Is MAC TOOLS Stanley Black & Decker Selling Illegal Franchises?

Law Firm Marks & Klein LLP, of Red Bank, NJ, has fired another salvo at MAC TOOLS, INC., a Division of Stanley: Black & Decker, Inc., with a lawsuit filed today in the United States District Court for the District of Connecticut (Case 3:11-cv-01997 Walter v. Mac Tools, Inc.).

The lawsuit was filed by Marks & Klein on behalf of Dee C. Walter, a Mac Tools distributor in Minnesota.

The lawsuit alleges that while the business opportunity is marketed by Mac Tools as a “distributorship,” it meets the state and federal legal definitions of a “franchise.”

In selling a franchise to Mr. Walter without providing the information, disclosures and review time required in the sale of a franchise, the suit contends that Mac Tools violated Federal Trade Commission (FTC) Rule 436.

The suit also contends that the illegal sale of a franchise to Mr. Walter (as well as Mac Tools’ subsequent termination of said franchise) violates state-specific laws, including the Connecticut Unfair Trade Practices Act (“CUTPA”) and the Minnesota Franchise Act.

According to the suit, the lawsuit arose out of Mac Tools “willful failure to properly compensate” Mr. Walters for warranty and repair work required of all Mac Tools distributors.  Requiring services to be performed without compensation, as Mac Tools does, is a violation of the Fair Labor Standards Act 29 U.S.C. § 201 et. seq. (“FLSA”) the suit contends.

“As a result of Defendants ‘foregoing violations of state and federal law, Plaintiff seeks compensatory, punitive, statutory, and treble damages, as well as attorneys’ fees and costs from Defendant.

The Mac Tools Caution Flag is Out

The allegations that Mac Tools and Stanley Black & Decker are selling what amounts to an illegal franchise could have far-reaching consequences.

There are currently Mac Tools distributors in all 50 states.  If the allegations are proved correct, each distributor could claim they were sold an illegal franchise.

In October, 2011, a A federal judge has cleared the way for Marks & Klein, on behalf of the spouse of a former Mac Tools distributor, to proceed with fraud claims against the Mac Tools division of Stanley Black & Decker, Inc. in a New Jersey state court.  (Read MAC TOOLS Guilty of Franchise Fraud?)

In that suit, Marks & Klein contends that Mac Tools violated FTC (Federal Trade Commission) regulations by selling plaintiff Ms. Elba Maria Ceballo  and her husband a tool sales route as a “distributorship” when, in fact, it was an undisclosed “franchise.”

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