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SNOHOMISH, Wash. – Dream Dinners, Inc, a meal assembly franchisor that allows customers to prepare and take home dinners for their families, is once again in violation of Washington’s franchise law.
Washington State Securities Division’s legal examiner Martin Cordell issued a consent order on October 18, 2012, detailing the facts of their case against the franchisor and its officers president Stephanie Allen and vice president Tina Kuna, co-founders of the company.
The order states that Dream Dinners was registered with the Securities Division to offer and sell franchises from June 2003 to May 2010, in which it charged an initial franchise fee ranging from $32,500 to $45,000. From April 2012 to July 2012, Dream Dinners website www.dreamdinners.com advertised that franchises were available to prospective buyers by clicking on “Franchise Opportunities,” a hyperlink to a page titled “Franchise Information.”
Interested buyers were told the following:
Franchises are not being sold at this moment, but information is being accepted for interested parties. Please fill out the form below to be added to the list. We'll keep you posted on store sales in your area as they develop. Upon submission you will receive an email requesting you ‘click here to complete the signup process.’ Make sure to click on the link to be added to the list.
Prospective franchisees could then complete the “Dream Dinners Franchise Info Request Form,” providing their name, email address, phone number, and the city and state in which they were interested in opening a franchise.
The consent order also lists anti-fraud violations citing earnings claims made at Dream Dinners’ Discovery Day PowerPoint presentation from 2004 to 2008. They showed prospective buyers that at 187 customers per month, they could expect to earn $75,400 in profit annually, or 18.9 percent of total revenue. On the high end, company officials quoted that 328 customers per month could bring net profits of $163,300, or 23.3 percent of sales. The prospects were not provided with the material basis for that financial information.
In connection with the offer of Dream Dinners franchises from 2004 to 2008, the franchise examiner also stated that franchisees were required to sign binding non-competition, non-intervention, or non-solicitation agreements without receiving the proper disclosure documents containing financials at least 10 days prior to signing. He also asserts that Dream Dinners is not currently registered to sell its franchises in the state of Washington.
Franchisees advised to contact attorneys to determine their rights
As a requirement by the examiner, Dream Dinners sent out a certified letter dated November 15, 2012 to past and present franchisees notifying them of the violations of state franchise laws. CEO Darin Leonard stated what the allegations were, including an unregistered offer of franchises. He stated that the company “was not required to, and does not, admit or deny wrongdoing” in connection to the consent order. Leonard also advises that franchisee may consult with their attorneys in order to determine what rights or civil remedies, if any, they may have under the Washington State Franchise Investment Protection Act.
Minneapolis attorney W. Michael Garner, who previously represented a number of franchisees in litigation against Dream Dinners and its attorneys, resulting in a settlement, said of the consent order, “I am pleased to see that the state of Washington took enforcement action.” But he added, “I am surprised to see, in light of the previous litigation, that there were violations of the franchise law as late as 2012.”
Washington attorney Howard Bundy, who also represented former franchisees in the previous litigation and settlement, said what troubles him in the letter notifying franchisees is the issue of the statute of limitations.
“Anybody who receives this letter needs to understand that in addition to the facts contained in it their statutes of limitations have now started to run, if they haven’t already begun.” Bundy explained that the most generous interpretation of the statute of limitations would be that it runs and cuts off their right to make a claim three years from the day they receive the letter from Dream Dinners notifying them of the consent order. He said different states have different rules, but Washington’s statute is for three years. Others could be for 90 days or one or two years, depending on what laws apply.
|Dream Dinners Oct 2012 Consent_Order.pdf||6.22 MB|