http://www.bluemaumau.org/frontpagestories en Study: Bottom Quintile of Franchisors Churn Franchises Three Times More than the Top http://www.bluemaumau.org/14963/study_bottom_franchisors_churn_franchises_three_times_more_top <!-- google_ad_section_start --><p>LOUISVILLE, Ky.&mdash;The bottom 10 percent of bad franchisors have more than triple the churn of franchised stores from franchisor terminations of stores and ceased operations by franchisees than the top 10 percent, according to a 5 year research of Franchise Disclosure Documents by FranchiseGrade.com.</p> <!--break--><!--break--><p>The numbers show there is a clear division between the good and the bad franchisors. <img align="right" alt="" src="http://www.bluemaumau.org/sites/default/files/021316_0006_StudyBottom1.png" width="336" height="336" />Those bad apples are spoiling the franchise industry, according to a study of 2,260 franchise systems in the United States.</p> <p>To be sure there are franchise investments that have an A grade based on store income, low franchise unit churn and performance metrics. According to FranchiseGrade.com, FastSigns, Home Care Assistance, FastSigns and Christian Brothers Automotive are grade &quot;A&quot; franchisors that do it right for franchise owners.</p> <p>But how bad are the worst in spoiling the industry? The answers to that are multifaceted. In its first report of many, FranchiseGrade.com simply points out that from 2010 to 2015, the bottom 10 percent of franchisors, or 226 franchising firms, churned 58,440 franchises that they terminated or had to cease operation compared to a more placid 19,436 franchises for the top quintile. The bottom quintile of franchisors terminated 25,965 franchises and 32,475 of their franchised establishments ceased operations. Compare that with the top 10 percent which had only 8,752 terminations and 10,684 ceased operations.</p> <p>In other words, franchisors on the bottom quintile churned franchises three times greater than those in the top (see chart).</p> <p>Looked at another way, sickly franchisors in the bottom quintile had 79.2 percent unit turnover of a bad kind. The 79.2 percent consisted of 1) franchise terminations by franchisors, 2) non-renewal of licenses, 3) reacquisition of the franchise by the franchisor, and 4) franchises that ceased operations. The remaining category of 20.8 percent was 5) sales to franchise buyers, or what is technically called turnover. All five categories put together are called the total turnover rate, which is not to be confused with turnover. Compare that 79.2 percent of unhealthy turnover in the bottom quintile with the top quintile of franchise systems that have only 53.5 percent turnover from the more harmful categories of 1) through 4). That is to say, the top quintile had a healthier 46.5 percent of turnover from the better category of #5, turnover by sales of franchise locations, compared to all categories, while the bottom quintile had only 21.8 percent from the sales of franchises compared to total turnover. That turnover ratio of 46.5 percent in sales over total turnover is still not ideal, but it is significantly better than the worst quintile.</p> <p>The sizable investments into high turnover systems means it is tough for franchisee investors to figure out where their money is best put to use.</p> <p>&quot;Unhealthy franchisors cost franchisees their investment, foster an unfavorable image of the franchise industry and detour good franchisee investments away from strong, healthy franchise systems into unhealthy systems,&quot; says Jeff Lefler, chief executive officer and founder of FranchiseGrade.com.</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/14963/study_bottom_franchisors_churn_franchises_three_times_more_top#comments Buying a franchise Sat, 13 Feb 2016 04:31:23 +0000 Don Sniegowski 14963 at http://www.bluemaumau.org Burger King to Permanently Serve Hot Dogs Nationwide http://www.bluemaumau.org/14964/burger_king_offer_hot_dogs_nationwide <!-- google_ad_section_start --><p><img alt="Burger King introduces grilled dogs, permanently" src="http://www.bluemaumau.org/sites/default/files/resize/021316_0424_BurgerKingt1-330x330.jpg" style="float: right; height: 330px; width: 330px; margin-left: 5px; margin-right: 5px;" width="330" height="330" />MIAMI &ndash; Burger King restaurants will permanently introduce all beef hot dogs to their menu, starting February 23.</p> <!--break--><!--break--><p>The company says with its launch nationwide, its franchised restaurants will serve hot dogs in more locations than any other restaurant chain in America. The recommended price will be $1.99 for the classic grilled dog and $2.29 for a chili cheese dog. A combo meal, which includes fries and a small fountain drink, will be recommended to franchises at $4.49 for the classic grilled and $4.79 for a chili cheese dog.</p> <p>&quot;The introduction of Grilled Dogs just made sense to our guests and for our brand,&quot; said Burger King&#39;s Alex Macedo, president of North America.&nbsp;Burger King is part of Toronto-based&nbsp;Restaurant Brands International (NYSE:QSR).</p> <p>The Miami-based burger chain offers this major extension to its food offerings at a time that sales and competition are heating up among its largest quick service restaurant competitors &ndash; McDonald&#39;s, Wendy&#39;s and Sonic. McDonald&#39;s launched its permanent all-day breakfast menu in September of last year. Wendy&#39;s followed suit in October by offering its 4 items for $4 meal. Sonic added a limited time offer of mini hot dogs and chicken sandwiches at the end of January.</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/14964/burger_king_offer_hot_dogs_nationwide#comments Marketing NYSE:QSR Quick Service Restaurants Inc Sat, 13 Feb 2016 04:24:56 +0000 BMM Staff 14964 at http://www.bluemaumau.org A Franchise Consultant’s Legal Nightmare http://www.bluemaumau.org/14961/franchise_consultant%E2%80%99s_legal_nightmare <!-- google_ad_section_start --><div class="photoright"><img alt="Chris Conner" src="/sites/default/files/resize/ChrisConner-679x382.jpg" style="width: 679px; height: 382px;" width="679" height="382" /> <div class="caption">Franchise Marketing Systems&#39; president Chris Conner speaks on <a href="https://www.youtube.com/watch?v=j7sPXsfsDq0" target="_blank">YouTube</a></div> </div> <p>GAINSVILLE, Georgia &ndash; Christopher Conner, founder and president of Franchise Marketing Systems, made a curious statement in 2012. He said, &quot;Franchisees will sometimes sue; this is part of doing business.&quot; But he adds, &quot;Or is it?