An investigation into Dental Fix RX franchisor Dental Fix RX, LLC and its CEO David Lopez by the Commonwealth of Virginia has resulted in a significant settlement on behalf of the company’s Virginia franchisees. Represented by attorney Robert M. Einhorn of Zarco, Einhorn, Salkowski, Brito, David Lopez’ company has agreed to extend to Virginia Dental Fix franchisees an offer of rescission of their franchise agreements as well as financial restitution. The Commonwealth of Virginia alleges that Dental Fix RX and its employees deceived franchise owners with misleading franchise revenue representations and failure to disclose material facts. The 11/20/19 Settlement Order is posted below.
And we reported on both Dental Fix’s participation in and VP Scott Mortier’s praise for a blatantly deceptive and misleading franchise advertising scheme here: Dr. John Hayes & His 12 Amazingly Deceptive Franchises
We reported Dental Fix CEO David Lopez’s assertion that their franchise failures were due to irresponsible franchisees who spend SBA loan proceeds like “Monopoly Money” here: Dental Fix RX CEO Blames Franchise Failures on Franchisees, SBA Loans
Now it’s the Commonwealth of Virginia’s turn to call out the franchise sales practices of David Lopez and Dental Fix RX.
Virginia Franchising Division Alleges Deceptive, Unlawful Practices by Dental Fix RX
The Commonwealth of Virginia Division of Securities and Retail Franchising has completed its investigation into the franchise marketing and sales practices of dental industry franchisor Dental Fix RX and determined that the company violated the Virginia Retail Franchising Act on multiple occasions.
On November 20, 2019, the Virginia franchise commission issued the settlement agreement (posted below) bearing the signatures of Dental Fix RX, LLC CEO David Lopez and attorney Robert Einhorn.
Davie, FL-based Dental Fix LLC offers and sells franchises providing dental equipment repair services to dentists in specific geographic territories and also sells new dental equipment.
Dental Fix LLC’s parent company is Dental Whale LLC of Sunrise, FL.
According to the 2019 Dental Fix RX Franchise Disclosure Document (FDD), the company’s executive team includes David Lopez (CEO, Strategy Leader), Brian LaBasco (Financial Leader), Scott V. Mortier (Sales Leader), Matthew J. Lau (Training Leader), and Carolyn Bolton (Operations Leader).
The FDD states that Dental Fix RX executives and board members also have (or had) positions with Dental Whale LLC, Tralongo, LLC, Darby Group Companies, Henry Schein, Inc., and Froots Franchising Companies, Inc.
Dental Fix Employees “Made Untrue Statements” About Potential Monthly Revenue
According to the Virginia Settlement Agreement:
…the Division alleges that Dental Fix further violated § 13.1-563 (2) of the Act when certain employees of Dental Fix made untrue statements of material facts or omitted material facts in the offer and sale of franchises to the Virginia Franchisees by making representations about the potential monthly franchise revenues that failed to include:
- the number of customers,
- the number of competitors within the franchise territories,
- the level of sales and service experience needed, and
- the level of training and dental experience needed to make the franchise successful.
Based on the investigation, the Division alleges the Defendants violated § 13.1-563 (2) of the Act by making untrue statements of material facts or omitting to state a material fact necessary in order to avoid misleading the offerees in the sale or offer to sell a franchise.
The Dental Fix Website Contained “Misrepresentations of Franchise Revenue Forecasts”
According to the Dental Fix Settlement Order:
The Division further alleges that from 2013 through 2016, Dental Fix’s website contained misrepresentations of franchise revenue forecasts that the Virginia Franchisees relied upon when purchasing the franchise in violation of § 13.1-563 (2) of the Act.
David Lopez Failed to Disclose His Prior Settlement For Selling Unregistered FROOTS Franchises in Virginia
It appears that the Virginia franchise regulators have had prior issues with CEO David Lopez, a fact he unlawfully failed to disclose to prospective Dental Fix RX franchisees.
