document and accompanying exhibits, Asset Protection interrogator Steve Kellison refused to replay the two short video clips that allegedly proved that the Patels were guilty of an ongoing “illicit, and calculated, scheme to siphon cash from the operation of the store” by fraudulently redeeming Slurpee coupons.

Kellison reportedly refused to show the video clips to Dev Patel, who was in charge of day-to-day operations of the store.

Kellison allegedly threatened the Patels with public embarrassment, especially in the Indian community, by publicly naming them as Defendants in a lawsuit.

Kellison allegedly “told Patel that if 7-Eleven filed the threatened civil action in federal court, the Internal Revenue Service (“IRS”) would likely hear about it, and that the Patels could face imprisonment.”

Asset Protection interrogators Kevin New is alleged to have “told the Patels that his mother used to work for the IRS and that the threatened lawsuit, and those like it, have ‘a way of getting out’ to the IRS… Upon information and belief, New’s mother was never employed by the IRS.”

According to the complaint:

At this time, the Asset Protection Interrogators demanded that Dilip and Saroj sign a purported “settlement agreement,” telling the Patels that their continued failure to do so would result in the lawsuit being filed.

At this point, Dilip asked if he could have twenty-four hours to confer with an attorney; however, the Asset Protection Interrogators refused.

Dev then asked if he could take the settlement agreement and federal complaint to his friend, Anthony DiBenedetto, who had just graduated law school, to review both documents.

7-Eleven denied the Patels’ request to go to Mr. DiBenedetto’s office.

…Scared  and  frightened,  the  Patels  were  still  unable  to  retain  counsel  that  was familiar with franchisees’ rights and/or franchise litigation.

Saroj, a diabetic, was especially intimidated and became very emotional.

Saroj became inconsolable and attempted to leave the premises.

In order to end the ordeal, and avoid the threatened litigation and/or retaliation, and to save his wife from a possible diabetic episode, Dilip – individually and on behalf of Saroj Patel, Inc.—was  coerced  into  a  signing  a  purported  settlement  agreement,  purportedly  requiring Plaintiffs to give up the stores.

The complaint alleges that, through nearly eight hours of coercion, threats and lies, 7-Eleven Asset Protection Interrogators succeeded in breaking down the Patels both physically and emotionally, to the point where they signed away assets it had taken the family nearly two decades to build.

Lawsuit Seeks Return of Patel’s Riverside 7-Eleven Franchise, Compensatory & Consequential Damages

The Dilip Patel, Saroj Patel, and Saroj Patel, Inc., v. 7-Eleven, Inc. lawsuit includes 5 counts:  Violation of the California Franchise Relations Act, Breach of the Implied Covenant of Good Faith and Fair Dealing, Fraudulent Inducement, False Imprisonment, and a Declaratory Judgement nullifying all settlement and termination documents.

Plaintiffs Dilip Patel, Saroj Patel, and Saroj Patel, Inc. demand a trial by jury and judgement against 7-Eleven, Inc. that includes compensatory & consequential damages, attorneys fees and costs, and the return of the Riverside, CA franchise store.

Read the complaint & exhibits here:

Dilip Patel, Saroj Patel, and Saroj Patel, Inc., v. 7-Eleven, Inc. [Complaint]

[Exhibits]

 

Also read:

7-ELEVEN on UnhappyFranchisee.Com [Index of posts]

7-Eleven Franchise Complaints

7-ELEVEN Stole Our Store – Dev Patel’s Story

7-ELEVEN Franchise Owner Claims Franchisees Are Being Bullied

WHAT DO YOU THINK? ARE YOU FAMILIAR WITH THE 7-ELEVEN FRANCHISE, 7-ELEVEN LOSS PREVENTION AND 7-ELEVEN LAWSUITS?

PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

Companies and individuals discussed on UnhappyFranchisee.Com are invited to provide clarifications, corrections, rebuttals or other statements by sending us an email or posting a comment below.

TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven Asset Protection, 7-Eleven Loss Prevention, 7-Eleven lawsuit, 7-11 franchise, 7-11 Riverside CA, 7-Eleven litigation, 7-eleven franchise complaints, Dev Patel, Dilip Patel, Saroj Patel, Marks & Klein, Jerry Marks, Mark Stinde, Kevin New, Steve Kellison, William Halverson, Patricia Hollenbeck, Joe DePinto, Seven and I Holdings

MARK GOLOB LAWSUIT Is Attorney Nikolaus Reed SLAPPING Me?

February 25, 2014

by Sean Kelly, UnhappyFranchisee.Com

Last week, San Francisco Attorney Nikolaus W. Reed slapped (or perhaps SLAPPed) me with a $35,000,000 defamation lawsuit on behalf of his client, Mark Golob.

I say SLAPPed because that’s what I suspect this lawsuit is: a Strategic Lawsuit Against Public Participation (or SLAPP).

A SLAPP is a lawsuit that the suing party (or Plaintiff) has no real intention of winning.

In my understanding, it’s used by people who have enough money to threaten, intimidate and financially drain the resources of those who have expressed opinions they don’t like.

It’s a crass manipulation of the legal system to take away an opponent’s right to express his or her opinions (ie Public Participation), a right that’s protected by the 1st Amendment.

For that reason, filing a SLAPP is against the law in California.

Why would Mark Golob & Nikolaus Reed SLAPP me?

Mark Golob was founder,  CEO and President of a women’s fitness concept called Butterfly Life.  In the mid to late 2000s, Mr. Golob and his staff sold individual and area development franchise opportunities requiring an investment ranging from $90,000 to $287,000.  Eventually, the franchises failed, the franchisees’ investments were lost and the franchise chain folded.

In 2008, I conducted short interviews with 7 Butterfly Life franchisees about their experiences:  Jeff Marks, Carol King, Linda McBride,  Julie Franco, Lisle Head, Michael Motes, and Matt Wilson.

I also posted the tragic news when Butterfly Life franchisee Cynthia Holt took her own life, and when the franchisees lost their litigation against the franchisor when they could not come up with the arbitration fee.

I suspect that Mr. Golob is suing me in order to get these unflattering interviews and the accompanying comments removed from the Internet.

Perhaps he hired Mr. Reed to threaten and intimidate me to the point where I’ll willingly take the content down, and/or he can bankrupt me and destroy the site.

And since he has no valid justification for suing me (in my opinion), perhaps he is resorting to an invalid method:  SLAPPing.

Nikolaus Reed’s own website states that the statute of limitations has passed

Nikolaus ReedWhy do I suspect that attorney Nikolaus Reed is knowingly filing a lawsuit he knows is not credible?

Because the statute of limitations for defamation in California is 1 year from the date of first publication.  The comments Reed claims are defamatory were published nearly six years ago.

Mr. Reed states, on the page titled “Defamation, Libel, Slander” on his own website:

Unfortunately, the statute of limitations [in California] does not last long (ONE YEAR) and if you do not seek compensation from the offender before that time, no one can help you…

In the complaint, Nikolaus Reed references that his client read the comments in January, 2014, as if the date of “reading” is relevant.

[Update:  Later, Mark Golob would claim I made a new post in January, 2014 that included allegedly defamatory statements, though he wouldn't submit a copy of the allegedly defamatory posting.  I hadn't posted since 2008.]

According to the Digital Media Law Project (DMLP) website:

California’s statute of limitations for defamation is one (1) year. See California Code of Civil Procedure 340(c).

California applies the single publication rule pursuant to California Civil Code 3425.1-3425.5. A California Court of Appeals recognized the single publication rule in the context of publications on the Internet. Traditional Cat Ass’n, Inc. v. Gilbreath, 13 Cal.Rptr.3d 353, 358 (Cal. Ct. App. 2004).