&quot; Conner sells himself as a veteran franchise consultant &quot;who has been involved in several thousand business transactions without any lawsuits or litigation involved.&quot;</p> <!--break--><!--break--><p>Not so.</p> <p>As the former vice president of Francorp International, the litigious franchise development firm run by ex-con Donald Boroian for over fifty years, Conner has learned from the best. After leaving Francorp he established Conner &amp; Associates LLC, d/b/a Franchise Marketing Systems, in 2009 taking with him some of Boroian&#39;s team, including his relatives. In running his own business, Conner has continued to be entwined in litigation, with or against his clients and their franchisees. He is currently fighting against at least one state regulator on allegations related to the offer and sale of franchises without being registered in the state, and has settled with at least one other.</p> <p>Maryland&#39;s Attorney General issued an &quot;order to show cause&quot; against him, his company and his client RedRhino, Inc.: The Epoxy Flooring Company and its owner Michael Kenealy. It also tells that Conner identifies himself as &quot;franchise director&quot; of RedRhino.</p> <p>The state laid out its legal action stating a resident of Maryland received information from the company advertising that it was selling franchises while it was not registered. Conner had sent a brochure titled, &quot;Become a RedRhino Franchise Owner in 2012,&quot; along with &quot;franchise assumptions.&quot; The worksheet assumed franchisee gross sales from $265,000 in the first year, to $876,000 in the fifth year. It showed a $15,000 franchise fee, seven percent royalty on gross sales, one percent for local advertising, and five percent for corporate advertising. The franchise assumptions document included a representation of the amount of initial investment a prospective RedRhino franchisee could expect to make, from a &quot;low&quot; of $25,300 to a &quot;high&quot; of $43,800.&quot;</p> <p>Conner included a pro forma representing amounts of revenue, variable expenses, operating expenses, and total expenses franchisees could expect to achieve. It stated that a franchisee could expect a return on his investment of between 137 percent in the first year, to 983 percent in the fifth year. The buyer signed the &quot;2013 Management Agreement&quot; on November 23, 2013, and paid $25,000 for an exclusive territory that included Maryland, Washington, D.C. and its surrounding areas, including northern Virginia, West Virginia and Pittsburgh for a five-year term. The franchisee also agreed to pay a royalty fee of 7 percent on all gross collections produced through the RedRhino sales and business development model.</p> <p>Under the management agreement, RedRhino agreed to provide sales and marketing support, and two weeks training at the company&#39;s headquarters in Los Angeles, among other promises. It also stated the company would provide, manage and oversee lead generation efforts to produce web-based customer leads. Although not in the agreement, RedRhino required the franchisee to pay additional fees for marketing. Following a series of events of the company offering the franchisee two additional agreements, requiring him to pay $10,000 more for an expanded territory, the franchisee agreed. Although he exceeded the &quot;assumed gross sales&quot; listed on the pro forma, he never achieved anything close to the return on his investment represented in that document, the Securities Commissioner&#39;s order stated.</p> <p>The would-be franchisee never received a Franchise Disclosure Document (FDD) from Conner or RedRhino.</p> <p>On November 4, 2015, the Commissioner filed four counts against RedRhino and Conner: violation of registration provisions; violation of disclosure provisions, misrepresentation in connection with the offer and sale of franchises; and earnings claims (financial performance representations). It requires the franchisor and Conner to answer its questions, mainly that they must show cause why they should not be ordered to permanently cease and desist from the offer and sale of franchises in violation of the anti-fraud provisions of Maryland Franchise Law.</p> <p>Blue MauMau contacted the Maryland Securities Division to see what the current status was in the case. David Nitkin, Director of Communications and Policy Advisor, stated that the RedRhino matter is being handled by the Maryland Office of the Attorney General Securities Division. He said RedRhino had received an extension to reply to the Order to Show Cause and beyond that there is no publicly available information to report.</p> <h3><strong><span style="color:#800000;">Conner and RedRhino assessed by California regulator</span></strong></h3> <p>Prior to Maryland Securities taking action, the Department of Business Oversight of California filed its desist and refrain order on December 1, 2014, again charging Conner and his marketing firm and RedRhino Inc. for not registering their franchise prior to offering and selling franchises to residents of California. As they promoted selling franchises on their website for Northern California, they sold a location to a California resident for a $10,000 upfront franchise fee. RedRhino then collected $2,000 in monthly royalties from the buyer. The franchise agreement was under Trenton Group Inc., the franchise entity of RedRhino. Only two months after the resident signed the franchise agreement, he canceled because the company failed to provide the support and training it had promised.</p> <p>The order states that neither RedRhino and its owner Kenealy, or Conner and his firms registered offerings of the RedRhino franchises in California.</p> <p>The order cites the violation of the state&#39;s Corporations Code that prohibit the selling of unregistered, non-exempt franchise offerings. The order cites misrepresentation or omission of material facts. The California agency also asserts that the company was falsely promoted to the public as having national coverage, showing customers a national map with all RedRhino franchised and corporate locations. And that they had a proven model to grow business within a specific niche industry.</p> <p>RedRhino and Conner were assessed and ordered to pay $7,500 separately for the three violations, plus $5,000 in attorney fees. The commissioner may also allow rescission, restitution, disgorgement or damages on behalf of persons who claim injury from RedRhino&#39;s actions.