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Robert Zarco Critic Ordered to Remove Defamatory Statements

October 14, 2015

Attorney Robert Zarco, his partner Alejandro Brito and his law firm Zarco Einhorn Salkowski & Brito, P.A. are suing former Cold Stone Creamery franchisee Cecil Rolle and Sedna Consulancy LLC for defamation.  A circuit court judge has ordered Cecil Rolle to remove defamatory statements from his sites www.robertzarcofacts.org and www.zarcolawfacts.org  websites.

(UnhappyFranchisee.Com)  In the online defamation lawsuit  ZARCO EINHORN SALKOWSKI & BRITO, P.A., ROBERT ZARCO and ALEJANDRO BRITO, Plaintiffs, v. CECIL ROLLE and SEDNA CONSULTANCY, LLC Defendants,  back in September, 2013 Cecil Rolle and Sedna were prohibited by a Preliminary Injunction from publishing false statements of fact relating to or concerning Robert Zarco, Alejandro Brito, or ZESB on the www.robertzarcofacts.org website (or elsewhere).  Cecil Rolle was ordered to remove any defamatory statements (ie “false statements of fact”) from his website.

On October 1, 2013, Mr. Rolle submitted an affidavit stating that “Defendants have reviewed the www.robertzarcofacts.org, website] and determined that there are no false statements of facts. Defendants will continue to refrain from publishing false statements of fact relating to or concerning [Robert] Zarco, [Alejandro] Brito, or ZESB as instructed.”

Two years later, on October 5, 2015, Circuit Court Judge Monica Gordo has ruled that a number of statements made on Cecil Rolle’s www.robertzarcofacts.org and www.zarcolawfacts.org  websites violate the Preliminary Injunction, are defamatory, and must be removed.

View the complete ruling below, or view it as a PDF.

What do you think of the court’s ruling, or of this lawsuit in general?  Share a comment below.

Also read:  Attorney Robert Zarco Battles Cecil Rolle, RobertZarcoFacts.Org

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IN THE CIRCUIT COURT OF THE ELEVENTH JUDICIAL CIRCUIT, IN AND FOR MIAMI-DADE COUNTY, FLORIDA

ORDER ON PLAINTIFF’S MOTION TO SHOW CAUSE WHY DEFENDANTS SHOULD NOT BE HELD IN CONTEMPT OF COURT AND DEFENDANTS’ MOTION TO DISSOLVE TEMPORARY INJUNCTION

 

ZARCO EINHORN SALKOWSKI & BRITO, P.A., ROBERT ZARCO, Case No.: 13-25737 CA 06 and ALEJANDRO BRITO,

Plaintiffs,

v.

CECIL ROLLE and

SEDNA CONSULTANCY, LLC

Defendants.

THIS CAUSE having come before this Court on May 15, 2015 and September 28, 2015, on (i) Defendants’ Motion to Dissolve Temporary Injunction (“Motion to Dissolve”); and (ii) Plaintiffs’ Motion for Order to Show Cause Why Defendants Should Not Be Held in Contempt for Their Failure to Comply with this Court’s Order Dated September 16, 2013 (“Motion to Show Cause”), and the Court having considered the Motion to Dissolve and Motion to Show Cause, having heard the testimony of the parties and witnesses and the argument of counsel, and being otherwise fully advised in the premises, hereby finds and declares as follows:

I. Findings of Fact

1. Sedna Consultancy, LLC (“Sedna”) is a Florida limited liability company. Cecil Rolle (“Mr. Rolle”) is the managing member of Sedna.

2. Mr. Rolle is the registrant of the domain www.robertzarcofacts.org, which was registered on February 22, 2013.

3. On September 16, 2013, a Preliminary Injunction was entered by the Predecessor Judge, pursuant to which Mr. Rolle and Sedna were preliminarily enjoined and restrained from directly and/or indirectly, verbally or in writing, publishing, disseminating, mailing, delivering, or circulating any type of communication throughout the United States through any medium including, but not limited to, the www.robertzarcofacts.org website and Internet, which contains false statements of fact relating to or concerning Robert Zarco, Alejandro Brito, or ZESB. In addition, Mr. Rolle and Sedna were ordered to perform all acts necessary to remove all false statements of fact from the www.robertzarcofacts.org website concerning Robert Zarco, Alejandro Brito, or ZESB. Further, Mr. Rolle was to file an affidavit within ten (10) days of the Preliminary Injunction providing a detailed account of the manner in which Defendants complied with the Preliminary Injunction. Importantly, no appeal or Writ was sought from the appellate court based on the Court’s order.

4. On October 1, 2013, Mr. Rolle submitted an affidavit stating that “Defendants have reviewed the www.robertzarcofacts.org, website] and determined that there are no false statements of facts. Defendants will continue to refrain from publishing false statements of fact relating to or concerning [Robert] Zarco, [Alejandro] Brito, or ZESB as instructed.” Rolle Affidavit, ¶36.

5. On November 17, 2013, after submitting the aforementioned affidavit, Mr. Rolle, on behalf of Sedna, registered another domain name: www.zarcolawfacts.org. Thereafter, Mr. Rolle published much of the same content that appeared and continues to appear on the www.robertzarcofacts.org, website on the www.zarcolawfacts.org website.

6. Mr. Rolle, on behalf of Sedna, regularly updates and maintains the www.robertzarcofacts.org, and www.zarcolawfacts.org  websites.

7. At present, the www.robertzarcofacts.org, and www.zarcolawfacts.org websites contains various statements concerning Plaintiffs with respect to the case styled: Massey, Inc. et al. v. Moe’s Southwest Grill, LLC et al., Northern District of Georgia, Case No. 07-00741-RWS (“Massey”).1 In particular, the www.robertzarcofacts.org, website states “the highly respected Federal Judge presiding over the case issued an order that highlights Attorney Robert Zarco’s and Attorney Alejandro Brito’s poor professional performance” and “[t]he judge clearly communicated that he was underwhelmed with Attorney Robert Zarco’s and Attorney Alejandro Brito’s shoddy legal practices[,] as well as Attorney Robert Zarco’s and Attorney Alejandro Brito’s lack of attention to the responsibilities owed their Moe’s [f]ranchisee clients.” Similarly, the www.zarcolawfacts.org  website states “[i]n a scorching opinion in the case, United States District Judge Richard W. Story criticized Robert Zarco, Alejandro Brito and their firm for their poor professional standards.” The websites both contain a hyperlink to the order entered by Judge Richard Story that Defendants have selectively highlighted and misconstrued.

8. Importantly, a review of the docket indicates that Alejandro Brito had no involvement, and never appeared as counsel, in the Massey case as clearly implied by Defendants. This fact unequivocally establishes the falsity and defamatory nature of the statements on the www.robertzarcofacts.org, and www.zarcolawfacts.org websites regarding Mr. Brito and his conduct in the Massey case.  Moreover, Mr. Zarco testified that he never played any active role in the trial or pretrial proceedings in that case.

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1 Plaintiffs filed a Request for Judicial Notice pursuant to Florida Statutes § 90.202(6), requesting that the Court take judicial notice of the docket in the Massey case when considering the Motion to Show Cause, which the Court has done.

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9. The www.robertzarcofacts.org, website continues on to state that “[i]t should be noted that [Judge Story’s] harsh criticism is entirely consistent with unflattering assessments of Attorney Robert Zarco’s and Attorney Alejandro Brito’s mistake-riddled court filings made by other Federal judges in entirely separate cases.” The previous sentence contains hyperlinks to an order in the case styled: Cold Stone Creamery, Inc. v. Nutty Buddies, Inc., District Court of Arizona, Case No. 12-0420-PHX DGC (“Nutty Buddies”), and an order in the case styled: Zarco Marine Group, LLC v. Westerbeke Corporation, Southern District of Florida, Case No. 13-20082- JLK (“Zarco Marine”). The orders cited by Defendants in the Nutty Buddies and Zarco Marine cases do not contain “unflattering assessments” of Plaintiffs and make no mention of “mistake- riddled court filings” as Defendants suggest on the www.robertzarcofacts.org, website. Defendants have mischaracterized and failed to adequately represent the orders entered in the Nutty Buddies and Zarco Marine cases.

10. The following statements are also currently published on www.robertzarcofacts.org, website:

  • “A familiar refrain is that Attorney Robert Zarco is the one walking away with his pockets full of cash and it is others, particularly his very own clients, who are left complaining he has taken financial advantage of them.”
  • “Here you have five cases than form the genesis of a Florida Bar investigation, and then expand from there.”
  • “Numerous clients and potential clients have complained that Attorney Robert Zarco violated their trust by undertaking activities that financially benefitted Attorney Robert Zarco at the client’s expense.”
  • “When Attorney Robert Zarco gets involved, it seems that others are often left complaining that he, and sometimes his family and or friends, have walked away with an undeserved amount of cash while some clients and non-clients are left complaining they have little or nothing.”
  • “This attorney who only several years ago was regarded by some as one of the top 100 franchise attorneys, has fallen so far so fast and has now also been exposed as a repeated liar who is willing to intentionally mislead the public—all for the sake of generating substantial attorney’s fees to fuel his extraordinarily lavished lifestyle.”

11. The following is currently published on the www.zarcolawfacts.org  website:

More recently, the United States Trustee’s Office’s filed official papers against Attorney Robert Zarco, his partner Attorney Alejandro Brito and [ZESB].

The United States Trustee’s Office’s documents filed against Attorney Robert Zarco, Attorney Alejandro Brito and [ZESB] include numerous charges and raise serious concerns as to the conduct of Attorney Robert Zarco, Attorney Alejandro Brito and [ZESB] on several legal and ethical topics. Among those charges is an allegation that Attorney Robert Zarco, Attorney Alejandro Brito and [ZESB] engaged in money transfers with the ‘intent to hinder, delay, or default’ numerous individuals. The United States Trustee’s Office is seeking financial recovery of nearly $300,000 from Attorney Robert Zarco, Attorney Alejandro Brito, and [ZESB] on behalf of perhaps dozens of alleged victims.

12. The “official papers” referenced on the www.zarcolawfacts.org and · websites were not filed by the United States Trustee Office.

Instead, the complaint was filed by a court-appointed trustee responsible for overseeing the consolidated estates of Claudio Osorio and several related entities formerly owned or controlled by Mr. Osorio. The court-appointed trustee was seeking to recover or “claw back” certain transfers made by Claudio Osorio and Innovida Services to ZESB for legal services. The description of the lawsuit on the · and www.zarcolawfacts.org websites is misleading and does not accurately represent the nature of the proceeding.