The DMLP site explains the “Single Publication Rule”:

Most states have adopted the so-called “single publication rule,” which states that the statute of limitations period begins to run when a defamatory statement is first published… [In cases regarding the Internet], the statute of limitation period begins when a defamatory statement is first made available online.

If I, a lowly blogger and non-attorney, could find this information with a couple of Google searches, it seems likely that California attorney Nikolaus Reed knew ful-well that the statute of limitations for Mr. Golob’s lawsuit had run out nearly 5 years ago.

But he filed it anyway.

Be careful who you SLAPP.  They might SLAPPback.

In the midst of all this nastiness, there is some good news.

According to the DMLP site, those who are SLAPPed can SLAPPback:

If you prevail on a motion to strike under California’s anti-SLAPP statute, the court will dismiss the lawsuit against you, and you will be entitled to recover your attorneys’ fees and court costs. See Cal. Civ. Proc. Code § 425.16(c).

Additionally, if you win your motion to strike and believe that you can show that the plaintiff filed the lawsuit in order to harass or silence you rather than to resolve a legitimate legal claim, then consider filing a “SLAPPback” suit against your opponent. A “SLAPPback” is a lawsuit you can bring against the person who filed the SLAPP suit to recover compensatory and punitive damages for abuse of the legal process…

If your successful motion to quash arises out of a lawsuit filed in a California court, the judge has discretion to award expenses incurred in making the motion. The court will award fees if the plaintiff opposed your motion “in bad faith or without substantial justification,” or if at least one part of the subpoena was “oppressive.” Cal. Civ. Pro. Code § 1987.2(a).

Interesting stuff.  I’m off to speak to attorneys specializing in anti-SLAPP lawsuits.

If you have a recommendation, or an opinion on whether this qualifies as a SLAPP, please comment below or email me at UnhappyFranchisee[at]gmail.com.

[UPDATE:  The Judge ruled in my favor, and ruled that Plaintiff Mark Golob must pay my attorney fees.  Read $35,000,000 Lawsuit Backfires on Health Club Franchisor]

Also read:

MARK GOLOB LAWSUIT : Overview, Updates, and Discussion

MARK GOLOB LAWSUIT: Does Mark Golob Have a History of Litigation in the Health Club Industry?

Help Support UnhappyFranchisee.Com & Sean Kelly’s Legal Defense:

Make a Contribution or Contact UnhappyFranchisee.com for other ways you can help!

 

WHAT DO YOU THINK?  PLEASE SHARE A COMMENT, OPINION OR WORD OF SUPPORT BELOW.

Contact UnhappyFranchisee.com


TAGS: Mark Golob, Mark Golub lawsuit, Butterfly Life lawsuit, Unhappy Franchisee lawsuit, Nikolaus W. Reed, attorney Nikolaus Reed, Sean Kelly, SLAPP lawsuit, frivolous lawsuit, franchise lawsuit, Strategic Lawsuit Against Public Participation, Anti-SLAPP, SLAPPback

MARK GOLOB LAWSUIT: Does Mark Golob Have a History of Litigation in the Health Club Industry?

February 24, 2014

Mark Golob, founder & former CEO of the failed franchise fitness chain Butterfly Life, is suing Sean Kelly, the founder of UnhappyFranchisee.com for $35,000,000.

Mr. Golob’s lawsuit, filed by San Francisco personal injury lawyer Nikolaus W. Reed,  states:

Sean Kelly and Does 1 to 10 posted defamatory statements on his website “unhappyfranchisee.com” which alleged that Plaintiff Mark Golob had a “checkered” past and a “history of litigation in the health club industry.”

…The statements tended to injure Plaintiff Mark Golob in his occupation and to expose him to hatred, contempt, ridicule, or shame and to discourage others from associating or dealing with him.

The statements are false…

According to the Electronic Frontier Foundation, “Truth is an absolute defense to a defamation claim.”