</p> <h3><strong><span style="color:#800000;">Other litigation settled</span></strong></h3> <p>A lawsuit was also filed in October of 2015 against Christopher Conner and RedRhino, also under The Trenton Group Inc., the franchise entity of RedRhino also owned by Michael Kenealy. Filed in Ohio district court, eastern division last August by attorney Stanley M. Dub, the second amended complaint lists violations of Ohio&#39;s franchise law regarding disclosure and other obligations, fraud, violation of RICO [Racketeer Influenced and Corrupt Organizations Act], and piercing of corporate veil. The attorney asks for rescission of his client&#39;s management agreement, the return of all amounts paid to RedRhino/Trenton and Conner, and losses of $35,000 which his client incurred in the establishment and operation of his business. He also asked for treble damages, to be determined at trial, and attorney fees. The case settled, and on November 9, 2015 the court issued an order to dismiss the legal action with prejudice, with each party bearing its own costs.</p> <p>Blue MauMau has learned of another legal dispute between Conner and a client, settled confidentially in 2015 where Conner agreed to pay $50,000. Again, the issue surrounded Conner&#39;s company selling unregistered franchises to unsuspecting buyers. A phone call to the franchisor was not returned. Blue MauMau received a copy of the confidential agreement.</p> <p>And yet another . . . Christopher Conner was also involved in litigation after he was hired by Restoration 1 to produce the Franchise Disclosure Documents for 2011, 2012 and 2013. His job was specifically to put together the company&#39;s Item 19 Financial Performance Representation, known as earnings claims, to show how much franchisees could expect to make in running their franchise.</p> <p>As background, Restoration 1 sued franchisees in Florida on August 6, 2015 after owner/CEO and sole manager Andor Kovacs terminated the franchisees&#39; agreements. Court documents state that Kovacs did so in retaliation against them for showing their dissatisfaction with the company. When the franchisees&#39; attorney Mario Herman tried to mediate the issues with Kovacs&#39; counsel Warren Lewis, the offer was flatly rejected. Some franchisees stopped paying royalties and filed arbitration demands against the company, and commenced de-identification of their franchises in late July of that year. They expressed that they wanted no part of the franchise, as it had a terrible reputation in the industry. Kovacs then terminated the franchisees and filed his lawsuit against them. They continued operating independent businesses for two months.</p> <p>At the core of the litigation seeking a preliminary injunction against the franchisees, Kovacs attempted to show irreparable harm to his company. Franchisees asserted through their counsel that because Restoration 1 made numerous misrepresentations connected to the sale of franchises, it violated the Florida Franchise Act and other state laws. The company misrepresented in Item 19 of its Franchise Disclosure Document revenue figures that were &quot;highly inflated.&quot; During depositions, owner Kovacs admitted the numbers were &quot;possibly fabricated.&quot;</p> <p>The earnings claims in the FDD for 2011, 2012 and 2013 had been drafted by Christopher Conner, a former employee of Francorp development firm, court documents disclose. Testimony states that Conner never had access to information from Restoration 1 or its accountants in preparing the Item 19 data. The company testified that it did not have any documents that substantiated the financial performance representations Conner made in the FDDs, &quot;absolutely nothing,&quot; Kovacs stated. The company owner said he relied on his &quot;expert witness&quot; Christopher Conner in drafting Item 19 in disclosure documents. He said, &quot;I had one telephone call with Conner, told him about the numbers roughly, and he came up with these [earnings claims] numbers.&quot;</p> <p>The lawsuit, filed in the Circuit Court of the 17th Judicial Circuit Court, Broward County, Florida, was recently settled confidentially. No other information has been released.</p> <hr /> <p><strong>Related articles</strong>:</p> <ul> <li><a href="https://www.google.com/url?q=http://www.bluemaumau.org/13738/francorp_did_practice_law_without_license_jitterswing&amp;sa=U&amp;ved=0ahUKEwiytufv8fLKAhUW2mMKHRMjAIUQFggLMAI&amp;client=internal-uds-cse&amp;usg=AFQjCNHf_pBASAZmrPi9Zjeafh8DPOBCvQ" target="_top">Francorp&nbsp;Did Practice Law without License in JitterSwing&nbsp;...</a></li> <li><a href="https://www.google.com/url?q=http://www.bluemaumau.org/8284/400k_judgment_filed_against_boroian_and_francorp&amp;sa=U&amp;ved=0ahUKEwiytufv8fLKAhUW2mMKHRMjAIUQFggcMAg&amp;client=internal-uds-cse&amp;usg=AFQjCNH2SaRQxF47rObP9ihlotx2DlDeYg" target="_top">$400K Judgment Filed against&nbsp;Boroian&nbsp;and&nbsp;Francorp</a></li> <li><a href="https://www.google.com/url?q=http://www.bluemaumau.org/12044/another_francorp_inhouse_attorney_jumps_ship&amp;sa=U&amp;ved=0ahUKEwiytufv8fLKAhUW2mMKHRMjAIUQFggRMAQ&amp;client=internal-uds-cse&amp;usg=AFQjCNE7mxsZu54aQbZhHSYk22v7fdPUpQ" target="_top">Another&nbsp;Francorp&nbsp;In-house Attorney Jumps Ship</a></li> <li><a href="http://www.bluemaumau.org/5877/boroian_free_last">Boroian Free at Last</a></li> <li><a href="http://www.bluemaumau.org/prison_proves_to_be_small_deterrent_boroian" title="Prison Proves To Be Small Deterrent for Boroian">Prison Proves To Be Small Deterrent for Boroian</a></li> <li><a href="http://www.bluemaumau.org/prison_investigating_francorps_ceo_boroian" title="Prison Investigating Francorp's CEO Boroian">Prison Investigating Francorp&#39;s CEO Boroian</a>&nbsp;</li> <li><a href="http://www.bluemaumau.org/boroian_sent_solitary_confinement" title="Boroian Sent to Solitary Confinement">Boroian Sent to Solitary Confinement</a></li> <li><a href="http://www.bluemaumau.org/boroian%E2%80%99s_release_date_pushed_back" title="Boroian’s Release Date Pushed Back">Boroian&#39;s Release Date Pushed Back</a></li> <li><a href="http://www.bluemaumau.org/boroian_purchased_condo_prior_imprisonment" title="Boroian Purchased Condo Prior to Imprisonment">Boroian Purchased Condo Prior to Imprisonment</a></li> <li><a href="http://www.bluemaumau.org/boroian_toys_with_government" title="Boroian Toys with Government">Boroian Toys with Government</a></li> <li><a href="http://www.bluemaumau.org/boroian_released_duluth_federal_prison_camp" title="Boroian Released from Duluth Federal Prison Camp">Boroian Released from Duluth Federal Prison Camp</a>&nbsp;</li> <li><a href="http://www.bluemaumau.org/4624/boroian_speaks_out_irs_woes_moving_forward" title="Boroian Speaks Out on IRS Woes, Moving Forward">Boroian Speaks Out on IRS Woes, Moving Forward</a></li> </ul> <!