David Rutkauskas, founder and CEO of Beautiful Brands International (BBI), is being sued by Emirates Associated Business Group (EABG), an Abu Dhabi Corporation.
Also named in the suit are:
– Beautiful Brands International, LLC
– Dixie Cream Donuts Franchise Systems, LLC
– Daylight Donut Flour Company, LLC
– Freshberry Franchise Systems, LLC
– Camille’s Franchise System, LLC
– Blazing Onion Franchising, LLC
The suit was filed September 28, 2012 in the Superior Court of Washington for Snohomish County by Howard Morrill & James Jackson of Simburg, Ketter, Sheppard & Purdy, LLP, the attorneys for the Plaintiff.
The lawsuit alleges that on or about December 27, 2010, EABG entered in a Master Franchise agreement for the United Arab Emirates (UAE), Qatar, Iraq, Jordan, Turkey, Bahrain, Lebanon and Syria.
EABG alleges it paid an initial fee of $500,000 for the right to develop Dixie Cream Donuts and other BBI-owned and BBI partner brand franchises in the Middle East.
The complaint against David Rutkauskas and BBI states “the Agreement explicitly conveys the rights to develop eight additional “Dixie Cream Donuts/Beautiful Brands International franchise brands.”
Those brands include:
- Rex’s Chicken
- Greenz Salads
- In The Raw Sushi
- Le Beau Rouleau
- Camille’s Sidewalk Café
- Blazing Onion Burger Company
- Top That Pizza
The suit alleges that EABG was not provided with a Uniform Franchise Offering Circular (UFOC) or a Franchise Disclosure Document (FDD) in connection with its purchase of the franchise rights of the named brands.
The lawsuit against Mr. Rutkauskas & BBI states:
EABG has learned that a third party has been sold franchise rights by Beautiful Brands that conflict with rights purportedly conveyed to EABG under the Agreement.
Beautiful Brands has disavowed material terms of the Agreement and has demanded additional compensation as a condition of fulfilling its obligations…
The foregoing acts and omissions of Dixie Cream, Beautiful Brands and Mr. Rutkauskas constitute actual or anticipatory breaches of the Agreement…
The foregoing acts and omissions constitute violations of the Oklahoma Business Opportunity Sales Act, the Washington Franchise Investment Protection Act and/or the Federal Trade Commission Franchise Rule…
The EABG lawsuit seeks rescission of the master franchise agreement, an award of EABG’s damages, an award of EABG’s costs and attorneys’ fees, and “additional relief as the Court deems just and equitable.”
Read the complaint here (PDF): EABG v. David Rutkauskas, Beautiful Brands et al
Related post: BEAUTIFUL BRANDS Partner Program: Behind the Hype
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