Craig Tractenberg of Fox Rothschild. Courtesy photoAvoiding Franchisor Failures: Be Cautious and Do Your Research
On Nov. 15, 2024, the California Department of Financial Protection and Innovation issued a stop order against Anchored Tiny Homes Franchising LLC from offering franchisees. The franchisor stopped operation just months after selling close to 100 franchises during the first two quarters of 2024. This follows the FTC injunction and damage award in January 2024 against the founder of BurgerIM for $48 million for defrauding hundreds of franchisees who never were able to open a franchise. How does this happen and how can we avoid losses in the future?
December 23, 2024 at 01:02 PM
6 minute read
On Nov. 15, 2024, the California Department of Financial Protection and Innovation issued a stop order against Anchored Tiny Homes Franchising LLC from offering franchisees. The franchisor stopped operation just months after selling close to 100 franchises during the first two quarters of 2024. This follows the FTC injunction and damage award in January 2024 against the founder of BurgerIM for $48 million for defrauding hundreds of franchisees who never were able to open a franchise. How does this happen and how can we avoid losses in the future?
Take three actual clients whose franchisors closed their business before the franchisees could even open. They each had a franchise consultant; a third-party lawyer and they keep asking themselves what did they miss? The truth is that despite their experience and sophistication, the clues of pending failure were really hard to see and may have even been ignored by their consultants and lawyers.
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Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
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