Let’s first take a look at whether Mark Golob has a history of litigation in the health club industry.

Does Mark Golob Have a History of Litigation in the Health Club Industry?

 What do you think?  Share a comment below.

1)  Wulf v. Women’s Workout World, et al February 1991

Back in 1991, Mark Golob was named in a job discrimination lawsuit filed in Chicago.  This appears to be litigation against Mark Golob, and it’s in the health club industry.

1:91-cv-00924 Wulf v. Women’s Workout World, et al

Date filed: 02/12/1991

Cause: 42:2000e Job Discrimination (Employment)

Plaintiff: Lisa Dewey Wulf

Defendants: Women’s Workout World, Inc., Audrey Sedita, Mark Golob

Source:  Pacer database

 

2)  Mark Golob’s Litigation With Actress Linda Evans (1998 – 1999)

Remember Linda Evans, who played Audra Barkley on The Big Valley and Krystle Carrington on Dynasty?

According to a July 29, 1999 story on SFGate, Golob was entangled in bitter “health club industry” litigation with the actress:

The former “Dynasty” star was the first to go to court last year, accusing two executives who run a string of women’s health clubs in the Bay Area bearing Evans’ name of breach of contract, among other allegations.

The executives, Mark Golob and Thomas Gergley, fired back with a $5 million lawsuit of their own this week that targets Evans and two companies that sell facial products in cable television infomercials.

The two men — who run 11 Linda Evans Fitness Clubs in the Bay Area — also accuse Evans of initiating litigation in an attempt to break a contract she signed in 1994 guaranteeing exclusive rights to her name…

Evans has made a host of accusations against the two men, claiming they improperly put their two wives on the company payroll while failing to pay her share of the business… a judge ordered Evans’ lawsuit transferred from Los Angeles to Contra Costa County. Any court action in both cases will be played out here.

Source:  Legal Mess Over Using Actress Linda Evans as Spokeswoman / Health club owners sue `Dynasty’ ex-star

Mark Golob3)  Mark Golob’s Legal “Ruckus” over Refusal to Refund Membership Fees (August, 2004)

In 2004, the Orange County District Attorney’s office investigated Mark Golob’s refusal to pay refunds to members of several Linda Evans Health Clubs that he closed.  Members were outraged when Golob said that his providing them with access to the coed  24 Hour Fitness club satisfied his obligation to provide membership to a comparable club.  Despite the positioning of Linda Evan’s as a women’s fitness club, Golob was quoted as saying “There’s no such thing as a women-only club.”

According to a July 23, 2004 Los Angeles Times story, the District Attorney threatened a civil lawsuit if the Mark Golob didn’t settle:

The Linda Evans chain’s actions violate the women’s contracts because female-only clubs aren’t comparable to clubs for men and women, the members say — and at a meeting Monday night, Dist. Atty. Tony Rackauckas agreed…

Senior Deputy Dist. Atty. Joe D’Agostino said that after gathering as much information from as many gym members as possible, his office will contact the chain’s attorney. If the chain doesn’t settle, he said, the district attorney’s office will file a civil lawsuit.

Source:  D.A. Takes Case of O.C. Women Losing Their Fitness Centers

Linda Evans gym centers trim back

4)  Butterfly   Life.   Inc.   v   Susan   Kruse   and   Linda   Coogan  (September, 2005)

On September 9, 2005, when Mark Golob was CEO and President,   Butterfly Fitness. Inc.,  filed an amended claim for arbitration against the named franchisees for breach of contract pursuant to a November 5, 2003 Franchise  Agreement; breach of the  implied  covenant  of good  faith  and  fair  dealing;  misappropriation  of trade  secrets;  and interference with economic relationship. The franchisees filed a counter claim for fraud, intentional  misrepresentation, violation of the California Franchise Act, breach  of contract and  breach  of the duties of good  faith and fair dealing. On October  6, 2005,  the  parties entered  into  a  Settlement  Agreement. (American   Arbitration   Association,   Western   Case Management Center, Case No.: 74 114 00618 05).

