Posts Tagged ‘franchises’

CleanNet exploits franchisees: suit

May 18, 2009

“CleanNet of New England target Spanish- and Portuguese-speaking franchisees by selling commercial cleaning franchises through misrepresentations, breaching the agreements, interfering with their businesses, and overcharging them for services, a class action claims in Middlesex County Court.”

Complaint courtesy Courthousenews

Papa Murphy’s sues vendor for $20 million

February 3, 2009

The pizza franchise decided to purchase a point of sale system to replace the electronic cash register for its stores.  Papa Murphy’s expected to save $9 million on labor, cost of goods and marketing annually.  However, according to the complaint, there were a large number of glitches that transformed the advantages of the new system into nightmares with customers waiting in long lines and in many cases not returning.  Finally, after years of struggling with the system, Papa Murphy terminated the contract with Partech and sued them in Washington State federal court.

This is a useful complaint for competitive intelligence into the world of fast-food franchises.  I learned that Papa Murphy’s owns a significant number but low percentage of its own restaurants and that many franchisees own between 3 and 10 stores.  One of the touted benefits to the new system was that it could track through the bar code the origins of the many coupons used to purchase Papa Murphy pizzas and this would help them with their marketing efforts.  The complaint explains that Papa Murphy makes about 75% of its sales on coupon purchases.

Complaint courtesy Courthousenews

Quiznos loses meaty case to franchisee

January 8, 2009

Quiznos launches a campaign against Subway where they claim to provide more than twice the meat on its Prime Rib Chilly Cheesesteak (just writing that makes me feel stuffed) and to enforce their claim, they send mystery shoppers to order the sandwich at Quiznos franchises.  

This happened at a Pennsylvania franchise and when the shopper weighed the meat (did he bring a tiny scale?) it was only 4 ounces and not the required 4.5.  As a result these franchisees along with three hundred other franchises were sent termination notices requiring they shut down their stores.  BUT, these three hundred franchise were sent electronic notices that told them if they responded to an email address at the bottom of their “termination notice” they would get another email telling them they weren’t really terminated if they passed the next inspection.

Well, Mr. Piotrowski didn’t email but called the General Counsel and when Mr. P didn’t hear back, he emailed threatening to hold a press conference.  Quiznos didn’t take kindly to this and filed a lawsuit saying that had the franchisee had “materially damaged the brand.”

The judge didn’t like Quiznos behavior in this matter one bit and said so:

“I find that this whole charade of ‘terminating’ and ‘defaulting’ franchisees who failed the field test was just that – a charade – driven not by Quiznos’ genuine concern about whether its franchisees were making sandwiches to spec, but rather by its overriding public relations desire to be able to proceed with its national advertising campaign targeting Subway.”

The judge awarded the franchisees almost $400,000 for wrongfully breaching the Quiznos brand.  

Remind me, just who damaged the Quiznos brand?