Big franchise expansion plans and a upcoming IPO may have prompted Stewart’s All American Corp., franchisor of “Stewart’s All American, to cross the line from overzealous to illegal in its franchise advertising and sales efforts. The company and its President Jim Laganke are being sued for fraud by the franchisee of two failed Stewart’s franchise locations.
(UnhappyFranchisee.Com) In the past, we’ve reported fraudulent ads and fraudulent franchise advertising accounts to the lead generation portal BizBuySell.com and its sister site BizQuest.com.
While BizBuySell.Com addressed some of the specific accounts we’ve reported, they allow the irreputable franchise sellers to re-register under new fake names and trick visitors into giving their personal information using ads for non-existent businesses.
Stewart’s All American franchise is one of those alleged to have used this technique, which involves advertising a supposedly established franchise location (along with bogus gross sales and cash flow representations) in the advertising section dedicated to the sale of existing, established franchise resales.
Stewart’s All American Franchise is Off to a Shaky Start
According to a July, 2017 story in the New Haven Register, Stewart’s All American had (at that time) 32 locations open, had leases signed for 10 new locations, and planned to open 25 additional locations in 2018.
A company press release dated April 10, 2017 states:
Stewart’s All American Corp., today announced that the company has signed a letter of intent for an initial public offering of its common stock with a FINRA member investment banking firm. Stewart’s intends to file a registration statement with the Securities and Exchange Commission later in the second quarter of 2017….
Proceeds from the offering will be used for opening new company training stores as well as expanding executive staff to take advantage of franchising on a national basis and for operating capital.
The lawsuit allleges that Stewart’s and its officers are guilty of violations of the New Jersey Consumer Fraud Act, Fraudulent Inducement, Negligent Misrepresentation, Violation of the New Jersey Franchise Practices Act, Breach of Contract, Violation of the Covenant of Good Faith and Fair Dealing.
Stewart’s officers and owners named as defendants in the lawsuit include Jim Laganke, Richard Rosen, Gary Kliesch, Lee Moutsados and Neil Venezia.
The full press release issued by the Plaintiff’s attorney is included below:
STEWART’S ALL AMERICAN SUED FOR DEFRAUDING FRANCHISE INVESTOR (PRESS RELEASE)
FREEHOLD, N.J. (10/9/2017) – A complaint seeking actual, compensatory, and punitive damages was filed in the Superior Court of New Jersey, Monmouth County against
Stewart’s All American, Corp., the franchisor of the “Stewart’s All American” brand of quick service restaurants and kiosks, as well as several of its officers, by one of its franchisees, A&S Freehold, LLC..
The six-count complaint claims that Stewart’s fraudulently misled the Plaintiffs into purchasing two units in the Stewart’s All American system.
The defendants are:
Stewart’s All American, Corp., a Nevada corporation with a principal place of business in Rutherford, New Jersey, franchisor of the Stewart’s Restaurant and Stewart’s All
American Grill branded restaurants;
Jim Laganke, an officer and owner of Stewart’s All American Corp.;
Richard Rosen, an officer and owner of Stewart’s All American Corp.;
Gary Kliesch, an officer and owner of Stewart’s All American Corp.;
Lee Moutsados, and officer and owner of Stewart’s All American Corp.; and
Neil Venezia, an officer of Stewart’s All American Corp.
The defendants operate businesses throughout New Jersey, Ohio, Pennsylvania, and West Virginia, with franchise locations in New Jersey, New York, and Pennsylvania.
The suit was brought on behalf of New Jersey incorporated entity A&S Freehold, LLC (“A&S”) and its owner/operator.
The Plaintiffs own and operate two franchise outlets: a kiosk in the Freehold Raceway Mall in Freehold, New Jersey and an in-line store in the food court of the Willow Grove Park Mall in Willow Grove, Pennsylvania.
The Plaintiffs are represented by the Red Bank, New Jersey franchise law firm of Marks & Klein, LLP.
The suit alleges Stewart’s All American Grill, together with its owners and officers, perpetrated a fraud upon the Plaintiffs by means of, among other things, written advertisements, which included intentionally false financial projections.
“A&S Freehold, LLC is taking this action because they were lied to, and as a result suffered significant monetary losses,” said Justin M. Klein, the Red Bank, New Jersey franchise attorney representing the plaintiffs. “The Defendants unfairly took advantage of this franchisee, and others, by intentionally inflating the financial information they disclose. The Plaintiffs were entitled to know the truth. Franchising done wrong is bad for all franchise companies.”
FROM: Marks & Klein, LLP FOR IMMEDIATE RELEASE
CONTACT: Justin M. Klein, Esq. (732) 747-7100 , Steven T. Keppler, Esq.
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tags: Stewart’s All American, Stewart’s All American franchise, Stewart’s All American Grill, Stewart’s All American lawsuit, Stewart’s All American Freehold Mall, Stewart’s franchise, Stewart’s lawsuit, A&S Freehold LLC, Jim Laganke, Richard Rosen, Gary Kliesch, Lee Moutsados, Neil Venezia, Stewart’s franchise complaints, Marks & Klein, attorney Justin Klein, attorney Steven T. Keppler