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The dispute began when Lesonsky began contacting EMI's customers and soliciting them to complete an application for an "Annual Franchise 300 Ranking" for AllBusiness.com. EMI stated that the information it collects from its list of over 1,800 franchisors nationwide is highly valued by EMI's audience. It considers that information and the exclusive formula it uses to calculate its rankings to be trade secrets.
The lawsuit asserts that the plaintiffs' use of EMI's secret formula, databases, and contact list, as well as use of the "Franchise 300" name, violates federal and state law. The causes of action named in the complaint include false designation of origin, breach of contract, misappropriation of trade secrets, and unfair competition.
AllBusiness.com Inc. and Maria Anton, a 23-year EMI employee are also named in the lawsuit filed in the U.S. District Court of California, Central District. The law firm of Latham & Watkins LLP is representing Entrepreneur Media.
Peter Shea, chairman and CEO of EMI, said in a press release, "We are in the business of supporting entrepreneurs, and we wish Rieva well with her new venture. But it saddens and disappoints me that someone whom we trusted with our most valuable assets would take our confidential information and attempt to market it as her own."
Fred DeLuca, president and founder of Subway, also offered his support of EMI, stating, "The Franchise 500® is the gold standard for consumers and the franchise community, who rely on the rankings when making critical business decisions."
Entrepreneur Media will celebrate the 30th anniversary of its Franchise 500 rankings in January 2009.