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ATLANTA – After a court ruled that Any Test Franchising, Inc could defer its litigation and force a franchisee into arbitration instead, the franchisor is now faced with paying out $340,000 to that franchise owner.
That’s what a three-judge panel of arbitrators awarded to the South Carolina franchisee on October 8, 2012.
When Susan Workman signed on as a franchise owner in 2007 with Any Test Franchising, Inc, the licensing arm of Any Lab Test Now, the franchisor had just started its franchise program. Today it has over 150 stores across America. The company provides laboratories that are specialized in the collection of blood, urine, DNA and other human specimens for analysis. It performs laboratory tests, such as cholesterol, PSA, testosterone, saliva hormone and teen drug testing, to be directly sold to consumers. Its website claims it is the first-ever franchise opportunity in the high-margin, high-growth medical lab testing facility industry.
Court documents show that the legal dispute began after Any Test Franchising terminated Workman and her company Rooster Enterprises, LLC, even though she claimed the franchisor had no legal standing to do so. Workman asserted that after she signed her franchise and area development agreements on December 31, 2007, her Greenville location had been successful. The franchisor had even praised her and her business partner for having the highest revenues in October 2008.
When Any Test began receiving inquiries from interested investors in 2009 about opening franchises in Rooster’s territory, the franchisor approached her about either taking on partners or selling some of her territory to potential buyers. But soon after they contacted her, Workman claims Any Test began negotiating agreements behind her back and without her knowledge or consent.
Workman contended that the franchising firm terminated her area development and franchise agreements on June 4, 2009, in order to resell those territories to interested third parties. While Any Test accused her of being in default of her area development contract for not opening a second location by the December 31, 2008 deadline, Workman did open that facility less than two months later. Any Test sued Workman in Fulton County Superior Court in March 2010. The franchisor accused her of breaching her contracts, trademark infringement, violation of Georgia’s Uniform Deceptive Trade Practices Act and Fair Business Practices Act, trademark dilution and breach of guaranty. It also filed a protective order to prevent the franchise owner from continuing to operate after being terminated.
Workman and Rooster Enterprises then filed their answer to the complaint and countersued Any Test Franchising through attorneys Cochran & Edwards in Atlanta. As part of her defense, they asserted that despite the fact that Any Lab had claimed to have terminated Workman on June 4, 2009, Any Test’s chief operating officer sent the franchisee an email dated July 15, asking her to release her development rights in two counties and to further release any potential claims, which she may have had against Any Lab Test and any other franchisee. The countersuit states, “Moreover, she [the COO] stated that Workman was still required to develop a total of six stores, and “that your fourth location is scheduled to open within six weeks.” But Any Test immediately sold those counties to another franchisee, although Workman refused to release her company’s development rights. The franchisor officially terminated her franchise on July 24, 2009.
After the countersuit was filed, the franchisor filed its motion to stay the lawsuit and compel arbitration, and the court granted its request. The arbitration, through the American Arbitration Association, did not begin until September 2012.
Attorney Randy Edwards said the main reason it took so long to get to arbitration was because the case was suspended for a while due to his client’s inability to pay her share of the arbitration fees. “Any Test insisted on a panel of three arbitrators, which of course, tripled the cost. That is a common tactic when a small business owner is forced to arbitrate, the bigger company, the one that drafted the arbitration clause, will make it cost prohibitive to arbitrate against them.” Edwards said Workman was eventually able to gather the money, and then they were able to get the case back on track.
After the award was made by the three arbitrators on October 8, attorney Edwards filed on behalf of his franchisee clients the proper motions to confirm the award on October 18, 2012. The ruling states Workman and her company are entitled to $219,673 in damages for wrongful termination of her contracts, and $87,869 in attorney fees. Any Test was also ordered to reimburse the franchisees $31,829 for arbitration fees and expenses paid by Workman in excess of the apportioned costs she previously incurred.
Halsey G Knapp, Jr of Foltz Marlin in Atlanta, representing Any Test Franchising, did not return a telephone call to answer questions regarding the arbitrators’ award, as to how soon it would be paid once confirmed. Richard Simeone, the attorney who handled the arbitration for the franchisor did not return emails or phone calls.
In light of this ruling and other pending arbitrations against Any Test Franchising, Blue MauMau questioned the financial status of the company.
Edwards said he could only go by what the 2012 Franchise Disclosure Document states and the testimony from arbitration. He said, “Based on the 2011 financials attached to the FDD, they had about $720,000 cash on hand at the end of 2011 and over $2 million in revenues in 2011. They now claim to have about 150 franchisees. If those franchisees are only paying the $500 monthly minimum, that is $75,000 in monthly royalties that we can garnish if necessary once the award is confirmed and judgment is entered.” Edwards added, “It may be somewhat painful for Any Test Franchising to pay a $340,000 award, but we suspect we will get paid eventually.”
|Any Test - Brief to Confirm 10-18-2012.pdf||1.78 MB|
|Any Test - Motion to Confirm 10-18-2012.pdf||3.71 MB|
|Any Test Answer Defenses and Counterclaim.pdf||1.65 MB|
|ANY TEST Complaint.pdf||6.42 MB|