13. At present, the www.zarcolawfacts.org website also contains the following statements:

  • “Robert Zarco, his partner Alejandro Brito and their firm have lost one ruling, after another, after yet another.”
  • “Not only has Zarco failed to live up to his obligation under the Florida Rules of Ethical Conduct, he has also failed to fulfill his own promises.”
  • “Not only did Zarco fail to come forth with the truth, but outrageously he showed a complete lack of deference towards the court when he, Brito and ZESB produced a fake bank statement in what clearly appears to have been an attempt to lend credibility to Zarco’s earlier false statements to the court.”
  • “I believe Zarco’s complete mishandling of the CNBC documentary exposed him as an attorney of questionable integrity, questionable ethical standards and poor professional standards. This attorney who only several years ago was regarded by some as one of the top 100 franchise attorneys, has fallen so far so fast and has now also been exposed as a repeated liar who is willing to intentionally mislead the public—all for the sake of generating substantial attorney’s fees to fuel his extraordinarily lavished lifestyle.”
  • “It was all too tempting for Zarco and consequently, he took the large payday from Kahala Corp and abandoned the same franchisees he claimed he so dedicated to.”
  • “Zarco went against everything he told our franchisees and sold out when Kahala waved a suitcase full of cash in his face. Under these circumstances, how does anyone come to a conclusion other than: Zarco is a liar who will sellout his clients if the opportunity to earn more money is dangled before him? With that in mind, why would any Zarco Einhorn Salkowski & Brito, P.A. (ZESB) franchisee or franchisee association ever put trust in anything Zarco says— particularly given that there are highly reputable law firms to choose from?”

II. Conclusions of Law

 

A. Motion to Dissolve Injunction

14. If a motion to dissolve an ex parte temporary injunction is filed and a hearing on the motion is held, “the party who obtained the injunction bears the burden of going forward with evidence to establish a prima facie case to support the injunctive relief.” Thomas v. Osler Medical, Inc., 963 So. 2d 896, 900 (Fla. 5th DCA 2007).

15. “The well-established requirements for the issuance of a temporary injunction are: (1) the likelihood of irreparable harm and the unavailability of an adequate remedy at law;

(2) a substantial likelihood of success on the merits; (3) that the threatened injury to the petitioner outweighs any possible harm to the respondent; and (4) the entry of the injunction will not disserve the public interest.” Biscayne Park, LLC v. Wal-Mart Stores East, LP, 34 So. 3d 24, 26 (Fla. 3d DCA 2010). The Court finds, based on the record at the time of the hearing on Defendants’ Motion to Dissolve the Preliminary Injunction and the evidence presented, that Plaintiffs have sufficiently established the requirements for the issuance of a preliminary injunction.

16. First, the Court finds that, based on the allegations in the Verified Amended Complaint and the testimony of Mr. Robert Zarco, Plaintiffs have demonstrated irreparable harm because the www.robertzarcofacts.org and www.zarcolawfacts.org  websites have interfered with actual and potential customers of ZESB. Marine Turbo Engineering, Ltd. v. Turbocharger Services Worldwide, LLC, 2011 WL 6754058, at *10 (S.D. Fla. Dec. 22, 2011) (finding plaintiff demonstrated irreparable harm because loss of customers and goodwill is an irreparable injury); Southeastern Mechanical Services, Inc. v. Brody, 2008 WL 4613046, at *15 (M.D. Fla. Oct. 15, 2008) (loss of customer and goodwill is an irreparable injury and is difficult to measure); Tiffany Sands, Inc. v. Mezhibovsky, 463 So. 2d 349, 351 (Fla. 3d DCA 1985) (irreparable harm found from damage to goodwill and business reputation).

17. Second, the Court finds that, based on the record and the evidence presented, Plaintiffs have a substantial likelihood of prevailing on the claims for tortious interference with advantageous business relationships and defamation per se. To prevail on a tortious interference claim, a plaintiff must establish five elements: (1) the existence of a business relationship under which the claimant has rights; (2) the defendant’s knowledge of the relationship; (3) an intentional and unjustified interference with the relationship; (4) by a third party; and (5) damage to the claimant caused by the interference. Sloan v. Sax, 505 So. 2d 526, 527–28 (Fla. 3d DCA 1987). In this instance, Plaintiffs have sufficiently established the existence of a business relationship with existing and prospective clients of ZESB, and that Mr. Rolle is well-aware of this relationship. Plaintiffs, through the testimony of Mr. Robert Zarco, also established that Defendants have unjustifiably interfered with the business relationship between ZESB and its prospective and actual customers by operating the www.robertzarcofacts.org and www.zarcolawfacts.org websites, and that ZESB has sustained damage as a result of the interference because at least one group of franchisees elected to ultimately not retain ZESB after coming across the websites.

18. To prevail on a defamation per se claim, Plaintiffs must demonstrate that (1) Defendants published a false statement about Plaintiffs; (2) the false statement was communicated to a third party; and (3) the communication tended to subject Plaintiffs to hatred, distrust, ridicule, contempt, or disgrace, or tended to injure Plaintiffs in their trade or business. Perry v. Cosgrove, 464 So. 2d 664, 666 (Fla. 2d DCA 1985). To find defamation per se based on statements that are injurious to trade or business, “the court must first determine whether the statement is capable of a defamatory meaning.” Klayman v. Judicial Watch, Inc., 22 F. Supp. 3d 1240, 1249 (S.D. Fla. 2014). Here, Plaintiffs have identified numerous false statements displayed on the www.robertzarcofacts.org and www.zarcolawfacts.org websites that the Court finds are capable of a defamatory meaning.   The vast majority of the statements are, at best, mixed opinions which are designed to impugn Plaintiffs’ reputation and injure or harm their business. LRX, Inc. v. Horizon Associates Joint Venture ex rel. Horizon-ANF, Inc., 842 So. 2d 881, 885 (Fla. 4th DCA 2003) (mixed opinions, which are actionable, are “based upon facts regarding a person or his conduct that are neither stated in the publication nor assumed to exist by a party exposed to the communication . . . the communicator implies that a concealed or undisclosed set of defamatory facts would confirm his opinion”). The Court further finds that Defendants failed to offer any competent evidence that would suggest the identified statements on the www.robertzarcofacts.org or www.zarcolawfacts.org websites are true.  2 As a result, the Court finds that Plaintiffs are likely to prevail on their claim for defamation per se.

19. Third, the Court finds, based on the record and evidence presented, that the threatened injury to Plaintiffs—continual loss of actual and potential customers—outweighs any possible harm the Defendants would face in being forced to remove the false statements of fact from the www.robertzarcofacts.org and www.zarcolawfacts.org websites. See Buc. Int’l Corp. v. Int’l Yacht Council Ltd., 2002 WL 31399604, at *4 (S.D. Fla. July 5, 2002) (finding threatened injury—the likely loss of business—outweighed the harm to defendants in removing improper content from their website); see also Int’l Hair & Beauty Systems, LLC v. Simply Organic, Inc., 2011 WL 5359264, at *9 (M.D. Fla. Sept. 26, 2011) (finding that threatened injury to plaintiff—the loss of customers and goodwill—outweighed potential harm to defendant).

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2 Miami Herald Publishing Co. v. Brautigam, 127 So. 2d 718, 723 (Fla. 3d DCA 1961) (holding that truth is an affirmative defense as to which the defendant has the burden of proof).

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20. Lastly, the Court finds that the public interest is served by enjoining Defendants from disseminating false statements of fact about Plaintiffs because there is “no constitutional value” in such statements. Gertz v. Robert Welch, Inc., 418 U.S. 323, 338 (1974).  Put another way, “[f]alse statements of fact are particularly valueless; they interfere with the truth-seeking function of the marketplace of ideas, and they cause damage to an individual’s reputation that cannot easily be repaired by counterspeech, however persuasive or effective.” Hustler Magazine v. Falwell, 485 U.S. 46, 51 (1988).

21. In light of the foregoing, the Court finds that Plaintiffs have established a prima facie case to support the injunction.

B. Motion for Order to Show Cause

 

22. On July 14, 2014, Plaintiffs filed a Motion for an Order to Show Cause Why Defendants Should Not be Held in Contempt for Their Failure to Comply with the Preliminary Injunction Order Dated September 16, 2013.

23. The Court finds that the assessment offered by Defendants on the www.robertzarcofacts.org and the www.zarcolawfacts.org websites pertaining to the order entered in the Massey case is false and misrepresents the contents and nature of the order. In particular, Judge Story never criticized or chastised any lawyers in the Massey case for anything, let alone Mr. Zarco who did not actively participate in the case, or Mr. Brito who never appeared as counsel in the case and had no involvement in the case whatsoever.

24. The Court also finds that the statements on the www.robertzarcofacts.org website that “other Federal judges” have made “unflattering assessments of Attorney Robert Zarco’s and Attorney Alejandro Brito’s mistake-riddled court filings” are false and not supported by the order Judge David G. Campbell entered in the Nutty Buddies case or the order by Judge King in Zarco Marine case, as suggested by Defendants.

25. The Court also finds the statement in Paragraph 13, supra, concerning the “official papers” filed against Plaintiffs to be a false statement of fact. As pointed out above, the “official papers” were not filed by the Office of the United States Trustee and the assessment offered by Defendants omits important facts and misrepresents the nature of the proceeding.

26. Further, the Court finds the statements in Paragraphs 11 and 14, supra, to be false statements of fact. The identified statements are, at best, mixed opinions that omit important facts or misconstrue the actual underlying facts.

27. In summation, Mr. Rolle and Sedna have failed to comply with the Preliminary Injunction by continuing to disseminate and/or failing to remove false statements of fact concerning Plaintiffs from the www.robertzarcofacts.org and www.zarcolawfacts.org websites. Therefore, Defendants shall have five (5) days from the date of this Order to fully comply with the Preliminary Injunction by removing the false statements of fact identified above, as well as any other false statement of fact concerning Robert Zarco, Alejandro Brito, and/or ZESB from the www.robertzarcofacts.org and www.zarcolawfacts.org websites.

28. The Court finds that Defendants have the ability to comply with the Preliminary Injunction and have failed to do so at their own peril. Thus, in the event Defendants fail to fully comply with the Preliminary Injunction and fail to remove the false statements of fact identified above and any other false statements of fact from the www.robertzarcofacts.org and www.zarcolawfacts.org websites, Defendants will each be subject to the imposition of contempt sanctions in the amount of $100 per day. Wilcoxon v. Moller, 132 So. 3d 281, 286 (Fla. 4th DCA 2014) (purpose of civil contempt to obtain compliance with court order); Parisi v. Broward County, 769 So. 2d 359, 363 (Fla. 2000) (courts have the authority to enforce an order or judgment through the exercise of their contempt powers). The contempt sanctions shall remain in effect until Defendants fully comply with the Preliminary Injunction and this Order.

29. Further, the Court finds that if contempt sanctions become necessary, Defendants can easily purge themselves of the $100 per diem fine by complying with the Preliminary Injunction and this Order. The Court also finds that the $100/day contempt sanction is reasonable in light of the damages Plaintiffs are sustaining from the loss of actual and potential clients as a result of the www.robertzarcofacts.org and www.zarcolawfacts.org websites.

III. Conclusion

Based on the foregoing, the Court finds (i) that Plaintiffs have sufficiently established a prima facie case for a preliminary injunction; and (ii) that the www.robertzarcofacts.org and www.zarcolawfacts.org websites contain false statements of fact concerning Plaintiffs in violation of the Preliminary Injunction entered by this Court on September 16, 2013.