According to the Dental Fix FDD, David Lopez has served as Chief Executive Officer and President of Froots Franchising Companies, Inc. in Davie, Florida from 2014 to present.
The Dental Fix RX Settlement Order states:
The Division alleges the Defendants failed to disclose in the franchise disclosure document that Lopez was chief executive officer of a franchise [FROOTS] that entered into a settlement with the Commission (SEC-2008-00105)1 as required under § 13.1-563 (2) of the Act.
Froots appears to be a near-defunct juice & smoothie franchise chain that reportedly had 49 domestic franchises in 2009. All but 18 FROOTS franchises had closed by 2014, according to Entrepreneur. While the Froots website currently lists 11 Froots U.S. locations, it appears that fewer than 10 are still open and operating. Several locations listed as OPEN on the Froots website (Windermere, FL, Miami, FL, Mesquite, TX) appear to actually be closed.
In 2008, the Commonwealth of Virginia investigated & fined FROOTS for selling unregistered franchises in their state. David Lopez signed that Settlement Order as well, but failed to disclose SEC-2008-00105 (See below) in the litigation section of the Dental Fix FDD.
Dental Fix Virginia Franchisees to be Offered Rescission, Payments
The Settlement Order does not require Dental Fix RX, LLC or David Lopez to either admit or deny the allegations. However, it obligates Dental Fix RX to offer each of the six (6 ) franchisees a rescission (nullification) of their franchise agreements, and to pay each a significant sum:
As a proposal to settle all matters arising from these allegations, the Defendants have made an offer of settlement to the Commission wherein the Defendants will abide by and comply with the following terms and undertakings:
(1) The Defendants will make an offer of rescission (“Offer”) to the Virginia Franchisees within seven (7) days of the entry of this Order. The Virginia Franchisees will have thirty (30) days to accept the Offer.
If the Virginia Franchisees accept the Offer, the Defendants will pay each Virginia Franchisee who accepts the Offer the particular amount referenced for such Virginia Franchisee on a previously agreed upon payment schedule within thirty (30) days of such acceptance and the execution by each accepting Virginia Franchisee of a legal release using a form release (“Release”).
The maximum amount of restitution that shall be owed by Defendants is One Hundred Twenty-two Thousand Five Hundred Dollars ($122,500) if all five current Virginia Franchisees accept the Offer.
In addition, the Defendants shall pay Twelve Thousand Five Hundred Dollars ($12,500) in restitution to a former Virginia Franchisee within thirty (30) days of the execution of a Release by this former Virginia Franchisee.
Dental Fix RX Agrees to Pay an Additional $17,000 for Penalties & Costs
Additionally, Dental Fix RX must pay $17,000 in penalties and cost reimbursement to the Commonwealth of Virginia:
(4) The Defendants will pay to the Treasurer of Virginia, within five (5) days after the entry of this Order, the amount of Twelve Thousand Dollars ($12,000) in monetary penalties;
(5) The Defendants will pay to the Treasurer of Virginia, within five (5) days after the entry of this Order, the amount of Five Thousand Dollars ($5,000) to defray the costs of
investigation in this matter; and
(6) The Defendants will not violate the Act in the future.
Dr. John Hayes & His 12 Amazingly Deceptive Franchises (featuring Dental Fix)
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TAGS: Dental Fix RX, David Lopez, Dental Fix RX franchise, Dental Fix franchise opportunity, Dental Fix franchise complaints, Dental Fix franchise, Dental Fix franchise violations, Dental franchise, Dental Whale, Dental Whale LLC, Tralongo, LLC, Darby Group Companies, Henry Schein, Inc., Froots Franchise, Brian LaBasco, Scott V. Mortier, Matthew J. Lau, Carolyn Bolton, Robert M. Einhorn, Zarco, Einhorn, Salkowski, Brito, P.A., Virginia Franchise Regulation, Virginia Franchise Settlement