PRIMOHOAGIES Franchise Complaints: Nicholas Papanier, PrimoHoagies franchisor and owner of PrimoHoagies’ food supplier Nellie’s Provisions, served prison time and house arrest for tax fraud last year.
(UnhappyFranchisee.Com) Nicholas Papanier, PrimoHoagies franchisor and owner of PrimoHoagies’ food supplier Nellie’s Provisions, served prison time and house arrest for tax fraud last year. Hopefully, Papanier’s federal conviction for fraud and his current probation is being disclosed to prospective franchisees in the PrimoHoagies Franchise Disclosure Document (FDD).
We also hope that the financial arrangement between PrimoHoagies and Nellie’s Provisions are fully disclosed, as the relationship between the franchisor and required source of supplies is important to consider while performing due diligence.
(Note that PrimoHoagie’s attorney Craig Tractenberg disputes the U.S. Attorney’s characterization of the role PrimoHoagies played in Nick Papanier’s tax fraud conviction. See PRIMOHOAGIES Owner of Nellie’s Provisions Pleads Guilty to Tax Fraud [Updated])
Are you familiar with PrimoHoagies, Nick Papanier and Nellie’s Provisions? Please share your experience with them – positive or negative – below.
PrimoHoagies and Nick Papanier are also invited to share their views… and a copy of their FDD for our review.
We first learned of the PrimoHoagies and Nick Papanier’s malfeasance on the BlueMauMau.org published the story Primo Hoagies Franchisor Goes to Prison last March.
We read the Press release on the US Department of Justice website: PRIMOHOAGIES Owner of Nellie’s Provisions Pleads Guilty to Tax Fraud.
When we read about franchisor Nick Papanier being convicted of tax fraud, we weren’t so much concerned about Uncle Sam not getting his cut of the booty.
No, our alarm bells were ringing because of
1) the fact that the franchisor and the required supplier had the same owner,
2) Mr. Papanier allegedly “caused” franchisees to buy from his own supply company, and
3) Mr. Papanier’s admission to tax fraud raises some, shall we say, ethical concerns.
These three factors can be a deadly combination for franchisees, as evidenced by the many franchise failures and ultimate collapse of Quiznos, mostly due to a franchisor who double-dipped by selling required supplies and food items to franchisees, and charged royalties on sales.
We are not saying that Papanier’s tax fraud case contained evidence that PrimoHoagies franchisees were adversely affected by PrimoHoagie’s relationship with Nellie’s Provisions. We did not see any allegations of overcharging or unreasonable purchase requirements. We are just saying that, in general, franchisor ownership of a required source of supply has been the source of much tension and litigation with franchisees in the past, and is a factor prospective franchisees should consider when performing their due diligence.
This June 30, 2013 story from the Philadelphia Inquirer states Nick Papanier made more than a million dollars in just three years, and tried to avoid paying taxes on half of it:
Prison for tax evasion for Primo Hoagie franchiser
The owner of Primo Hoagie’s franchising business will spend four months in prison for tax evasion, a Camden federal judge ruled Friday.
In a plea bargain designed in part to avoid prosecution of his wife and save his son’s house, Nicholas Papanier Sr., 57, of Sewell, admitted that he avoided paying taxes totaling $189,656 in 2006, 2007, and 2008.
Papanier, who also owned Nellie’s Provisions in Gloucester City, often received cash payments from Primo Hoagie’s franchisees when they bought salami, provolone, and other deli items from him.
Over three years, he made more than a million dollars, but paid taxes on only about half of it, according to court documents.
After Papanier gets out of prison, he must serve four months of house arrest, followed by 20 months of probation, the judge said.
U.S. District Judge Noel L. Hillman also ordered Papanier to forfeit $484,010 the federal government seized from his bank accounts as part of its investigation.
In banking that money in his personal accounts, Papanier made small deposits designed to avoid reporting requirements, the government said.
Papanier pleaded guilty to one count of tax evasion March 22. His lawyer was Ronald Warren of Haddonfield. Assistant U.S. Attorneys Jason M. Richardson and Jordan Anger prosecuted the case.
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