Accordingly, it is ORDERED AND ADJUDGED as follows:

1. Defendants’ Motion to Dissolve the Preliminary Injunction is DENIED.

2. Plaintiffs’ Motion for an Order to Show Cause Why Defendants Should Not Be Held in Contempt for Their Failure to Comply with the Court’s Order Dated September 16, 2013 is GRANTED.

3. Defendants shall take all acts necessary to comply with the Preliminary Injunction within five (5) days of this Order, including, without limitation, removing any and all false statements of fact concerning or pertaining to Plaintiffs from the www.robertzarcofacts.org and www.zarcolawfacts.org websites. Defendants shall then appear before the Court within fifteen (15) days of this Order and offer sufficient proof of compliance with the Preliminary Injunction and this Order.

4. In the event Defendants fail to comply with Preliminary Injunction by removing all false statements of fact from the www.robertzarcofacts.org and www.zarcolawfacts.org websites within five (5) days of this Order, Cecil Rolle and Sedna Consultancy, LLC shall each be subject to the imposition of civil contempt sanctions in the amount of $100 per day until Defendants comply with the Preliminary Injunction as directed by this Order.

DONE AND ORDERED in Chambers at Miami-Dade County, Florida, on 10/05/15.

MONICA GORDO CIRCUIT COURT JUDGE

 

The parties served with this Order are indicated in the accompanying 11th Circuit email confirmation which includes all emails provided by the submitter. The movant shall IMMEDIATELY serve a true and correct copy of this Order, by mail, facsimile, email or hand-delivery, to all parties/counsel of record for whom service is not indicated by the accompanying 11th Circuit confirmation, and file proof of service with the Clerk of Court.

Signed original order sent electronically to the Clerk of Courts for filing in the Court file.

Copies Furnished To: Counsel of Record

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ALSO READ:

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Contact UnhappyFranchisee.com

TAGS: Robert Zarco, Attorney Robert Zarco, Franchise attorney Robert Zarco, Alejandro Brito, Zarco Einhorn Salkowski Brito P.A., Cecil Rolle, Cold Stone Creamery, Kahala, Online defamation, Internet defamation, online defamation lawsuit, online defamation litigation, internet defamation law

CA Franchise Legislation AB-525 Signed into Law

October 14, 2015

On Sunday, Oct. 11, Gov. Jerry Brown signed California bill AB-525 into law, giving Caligornia franchisees more protections when purchasing, transferring and terminating their franchise agreement.

(UnhappyFranchisee.Com) Keith Miller, Chairman at Coalition of Franchisee Associations (CFA), has shared the good news that the California legislation that he and other fair franchising advocates have been working hard to pass, has been signed into law.  According to a CFA announcement from Keith:

Coalition of Franchisee Associations.

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Dear CFA Members,

On Sunday, Oct. 11, Gov. Jerry Brown (D-CA) signed California bill AB-525 into law. This sweeping new law gives franchisees across the state more protections when purchasing, transferring and terminating their franchise agreement.
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Sponsored by the Coalition of Franchisee Associations (CFA), the law affects new franchisees (i.e., those who are granted or renew an agreement after Jan. 1, 2016) and current franchisees upon sale, transfer or termination of their franchise agreement.
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Specifically, the law amends the California Franchise Relations Act as follows:

Termination

  • Changes good cause for termination from failure to comply with “any lawful requirement of the franchise agreement” to failure to “substantially comply with the lawful requirements of the franchise agreement.”
  • Changes 30-day notice and cure period to at least 60-day notice and cure period. (Current immediate health and safety issues without full cure period remain).

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Sale and Transfer

  • Prohibits franchise agreements from preventing the sale/transfer of a franchise as long as transferee is qualified under then-existing standards for new or renewing franchises.
  • Prohibits the sale without franchisor written consent.
  • Requires franchisee to notify franchisor in writing prior to the sale/transfer.
  • Requires franchisors to communicate standards required for approval of new or renewing franchises.
  • Mandates that franchisors must notify franchisee of approval/disapproval of sale/transfer in writing within 60 days and if disapproved, must give reason. If not disapproved within 60 days, it is considered approved.

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Termination/Non renewal

  • Requires franchisors who terminate/fail to renew and take possession of the premises to repurchase all resalable inventory, and purchase equipment and fixtures at depreciated value.
    • Applicable for legal terminations and non renewals.
    • Previous law only required repurchase of inventory in cases of non renewal or unlawful termination.
  • Requires franchisors who terminate/fail to renew improperly as defined by the law to be liable for actual damages.

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To read the new law, click here. Note that the CFA will be hosting a webinar in the next several weeks to explain the details of the law and how it affects California franchisees.
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Please contact Misty Chally at 202-416-0270 or mistyc@thecfainc.com with any questions.

Congratulations to all those who worked to get AB-525 signed into law.

ALSO READ:

FRANCHISE DISCUSSIONS by Company

 

ARE YOU FAMILIAR WITH THE AB-525 CALIFORNIA FRANCHISE LEGISLATION?  WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: franchise legislation, California franchise legislation, California Bill AB 525, Coalition of Franchisee Associations, CFA, Keith Miller, franchise laws, franchise complaints, franchise, franchise opportunity, franchise complaints, unhappy franchisee

NY BAGEL CAFÉ & DELI Newburgh Store For Sale $50K

September 30, 2015

NY Bagel Café president Joe Smith appears to have his Newburgh, NY store listed for sale on Craigslist for $50,000.  Ad says the owner “has other interests” and “is moving on to other things.”

NY Bagel Cafe(UnhappyFranchisee.Com) Joe Smith,  founder of the controversial NY Bagel Café & Deli chain, appears to be trying to unload the sole non-franchise, company location, which is located in Newburgh, NY.

Two ads currently are running on the local Craigslist site for Hudson Valley, NY.

While the estimated start-up expenses for a new NY Bagel Café is between $100,000 and $200,000, Joe is trying to sell his store for just $50,000.

The Craigslist ads read:

BAGEL COFFEE DELI BIZ FOR SALE – $50000

20 year old bagel store for sale Fresh Baked N.Y. Bagels coffee cappuccino baked goods muffins crumb cakes full boars head deli wraps salads paninis soups and much more great location with outside seating owner moving on to other things $50k firm call 845-563-0891 for more details Located in the town of newburgh

and

BAGEL COFFEE DELI BIZ FOR SALE – $50000

20 YR. Old Bagel store offering fresh baked NY Bagels coffee capuccinos baked goods wraps salads smoothies full boars head deli and much more Owner has other interests free standing building parking and outside deck for eating call 845-563-0891 $50,000 firm located in the town of newburgh

Here’s are PDFs of NY Bagel Newburgh ad #1 and NY Bagel Newburgh ad #2.

NY Bagel NewburghIt’s not clear whether the store is being sold as a franchise, or whether the buyer will be free to rebrand.

NY Bagel Café is not registered to sell franchises in New York state.

Since there is no registered trademark for “NY Bagel Café,” a new owner would likely not have to change the name if he took over the store.

NY Bagel Café, CEO Joe Smith and franchise broker Dennis Mason have been the subject of much controversy and several investigations into their franchise practices:

Learn more here…

What’s Going on with NY Bagel Café Newburgh?

Joe Smith appears to be eager to shed the Newburgh NY Bagel Cafe. with ads on Craigslist.

Facebook posts on the company pages announced that NY Bagel Café Newburgh has new management.

NY Bagel Café Newburgh also has a new phone number.

Does anyone know what’s going on with NY Bagel Café Newburgh?

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NY BAGEL CAFÉ Franchise Graveyard

NY BAGEL CAFÉ Franchise: How Many Have Closed? [UPDATED]

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Joe Smith, Dennis Mason & NY Bagel Café Franchise Exposed: 10 Things You Should Know

NY BAGEL CAFÉ & DELI Franchise Complaints

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ARE YOU FAMILIAR WITH NY BAGEL NEWBURGH, NY BAGEL CAFÉ FRANCHISE OPPORTUNITY, JOE SMITH OR DENNIS MASON?

PLEASE SHARE YOUR OPINION BELOW or Contact UnhappyFranchisee.com

TAGS: NY Bagel, NY Bagel Cafe, NY Bagel franchise, NY Bagel Cafe for sale, NY Bagel Cafe Newburgh, NY Bagel Cafe franchise scam, New York Bagel Cafe Newburgh, NY Bagel Newburgh, New York Bagel franchise, New York Bagel Cafe, NY Bagel complaints, NY Bagel lawsuits, Joe Smith, Joseph Smith, Dennis Mason, franchise scam

LEGACY ACADEMY, INC. v. Mamilove LLC Franchisee Award Reversed (Court Ruling)

September 30, 2015

In 2013, a Gwinnett County jury awarded former Legacy Academy franchisees  $1,155,000 after finding the childcare franchisor had made misleading and deceptive earnings claims in the franchise sales process.  The Georgia Supreme Court reversed the verdict and voided the award, in part because the franchisees hadn’t read the disclosure documents before signing.  See the full court opinion below.

(UnhappyFranchisee.Com)  The Georgia Supreme Court reversal of the Legacy Academy ruling and award conveys two powerful lessons for prospective franchisees:

1) Read your Franchise Disclosure Document (FDD) and Franchise Agreement

2)  Understand what you’re agreeing to

Here’s the story, in a nutshell, as I understand it (non-attorney version):

Two sisters, The Reymonds,  approached Frank Turner and Melissa Veal Turner about becoming Legacy Academy franchisees

  • The Turners made pre-sale earnings claims that weren’t disclosed in the disclosure documents (as required by the FTC)
  • The Turners pressured the Reymonds to sign the franchise agreement even though they had just provided them with the disclosure documents at the same lunch meeting (The FTC requires 14 days must pass between disclosure and signing.).  The Turners allegedly told the Reymonds they’d lose their location if they didn’t sign then and there.
  • The Reymonds signed the franchise agreement without reading the documents or having them reviewed.
  • 10 years later, the Reymonds sued Legacy for fraud, negligent misrepresentation and violations of the RICO Act.
  • A jury found in the franchisee’s favor and awarded them over $1M.
  • On appeal, the GA Supreme Court reversed the verdict and nullified the award since, by signing the franchise agreement, the Reymonds had attested that they had received no earnings claims (Item 19) and that the representations in the franchise agreement  were all they relied on (merger clause).

(I have asked Legacy Academy attorney M. Kathleen Hart to point out any factual misstatements in my layman’s summary)

Chief Justice Thomas ruled that the franchisees could not legitimately claim they were defrauded by an agreement they did not read. He cited something called Lewis, supra 189 Ga. at 601 which states, in part:

The law will not excuse [a plaintiff] for failing to read the instrument because of her confidence in the defendant, upon whom she had no legal right to rely, and who the allegations show employed no trick or artifice that caused her to fail to do her duty in reading before signing… The law will protect the innocent against fraud . . . but it demands of every one that he make use of his own facilities to avoid being defrauded.

Was Legacy Academy Cleared of Fraud Allegations?

Legacy Academy attorney M. Kathleen Hart wrote to us that “the Court found that Legacy did not commit fraud and overturned the damage award.”