-- google_ad_section_end --> http://www.bluemaumau.org/14961/franchise_consultant%E2%80%99s_legal_nightmare#comments Legal judgment & dispute resolution bogus earnings claims California regulator enforcement franchise Christopher Conner Conner & Associates FDD Item 19 Financial Performance Representations franchise consultant litigation Franchise Marketing Systems Francorp fraudulent misrepresentations Maryland Securities enforcement Michael Kenealy RedRhino Restoration 1 violations of disclosure provisions Fri, 12 Feb 2016 18:58:24 +0000 Janet Sparks 14961 at http://www.bluemaumau.org Franchisee's Fraudulent Misrepresentation Claims Dismissed because of Franchise Contract Disclaimer http://www.bluemaumau.org/14958/franchisee%E2%80%99s_fraudulent_misrepresentation_claim_dismissed_based_disclaimer <!-- google_ad_section_start --><p><img alt="" src="http://www.bluemaumau.org/sites/default/files/resize/021016_2057_Franchisees1-330x315.jpg" style="float: right; height: 315px; width: 330px; margin-left: 5px; margin-right: 5px;" width="330" height="315" />CHICAGO - A district court in Illinois granted a franchisor's motion to permanently dismiss a franchisee's counterclaim that he was given bogus financials related to how much he could expect to make in purchasing a franchise.</p> <!--break--><!--break--><p> The judge ruled that because he had agreed to the franchisor&#39;s disclaimer that no oral or written financial statements had been made by company officials, a requirement of the franchise agreement, the franchisor was protected from any impending fraud claims.</p> <p>In <em>Fantastic Sams Salons Corp. v. PSTEVO, LLC</em>, franchisee Jeremy Baker alleges that he met with the vice president and regional director. At the meeting he was given various financial disclosure documents that showed he would only need three months of working capital to open a franchise, and that he could expect the franchise to be profitable thereafter. The shop owner affirmed that the disclosure documents were consistent with oral representations made by Fantastic Sams&#39; agents and with statements published on its website. He alleges that the company executives, Tom Boitz and David Boitz knew the statements were false and that it would take longer than the three months for the salon to become profitable. Baker claims the misrepresentations were material in that his company relied on them in deciding whether to enter into the franchise agreement.</p> <p>Fantastic Sams argued that the franchisee&#39;s claims are barred by two disclaimers in the agreement and signed by both parties. Those disclaimers stated: (1) &quot;No oral, written or visual claim or representation which contradicted the disclosure document was made to me, except,&quot; and (2) &quot;No oral, written or visual claim or representation which stated or suggested any sales, income, or profit levels was made to me, except.&quot; After each disclaimer, the franchise owner wrote the word &quot;none&quot; and initialed his response.</p> <p>Baker does not dispute that he wrote &quot;none&quot; by the disclaimers. Rather, he argues that the disclaimers do not apply to the particular misrepresentations alleged. Specifically, he says they do not apply to the particular misrepresentations alleged. &quot;In other words, the alleged misrepresentations made by Boitz and Fantastic Sams&#39; website were consistent with, rather than contradicted by, the disclosure documents,&quot; the judge stated. He agreed that the first disclaimer does not bar the franchisee&#39;s fraudulent misrepresentation claim.</p> <p>Regarding the second disclaimer, Baker argued that it does not preclude his fraudulent misrepresentation claim because his claim is premised on &quot;minimum viability,&quot; not guaranteed income. The court disagreed saying Baker&#39;s fraud counterclaim is clearly premised on the assertion that Fantastic Sams misrepresented projected profit levels that he could expect to be profitable three months after opening his salon.</p> <p>The court found that the first disclaimer was not effective to bar the franchisee&#39;s claims because the alleged misrepresentation made by Fantastic Sams&#39; agents and contained on its website was consistent with, rather than contradicted by, the disclosure documents. However, Fantastic Sams successfully argued that the second disclaimer expressly disclaimed the representation on which Baker had allegedly relied, and the court dismissed the claim with prejudice.</p> <p>Fantastic Sams was represented by Cheng Cohen in Chicago. Jeremy Baker and PSTEVO, LLC were represented by Katina S. Haloulos.</p> <hr /> <p>Case: <a href="http://www.leagle.com/decision/In%20FDCO%2020160115S17/FANTASTIC%20SAMS%20SALONS%20CORP.%20v.%20PSTEVO,%20LLC" target="_blank">Fantastic Sams Salons Corp.v. PSTEVO, LLC, Jeremy Baker</a> Leagle.com&nbsp;</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/14958/franchisee%E2%80%99s_fraudulent_misrepresentation_claim_dismissed_based_disclaimer#comments Legal judgment & dispute resolution franchise contract trap franchisor disclaimers fraudulent misrepresentation integration clause Wed, 10 Feb 2016 20:58:04 +0000 Janet Sparks 14958 at http://www.bluemaumau.org Restaurant Delivery Grows by Double Digits http://www.bluemaumau.org/14955/restaurant_delivery_grows_doubledigits <!-- google_ad_section_start --><p>CHICAGO &mdash;Food delivery traffic, outside of pizza delivery, has grown by 33 percent since 2012, according to foodservice researcher the NPD Group. Meanwhile, traditional quick service restaurant (QSR) pizza delivery is on the decline. Foodservice delivery options outside of pizza are still relatively small, with roughly six million delivery-related visits in the past year. But there is little doubt that the growth rate for delivery categories outside of QSR pizza will continue on a strong growth path. All types of restaurants are increasingly partnering with delivery services, such as Eat24, Grub Hub, DoorDash and small Nashville-based franchisor Doorstep Delivery.</p> <p>As UberEATS and Amazon Prime Now restaurant delivery continues to roll out nationally, delivery will see significant growth. NPD forecasts that off-premise foodservice will continue to outpace overall restaurant industry traffic growth over the next decade.