tag:blogger.com,1999:blog-6884823764204267007.post7410051291050618088..comments2018-09-25T18:42:53.302-07:00Comments on Behind The Stone: The Great Franchising RobberyEd Ramseyhttp://www.blogger.com/profile/05621586867791364997noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-6884823764204267007.post-27392482225540958812010-12-30T08:03:51.195-08:002010-12-30T08:03:51.195-08:00Yes! Ed! There is no doubt that franchise law is s...Yes! Ed! There is no doubt that franchise law is stacked in favor of the franchise systems. Thirty years of case law that supports the goal of the FTC Franchise Rule to support the franchise systems and those "lucky" franchisees who survive in the systems can't be overcome. Those who fail must be discredited and silenced to protect the systems. <br /><br />Unfortunately, the qualifications to be a franchisor and to sell franchises under the FTC Franchise Rule and the State FDD's have been set very low and franchisors need provide no proof that they are selling anything of value to prospective franchisees. <br /> <br />The courts appear to rule that it doesn't matter whether or not a franchise has any value or not for the buyers as long as the contract itself spells out that no success or profits have been promised by the franchisor to the franchisee in the written contract. <br /> <br />Hopefully, CNBC will not just fold up their tent and go away and will stand behind their coverage of Cold Stone's treatment of their franchisees.<br /><br />This is the first time in many years that BIG media has taken a close look at franchising but the reporter hasn't made his name in writing about general business matters. His bio indicates he writes primarily about the Sports World and business, etc.. <br /><br />When all three branches of government cooperate to promote the sale of franchises without full disclosure of the risk and ignore the flaw in the FTC Rule that enables churning, encroachment, exploitation, etc.. of good faith franchisees, we need some big media entity like CNBC to dare to tell the truth. <br /><br />But, will any big media entity take on the status quo and will any reporter be allowed to tell truth that would slow the sale of franchises?Carol Crosshttps://www.blogger.com/profile/07209388385525349594noreply@blogger.comtag:blogger.com,1999:blog-6884823764204267007.post-46055610604781311732010-12-29T09:04:16.916-08:002010-12-29T09:04:16.916-08:00I know that the court ruled on behalf of Cold Ston...I know that the court ruled on behalf of Cold Stone.....Cecil has not made a secret of the rulings against him. But you failed to mention the complete text of what the judge said in his ruling, which was basically that had Cecil had a basis for bringing suit against Cold Stone, just not under the motions of the current counter suit. Also, the ruling against Cecil just confirms my contention that the franchise laws do nothing to protect the franchisee from unfair practises of the franchisor and its agents! And due diligence is impossible, when the information needed to comply with due diligence is lacking, or the information given by the franchisor is highly suspect as being accurate!Ed Ramseyhttps://www.blogger.com/profile/05621586867791364997noreply@blogger.comtag:blogger.com,1999:blog-6884823764204267007.post-36174212381545825992010-12-28T19:33:59.904-08:002010-12-28T19:33:59.904-08:005
II.