I find that statement a bit misleading, at least when communicating it to a non-lawyer, as it implies the Turners were cleared of wrongdoing.  While the Turners may have been cleared of fraud in a legally actionable sense,  nowhere does it say that they did not provide undisclosed and deceptive earnings claims, that they did not knowingly violate the mandatory 14-day review period, or that they did not pressure the franchisees with the (probably empty) threat that they’d lose their prized location if they didn’t sign on the spot.

From an outside, non-legal perspective, both franchisees and franchisor were proven guilty.

The Reymonds are guilty, it seems, of failing to do an ounce of due diligence, of signing an agreement for a huge investment without reading it or having it reviewed by an attorney, and of expecting a court to fetch them back their money 10 years later.

The Turners and Legacy Academy are guilty, it seems, of short-sighted and questionable franchise business practices that have earned them years of franchise litigation and undoubtedly stunted the growth of the Legacy Academy franchise chain.

What do you think?  Share a comment below.

LEGACY ACADEMY, INC. v. Mamilove LLC Georgia Supreme Court Decision

View as a PDF:  LEGACY ACADEMY, INC. v. Mamilove LLC Georgia Supreme Court Decision

297 Ga. 15 FINAL COPY

S14G1891. LEGACY ACADEMY, INC. et al. v. MAMILOVE, LLC et al.

THOMPSON, Chief Justice.

This appeal arises out of an action brought by the owner of a franchise, Mamilove, LLC, and its officers, Michele and Lorraine Reymond (collectively “the Reymonds”), in which they sought rescission of a franchise agreement and damages for claims related to their negotiations for, and ultimate purchase of, a daycare franchise. The named defendants are the franchisor, Legacy Academy, Inc., and its officers, Frank and Melissa Turner (collectively “Legacy”).

A review of the evidence presented at trial demonstrates that in 2001, Michele and Lorraine Reymond, sisters, approached the Turners and expressed an interest in purchasing a Legacy Academy Center daycare franchise. Michele testified that in July 2001, Legacy gave her and her sister an earnings claim purporting to state the historical earnings of existing franchisees. This earnings claim reflected that in the first two years after purchasing a franchise, franchisee could expect to receive net income of $260,000 and $440,000, respectively. The Turners also discussed with the sisters an available property on Old Peachtree Parkway, suggesting it would be a good location for their franchise.

Subsequently, the Reymond sisters created Mamilove, LLC, an entity established for the purpose of holding title to the real property upon which they intended to build their Legacy Academy franchise and the building and personal property used in the operation of their franchise. In September 2001, Michele, who had a master’s degree in business administration and was working for a large corporation, and Lorraine, who was working for WebMD, again met with the Turners and were given an offering circular and a franchise agreement (the Agreement) for their signature. They signed the Agreement the same day without reading either it or the offering circular. Ten years later, they brought the action at issue in this appeal, alleging that Legacy fraudulently induced them to sign the Agreement by providing false information about the historical earnings of existing Legacy Academy franchisees.1

They sought to rescind the Agreement and to recover damages for claims based on allegations of fraud, negligent misrepresentation, and violation of both OCGA § 51-1-62 and the Georgia Racketeer Influenced and Corrupt Organizations Act (“RICO”),3 OCGA § 16-14-1 et seq.

A jury trial ensued, and after the close of evidence, the trial court denied Legacy’s motion for directed verdict as to all of the Reymonds’ claims.4

The jury found in favor of the Reymonds, issuing a general verdict awarding them $750,000 in compensatory damages, $375,000 in additional RICO damages, and $30,000 in costs of litigation.

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1 The Reymonds’ daycare center opened in November 2002. At trial, they claimed the center lost $212,300 in the first year of operation and had net earnings of $103,692 in 2004, but that by 2009, net earnings dropped to $28,299.

2 OCGA § 51-1-6 states that “[w]hen a law requires a person to perform an act for the benefit of another or to refrain from doing an act which may injure another, although no cause of action is given in express terms, the injured party may recover for the breach of such legal duty if he suffers damage thereby.” The Reymonds alleged Legacy failed to make certain required disclosures in violation of 16 CFR § 436 and that Legacy’s failure to comply with the duties imposed by this Federal Trade Commission regulation caused them damage.

3 The Reymonds predicated their RICO claim on allegations that Legacy committed acts of theft by conversion (OCGA § 16-8-4), theft by deception (OCGA § 16-8-3), theft by taking (OCGA § 16-8-2), and falsification, concealment, and fraudulent financial documentation (OCGA § 16-10-20).

4 Consistent with this ruling, the trial court also denied Legacy’s motion for judgment notwithstanding the verdict. See OCGA § 9-11-50 (b).

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Legacy appealed, raising various challenges, including a challenge to the trial court’s ruling on its motion for directed verdict.  The Court of Appeals affirmed, Legacy Academy, Inc. v. Mamilove, LLC, 328 Ga. App. 775 (761 SE2d 880) (2014), and we granted a writ of certiorari to determine whether the Court of Appeals erred when it affirmed the trial court’s denial of a directed verdict on the Reymonds’ claims for rescission, fraud, negligent misrepresentation, and violation of the Georgia RICO statute. Because we find Legacy was entitled to a directed verdict as to these claims, we reverse the decision of the Court of Appeals in part.

1.   A motion for directed verdict may be granted only where the evidence demands the particular verdict and fails to disclose any material issue for jury resolution. See OCGA § 9-11-50 (a). Legacy argues the trial court erred by denying its motion for directed verdict on the claim for rescission based on fraudulent inducement because this claim was precluded as a matter of law by the Reymonds’ failure to read the Agreement.

“In general, a party alleging fraudulent inducement to enter a contract has two options: (1) affirm the contract and sue for damages from the fraud or breach; or (2) promptly rescind the contract and sue in tort for fraud.” Ekeledo v. Amporful, 281 Ga. 817, 819 (1) (642 SE2d 20) (2007). Having elected to seek rescission and pursue a claim for fraud, the Reymonds were required to prove that Legacy through misrepresentation, act, or artifice intentionally induced them to sign the Agreement and that they justifiably relied on the misrepresentation, act, or artifice, being “reasonably diligent in the use of the facilities at [their] command.” Lewis v. Foy, 189 Ga. 596, 598 (6 SE2d 788)(1940). See Markowitz v. Wieland, 243 Ga. App. 151, 153 (532 SE2d 705) (2000). They attempted to meet their burden through the presentation of evidence showing inaccuracies in the earnings claim provided by Legacy prior to the Agreement’s execution and their reliance on these representations in deciding to sign the Agreement. It is well-settled law, however, that

a party who has the capacity and opportunity to read a written contract cannot afterwards set up fraud in the procurement of his signature to the instrument based on [extra-contractual] representations that differ from the terms of the contract. Statements that directly contradict the terms of the agreement or offer future promises simply cannot form the basis of a fraud claim for the purpose of cancelling or rescinding a contract. In fact, the only type of fraud that can relieve a party of his obligation to read a written contract and be bound by its terms is a fraud that prevents the party from reading the contract.

(Citations and punctuation omitted.) Novare Group, Inc. v. Sarif, 290 Ga. 186, 188-189 (718 SE2d 304) (2011). See also Craft v. Drake, 244 Ga. 406, 408 (260 SE2d 475) (1979); Lewis, supra, 189 Ga. at 598.

The Court of Appeals held that the Reymonds’ failure to read the Agreement was excused because the jury would have been authorized to find based on evidence that they gave the Agreement to the Reymonds on the same day it was signed and told them that they had to sign the documents that day or another franchisee would be allowed to take their desired location. While these allegations would have authorized a jury to conclude that Legacy rushed the Reymonds by threatening the loss of their desired franchise location, they are legally insufficient to support a finding that the Reymonds were prevented from reading the Agreement through fraud or misleading artifice. See Budget Charge Accounts, Inc. v. Peters, 213 Ga. 17, 18 (96 SE2d 887) (1957) (mere allegation that defendant was in a hurry insufficient to excuse plaintiffs from reading documents); Citizens Bank, Vienna v. Bowen, 169 Ga. App. 896, 897 (315 SE2d 437) (1984) (evidence that defendants covered part of document and were in a hurry to have documents signed insufficient to establish that plaintiff was prevented by fraud from reading documents). Indeed, the complaint, the Reymonds’ arguments, and the evidence at trial all demonstrate that the Reymonds were not prevented from reading the Agreement but that they blindly relied on Legacy’s representations regarding expected income as a result of their own desire to quickly begin construction of their center at a particular location.

In addition, the record demonstrates that had they chosen to read the Agreement, the Reymonds would have been aware that they were signing an agreement expressly stating that Legacy had made no representations and they were not given or relying on any representations by Legacy regarding potential volume, profit, income, or success of the franchise5 and that by signing the Agreement, they were acknowledging that neither Legacy nor any of its agents had made any representation as to: “(i) earnings capability of Legacy Academy Center; (ii) a specific level of potential sales, income, gross or net profit for the Franchisee; or (iii) a specific level of sales, income, gross or net profits of existing centers (whether franchised or company-owned) other than as specifically described in the Offering Circular.”6  Because the pre-contractual earnings claim upon which the Reymonds allege they relied expressly contradicts the disclaimer and acknowledgment provisions of the Agreement,

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5 The Agreement included a disclaimer clause providing that “Franchisor expressly disclaims the making of, and Franchisee and each Owner acknowledge that it has not received from Franchisor or any party on behalf of Franchisor, any representation, warranty or guarantee, express or implied, as to the potential volume, profit, income or success of the business licensed under this Agreement.”

6 It is undisputed that the offering circular made no representations regarding potential sales, income, gross or net profits for either existing or potential franchisees. In fact, it affirmatively states both that it contains no representations as to potential sales, income or profits and that franchisor was making no representations as to potential sales, income or profits.

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their reliance on such representations was unreasonable as a matter of law. See Novare Group, supra, 290 Ga. at 188-189 (“[s]tatements that directly contradict the terms of the agreement . . . simply cannot form the basis of a fraud claim for the purpose of cancelling or rescinding a contract”); Craft, supra, 244 Ga. at 408 (pre-contractual statement that contradicted language of contract cannot be basis for fraud absent evidence that plaintiff was prevented by fraud from reading the contract); Ledford v. Smith, 274 Ga. App. 714, 726 (618 SE2d 627) (2005) (“Fraud cannot be the basis of an action if it appears that the party alleging the fraud had equal and ample opportunity to prevent it and yet made it possible through the failure to exercise due diligence. [Cits.]”). As stated in Lewis, supra, 189 Ga. at 601:

The law will not excuse [a plaintiff] for failing to read the instrument because of her confidence in the defendant, upon whom she had no legal right to rely, and who the allegations show employed no trick or artifice that caused her to fail to do her duty in reading before signing. No one can truthfully claim to have been defrauded in a matter about which that one has full knowledge and opportunity to exercise his free choice. The law will protect the innocent against fraud . . . but it demands of every one that he make use of his own facilities to avoid being defrauded. No other rule could safely be adopted and enforced by the courts with reference to written instruments. It is essential to all business relationships that the validity and solemnity of written contracts, freely and voluntarily executed, be upheld.