</p> <p>&quot;Consumers want the &#39;dining out&#39; experience of quality food, but they&#39;re saving money and time by having food delivered to their homes,&quot; says Bonnie Riggs, NPD&#39;s restaurant industry analyst. &quot;Similar to the consumer value online direct-to-door shopping fulfills, there is the appeal of being in the comfort of their own homes, and not having to deal with the &#39;hassle&#39; of the outside world.&quot;</p> <p>In-home meal kits, whether meals to cook from scratch or just assembled and brought to the home, are a more recent offering than foodservice delivery. These kits appeal to consumers wanting fresh, authentic food, and control over what they&#39;re eating, says NPD. Small franchisor Dream Dinners is one such example. Other franchisors have come and gone. Meal kit delivery services tend to be placed in urban areas. They are not nearly as mainstream as foodservice deliveries.</p> <p>&quot;I don&#39;t believe we&#39;ll see mainstream adoption of home meal kits, like we&#39;ve seen with foodservice delivery,&quot; says Darren Seifer, NPD&#39;s food and beverage industry analyst. &quot;Meal kit consumers have more expendable income and primarily live in major metro areas. There is definitely a market for these services; it&#39;s just not nearly as big as foodservice delivery.&quot;</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/14955/restaurant_delivery_grows_doubledigits#comments trends Tue, 09 Feb 2016 19:16:48 +0000 Don Sniegowski 14955 at http://www.bluemaumau.org Franchise Employment Doubles the Pace of Small Business; Leisure Loses http://www.bluemaumau.org/14948/franchise_employment_doubles_pace_small_business_leisure_loses <!-- google_ad_section_start --><div class="photoright"><img alt="McDonald's franchise hiring" src="https://c2.staticflickr.com/4/3887/14781369725_515df1691c_c.jpg" style="width: 330px; height: 160px;" /></div> <p>ROSELAND, NJ&mdash; Private-sector jobs in American franchised establishments increased by 20,000 in January of 2016, according to the ADP National Franchise Report. </p> <!--break--><!--break--><p> Those figures show January as being somewhat weaker in franchise hirings compared to December of last year. However, over the past twelve months franchise establishments have hired at double the pace of small businesses, and over double the rate compared to all U.S. nonfarm private employment. Total U.S. nonfarm private sector employment was up a robust 205,000 for the month.</p> <p>Despite snowstorms <a href="http://www.autonews.com/article/20160202/RETAIL01/160209973/snowstorms-drive-sales-down-0-4-saar-rises-to-17-55-million">pushing auto sales down by 0.4 percent in January</a> compared to a year before, auto and parts dealers&#39; employment numbers were up for the month.</p> <p>&quot;Franchise employment growth, though not as strong as the previous month, remained at double the pace of the labor market overall for the past twelve months,&quot; said Ahu Yildirmaz, vice president and head of the ADP Research Institute. &quot;Auto Parts and Dealers and Restaurants, two segments that help signal consumer spending trends, added the most jobs.&quot;</p> <p>As far as total year-over-year growth rate, personal service is the fastest growing sector for hiring, growing 10 percent. At the bottom of the list are leisure franchises, such as fitness centers, bowling alleys and other recreational centers, which shrank by 4 percent in employees hired over the past twelve months. For the month of January, business services and education, which includes learning centers, dropped the most at -0.6 and -0.4 percent compared to the month before.</p> <p>&quot;Job growth remains strong despite the turmoil in the global economy and financial markets,&quot; said Mark Zandi, chief economist of Moody&#39;s Analytics, about the overall economy. &quot;Manufacturers and energy companies are reducing payrolls, but job gains across all other industries remain robust. The U.S. economy remains on track to return to full employment by mid-year.&quot;</p> <hr /> <h2>The numbers:</h2> <p>January 2016</p> <table> <tbody> <tr style="height: 40px; background: #9bbb59"> <td rowspan="2" style="padding-left: 7px; padding-right: 7px; border-top: solid 2.25pt; border-left: none; border-bottom: solid 2.25pt; border-right: none"><span style="color:white"><strong>Industry</strong></span></td> <td rowspan="2" style="padding-left: 7px; padding-right: 7px; border-top: solid 2.25pt; border-left: none; border-bottom: solid 2.25pt; border-right: none"><span style="color:white"><strong>Monthly Employment Change</strong></span></td> <td rowspan="2" style="padding-left: 7px; padding-right: 7px; border-top: solid 2.25pt; border-left: none; border-bottom: solid 2.25pt; border-right: none"><span style="color:white"><strong>Employment Level (x1000)</strong></span></td> <td rowspan="2" style="padding-left: 7px; padding-right: 7px; border-top: solid 2.25pt; border-left: none; border-bottom: solid 2.25pt; border-right: none"><span style="color:white"><strong>Monthly Growth Rate (%)</strong></span></td> <td rowspan="2" style="padding-left: 7px; padding-right: 7px; border-top: solid 2.25pt; border-left: none; border-bottom: solid 2.25pt; border-right: none"><span style="color:white"><strong>Contribution&nbsp;<br /> Growth %</strong></span></td> <td rowspan="2" style="padding-left: 7px; padding-right: 7px; border-top: solid 2.25pt; border-left: none; border-bottom: solid 2.25pt; border-right: none"> <p><span style="color:white"><strong>Year-Over-Year Growth Rate (%)</strong></span></p> </td> <td rowspan="2" style="padding-left: 7px; padding-right: 7px; border-top: solid 2.25pt; border-left: none; border-bottom: solid 2.25pt; border-right: none"><span style="color:white"><strong>12 Month Average Growth Rate (%)</strong></span></td> </tr> <tr style="height: 21px"> </tr> <tr style="height: 60px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Total U.S. NonFarm Private Employment *</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>205,000</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>121,063</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.2%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>&nbsp;&nbsp;</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>2.0%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.2%</p> </td> </tr> <tr style="height: 40px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Small Business (1-49 Employees)</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>79,000</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>50,740</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.2%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>&nbsp;&nbsp;</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>2.2%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.2%</p> </td> </tr> <tr