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Posted on Thu, 11/3/2011 - 03:38 PM by
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When is an earnings claim not an earnings claim? When made on FranchiseGator or to the SBA. Mark Meade purchased a Kiddie Academy franchise. Things did not go well, and he ended up bankrupt. Meade brought a state court suit and a federal suit against Kiddie Academy, alleging that they had made earnings claims and provided false information to enable him to get an SBA loan from CIT. Meade even attached a printout from FranchiseGator, and attached earnings projections (on Kiddie Academy stationery) as pages 30 and pages 37 thru 40 in his Exhibits (pdf). The franchisor attorneys responded with a Memorandum of Law (pdf) in which they noted that the Franchise Agreement disclaims any warranty or guarantee, express or implied as to potential volume, profits earnings or success of the business venture contemplated by this Agreement The attorneys also noted that there was an arbitration provision and a one-year time limit for bringing any claims. On October 25, the federal judge dismissed Mark Meade's pro se lawsuit. Would Meade have gotten a different result using an experienced attorney? Perhaps not. But the court pleadings are a cautionary lesson to anyone who thinks that franchisors can be held to account for an earnings claim made to the SBA. And the court pleadings suggest that the SBA investigation of Banco Popular may have missed a much more significant lender, not to mention other franchisors. There is a reason that FranchiseGator crocodile in the suit is grinning. Mark Meade v. Kiddie Academy Domestic Franchising, D. New Jersey, October 25, 2011 For Mark Meade: pro se For Kiddie Academy: Craig Tractenberg, Nixon Peabody (New York)
MORE NEWS FROM BLUEMAUMAUGoing Green Costs Franchisees Much GreenBeing forced to buy imaginary products is just one of the nonsensical results of government policy affecting franchisors and franchisees. Good News, U.S. Hotel Profit RecoveryAccording to the new PKF Trends survey, the U.S. lodging industry produced a 12.7% profit growth in 2011. 80.5% of participating hotels enjoyed an increase in total revenue while 72.3% achieved growth in profits. The recently released 2012 edition of Trends presents data from a sample of nearly 7000 financial statements of United States hotels. For the Trends report, hotel profits are defined as net operating income (NOI) before deductions for capital reserves, rent, interest, income taxes, depreciation and amortization. Federal Court Invalidates "Quickie" Union Election Rule, For NowOn May 14, 2012, the U.S. District Court for the District of Columbia set aside a controversial final rule of the National Labor Relations Board ("NLRB") that was designed to make it easier and faster for unions to hold organizing elections. Chamber of Commerce of the United States of America, et al. v. NLRB, Case No. 11-02262 (D.D.C. May 14, 2012). Business groups are hailing the decision, but the celebration may be short lived. Because the ruling was essentially decided on a procedural point, the NLRB may seek to resurrect the rule, which creates a very short window for union elections, and leaves employers with little time to react to an organized union campaign. Field Representatives Coach Franchisees to Victory
A good coach will make his players see what they can be rather than what they are. "Live For Now" Stars Dead IconPepsiCo announced aggressive marketing plans, boosting ad spending by 20% and bringing back deceased pop icon Michael Jackson as part of a worldwide campaign. RELATED SMALL BUSINESS NEWSHot Franchise Topic: Getting a LoanIt seems like the entire franchise industry is focused on funding, and with good reason; franchise loans are still a bit challenging to secure. Production Agreements of a Supply Chain; The Other End of the RainbowMany years ago I was pulled away from my usual assignments to do a major product production tolling agreement between two of America’s larger food companies. It was a stroke of luck for me because it provided something new for my interest in multivariate risks management. Since then I have prepared many multivariate high risk agreements, and it is always an enjoyable as well as remunerative adventure. When you think of every brand as a franchise in itself, it fits perfectly into my customary practice of managing franchise relationship disconnect issues. Know the Benefits of Application Protection in Any OrganizationIt is very important to ensure proper method of data availability on time. In that case, replication needs to be adopted in order to manage current backup information and system settings so that it can deliver fast restoration of data after any kind of disaster. As we know that it is not possible to avoid any kind of natural disaster or human error; but it is always mandatory to take proper measures for application protection, so that users do not face any kind of problem related to data loss. And, data replication is found to be the only way to remove or minimize the time lapse experienced in these situations. Pepsi Wants a New GenerationEverything the light touches this year is rapper Nicki Minaj’s kingdom. From the Billboard Top 100 to the Super Bowl half-time show, and her reign is about to expand to a major role in a new ad campaign for Pepsi. A Business Plan Should be a Requirement for Buying a FranchiseVisit any website that offers advice on starting a new business or expanding an existing one and you’ll find articles and advice on the importance of writing a business plan. There are tips ranging from how to write an effective business plan to the reasons why it’s so important. |
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