Next, the Rolles contend that the district c...5<br />II.<br />Next, the Rolles contend that the district court erred in denying their motion<br />for leave to amend their pleadings to add a antitrust counterclaim. We review the<br />district court’s denial of that motion for abuse of discretion. See Green Leaf<br />Nursery v. E.I. DuPont De Nemours and Co., 341 F.3d 1292, 1300 (11th Cir. 2003).<br />Because the Rolles filed their motion six weeks after the scheduling order’s<br />deadline for amending pleadings, they were required to show “good cause” for their<br />delay. See Fed. R. Civ. P 16(b); Oravec v. Sunny Isles Luxury Ventures, L.C., 527<br />F.3d 1218, 1231–32 (11th Cir. 2008). Although the Rolles argue that their delay<br />was caused by Cold Stone’s alleged misconduct during discovery, they admit that<br />they had a basis to allege their antitrust claim before the discovery squabbles began.<br />We are therefore convinced that the district court did not abuse its discretion in<br />finding that the Rolle’s excuse did not amount to good cause for their delay. We<br />affirm the district court’s denial of the Rolles’ motion to amend their pleadings.<br />III.<br />The Rolles also contend that the district court erred in its jury instruction<br />regarding the offset due on the promissory note based on the collateral recovered<br />from the Rolles’ franchises. The district court has “wide discretion as to the style<br />and wording employed in its [jury] instruction.” McCormick v. Aderholt, 293 F.3d<br />6<br />1254, 1260 (11th Cir. 200) (citation omitted). “We will only reverse the lower<br />court because of an erroneous instruction if we are left with a substantial and<br />ineradicable doubt as to whether the jury was properly guided in its deliberations.”<br />Id. (internal quotation marks and citation omitted). Here the district court instructed<br />the jury to reduce the amount due on the promissory note based on the reasonable<br />market value of the collateral that Cold Stone recovered. The Rolles argue that<br />because Cold Stone did not provide them with notice of the sale of the collateral at<br />issue, there is a rebuttable presumption that the collateral seized satisfies the full<br />value of the debt owed, and that the district court should have instructed the jury<br />about that presumption. We disagree.<br />The presumption is rebuttable, and the district court properly found that it<br />was rebutted by proof that the note covered more than just the collateral at issue;<br />that the Rolles had removed a significant amount of equipment from one of the<br />stores before it could be recovered by Cold Stone; and that the equipment had<br />depreciated in value over time. The district court was not required to leave the<br />determination regarding the presumption up to the jury when the evidence in this<br />case was so overwhelming. The district court instructed the jury to determine the<br />reasonable value of the collateral that was recovered by Cold Stone and to offset the<br />amount due on the promissory note by that amount. That instruction was correct.<br />7<br />We are not “left with a substantial and ineradicable doubt” that the jury was<br />misguided. Id.<br />IV.<br />The Rolles’ motion for a directed verdict fails for a similar reason. They<br />contend that Cold Stone disposed of the collateral in a commerically unreasonable<br />manner, and for that reason the collateral should be presumed equal to the total<br />amount of the debt owed. That presumption, however, is also rebuttable. See<br />Weiner v. Am. Petrofina Mktg. Inc. 482 So. 2d 1362, 1365 (Fla. 1986). Because<br />Cold Stone proved that the “fair market value of the collateral was less than the<br />debt,” it was entitled “to recover a deficiency judgment in an amount equal to the<br />total debt minus the fair market value of the collateral as ultimately determined.”<br />Id. The district court properly denied the Rolles’ motion for a directed verdict.<br />AFFIRMED.<br />8Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6884823764204267007.post-10603291703766816912010-12-28T19:33:38.270-08:002010-12-28T19:33:38.270-08:00A.