style="height: 40px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Total U.S. Franchise Employment</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>20,000</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>8,795</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.2%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>100%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>4.4%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.4%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Restaurants</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>18,840</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>4,506</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.4%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>94%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>5.0%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.4%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Auto Parts and Dealers</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>3,810</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>1,377</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.3%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>19%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>7.9%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.6%</p> </td> </tr> <tr style="height: 40px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Gasoline Stations and Auto Repair</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>1,960</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>430</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.5%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>10%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.3%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.0%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Personal Services</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>650</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>120</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.5%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>3%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>10.0%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.8%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Food Retailers</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>440</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>186</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.2%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>2%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>4.2%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.3%</p> </td> </tr> <tr style="height: 40px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Building Material and Garden Equipment</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>240</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>50</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.5%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>1%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>6.0%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.5%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Professional Services</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>150</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>127</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.1%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>1%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>2.8%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.2%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Manufacturing</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>120</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>23</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.5%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>1%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.4%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.0%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Real Estate</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>80</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>92</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.1%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>1.9%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.2%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Rental</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-10</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>35</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.0%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>3.3%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.3%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Personal Care Retailers</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-20</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>71</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.0%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>5.6%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.5%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Leisure</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-180</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>88</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-0.2%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-1%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-4.0%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-0.3%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Education</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-280</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>65</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-0.4%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-1%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-2.3%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-0.2%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Other</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-470</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>432</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-0.1%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>-2%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>1.0%</p> </td> <td style="padding-left: 7px; padding-right: 7px"> <p>0.1%</p> </td> </tr> <tr style="height: 20px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none"> <p><span