NY Bagel Café franchise parent New York Bagel Enterprises Inc. had its NJ corporate status revoked in 2011 for not filing annual reports. Franchisee plaintiffs in a 2013 franchisee lawsuit asserted that since New York Bagel “is not an authorized business entity in any State,” they were sold a franchise that “that did not and could not exist at the time the Franchise Agreement was signed” and demanded their $29,500 franchise fee be returned.
(According to this document New York Bagel Enterprises Corporate Status Report, it remains suspended “pending reinstatement.”)
A civil lawsuit Albarqawi v. New York Bagel Enterprises, Inc., filed in NJ District Court, asserts that because New York Bagel Enterprises wasn’t registered to do business, they were defrauded, their franchise agreement was invalid, and they deserved their money returned.
NY Bagel Took Their Franchise Fee, Then Allegedly Stopped Communicating
The Albarqawi franchisees claimed, in a civil lawsuit, that they paid a $29,500 franchise fee to open a NY Bagel Café franchise in the Philadelphia area.
Once the company had the franchisees’ money, communication ceased and the franchisees were not able to get ahold of New York Bagel Enterprises or CEO Joe Smith.
After the franchisee’s demanded the return of the $29,500.00, “the Defendants have failed and refused to return the money or take any other action in furtherance of the franchise agreement.”
The civil complaint asserted that
On or about November 2, 2011 Plaintiffs entered into a “Franchise Agreement” with NYB. See agreement attached hereto as Exhibit “A”.
Defendant, NYB is not an authorized business entity in any State.
NYB was originally formed by Smith on or about March 10, 2008 as a New Jersey Corporation. See Certificate of Inc, (Profit) attached hereto as Exhibit “B”.
However, New Jersey revoked NYB’s corporate status on October 16, 2011. See [New York Bagel] revocation report attached hereto as Exhibit “C”.
Smith continued to operate his scheme using the corporate name New York Bagel Enterprises, Inc.
Plaintiffs paid the defendants an initial Franchise Fee of $29,500.00 to own and run a NY Bagel shop that Defendants claimed to be the Franchisors…
The Plaintiffs were not able to have any meaningful contact with the Defendants to set up an actual location for the bagel shop once the Plaintiffs paid the $29,500.00 Franchise Fee.
Defendants failed and refused to respond to the Plaintiffs…
Defendants are not authorized to transact business within the Commonwealth of Pennsylvania…
Plaintiffs have demanded the return of the $29,500.00, however the Defendants have failed and refused to return the money or take any other action in furtherance of the franchise agreement.
By reason of the lack of authority to transact business in the State of New Jersey the Franchise Agreement has no force or effect…
NY Bagel Complaints About Unreturned Franchise Fees
MA resident Janet Conlon provided us with an email exchange in which NY Bagel franchise salesman Dennis Mason told the Conlons her franchise fee would be refunded if she failed to get funding.
She failed to get funding but NY Bagel wouldn’t refund her $25,000 (Read NY BAGEL CAFÉ Franchise a Scam? MA Woman Says Yes).
PA resident Jeanette Mora won an arbitration case for return of her $29,500 franchise fee after she could not get financing (Jeanette Mora v. New York Bagel Enterprises, Inc., et al., American Arbitration Case No. 18 114 e 730 10).
New York Bagel Enterprises Inc. was ordered to repay Ms. Mora at the rate of $1,000 per month but it’s not known whether they did.
Have you paid NY Bagel Café a franchise fee but never opened a franchise? We want to hear from you.
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Albarqawi v. New York Bagel Enterprises, Inc. and Joe Smith
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