Absent any evidence of fraud that prevented the Reymonds from reading the Agreement, the evidence demanded a verdict in favor of Legacy on the rescission claim.

2. Having determined that the Reymonds were entitled to the remedy of rescission, the Court of Appeals held that the merger clause contained in the rescinded Agreement did not bar the remaining claims for fraud, negligent representation, and RICO violations. Our ruling in Division 1 now mandates a different result.

There is no dispute that the Reymonds executed the Agreement and our holding in Division 1 affirming its validity means that they are bound by its provisions, including a comprehensive merger clause which, using standard contract language, states that “this agreement constitutes the entire agreement of the parties with respect to the matters contained herein. This [a]greement terminates and supercedes any prior agreement between the parties concerning the same subject matter.” Under Georgia law, as “a matter of law, a valid merger clause executed by two or more parties in an arm’s length transaction precludes any subsequent claim of deceit based upon pre-contractual representations.” See First Data POS, Inc. v. Willis, 273 Ga. 792, 795 (546 SE2d 781) (2001). As we explained in First Data,

[w]here a conflict exists between oral and written representations, it has long been the law in Georgia that if the parties have reduced their agreement to writing, all oral representations made antecedent to execution of the written contract are merged into and extinguished by the contract and are not binding upon the parties.

Id. at 794-795 (citations omitted). Thus, where a written contract contains a comprehensive merger clause, “prior or contemporaneous representations that contradict the written contract cannot be used to vary the terms of a valid written agreement purporting to contain the entire agreement of the parties, nor would the violation of any such alleged oral agreement amount to actionable fraud.” Id. at 795, quoting Campbell v. C&S Nat. Bank, 202 Ga. App. 639, 640 (415SE2d 193) (1992). Compare Authentic Architectural Millworks, Inc. v. SCM Group USA, Inc., 262 Ga. App. 826 (2) (a) (586 SE2d 726) (2003) (merger clause does not bar fraud and negligent misrepresentation claims where alleged misrepresentations are contained within contract) and Raysoni v. Payless Auto Deals, LLC, 296 Ga. 156, 157-158 (766 SE2d 24) (2014) (partial merger clause was not comprehensive and did not bar reliance on written representations outside scope of merger clause). It follows that the Reymonds’ fraud, negligent misrepresentation, and violation of RICO claims which depended entirely on allegations of pre-contractual representations are precluded as a matter of law by the Agreement’s merger clause.7

3. The Reymonds argue that even if Legacy was entitled to directed verdicts on their claims for fraud, negligent misrepresentation, and RICO, the jury’s award of $750,000 in compensatory damages can be upheld as an award of damages on their OCGA § 51-1-6 claim.8   We cannot agree. The verdict form submitted to the jury, which was reviewed and agreed to by the parties, asked the jury to determine, in pertinent part: (1) whether as to the Reymonds’ claims against Legacy, it found in favor of the Reymonds or Legacy, and if in favor of the Reymonds, in what amount; (2) if it found in favor of the Reymonds and awarded damages and found Legacy liable under the RICO statute, whether the Reymonds were entitled to additional RICO damages; and (3) whether either party was to be awarded costs of litigation and if so, in what amount. The verdict thus clearly reflects the jury’s finding that Legacy violated the RICO statute because it awarded the Reymonds $375,000 in additional RICO damages. The verdict provides no insight, however, into the jury’s specific findings regarding the other claims presented for its determination. In fact, it is impossible to ascertain from the general verdict returned whether the jury based its award of damages solely on the RICO violation or on a combination of the RICO violation and one of the other asserted grounds, several of which we have determined should not have been submitted to the jury. See Division 1, supra. Accordingly, the jury’s verdict must be reversed in its entirety and the case remanded for a new trial. See Ga. Power Co. v. Busbin, 242 Ga. 612, 616 (250 SE2d 442) (1978) (verdict cannot stand where appellate court cannot determine whether verdict was entered on a proper basis).

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7 Contrary to the Reymonds’ argument, our holding in City Dodge, Inc. v. Gardner, 232 Ga. 766, 769-770 (208 SE2d 794) (1974), does not require a different result. We stated in City Dodge that where there is evidence from which a jury could find that a rescinded contract is void because of antecedent fraud, the contract’s disclaimer clause would be ineffectual because “in legal contemplation, there is no contract between the parties.” Id. at 770. In comparison, the terms of the contract in this case, including the merger and disclaimer clauses, are enforceable against the Reymonds because there was no evidence from which a jury could have determined that they were entitled to rescind the Agreement.

8 Legacy did not seek review on certiorari of the Court of Appeals’ holding as to the OCGA § 51-1-6 claim so we express no opinion on that issue.

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Judgment reversed in part and case remanded. Benham, Hunstein, Melton, Nahmias and Blackwell, JJ., and Judge Ural Glanville concur. Hines, P. J., not participating.

Decided April 20, 2015.

Certiorari to the Court of Appeals of Georgia – 328 Ga. App. 775.

C. David Joyner; Gregory, Doyle, Calhoun & Rogers, Charles L. Bachman, Jr., for appellants.

Ichter Thomas, Cary Ichter, W. Daniel Davis, for appellees.

Greenberg Traurig, Ernest L. Greer, Michael J. King, amici curiae.

 

ALSO READ:

FRANCHISE DISCUSSIONS by Company

LEGACY ACADEMY Franchise Complaints

LEGACY ACADEMY Ichter Thomas Wins Suit for Legacy Academy Franchise Owners

ICHTER THOMAS Another Win Against Legacy Academy Franchise

LEGACY ACADEMY Franchise Marketing Representations

LEGACY ACADEMY Are Frank & Melissa Turner “Disreputable”?

LEGACY ACADEMY Invited to Respond to Franchise Complaints

 

ARE YOU FAMILIAR WITH THE LEGACY ACADEMY FRANCHISE PROGRAM AND ITS FRANCHISEE DISPUTES?

WHAT DO YOU THINK?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS:  Legacy Academy,  Legacy Academy franchise, Legacy Academy litigation, Legacy Academy litigation, LEGACY ACADEMY, INC. v. Mamilove LLC, franchise earnings claims, franchise fraud, Andersen, Tate & Carr PC, Frank Turner, Melissa Turner, Melissa Reymond, Lorraine Reymond, Cary Ichter, M. Kathleen Hart, cease and desist, takedown demand letter

UNHAPPYFRANCHISEE.COM Response to Legacy Academy 2nd Cease and Desist Letter

September 29, 2015

UnhappyFranchisee.Com responds to a nasty legal demand by Legacy Academy attorney M. Kathleen Hart of Andersen, Tate & Carr PC to remove a Legacy Academy logo and a supposed replacement logo from a 2 1/2 year old post.  We aren’t sure how to comply, since no logo has appeared on that page for 21 months. #bullying #harrassment

(UnhappyFranchisee.Com) On September 24, 2015 attorney M. Kathleen Hart sent us a our 2nd cease and desist letter demanding that we remove the Legacy Academy logo from a 2013 blog post.

She claims that she had made the same demand 21 months ago and we refused to comply.

Legacy Academy(See LEGACY ACADEMY 2nd Cease & Desist Letter to UnhappyFranchisee.Com)

Then she went off on how we had added disclaimer copy to the logo, but that wasn’t enough to qualify for “nominative fair use” because it didn’t meet the “minimum necessary test.”

M. Kathleen’s letter was delightfully condescending and snarky, in that arrogant attorney style we’ve come to enjoy so well:

Since you claim to be just a “simple blogger,” I’ll try to be simple…

…I don’t want to repeat myself, so let’s just keep this simple…

… you presumably know how to use email…

I was just about to start Googling “nominative fair use” and “minimum necessary test” when it occurred to me to check the web page.

Lo and behold, there isn’t a single Legacy Academy logo (or replacement logo) on that page, and there hasn’t been since I removed it in January, 2014.

Now I must inform the fiery and irascible Ms. M. that I cannot remove what no longer exists.

Unhappy Franchisee.

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M . Kathleen Hart, Esq.

Attorney for Legacy Academy, Inc.

Andersen, Tate & Carr , P . C .

1960 Satellite Boulevard , Suite  4000

Duluth, Georgia 30097

September 29, 2015

Dear M.:

Thank you for your letter of September 24, 2015.

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However, your representation that we have continued to use the logo (or replaced it with one with a disclaimer) on the page that you first objected to in your letter of January 28, 2014 is incorrect.

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You state “On January 24, 2014, we issued a written demand on behalf Legacy [sic] that you cease and desist violating Legacy’s protected rights in the Mark by removing the logo displayed on the webpage http://www.unhappyfranchisee.com/index.php?s=legacy.   Despite this demand, you have chosen to continue using and displaying the Mark on your webpage…”

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Your original letter (attached) contained a scan of a printed post published December 18, 2013 titled “ICHTER THOMAS Another Win Against Legacy Academy Franchise.” The logo was removed from that post shortly after we received your January 24, 2014 letter and was not replaced. There has not been a Legacy Academy logo on that page for the 21 months since you last communicated with us.

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If you would like us to be able to accurately respond to objections in the future, please indicate the specific text or graphics you object to by providing a screen capture or printed/scanned page, as you did with your original letter.

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Also, when providing web addresses to designate specific online content you find objectionable, it would be advisable for you to refer to static web pages rather than dynamic web pages that contain changing indexes of category contents (as you did in both your letters when you referenced the dynamic web page http://www.unhappyfranchisee.com/index.php?s=legacy.) Referring to a dynamic category index of blog posts will inevitably cause confusion, as the content of that web page changes every time a post in that category is added, updated or recategorized.

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Learning the difference between the two types of web pages should help you communicate more effectively in the future not only with us, but with other blogging miscreants, infringers and roustabouts.

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Please let me know if there’s anything else I can do to address your concerns and put your clients’ minds at ease. But please don’t wait 21 months to respond this time! My memory span is not what it used to be!

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Cheers… ADMIN (UnhappyFranchisee.Com)

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CC via email Mr. Frank Turner, Mrs. Melissa Veal Turner, Legacy Academy

Attachment: Legacy Academy 1st cease and desist letter

 

Read:

LEGACY ACADEMY 2nd Cease & Desist Letter to UnhappyFranchisee.Com

ALSO READ:

FRANCHISE DISCUSSIONS by Company

LEGACY ACADEMY Franchise Complaints

LEGACY ACADEMY Ichter Thomas Wins Suit for Legacy Academy Franchise Owners

ICHTER THOMAS Another Win Against Legacy Academy Franchise

LEGACY ACADEMY Franchise Marketing Representations

We have also had our own issues with Legacy Academy and its attorneys:

LEGACY ACADEMY Issues Cease & Desist Letter to UnhappyFranchisee.Com

LEGACY ACADEMY Are Frank & Melissa Turner “Disreputable”?

LEGACY ACADEMY UnhappyFranchisee.Com Complies With Legal Request/Threat

LEGACY ACADEMY Invited to Respond to Franchise Complaints

 

ARE YOU FAMILIAR WITH THE LEGACY ACADEMY, FRANK TURNER, MELISSA TURNER OR M. KATHLEEN HART?