style="color:white"><strong>Accommodations</strong></span></p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-2,480</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>714</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-0.3%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>-12%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>1.0%</p> </td> <td style="background: #d8d8d8; padding-left: 7px; padding-right: 7px"> <p>0.1%</p> </td> </tr> <tr style="height: 21px"> <td style="background: #9bbb59; padding-left: 7px; padding-right: 7px; border-left: none; border-bottom: solid 2.25pt"> <p><span style="color:white"><strong>Business Services</strong></span></p> </td> <td style="padding-left: 7px; padding-right: 7px; border-bottom: solid 2.25pt"> <p>-2,820</p> </td> <td style="padding-left: 7px; padding-right: 7px; border-bottom: solid 2.25pt"> <p>479</p> </td> <td style="padding-left: 7px; padding-right: 7px; border-bottom: solid 2.25pt"> <p>-0.6%</p> </td> <td style="padding-left: 7px; padding-right: 7px; border-bottom: solid 2.25pt"> <p>-14%</p> </td> <td style="padding-left: 7px; padding-right: 7px; border-bottom: solid 2.25pt"> <p>2.6%</p> </td> <td style="padding-left: 7px; padding-right: 7px; border-bottom: solid 2.25pt"> <p>0.2%</p> </td> </tr> </tbody> </table> <p><center><img alt="<br /> U.S. Added 20,000 Franchise Jobs in January, According to ADP National Franchise Report<br /> " border="0" height="1598" src="http://www.adpemploymentreport.com/2016/January/NFR/images/infographic/main/NFRJanuary2016_infographic.gif" width="598" /></center></p> <!-- google_ad_section_end --> http://www.bluemaumau.org/14948/franchise_employment_doubles_pace_small_business_leisure_loses#comments The Economy Thu, 04 Feb 2016 19:00:06 +0000 Don Sniegowski 14948 at http://www.bluemaumau.org When Chipotle Was Down, Young Adults Upped Their Visits http://www.bluemaumau.org/14941/when_chipotle_was_down_young_adults_increased_visits <!-- google_ad_section_start --><p><img alt="" src="https://c2.staticflickr.com/6/5811/22584598482_8b51fba54f_n.jpg" style="width: 329px; height: 219px; float: right; margin-left: 5px; margin-right: 5px;" />CHICAGO&mdash;Chipotle&#39;s recent series of food safety outbreaks rattled its customers and visits declined. But the chain&#39;s strong base of teens and young adult customers continue to support the fast casual chain. </p> <!--break--><!--break--><p> In the quarter ending in December, during which several of the outbreaks occurred, total visits to Chipotle were down 5 percent compared to a 19 percent traffic gain the same quarter a year ago, finds the NPD Group&#39;s ongoing foodservice market research. However, teens and young adults increased their visits to the Mexican fast casual chain by double-digits last year.</p> <p>&quot;Young adults represent the largest share of Chipotle&#39;s overall traffic,&quot; says Bonnie Riggs, NPD Group&#39;s restaurant industry analyst. &quot;Their willingness to overlook any food safety concerns to eat at Chipotle could be a result of unabashed loyalty or lack of awareness.&quot;</p> <p>NPD Group continually tracks U.S. consumer awareness and concern about food safety outbreaks. It often sees heightened awareness and concern of an outbreak that corresponds with heavy news coverage of the incident. After the news cycle quiets down, awareness and concern over the outbreak declines.</p> <p>As for those Chipotle customers who have deserted the brand, they appear to have scattered to various quick service or fast casual outlets for their food. There is no particular outlet or chain that is the clear recipient of the chain&#39;s former customers, based on an analysis using NPD Group&#39;s receipt harvesting service, Checkout Tracking. Chains with the most units, like McDonald&#39;s, Burger King or Wendy&#39;s, had the opportunity to attract more customers from among those who had turned their backs on Chipotle.</p> <p>&quot;What our research tells us is that Chipotle has a strong loyal base from which to build its business back up relatively quickly,&quot; says Riggs. &quot;To win back the trust of their former customers, Chipotle will need to continually communicate all of the ways in which they are preventing any future outbreaks and prove to them that they able to deliver on their &#39;food with integrity&#39; promise.&quot;</p> <hr /> <p><strong>Related reading</strong>:</p> <p><a href="http://bluemaumau.org/chipotle_better_safe_sorry" target="_blank">Better Safe than Sorry, Chipotle</a></p> <!-- google_ad_section_end --> http://www.bluemaumau.org/14941/when_chipotle_was_down_young_adults_increased_visits#comments food Mon, 01 Feb 2016 16:13:47 +0000 Don Sniegowski 14941 at http://www.bluemaumau.org Area Developer Claims Tilted Kilt Caused $20M in Damages http://www.bluemaumau.org/14933/area_developer_claims_titled_kilt_caused_20m_damages <!-- google_ad_section_start --><p><img align="right" alt="" src="http://www.bluemaumau.org/sites/default/files/012816_2322_AreaDevelop1.jpg" width="396" height="297" />CHICAGO &ndash; An area developer of Tilted Kilt Pub &amp; Eatery is striking back at the chain by claiming it was making unlawful financial performance representations to prospective franchisees, asking the court to terminate its development agreement.</p> <p>The Rolling Meadows, Illinois-based company, 1220 LLC, filed its counterclaims against the franchisor on January 13. It alleges that because Tilted Kilt has undermined its ability to perform as an area developer &quot;in practically every possible way,&quot; it had caused it to suffer more than $20 million in damages. In court documents 1220 LLC states, &quot;Tilted Kilt has evaded the spirit of the bargain, lacked diligence, and defeated 1220&#39;s justifiable expectations.&quot; The developer also asserts that the franchisor has been arbitrary, capricious and unreasonable, and has abused its power under the terms of their contract.</p> <p>1220 LLC is owned and operated by the Baroud brothers&ndash;Robert, Emil, Anthony and Peter&ndash;who signed a 25-year development agreement on July 2, 2007, requiring them to pay $150,000 for an initial franchise fee. Under their agreement they were allowed to sell and develop franchises in northern Illinois, southern Wisconsin and northwest Indiana in return for revenue through various franchise-related fees, and were entitled to a 10-year renewal contract. The brothers state in legal documents that Tilted Kilt has breached its development agreement &quot;through a scheme to terminate its business, coveting the strong revenue stream it is entitled to.