Source:  Butterfly Life UFOC 2006

5)  Beth J. Shaw vs. Butterfly Fitness. Inc., (March, 2005)

On March 1, 2005, when Mark Golob was CEO and President, Ms. Shaw filed suit against Butterfly Fitness. Inc., alleging improper use of a person’s name or image in advertising or soliciting under California Civil Code Section 3344; appropriation of likeness; quasi  contract and breach of contract. The parties entered into a Settlement Agreement on November 1, 2005. (Superior Court of the State of California, County of Los Angeles, Case No.: BC329592).

Source:  Butterfly Life UFOC 2006

6)  Beth J. Shaw et al v. Butterfly Life, Inc. class-action arbitration

According to Financial Trouble Plagues Some Health Club Franchisees in Health Club industry publication Club Industry, February 1, 2008:

Butterfly Life filed an arbitration last fall against one of its franchisees, Beth Tomei of Walnut Creek, CA, for terminating the franchise agreement in the company’s UFOC and changing the name of her club. Tomei and nine other franchisees then filed a class-action counterclaim against Butterfly Life on Jan. 10 in California through the American Arbitration Association.

Mario L. Herman, a Washington, DC-based class arbitration attorney who is representing Butterfly Life franchisees, says 250 franchisees are potential members in the counterclaim. Herman says Butterfly Life misrepresented itself by orally providing illegal earnings claims, such as stating that the break-even point for franchisees was 200 members and that franchisees would make a profit within their first six months of operation. None of the franchisees have made a profit in that time frame, Herman says.

“We believe that there was a standardized pitch that was provided to everyone before they purchased,” Herman says. “It’s fraud in the inducement of the agreement as opposed to any breach-of-contract, post-signature, post-execution agreement.”

According to Mark Golob’s attorney Scott Hammel, quoted in our March 15, 2009 post BUTTERFLY LIFE: Franchisees Lose Arbitration?, “The franchisees’ claims are being terminated and dismissed because they failed to pay their allocated share of the arbitration fees.”

7)  Eric Rosner and Susan Rosner v. Mark Golob, Thomas Gergeley, Lisa Bellini,  Suzan Zager, Taylor Golob and Jane Doe Golob    July 27, 2009

Case Number: 1:2009cv03730  Filed:  July 27, 2009  Court: New Jersey District Court

Source:  Eric Rosner and Susan Rosner v. Mark Golob, Thomas Gergeley, et al

8)  DONNA and MIKE  BARNHART, et al v. MARK GOLOB and SUSAN ZAGER, TAYLOR GOLOB, CARLY GOLOB, et al     January 22, 2009

CASE NO.  C 09-00120  THIRD AMENDED COMPLAINT  Complaint filed:  January 22, 2009