ARE THEY JUSTIFIED IN HARASSING US?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: Cease and Desist letter, takedown demand, nominative fair use,  Legacy Academy,  Legacy Academy franchise, Early Learning franchise opportunity, Legacy Academy franchise complaints, Andersen, Tate & Carr PC, Frank Turner, Melissa Turner, M. Kathleen Hart, cease and desist, takedown demand letter

LEGACY ACADEMY 2nd Cease & Desist Letter to UnhappyFranchisee.Com

September 29, 2015

Georgia-based childcare franchisor Legacy Academy and attorney M. Kathleen Hart of Andersen, Tate & Carr PC seem obsessed with bullying our franchise blog into removing a logo from a 2 1/2 year old post.  Will this latest Cease & Desist Takedown Demand have the desired effect?  Or are they setting themselves up for ridicule and derision?

(UnhappyFranchisee.Com) In January, 2014,  attorney M. Kathleen Hart  wrote us a letter that said our use of the Legacy Academy “derivative mark” and “adulterated derivative mark” on a post published 13 months earlier could create a “likelihood of confusion” between Legacy Academy’s brick and mortar franchised daycare centers and our UnhappyFranchisee.com franchise discussion website. (See the 1st Cease & Desist Letter: Legacy Academy Cease & Desist Letter to UnhappyFranchisee.Com  January 24, 2014)

Citizens of the beautiful Southern state of Georgia, M. Kathleen Hart, Legacy CEO Frank Turner and VP Melissa Veal Turner were evidently concerned that there may be someone, somewhere, (a patient under heavy sedation? Or suffering from Traumatic Brain Injury?) who is unable to distinguish between a website and a large building filled with children.

It didn’t make sense to us but…  Maybe it’s a Southern thing, we thought.

Legacy AcademySo we took the logo (temporarily) off the web page they objected to (ICHTER THOMAS Another Win Against Legacy Academy Franchise).

We created a proposed alternative graphic which included text that unmistakably disclaimed any relationship between UnhappyFranchisee.Com and Legacy Academy.

(See our response to the 1st Cease & Desist Letter: LEGACY ACADEMY UnhappyFranchisee.Com Complies With Legal Request/Threat)

With these changes, we were certain that even a recently arrived extraterrestrial who had not been paying attention in his Earth Object Differentiation 101 class could not mistakenly believe that Legacy Academy had created a website with which to criticize itself.

We submitted our proposed solution to M. Kathleen Hart for her immediate review and feedback.

No answer.

We sent M. another email asking if our proposed solution was acceptable.

Her assistant confirmed that she received it, but again, no response.

21 months later, M. Kathleen Hart sent us the 2nd Legacy Academy cease and desist letter (below).

I could be wrong, but it seems to me that neither M. Kathleen nor her client ever bothered to check the original post to see that the logo they objected to was removed 21 months ago and never replaced.

A link to our response is posted below.

M. Kathleen Hart’s email as a PDF:  LEGACY ACADEMY 2nd Cease & Desist

 

Andersen Tate Carr law firm

M . Kathleen Hart

Direct Phone : 67 8 -5 18-6 8 5 1

Email: khart@atclawfirm.c o m  

Direc t Fax : 77 0 – 2 3 6 – 9 7 8 5

 

September 24, 2015

VIA   EMAIL: unhappyfranchisee[at]gmail. com

UnhappyFranchisee.com

RE: UnhappyFranchisee.com’s Unlawful Use of Legacy Academy, Inc.’s Registered Service Mark

To Whom it May Concern:

This law firm represents Legacy Academy, Inc. (“Legacy”), the owner of a federal registration for the “Legacy Academy For Children” service mark, USPTO Registration Number 2686283 (the “Mark”), which registration has become incontestable. On January 24, 2014, we issued a written demand on behalf Legacy that you cease and desist violating Legacy’s protected rights in the Mark by removing the logo displayed on the webpage http://www.unhappyfranchisee.com/index.php?s=legacy.   Despite this demand, you have chosen to continue using and displaying the Mark on your webpage (and, as a result, to be displayed as a result in Google’s “Images” search feature) and have merely added a disclaimer of sponsorship or affiliation.  Legacy now hereby renews its demand that you immediately cease and desist all use of the Mark, as such use is not nominative fair use.

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Since you claim to be just a “simple blogger,” I’ll try to be simple in outlining why your continued use of Legacy’s Mark is not legitimate.  While the disclaimer might address the factor of the nominative fair use test relating to an indication of joint sponsorship or endorsement, it does not address the factor that weighs whether the use of the mark was necessary (also known as the “minimum necessary” test). Courts have consistently found that use of a design mark or logo is not nominative fair use, because it is not necessary to identify the trademark owner’s goods or services. Basically, you can use the name “Legacy Academy For Children”, but you cannot use the logo or the graphic, because the logo is not necessary to your goal of identifying Legacy or its services. It might be helpful in driving traffic to your website and to your directory of franchisee attorneys, but it isn’t necessary.

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Also, with respect to the content of your articles regarding my client, I’ve enclosed a copy of the Georgia Supreme Court’s recent decision in Legacy Academy, Inc. et. al. v. Mamilove, LLC et al., in which the Court reversed the Georgia Court of Appeals ruling that you recount on your website. The Supreme Court unanimously determined that Legacy was entitled to a directed verdict on the plaintiff’s claims for rescission, fraud, negligent misrepresentation and violation of the Georgia RICO statute. To translate, the Court found that Legacy did not commit fraud and overturned the damage award. Given that you have invited all companies discussed on your website to “provide corrections, clarifications or rebuttals ,” I wanted to make sure that you have a copy of the decision so that you can update your story on Legacy accordingly (removing the headline that Legacy is “guilty of fraud” would be a good start), stop misleading those who visit your attorney advertising website and avoid any further pesky letters from me.

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I’ve already give you all the nasty-sounding warnings in my January 24, 2014 letter, and I don’t want to repeat myself, so let’s just keep this simple. Stop using Legacy’s logo and update your story on Legacy so that it is accurate and not misleading , and you will not have to hear from me again or spend time trying to write responses to my letters on your blog (responses that you never bothered to actually send to me directly, even though you presumably know how to use email). At least not unless you do something else that violates the rights of one of my clients.

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Of course, nothing in this letter is a waiver of any rights or remedies of my client, and Legacy reserves all rights regarding the same. Please direct your response to this letter to me.

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Sincerely,

M. Kathleen Hart, Esq.

for Andersen, Tate & Carr, P.C.

Enclosure

cc: Mr. Frank Turner (via email) Mrs. Melissa Turner (via email)

Mr. Robert Thomas, Esq., Andersen, Tate & Carr, P.C.

Read:

UNHAPPYFRANCHISEE.COM Response to Legacy Academy 2nd Cease and Desist Letter

 

ALSO READ:

FRANCHISE DISCUSSIONS by Company

LEGACY ACADEMY Franchise Complaints

LEGACY ACADEMY Ichter Thomas Wins Suit for Legacy Academy Franchise Owners

ICHTER THOMAS Another Win Against Legacy Academy Franchise

LEGACY ACADEMY Franchise Marketing Representations

We have also had our own issues with Legacy Academy and its attorneys:

LEGACY ACADEMY Issues Cease & Desist Letter to UnhappyFranchisee.Com

LEGACY ACADEMY Are Frank & Melissa Turner “Disreputable”?

LEGACY ACADEMY UnhappyFranchisee.Com Complies With Legal Request/Threat

LEGACY ACADEMY Invited to Respond to Franchise Complaints

 

ARE YOU FAMILIAR WITH THE LEGACY ACADEMY, FRANK TURNER, MELISSA TURNER OR M. KATHLEEN HART?

ARE THEY JUSTIFIED IN HARASSING US?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: Cease and Desist letter, takedown demand, nominative fair use,  Legacy Academy,  Legacy Academy franchise, Early Learning franchise opportunity, Legacy Academy franchise complaints, Andersen, Tate and Carr PC, Frank Turner, Melissa Turner, M. Kathleen Hart, cease and desist, takedown demand letter

TAKEDOWN HALL OF SHAME: ERA Expense Reduction Analysts

September 8, 2015

ERA Expense Reduction Analysts joins the UnhappyFranchisee.Com Takedown Hall of Shame with this takedown demand letter sent by Australian attorney Sylvia Fernandez of Holding Redlich.  Ms. Fernandez wanted us to take down a complaint by a “disgruntled franchisee” of Expense Reduction Analysts who alleges that ERA is guilty of “ a clear and deliberate fraud perpetrated on the USA authorities and on all ERA USA and global franchisees.”

(UnhappyFranchisee.Com)  ERA Expense Reduction Analysts took exception to a letter and supporting documents we received from a “disgruntled franchisee” of Expense Reduction Analysts who alleges that ERA is guilty of “ a clear and deliberate fraud perpetrated on the USA authorities and on all ERA USA and global franchisees.”

We invited ERA Expense Reductions Analysts, Charles Marfleet, and other all parties to provide corrections, clarifications and a rebuttal to the allegations made by the franchisee, Armstrong Consulting Pty Ltd.

Instead, they chose to have their law firm sending a threatening letter, thus earning them a coveted spot in the UnhappyFranchisee.Com Takedown Hall of Shame

Original Title of Threatened Content:  ERA EXPENSE REDUCTION ANALYSTS Franchise Fraud Allegations

Original location: http://www.unhappyfranchisee.com/era-expense-reduction-analysts-franchise-fraud-allegations/

Threat or takedown demand:  ERA Letter to Unhappy Franchisee – 02.09.15; ERA Letter to Nick Stretch Legal – 02.09.15

Date of threat or takedown:  September 2, 2015

UnhappyFranchisee.com response:  Polite refusal, invitation to publish company’s corrections, clarifications or rebuttal.

 

H Holding Redlich 200

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H HOLDING REDLICH



2 September 2015

The Proprietor

UnhappyFranchisee.com

By email to [redacted]

Partner Sylvia Fernandez

Direct line (02) 8083 0408

Email sylvia.fernandez@holdingredlich.com

Our RefSZF 14680036

Dear Unhappy Franchisee

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Letter of demand for the removal of defamatory material from ‘Unhappy Franchisee’ blog

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We act for Expense Reduction Analysts (ERA).

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It has been brought to ERA’s attention that your blog currently hosts an article described as having been submitted by Armstrong Consulting Pty Ltd (AC) entitled ‘ERA EXPENSE REDUCTION ANALYSTS Franchise Fraud Allegations’, located at ‘ http://www.unhappyfranchisee.com/era-expense-reduction-analysts-franchise-fraud-allegations/* (sic) (Article).

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For your benefit, you should be aware that AC is one of three related plaintiffs in proceedings in the Supreme Court of New South Wales against a number of ERA entities and directors. The plaintiffs are former shareholders in the ERA group who assert in the legal proceedings, among other things, breaches of various agreements governing their shareholdings in the group. Their claims do not concern the franchising aspects of ERA’s business. These legal proceedings have been on foot since 2011 and concern many of the matters raised in the Article. The hearing of these legal proceedings has yet to occur and as such, many of the statements made by AC in the Article pre-judge without foundation matters that will ultimately be determined by a court in relation to what is essentially a dispute between shareholders.

