Franchise And Antitrust

Molosky & Co. acted as co-counsel and recovered $1.5 million for our franchisee clients based upon the franchisers wrongful conduct and proscribed actions.

Molosky & Co. acted as co-counsel for a case involving 30 plaintiffs and defendant company that sold franchisees rust proofing and detailing chemicals and products. Defendant stated its goals were to offer franchisees competitive prices, uniformity, quality, and technical and administrative support. On the contrary, defendant imposed high royalties, unfair mark-ups, and required franchisees to purchase only defendant’s products. Defendant failed to disclose the sale of its chemical plant including all formulas, patents, recipes, and developing technology and at the same time, allowed a tooling patent to lapse. Defendant subsequently acquired products from a secondary supplier and represented its now renamed product to be the same. However, the product was inferior and caused numerous problems including equipment failure, product failure, and adverse health effects on franchisee employees. Defendant developed a third product it also claimed was identical to the first product. Despite franchisee’s expressed health and safety concerns, Defendant continued the product and added additional fees, increased royalties and cost mark-ups, increased insurance costs, imposed further restrictions, and removed guaranteed territory provisions. Franchisees sued defendant for violation of franchise investment law, breach of contract, antitrust violations, fraud, negligence, breach of product liability, breach of express or implied warranty and fitness for a particular purpose. After three weeks of arbitration, our client received an award of nearly $1.5 million.