Arbitrator Rules Favorably for Franchise Broker

Franchisee Loses Eleven of the Twelve Claims Against The Entrepreneur Source

TES Franchising, LLC, the Southbury, Connecticut based franchisor of the small business coaching and consulting company, The Entrepreneur’s Source, announced today a favorable outcome in a long running arbitration brought by a former part time franchisee against the company. Michael Greenspan, who was briefly a franchisee of The Entrepreneur’s Source in Phoenix, Arizona during 2002 and 2003, originally made twelve distinct claims against the company including breach of contract, fraud, negligent and fraudulent misrepresentation, violation of franchise and business opportunities laws and claimed damages of nearly $200,000.

In the arbitrator’s decision rendered last week, TES Franchising prevailed on eleven of Greenspan’s twelve causes of action.  The arbitrator said that Mr. Greenspan had proven only a single claim -- that TES violated Connecticut General Statutes Section 42-110 also known as CUTPA.  The damages of $43,900 awarded on that single claim were a small fraction of the damages Greenspan attempted to prove.  Nonetheless TES believes that the arbitrator improperly awarded those damages in restitution of fees paid by Mr. Greenspan without giving the company credit for the value Mr. Greenspan actually received in the transaction.  Taking such a credit into account, the damages properly calculated could be no higher than $15,900.

The extensive proofs submitted by the parties so clearly established the weakness of Greenspan’s claims, that his counsel actually withdrew nine of the twelve claims during his closing argument and admitted that he had not proven the damages claimed earlier.  Of the remaining three causes of action that were submitted to the arbitrator, the decision states that Mr. Greenspan’s central claims against TES were not supported by the evidence and that TES did not commit fraud or make any negligent misrepresentations in its dealings with him. 

While the company was disappointed with the arbitrator’s decision to award any damages, the outcome was very favorable to the company and vindicated the company’s policies and practices that Greenspan had attacked. The arbitrator upheld Greenspan’s claim that the statute had been violated but gave no indication what TES may have done that he felt violated CUTPA.  Greenspan attempted to prove that a  number of separate actions taken by the company toward him violated the statute, and the arbitrator’s finding was apparently based on one of those.

The company believes that it proved conclusively at the hearing that it did not violate CUTPA in any way and intends to file a motion in court to vacate the arbitrator’s incorrect decision on that one issue.  The company is confident that it did nothing improper in its dealings with Mr. Greenspan and that the decision on CUTPA will be reversed.