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We have also drawn to the attention of the firm of solicitors representing AC in these legal proceedings the defamatory nature of the Article and have demanded on behalf of ERA that AC immediately procure the Article to be removed from your blog. A copy of our letter [Letter to Nick Stretch Legal – 02.09.15] is enclosed for your reference.

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As you are now on notice of the defamatory nature of the Article, its irrelevance to the matters which appear to be the subject of your blog and its tendency to pre-judge matters that will ultimately fall to be determined by a court, ERA demands that you remove the Article from your blog immediately and that you undertake not to host the Article or any similarly defamatory publications which concern ERA or any of its directors or associates in the future. ERA’s rights are strictly reserved. ERA will rely on this letter on the question of its costs in the event that litigation ensues.

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Yours faithfully

Holding Redlich

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Sydney. Melbourne. Brisbane

Level 65 MLC Centre 19 Martin Place Sydney NSW 2000 OX 529 Sydney

GPO Box 4118 Sydney NSW 2001 T +61 2 8083 0388

www.holdingredlich.com


5:5129727_1 NDR ABN 15 364 527 724

* We corrected their incorrect URL.

Our Takedown Hall of Shame was inspired by and a tribute to the original Electronic Frontier Foundation [EFF] Takedown Hall of Shame.

Also read:

ERA EXPENSE REDUCTION ANALYSTS Franchise Fraud Allegations

EXPENSE REDUCTION ANALYSTS Franchise Complaints

ARE YOU FAMILIAR WITH THE EXPENSE REDUCTION ANALYSTS FRANCHISE OR THE ERA FRANCHISE Charles Marfleet or Charles Howson?

What about Armstrong Consulting Pty Ltd? Or Holding Redlich?

PLEASE SHARE A COMMENT – POSITIVE OR NEGATIVE – BELOW.

 Contact UnhappyFranchisee.com

TAGS: Expense Reduction Analysts, Expense Reduction Analysts franchise, ERA, ERA franchise, Expense Reduction Analysts franchise fraud, Armstrong Consulting Pty, Charles Marfleet, Ronnie Clucas, Charles Howson, Accuma Group PLC, Leonard Curtis, Hinzman and Associates, Kreston Dormer, Baker Tilley, Holding Redlich, H Holding Redlich

H&R Retail Ethical Questions Linger (re: NY Bagel Café)

September 8, 2015

H&R Retail is a commercial brokerage firm that provides real estate services for such franchise clients as McDonalds, Whole Foods, Sports Authority, Staples, Target, Ross Dress for Less and even Chuck E. Cheese.  We asked  H&R Retail partners to clarify the company’s policies, professional ethics, and relationship with the controversial NY Bagel Café franchise.

(UnhappyFranchisee.Com) Last week, we asked H&R Retail about suspicions that the commercial real estate broker was (either intentionally or inadvertently) helping its controversial franchise client NY Bagel Cafe  misrepresent the size, strength and success of its company to prospective franchisees and landlords.

When multiple requests for clarification were ignored by Brian Mitchell, the H&R Associate who represents NY Bagel Café and (we assume) its franchisees, we proceeded to publish our concerns without the benefit of their input:

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H&R Retail, Brian Mitchell Risk Their Reputations for NY Bagel Cafe?

Geoff Mackler

H&R Retail partner, Geoffrey L. Mackler, Esq. then emailed us that “The facts in your blog post are inaccurate,” but said he did not  have time to specify what those inaccuracies are.

So we have simplified our questions and invite H&R Retail to clarify its company’s policies, professional ethics, and relationship with the controversial NY Bagel Café franchise.

For an overview of NY Bagel Café issues, see:  NY Bagel Café Franchise Scam Overview

5 Questions Regarding H&R Retail Ethics & Client Relationship Policies

1)  If an H&R Retail leasing client has an 80% – 90% failure rate, would you recommend a change in leasing strategy?

Your client NY Bagel Café has had an estimated 30 retail franchise locations open and close in recent years. 

Of the 9 locations still in operation, several have had multiple owners fail in those spots, and many current owners are struggling. 

It appears that H&R Retail continues to recommend  the same types of upscale strip center locations and unsustainable rents that have resulted in significant losses for prior franchise owners.

Isn’t H&R Retail helping to put NY Bagel Café franchise owners into spaces with a high likelihood of failure?  (See NY BAGEL CAFÉ Franchise: How Many Have Closed? [UPDATED] and  NY BAGEL CAFÉ Franchise Graveyard)

 

2) Is H&R truthful in its representations to leasing agents, associates and landlords about the size, strength and track record of its retail clients?

Your website states that NY Bagel Café has 30 locations open and 50 under development. 

Yet the NY Bagel Café website lists only 9 locations open and 3 “coming soon.”  NY Bagel Café CEO Joe Smith says they’ve never had that many stores open.

Your website uses the upscale Wesley Chapel, NC location to represent the NY Bagel Café concept. 

Shouldn’t you show one of the 9 surviving stores, not one of the failed locations that ended in foreclosure?

 

3)  Does H&R Retail represent clients who are violating state and federal laws?

A recent investigation by the Maryland Attorney General determined that  the franchise disclosure document NY Bagel Café provides to prospective franchisees contains material misrepresentations and omissions, and does meet the requirements to offer or sell franchises under the FTC Franchise Rule.  (See NY BAGEL CAFÉ Franchise Fraud Investigation by MD Attorney General)

Additionally, the investigation determined that NY Bagel Café violated the Maryland state registration and disclosure laws.  Like Maryland, Virginia also requires registration and approval before a franchisor can legally offer and sell franchises there.  As NY Bagel Café is not registered in Virginia (or any other state), the Commonwealth of Virginia State Corporation Commission is looking into suspected franchise locations H&R Retail sourced for NY Bagel Café, including space in Alexandria, VA and Vienna, VA.

 

4)  Would H&R Retail allow a retail client to misrepresent H&R’s business relationship if it would help them sell more franchises?

We have received copies of emails from NY Bagel Café franchisees in which franchise salesman Dennis Mason repeatedly misrepresented H&R Associate Brian Mitchell as the company’s “Director of Real Estate” and the head of the NYB real estate department.  NY Bagel Café not only doesn’t have a real estate department, they don’t appear to have a corporate office or staff.

 

5)  Does H&R Retail represent retail concept that have a low likelihood of surviving the term of an average lease?

With a track record of failure in the same types of locations you are sourcing, no home office to support franchisees,  potentially invalid franchise agreements with franchisees, and multiple legal investigations, is H&R Retail confident that the majority of deals it facilitates for NY Bagel Café franchisees won’t end in default, foreclosure or franchisee failures?

 

We have extended an invitation to H&R Retail to provide specific corrections, rebuttals, clarifications or updates, which we publish in conjunction with these blog posts.

 

ALSO READ:

H&R Retail, Brian Mitchell Risk Their Reputations for NY Bagel Cafe?

NY Bagel Café Franchise Scam Overview

NY BAGEL CAFÉ Franchise Graveyard

NY BAGEL CAFÉ Franchise: How Many Have Closed? [UPDATED]

NY BAGEL CAFÉ Franchise Fraud Investigation by MD Attorney General

HOWARD FICHMAN Terminated Over NY Bagel Café Ties

Lenders Loan Capital Drops NY Bagel Cafe

Joe Smith, Dennis Mason & NY Bagel Café Franchise Exposed: 10 Things You Should Know

NY BAGEL CAFÉ & DELI Franchise Complaints

DENNIS MASON Franchise Complaints

ARE YOU FAMILIAR WITH H&R RETAIL, BRIAN MITCHELL, GEOFF MACKLER OR THE NY BAGEL CAFÉ FRANCHISE?

PLEASE SHARE YOUR OPINION BELOW or Contact UnhappyFranchisee.com

TAGS: H&R Retail, H&R Real Estate, Geoffrey Mackler, Geoff Mackler, Brian Mitchell, NY Bagel, NY Bagel Cafe, NY Bagel Café & Deli, NY Bagel franchise, NY Bagel Cafe franchise,  New York Bagel Cafe, New York Bagel franchise, Joe Smith, Joseph Smith, Dennis Mason, franchise scam

H&R Retail, Brian Mitchell Risk Their Reputations for NY Bagel Cafe?

September 3, 2015

NY Bagel Café is under investigation by at least three state Attorney Generals for allegedly violating anti-fraud, registration, and franchise disclosure laws.  UnhappyFranchisee.Com estimates that more than 90% of the NY Bagel Café franchise locations that opened have failed, some of them multiple times.  Why is commercial real estate company H&R Retail  and broker Brian Mitchell putting their own reputations on the line for this troubled and troubling company?

(UnhappyFranchisee.Com) H&R Retail, a real estate brokerage firm focused on retail tenants, landlords and developers within the greater Washington DC/Baltimore area, has a sort of shrine to NY Bagel Café on its website.

The page features a photo of a beautiful, white-columned NY Bagel Cafe in an upscale strip center.  The glowing copy describes a company with vision and commitment bordering on bagel sainthood:

NY Bagel Café & Deli is committed to providing quality food and cultivating satisfied customers.

The long range vision is to become a highly visible company known as the best retailer of high quality bagels and deli products.

NY Bagel Café & Deli  was founded in 1994. Presently, there are 30 shops and 50 more under development.

Yet H&R Retail is not being truthful.

There are presently 9 NY Bagel Café locations open – not 30.

There are perhaps a handful of NY Bagel locations under development – not 50.

We have uncovered about 30 NY Bagel Café franchises that opened – and closed… some with multiple owners losing their investments in the same space.

(See NY BAGEL CAFÉ Franchise: How Many Have Closed? [UPDATED] and  NY BAGEL CAFÉ Franchise Graveyard)

And the beautiful, upscale NY Bagel Café in the photo?  That’s the failed NY Bagel Café location in Wesley Chapel, North Carolina where Rob & Jen Pistani lost their investment.

It’s now the Greco Fresh Grille.

H&R Retail NY Bagel Cafe

NY Bagel Café relies on companies like H&R Retail to perpetuate its ruse

It’s not clear how many (if any) of the 30* unsuccessful NY Bagel Café retail locations were sourced by H&R Real Estate or Brian Mitchell.  It seems that most of them may have been the work of Brian Mitchell’s predecessor, NYB “Master Broker” Jack Intrator, former VP of Aptcor Commercial Real Estate.

However, it’s hard to believe that Mr. Mitchell and H&R Retail are not aware that 9 out of 10 NY Bagel Café franchisees thus far have closed and were unable to meet the obligations of their leases.

It’s hard to believe that Brian Mitchell and H&R Retail are not aware that the franchisees we assume they are encouraging to sign long-term retail leases (in the same types of locations as those that failed) are unaware of this horrendous track record and that franchisees are making huge financial commitments based on the ruse that NY Bagel Café is a proven, successful, concept.

It’s hard to believe that a seemingly reputable company like H&R Retail, one that values its reputation in the regional real estate market, would help provide the undeserved credibility that NY Bagel Café and salesman Dennis Mason need to sign up the next trusting and vulnerable 30 franchisees.

