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MIAMI – Today, a joint press statement was released by attorneys for plaintiff franchisees of South Beach Franchising LLC and defendants Donald Boroian and Francorp, Inc., announcing that the lawsuit has been amicably resolved.Boroian's 34-year-old development firm has been assisting start-up companies with their franchise programs for over 34 years. Although a jury awarded the five master franchisees $403,834 last December on nine claims including fraud, conspiracy, unfair and deceptive practices, negligent misrepresentation and violations of state laws, two other counts were not addressed. Count 10 alleged Boroian and his Francorp, Inc. development firm were engaged in the unauthorized practice of law, while Count 11 was on the Illinois unfair and deceptive trade practices count. Now as part of the settlement, those counts are dismissed by the court.
Today's press statement explains the unauthorized practice of law count, an issue closely-watched by the franchise community. Recently, some franchisor attorneys are being challenged in courts when crossing the line between acting as legal counsel and business adviser when preparing disclosure documents for franchise companies. The release states,
The Plaintiffs and Francorp clarify that the Court in the Winters case entered a directed verdict in Francorp and Boroian’s favor on Counts X and XI of the Fourth Amended Complaint. In those claims, which were dismissed by the Court, the Plaintiffs had asserted that Francorp and Boroian engaged in the unauthorized practice of law in violation of Section 454.23 of the Florida Statutes and Section 815 ILCS 510/2 of the Illinois Uniform Deceptive Trade Practices Act.
Plaintiff attorney Robert Einhorn of Zarco Einhorn Salkowski & Brito had previously stated that although the unauthorized practice of law issue wasn’t a separate claim in the lawsuit, it was evidence that supported the negligence and the unfair and deceptive trade practices claims. Einhorm explained, “So, there’s no official finding on it but it could be assumed that the jury concluded that by entering its verdict on everything claimed.”
But Boroian’s attorney Carl F. Schoeppl of Schoeppl & Burke had asserted that the court should have directed a verdict on all eleven counts and erred in letting the case even go to a jury. He stated that the court had granted a directed verdict in Francorp and Boroian’s favor on the last two counts which are under Illinois’ law. He explained, count 10 of the complaint was for the unauthorized practice of law, a negligence per se count. Count 11 was on the Illinois unfair and deceptive trade practices count.
The franchisees of South Beach Franchising, LLC not only sued Boroian and his firm, but also their client Carol (Meyers) Brothers, owner of the concept and a long-time friend of Boroian. The franchise investors claimed that they were fraudulently induced into buying their franchises and were part of a bait and switch tactic. After they made their purchases based on numerous misrepresentations by Brothers and Francorp, they were informed that the popular “South Beach” trade name would be changed to “AdaptoGenetics”, and the health products and services offered by the franchises would be altered.
As part of the litigation, Einhorn alleged that Boroian completely stepped out of the role of being a franchise consultant to become his client’s partner, her joint venturer and her legal counsel. He said Boroian and Francorp actively participated in a scheme to defraud his clients.
Because of the confidential nature of the terms of the agreement, attorneys were not permitted to make any additional statements beyond what is in the joint press statement.
As of today, the $403,834 judgment against Francorp and Boroian for the Winters case is still recorded on the Cook County Recorder of Deeds in Illinois. They also have numerous federal and state tax liens filed against them, totaling more than $1.5 million.