The first counterclaim alleges that Cold Stone ...A.<br />The first counterclaim alleges that Cold Stone violated the Florida Francise<br />Act. The Rolles contend that Cold Stone violated the FFA by misrepresenting the<br />franchise’s “prospects or chances for success.” Fla. Stat. § 817.416(2)(a). That<br />contention fails because the Rolles did not submit evidence creating a genuine<br />issue of material fact that they relied on any alleged misrepresentations made by<br />Cold Stone. Although the Rolles argue that they do not need to show reliance, that<br />argument is contrary to Florida law. See Travelodge Int’l Inc. v. E. Inns, Inc., 382<br />So. 2d 789, 791 (Fla. 1st DCA 1980) (holding that recovery under the FFA<br />requires proof of intentional misrepresentations by the franchisor that “were relied<br />on by the franchisee to his determinant”). On the record in this case, we agree with<br />the district court that the Rolles cannot establish the requisite detrimental reliance<br />3<br />necessary to recover under the FFA. Cold Stone’s franchise agreement included a<br />detailed disclaimer and explanation regarding the risks of owning and operating a<br />franchise and encouraged franchisees to conduct an independent investigation of<br />their prospects for success. The franchise agreement did not promise that the<br />Rolles would profit. The evidence shows beyond dispute that the Rolles<br />understood the agreement and that they also conducted an independent<br />investigation of their prospect for success. The district court properly granted<br />summary judgment to Cold Stone on this counterclaim.<br />B.<br />The district court also granted summary judgment for Cold Stone on the<br />Rolles’ counterclaim under the FDUTPA. The FDUTPA provides that “unfair<br />methods of competition, unconscionable acts or practices, and unfair or deceptive<br />acts or practices in the conduct of any trade or commerce are hereby declared<br />unlawful.” Fla. Stat. § 501.204(1). This claim is somewhat different from the<br />Franchise Act claim because the FDUTPA does not require a plaintiff to prove<br />actual reliance on the alleged conduct. See State, Office of the Att’y Gen. v.<br />Commerce Comm. Leasing, LLC, 946 So. 2d 1253, 1258 (Fla. 1st DCA 2007).<br />But the plaintiff must prove that “the alleged practice was likely to deceive a<br />consumer acting reasonably in the same circumstances.” Id. The alleged conduct<br />4<br />at issue does not meet that standard.<br />Viewing the evidence in the light most favorable to the Rolles, two other<br />franchisees that appeared to be acting as agents of Cold Stone made statements to<br />the Rolles about their prospects for success in operating a Cold Stone Creamery<br />store. Those statements must be viewed in light of the circumstances as a whole,<br />however. Some time after the alleged misrepresentations were made, the Rolles<br />were given and reviewed Cold Stone’s franchise agreement. That agreement<br />clearly states that the Cold Stone franchisees did not have the authority to make<br />representations on Cold Stone’s behalf about profit margins. The agreement also<br />provides a detailed discussion of financial information, including the average gross<br />revenues from Cold Stone franchises, but notes that “[a]ctual results vary from unit<br />to unit, and we cannot estimate the results of any particular Franchise.” It further<br />warns that “[i]f you rely upon the [provided] figures, you must accept the risk of<br />not doing as well.” As we have noted, the agreement also encourages potential<br />franchisees to “conduct an independent investigation of the cost and expenses you<br />will incur in operating a Cold Stone Creamery,” which the Rolles did. Under these<br />circumstances, it is not likely that a consumer acting reasonably would have been<br />deceived by the alleged statements made by the two Cold Stone franchisees.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6884823764204267007.post-3741822496376800402010-12-28T19:32:43.616-08:002010-12-28T19:32:43.616-08:00IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEV...IN THE UNITED STATES COURT OF APPEALS<br />FOR THE ELEVENTH CIRCUIT<br />________________________<br />No. 08-15335<br />Non-Argument Calendar<br />________________________<br />D. C. Docket No. 07-00303-CV-3-RH/WCS<br />COLD STONE CREAMERY, INC.,<br />an Arizona corporation,<br />Plaintiff-Counter-<br />Defendant-Appellee,<br />COLD STONE CREAMERY LEASING COMPANY, INC.,<br />Plaintiff-Appellee,<br />versus<br />LENORA FOODS I, LLC,<br />a Florida limited liability company,<br />LENORA FOODS II, LLC,<br />a Florida limited liability company,<br />LENORA FOODS III, LLC,<br />a Florida limited liability company,<br />CECIL D. ROLLE, individually,<br />JACQUETTE ROLLE, individually,<br />Defendants-Counter-<br />Claimants-Appellants.<br />________________________<br />Appeal from the United States District Court<br />for the Northern District of Florida<br />_________________________<br />(June 3, 2009)<br />Before CARNES, MARCUS and ANDERSON, Circuit Judges.