SUPERIOR COURT OF CALIFORNIA COUNTY OF CONTRA COSTA

Plaintiffs,

DONNA BARNHART and MIKE  BARNHART, individually and as wife and husband, and WOMEN’S HEALTH DEVELOPERS, INC., an Arkansas corporation; CHICFIT, INC., a Missouri company, MARY BAUER and JAMES BAUER JR., individually and as wife and husband; FITNESS CENTERS NW, INC., a Washington corporation, NW FITNESS CENTER NO. 1 Inc., DARWIN CHEVALIER and KEN UPTAIN, individually; TERRY CICHOCKI, an individual, and LIVIBETH, INC., a North Carolina corporation; KELLY DAVIDSON and ALI DAVIDSON, individually and as husband and wife, and KHRYSALIS ENTERPRISES,  INC., an Oregon corporation, and BFL, INCORPORATED, an Oregon corporation; THE DRISCOLL COMPANY, a North Carolina company, KAREN DRISCOLL and KEVIN DRISCOLL, individually and as wife and husband; JANEENE FITZGERALD, an individual, and the MONARCH GROUP LLC, a Colorado limited liability company; SETH GOODMAN, an individual, and FIRST FITNESS ONE, LLC, a limited liability company; LEE HARRELL, an individual; DEBBIE HARRELL, an individual; TODD HARRELL, an individual; SCOTT HARRELL, an individual, and EMERALD COAST WOMEN’S FITNESS, LLC, a Florida limited liability company: HENDERSON CONSULTING, LLC, a Colorado limited liability company. SUSIE HENDERSON and GEOFF HENDERSON, individually and as wife and husband;  HAESOOK KIM, an individual. and LIVING SOLUTIONS, INC., a California corporation;  CHERYL MERSCHEN, an individual; MARION NAPURANO and JOHN NAPURANO, individually and as wife and husband, and NAPURANO HEALTHY SOLUTIONS, INC., a Texas corporation;  HUBERT WASHINGTON and ROBIN  WASHINGTON, individually and as husband and wife, and STRETCH FORTH, L P. a Florida limited partnership,

v.
Defendants

THOMAS GERGLEY and LISA BELLINI,individually and as husband and wife; MARK GOLOB and SUSAN ZAGER, individually and as husband and wife; MARK MASTROV and MINDEE MASTROV. individually and as husband and wife; TAYLOR GOLOB and JANE DOE GOLOB, individually and as husband and wife; FLORA AUBE and JOHN DOE AUBE, individually and as husband and wife; JANET LOSSICK  and JOHN DOE LOSSICK, individually and as wife and husband; RON RANELLONE and JANE DOE RANELLONE, individually and as husband and wife; CHERYL HOKE and JOHN DOE HOKE, individually and as wife and husband; YOLANDA FAGEN and JOHN DOE FAGEN, individually and as husband and wife; PENNY CROOK  and JOHN  DOE CROOK, individually  and as husband and wife; CATHY GALLI and JOHN DOE GALLI individually and as wife and husband; CALLIE MILLER and JOHN DOE MILLER, individually and as wife and husband;  DENNY  MARSICO and JOHN DOE  MARSICO,  individually and as husband  and wife: CARLY GOLOB and JOHN DOE GOLOB, individually  and as husband and wife, and DOES  1 through 50.

Source: BARNHART, et al v. MARK GOLOB and SUSAN ZAGER, et al

9)  California Department of Corporations Desist & Refrain Order  (March 24, 2009)

California issued Mark Golob and Butterfly Fitness, Inc. a Desist & Refrain Order, stating that the company had violated a condition of its franchise regulations, and had willfully made an untrue statement of material fact in its franchise registration.  While the California Department of Corporations rescinded the order due to a jurisdictional issue related to the complainant, the DOC never cleared Butterfly Fitness of the violations.

Source:  Mark Golob CA Dept. of Corporations Desist & Refrain Order

 UPDATE:  Regarding Sean Kelly’s statement that Mark Golob has a “history of litigation,” California Superior Court Judge Henderson stated:

.. the allegation that Golob had a “history of litigation in the health club industry” is accurate. Truth of the statements made is a complete defense against liability for defamation…

Read the ruling here:  $35,000,000 Lawsuit Backfires on Health Club Franchisor

Also read:  MARK GOLOB LAWSUIT: Overview, Updates, and Discussion

WHAT DO YOU THINK?  IS ATTORNEY NIKOLAUS REED CORRECT THAT MARK GOLOB DOES NOT HAVE A HISTORY OF LITIGATION IN THE HEALTH CLUB INDUSTRY?  PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: Mark Golob, Mark Golub lawsuit, Butterfly Life lawsuit, Unhappy Franchisee lawsuit, Nikolaus W. Reed, Nikolaus Reed, Susan Zager, Taylor Golub, Carly Golob, Sean Kelly, Tom Gergeley, Lisa Bellini, SLAPP lawsuit, frivolous lawsuit, franchise lawsuit

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