*NY Bagel President will admit to 15 franchise closures, and he has acknowledged that the disclosure documents he gives prospective franchisees state zero failures.

NY Bagel Café claims Brian Mitchell heads up its “real estate department”

NY Bagel Café appears to have no home office and no support staff to speak of.

From correspondence with prospective and signed franchisees we’ve seen, NY Bagel Café franchise salesman Dennis Mason seemingly tries to give the impression that they do by referring to his internal “departments,” and “teams.”  He tells franchise prospects that his “Director of Real Estate” Brian Mitchell heads up the NY Bagel “Real Estate Department,” and as soon as they send him the check Brian will deploy his team to scout locations in their market.  He even references having to buy airline tickets for Brian’s real estate team to go to remote franchisee markets to work with them on locations.

Brian Mitchell H&R RetailBut according to the H&R Retail website, Brian is a full-time H&R Associate who joined the company in 2007.

That would make Brian Mitchell an outside, 3rd party broker for NY Bagel Café, not its “Director of Real Estate” or head of its (non-existent) “real estate department.”

And it seems that they work with brokers in a national network to source local retail spaces, rather than fly Brian’s “team” to remote and unfamiliar markets.

It seems unlikely (though possible) that Brian Mitchell  is unaware of these representations, since the references to his position as NYB management is peppered throughout on many emails that Brian Mitchell is copied on.

Brian Mitchell has not responded to multiple requests for clarification on his and H&R Retail’s relationship with NY Bagel Café.

Is H&R Retail sourcing locations for illegally sold franchises in Virginia?

The Federal Trade Commission requires all franchise sellers to present prospective franchisees with a document called a Franchise Disclosure Document (FDD) that truthfully discloses 23 Items of information, including the number of franchise failures in recent years.

NY Bagel President Joe Smith has admitted that his FDD does not disclose NY Bagel’s franchise failures, as is legally required.

Additionally, a number of states (called registration states) require franchisors to submit their Franchise Disclosure Document for review, approval and registration in order for them to legally sell franchises in those states.

Maryland is one such registration state, and recently determined that NY Bagel Café’s marketed and sold a franchise in Maryland, in violation of franchise law. (See NY BAGEL CAFÉ Franchise Fraud Investigation by MD Attorney General)

We confirmed that the NY Bagel Café franchise is not registered in Virginia (another registration state) and that NY Bagel Café cannot legally sell or open franchises there.

Yet Brian Mitchell has been actively sourcing and procuring locations, presumably for NY Bagel franchisees.

On 7/7/15 a real estate press release from H&R Retail announced:

NY Bagel Cafe leased 1,850 square feet at 431 Maple Ave. West, Vienna, Va. from MAVV, LLC. Brian Mitchell with H&R represented the tenant.

 

3/22/15 the same publication announced:

New York Bagel Cafe leased 1,500 square feet at Hilltop Shopping Center, Alexandria, Va. from WRI Hilltop Village, LLC. Brian Mitchell with H&R represented the tenant.

 

We have asked Brian Mitchell whether these are franchise locations or company-owned.  He has not responded.

He have passed this information and Brian Mitchell’s contact information to the Franchise Division of the Virginia Attorney General’s office for their investigation.

Vendors are distancing themselves from NY Bagel Café

As more and more information and allegations are disclosed about the franchise sales tactics and business practices of NY Bagel Café franchisor, numerous vendors have been distancing themselves from the increasingly controversial franchisor.

Lenders Loan Capital actually terminated a broker named Howard Fichman because of his continued relationship with NY Bagel Café and Dennis Mason.

Funding Solutions, Diamond Financial,   FranFund, Seed Capital, Lenders Loan Capital and Commercial Capital have all directed NY Bagel Café to drop them from the NYB “Approved Lenders” list.”

A number of franchise advertising portals have dropped NY Bagel Café as a client.

What have these companies come to understand about doing business with NY Bagel Café that Brian Mitchell and H&R Retail haven’t?

ALSO READ:

NY Bagel Café Franchise Scam Overview

NY BAGEL CAFÉ Franchise Graveyard

NY BAGEL CAFÉ Franchise: How Many Have Closed? [UPDATED]

NY BAGEL CAFÉ Franchise Fraud Investigation by MD Attorney General

HOWARD FICHMAN Terminated Over NY Bagel Café Ties

Lenders Loan Capital Drops NY Bagel Cafe

Joe Smith, Dennis Mason & NY Bagel Café Franchise Exposed: 10 Things You Should Know

NY BAGEL CAFÉ & DELI Franchise Complaints

DENNIS MASON Franchise Complaints

NY BAGEL CAFÉ Franchise a Scam? MA Woman Says Yes

Is NY BAGEL CAFÉ Violating Multiple State Franchise Laws?

Is NY BAGEL CAFÉ Ocean City MD an Illegal Franchise?

NEW YORK BAGEL ENTERPRISES INC. Franchisor’s Corporate Status Revoked

 

ARE YOU FAMILIAR WITH H&R RETAIL, BRIAN MITCHELL, OR THE NY BAGEL CAFÉ FRANCHISE?

PLEASE SHARE YOUR OPINION BELOW or Contact UnhappyFranchisee.com

TAGS: H&R Retail, H&R Real Estate, Brian Mitchell, NY Bagel, NY Bagel Cafe, NY Bagel Café & Deli, NY Bagel franchise, NY Bagel Cafe franchise,  New York Bagel Cafe, New York Bagel franchise, Joe Smith, Joseph Smith, Dennis Mason, franchise scam

7-ELEVEN on UnhappyFranchisee.Com [UPDATED]

August 31, 2015

7-Eleven is possibly the most contentious franchise in America at the present time.

With 7-Eleven’s Japanese owners wanting to quadruple the number of U.S. locations in coming years, the fireworks have just begun.

UnhappyFranchisee.Com is the only place to get the real, uncensored story on 7-Eleven, as franchisees, employees, vendors and other insiders here can comment and discuss the issues openly, candidly, and anonymously.

Please read & share your views on any post below.

“7-Eleven: The Price of Convenience” on ABC

Please watch the full video here, then return and leave a comment below:

ABC Australia’s Four Corners expose “7-Eleven: The Price of Convenience.”

UnhappyFranchisee.Com 7-Eleven.250Australian Public Television’s expose of worker and franchisee exploitation features UnhappyFranchisee.Com (at 24:28).

Gold Walkley Award-winning reporter Adele Ferguson returns to Four Corners with an investigation into the 7-Eleven business empire with revelations of dodgy bookkeeping, blackmail and the mass underpayment of its workforce. 

 

“7-Eleven Experience” Protest Controversy:

7-ELEVEN Franchise Owners Protest 2015 “7-Eleven Experience” [PHOTOS]

7-ELEVEN Franchise Experience Protest Update and Photos [UPDATED]

7-ELEVEN: NCASEF Letter re Franchisee Protest in Vegas

7-ELEVEN: Did NCASEF Initiate the 7-11 Franchisee Protest in Vegas? [OVERVIEW]

7-ELEVEN: Unhappy Franchisee Response Letter to NCASEF General Counsel

7-Eleven Breaking News:

7-ELEVEN Covering Up Illegal Plot to Purge Indian Franchisees, says Attorney

7-ELEVEN CEO Joe DePinto Parodied as Hitler

7-ELEVEN Whistleblower Alleges Franchise Discrimination

7-ELEVEN Bombshell: Insider Accuses 7-11 of Predatory Franchise Practices

Will 7-Eleven Help Terminate Donald Sterling’s NBA Franchise? (Humor)

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

NPR Reports on Franchising & Franchise Problems

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

 

7-Eleven Featured Posts:

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

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

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

7-ELEVEN Protest Over 7-11 Franchise Store Seizure (Pictures)

7-ELEVEN Stole My Store – Tyrone Carr’s Story [UPDATED]

7-ELEVEN Dev Patel Radio Interview on Riverside Franchise Seizure (Audio)

7-ELEVEN Franchise Ads We’d Like to See (Parody)

NJ Lawsuit Claims 7-Eleven Franchise Program is an Employment Scam  (NEW!)

7-Eleven Franchise Complaints (Most comments)

7-Eleven Franchise Complaints

7-Eleven Franchise Complaints

7-ELEVEN Franchise Owner Claims Franchisees Are Being Bullied

7-ELEVEN Franchise Owners Complain, Allege Churning

7-ELEVEN Cyber FOA Franchisees Post “Declaration of Independent Contractor”

7-ELEVEN Manhattan Group Protests 7-11 Expansion

NY Group Protests & Mocks 7-11; Debuts “Margaret Chabris” Skit

7-ELEVEN: No 7-Eleven Protest Group Holds NY Bodega Walk

7-Eleven Lawsuits Against Franchisees

7-ELEVEN Franchise Lawsuits 2013

7-ELEVEN Targets Portland, OR Franchise for Seizure

7-ELEVEN Franchisee Sodhi Can Operate Stores Despite 7-Eleven Court Battle

7-ELEVEN Franchisee Tariq Khan: Villain or Victim?

7-ELEVEN Franchise Lawsuit Against Franchisee Pursharth Kapoor

Franchisee Lawsuits Against 7-Eleven, Inc.

Franchisee Sues for Fraud, Labor Violations, Unfair Dealings

NJ Lawsuit Claims 7-Eleven Franchise Program is an Employment Scam

7-ELEVEN Class Action Franchise Lawsuit Brewing?

7-ELEVEN Upcoming Lawsuit Claims 7-11 Franchise is an Employment Scam

Immigration Enforcement Actions Against 7-Eleven

7-ELEVEN Franchises Raided by DOJ, Homeland Security

7-Eleven’s Imperial Japanese Overlord, er, Parent Company

7-ELEVEN to Open up to 21,500 New U.S. Stores

7-ELEVEN: UnhappyFranchisee.Com Invites Views of 7-11 Franchisee Groups

7-ELEVEN Downplays Japanese Ownership

7-ELEVEN’s Japanese Parent Posts Record Profits… Again

7-Eleven – General Information & Discussions

7-ELEVEN: How the 7-Eleven Franchise Works

7-ELEVEN: Is 7-Eleven a Good Franchise to Own?

7-Eleven Franchise Lawsuit Documents

7-Eleven, Inc. v. Kapoor Brothers Inc. et al

7-Eleven, Inc. v. Khan et al (Complaint),Declaration by Tariq Khan

Atalla, Naik, Patel, Patel et al v. 7-Eleven, Inc., Seven-Eleven Japan, Seven and I Holdings Co. Ltd.

 

WHAT DO YOU THINK?  ARE YOU FAMILIAR WITH THE 7-ELEVEN FRANCHISE, 7-ELEVEN INC. AND SEVEN AND I HOLDING CO.?  PLEASE SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com





TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven lawsuit, 7-Eleven lawsuits, 7-11 franchise, 7-11 lawsuits, 7-11 complaints, convenience store franchise, 7-Eleven litigation, 7-eleven franchise complaints, National Coalition Of Associations Of 7-Eleven Franchisees, NCASEF, SEI, 7-Eleven Inc., Seven and i Holdings Co

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