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Three unhappy franchisees are to sue franchisor Pie Face for estimated losses of A$2 million. They claim the franchisor misled them as to operating costs and then opened competing stores in close proximity.
Prit Dutta, an IT specialist, pilot Aleks Trajceski and lawyer Tom Bulmer are claiming they were mislead by Pie Face causing them to have lost millions of dollars.
After seven or eight months when I looked at the figures, they were totally different to what Pie Face projected for us. Prit Dutta
Dutta had owned two stores with one said to be operating at a loss and the other sold back to the franchisor at a loss to the franchisee of $170,000.
The franchisor founder and chief executive Wayne Homschek argues that economic downturn and poor franchisees are at the root of the problems faced by Dutta, Trajceski and Bulmer even though it would seem they were considered worthwhile investors at the time of signing their franchise contracts.
A lawyer for the group said other Pie Face franchisees may join the case, while others await the outcome from a complaint to the Australian Competition and Consumer Commission (ACCC).
Late Show with David Letterman is said to have boosted Pie Face expansion plans in the US after it was featured. Homschek also claims to be planning openings in New Zealand and Britain.