Franchisor Marketing » Legal Issues

Contours Express Franchise Owners Allege Fraud, Breach of Contract

Sean — Tue, 25 Sep 2007 19:35:36 +0000

Contours Express is now the #2 Women’s circuit training gym behind Curves. They claim to be the the second fastest growing with over 600 locations worldwide in 20 countries, the most affordable and the most effective.

However, nearly 60 Contours Express franchise owners don’t agree with the rosy picture painted in the marketing materials. According to a report on franchise discussion site FranchisePick.Com, hey have filed a petition for damages in the Circuit Court of St. Louis County against AABB FITNESS HOLDINGS, INC. (formerly known as CONTOURS EXPRESS, INC.), CONTOURS EXPRESS, LLC, and franchise broker JAMES E. HOGG (dba Franchise Visions), alleging fraud and breach of contract.

Among the numerous complaints, each of the plaintiffs allege that the Contours Express UFOC dramatically understated the cost of building out and operating a location, that the owners of Contours Express and their representatives also made “earnings claims” or verbal pitches regarding profitability, and that the typical franchisee’s working capital was exhausted soon after they opened their location and most could not service a debt load of 50 to 100 percent greater than they had been led to believe. The suit also alleges that Contours Express provided little or no support to the franchisees and once the stores were opened, very few of the franchisees were ever visited by representatives of the franchisor.

READ THE ARTICLE HERE: Franchise Dreams Becoming Nightmares for Many Fitness Club Owners

Is Curves for Women a Good Franchise Investment?

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The Contours Express Second Amended Complaint for Damages document, Uniform Franchise Offering Circular (UFOC) and other documents are available in the FranBest.Com franchise document library.

Discover the best coffee franchise opportunities at FranBest’s Coffee Franchise Guide

Where to promote your top new franchise? Start with Top New Franchises.

Rhonda Sanderson on Handling Negative Blog Postings

Sean — Thu, 01 Feb 2007 00:12:08 +0000

After criticism of Cuppy’s Coffee & More levelled by irate, blog-wielding Java Jo’z licensees (who claimed the new corporation and name was a ploy to escape prior obligations) blew up into a PR nightmare, the Cuppy’s folks called in Rhonda Sanderson and Sanderson & Associates. Tacked on to the first Sanderson release were some good tips on how to keep such a mess from occuring in the first place:

FIVE WAYS TO AVOID THIS SITUATION!

When such a transaction takes place, produce via a professional source a very thorough and concise press release explaining the deal.
If facts and/or dates are confusing, put together a precise timeline of events with bullets representing each step.
Make sure your facts are consistent and delivered by a spokesperson who is preferably an officer of the company.
Do not “dodge” questions. Answer them in a very clear and concise manner. If there are matters you choose not to discuss, have an answer ready such as “we are not prepared to discuss that matter at this time”. Then offer to get back to the reporter eventually with a proper answer.
Once negative items are revealed in the press, or accusations made by others, answer these with ONE clear statement stating your position and the facts.
Do NOT get into a “match” with the accusers, constantly going back and forth making claims and denials. One dignified statement should suffice. After that if it truly becomes an issue of libel or slander, it is time to speak with your legal counsel.

READ THE WHOLE STORY HERE

Subway(R) Franchisee Association Files Suit

Sean — Wed, 19 Jul 2006 16:51:49 +0000

The North American Association of SUBWAY Franchisees, Inc. has filed suit against Doctor’s Associates Inc. (DAI), the franchisor of the sandwich restaurant chain. Click here to get the story.

Subway Ad Fund Dispute Prompts Franchisee Lawsuit

Sean — Wed, 28 Jun 2006 17:20:58 +0000

Subway franchisees filed a lawsuit against the restaurant chain this past Monday, disputing that a new franchise agreement will compromise their control over a $500 million advertising trust fund. Read the full news article here.

A press release was also filed by the disputing franchisees.

Cereality Snaps. Competition Crackles. Loyal Students Pop.

Sean — Thu, 01 Jun 2006 22:39:21 +0000

The founders of Cereality, a cereal cafe currently in the process of franchising, are dealing with a heaping spoonful of competitive reality. Apparently, they don’t consider the perceived imitation by some very similar restaurant concepts as a sincere form of flattery. They consider it trademark and patent infringement.

So they’re suing.

The legal tussle caught the attention of Time magazine which has included an article about the cereal smackdown in its latest issue. Click here to read the article. We’d like to get your take on this topic. Is Cereality overreacting? Are the competitors getting a free ride after Cereality has already done all of the heavy lifting? Are protesting college students justified in accusing Cereality of heavy-handedness?

And isn’t it poetic justice that it all began in a place named Battle Creek?

Ask the Experts: Advertising franchises as employment opportunities

Sean — Thu, 25 May 2006 17:14:43 +0000

Dear Franbest: We have a low-investment franchise opportunity. We target sales professionals as franchisees. My franchise sales director had a great thought: run sales employment ads on Monster.Com and Careerbuilder.com, and when prospects inquire, tell them for a small investment they can own, not just work for, a business. What do you think?

Sean Kelly responds: Great thought. Real bad idea. While the Franchise Rule doesn’t tell franchisors specifically where to advertise, the Federal Trade Commission issued an Informal Staff Advisory Opinion in January, 2006 stating that ”…a false offer of employment where no bona fide job exists that is made for the purpose of luring consumers into purchasing a franchise or other opportunity is a deceptive practice in violation of Section 5″ of the Franchise Act. That darn honesty continues to be the best policy, it seems. If you advertise on those sites, advertise a franchise opportunity, not employment. (See the FTC staff advisory on franchise advertising on employment sites by clicking here)