<br />PER CURIAM:<br />Cecil Rolle and Jacquatte Rolle, doing business as Lenora Foods LLC,1 are<br />former franchisees of Cold Stone Creamery. The Rolles took out a promissory<br />note to fund the cost of their franchise. Cold Stone holds the rights to collect on<br />that promissory note. After the Rolles failed to make the payments due on the<br />note, Cold Stone sued to collect the amount owed. The Rolles filed several<br />counterclaims. The district court granted Cold Stone summary judgment on the<br />liability on the note and also granted summary judgment against all of the Rolles’<br />counterclaims. A jury trial was held to determine damages, and the jury returned a<br />verdict for $800,000. The Rolles contend that the district court erred in: (1)<br />granting summary judgment to Cold Stone on the Rolles’ counterclaims based on<br />the Florida Franchise Act and the Florida Deceptive and Unfair Trade Practices<br />Act (FDUTPA); (2) denying their motion to amend their counterclaim; (3)<br />1 We will refer to the defendants collectively as “the Rolles” unless context requires<br />otherwise.<br />2<br />submitting an improper jury instruction; and (4) denying their motion for a directed<br />verdict.<br />I.<br />The Rolles first contend that the district court erred in granting summary<br />judgment to Cold Stone on two of the Rolles’ counterclaims. We review de novo<br />the district court’s grant of summary judgment on those counterclaims. Houston v.<br />Williams, 547 F.3d 1357, 1361 (11th Cir. 2008).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6884823764204267007.post-34245166371390026492010-09-03T20:56:33.138-07:002010-09-03T20:56:33.138-07:00Obviously, the business model of franchising and ...Obviously, the business model of franchising and the unilateral contract invites exploitation of the franchisees who are considered "expendable" because their assets, when possible, continue to serve the franchisor. <br /><br />Remember! Because of the FTC Rule that governs the sale of franchises to the public, there has been no case law made that implies that franchisors have any duty to be competent. The qualifications to be a franchisor were set very LOW by the government in order to encourage startup small businesses. Churning, apparently, has been what has made franchising so durable in our economy. <br /><br />But it is hard to understand how a franchisor could justify forcing "shoddy equipment" on their franchisees because their primary interest is the gross sales of the franchisee's business from which they realize their profits. Greed or incompetence?Carol Crosshttps://www.blogger.com/profile/07209388385525349594noreply@blogger.comtag:blogger.com,1999:blog-6884823764204267007.post-36895349881591202762010-08-26T08:42:44.334-07:002010-08-26T08:42:44.334-07:00I agree that I have not talked much about the sho...I agree that I have not talked much about the shoddy equipment the franchisees were forced to buy (with a kickback to Cold Stone Creamery, Inc., of course!). All of the equipment we were forced to buy was not high use restaurant quality! Often our refrigeration compressors failed, or evaporator coils froze over, causing any water build up in the freezer to blow onto the ice cream, resulting in a huge loss of product. Or the register system failed during the Friday night rush. Of course, you could not reach anyone to help you in a timely manner, even though you were paying a premium price for technical support! The ghia was a nightmare waiting to happen!Ed Ramseyhttps://www.blogger.com/profile/05621586867791364997noreply@blogger.comtag:blogger.com,1999:blog-6884823764204267007.post-40338016460491022042010-08-25T12:22:59.406-07:002010-08-25T12:22:59.406-07:00The thing that folks like Ed and Cecil never even ...The thing that folks like Ed and Cecil never even talk about, having blown out early on in the Coldstone arena, is the fact that not only is the business garbage, but the equipment all fails and breaks long before the business is out of debt. It's a whole piece of the picture that nobody even talks about and I know it's not just our store, because every other franchisee I talk to has the same problem. By the way, nice job on the summer 2010 promotion corp!!! Way to stick us with another loser ad campaign. Anybody for leftover peach ice cream pie??? It's shamefull how pathetic corp is on every level. Churn this!!!!!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6884823764204267007.post-82598440437758161512010-04-08T10:19:47.124-07:002010-04-08T10:19:47.124-07:00Churning and turning of units by way of third part...Churning and turning of units by way of third party straws appears to be a practice that is not looked at by either the regulators or the courts. Read the article "Buying a Franchise. Look out for the Franchisors Use of Third Party Straws" in a Google Search under "Franchise Fraud and Third Party Churning." <br /><br />Much of the third-party churning is not discernible to new buyers of franchises because failed franchisees continue to pay on their startup debt to avoid personal bankruptcy. <br /><br />The business model of franchising, when unfairly regulated in the sales process, appears to permit franchisors to lie, cheat, and steal with impunity under the law!Anonymousnoreply@blogger.com