&quot;</p> <p>Tilted Kilt filed a complaint against the Baroud brothers and 1220 LLC on November 17, 2015 through attorney Fredric &quot;Ric&quot; Cohen of Cheng Cohen. They allege the development firm repeatedly violated both state and federal law in connection with the offer and sale of Tilted Kilt franchises within their territory. The company claims two partners of 1220 LLC made the unlawful financial performance representations to prospective franchisees to induce them into signing franchise agreements, all in order to collect part of the development fee and ongoing royalties paid by the franchisees. That business deal in Wisconsin led to the new franchise owners opening locations in Gurnee, Vernon Hills and Kenosha, causing them to &quot;sustain significant losses.&quot; Tilted Kilt blames the area developer for giving the bogus earnings claims.</p> <p>Tilted Kilt asked the court to allow it to terminate its development agreement and for relief consistent with the declaratory judgment sought, including an award for damages it has incurred as well as liquidated damages and attorney fees.</p> <p>In its memorandum in support of its motion to dismiss the lawsuit, the area development firm argues that Tilted Kilt and 1220 LLC had agreed that the franchisor could only have the right to terminate their agreement for breach of contract under 11 defined circumstances. Tilted Kilt would then give 1220 LLC notice of breach and an opportunity to cure. But the breach the company is claiming is not one of the 11 circumstances and, therefore, it has no right to assert the claim. The parties also agreed that in the event of a breach by 1220 LLC, Tilted Kilt could terminate the contract, but only if the area developer does not correct the violation within a 30-day period and after written notice is delivered.</p> <p>Represented by franchise attorney Carmen Caruso, the Baroud brothers filed their counterclaims on January 13, 2016, stating Tilted Kilt Franchising Operating is subject as a matter of law to an implied covenant of good faith and fair dealing. That prohibits either party from engaging in a variety of conduct that may be characterized as involving &quot;bad faith&quot; because they violate community standards of decency, fairness or reasonableness.</p> <p>The counterclaims assert that Tilted Kilt made grossly unreasonable or bad faith decisions as to the &quot;products, services, equipment and supplies that franchisees are required to purchase, resulting in the franchisees experiencing higher costs and receiving less value for their money.&quot; It also claims the company abused vendor rebates, placing franchisees at a severe competitive disadvantage. And, documents state, Tilted Kilt has failed to develop, implement or enforce effective advertising programs at the national or local levels, which their development agreement dictates.</p> <p>Attorney Caruso said he has not had any precedent in getting the receiver appointed in a franchising case, that this would be a first for him. But he said, &quot;I think it falls under recognized equitable principles. It would spring from a recognition that franchisees and area developers have vested interests in goodwill of the brand and we should be able to protect the brand from dissipation of goodwill.&quot;</p> <p>Franchisor attorney Cohen did not return a phone call to give comment or answer questions about the case.</p> <!-- google_ad_section_end --><table id="attachments" class="sticky-enabled"> <thead><tr><th>Attachment</th><th>Size</th> </tr></thead> <tbody> <tr class="odd"><td><a href="http://www.bluemaumau.org/sites/default/files/#1 Complaint for Declaratory Judgment and Further Relief (002).pdf">#1 Complaint for Declaratory Judgment and Further Relief (002).pdf</a></td><td>173.78 KB</td> </tr> <tr class="even"><td><a href="http://www.bluemaumau.org/sites/default/files/#7 Memorandum in Support of Motion to Dismiss.pdf">#7 Memorandum in Support of Motion to Dismiss.pdf</a></td><td>2.51 MB</td> </tr> <tr class="odd"><td><a href="http://www.bluemaumau.org/sites/default/files/Tilted.Kilt_.Counterclaim.01.13.2016.pdf">Tilted.Kilt_.Counterclaim.01.13.2016.pdf</a></td><td>2.5 MB</td> </tr> </tbody> </table> http://www.bluemaumau.org/14933/area_developer_claims_titled_kilt_caused_20m_damages#comments Legal claim & allegation area developer Baroud brothers Carmen Caruso lawsuit Tilted Kilt Thu, 28 Jan 2016 23:22:55 +0000 Janet Sparks 14933 at http://www.bluemaumau.org Marriott Says 2015 Looks Strong http://www.bluemaumau.org/14929/marriott_says_2015_looks_strong <!-- google_ad_section_start --><p>BETHESDA, Md.&ndash; Marriott International, Inc. (NASDAQ: MAR) said yesterday that 2015 was an outstanding year for the franchisor, with contracts signed for hotels totaling 104,000 rooms during the year.</p> <p>From the franchisor&#39;s perspective, it opened 300 hotels worldwide in 2015, accounting for nearly 52,000 rooms. This includes 9,600 rooms through its acquisition of Delta Hotels &amp; Resorts.&nbsp;</p> <p>&quot;The contracts we signed in 2015 encompass more than $15 billion of investment by our owners, and represent a tremendous vote of confidence in Marriott&#39;s brands,&quot; said Arne Sorenson, Marriott&#39;s president and chief executive officer. &quot;Marriott&#39;s new signings reflect broadly distributed growth across the company&#39;s global hotel portfolio, and demonstrate the extraordinary appeal of Marriott&#39;s brands to customers, industry-leading innovation, significant scale, highly effective systems, and the best associates in the business &ndash; all of which attract hotel owners and lenders to our portfolio.&quot;</p> <p>In November 2015 Marriott signed a binding agreement to acquire Starwood Hotels &amp; Resorts Worldwide (&quot;Starwood&quot;) through a merger transaction. Marriott expects to close the transaction in mid-2016.</p> <p>Marriott will release its fourth quarter earnings for 2015 on Thursday, February 18.</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/14929/marriott_says_2015_looks_strong#comments hotel Wed, 27 Jan 2016 11:58:55 +0000 Don Sniegowski 14929 at http://www.bluemaumau.org IFA Takes Fight against Seattle Wage Hike to U.S. Supreme Court http://www.bluemaumau.org/14925/ifa_takes_fight_against_seattle_wage_hike_us_supreme_court <!-- google_ad_section_start --><div class="photoright"><img alt="Seattle minimum wage" src="https://c2.staticflickr.com/4/3680/12059302904_ca4c03434c_c.jpg" style="width: 330px; height: 186px;" /> <div class="caption">Seattle march for $15 wage on ML King Day in 2014. Photo/<a href="https://www.flickr.com/photos/pnwbot/12059302904" target="_blank">pnwbot</a></div> </div> <p>WASHINGTON &ndash; The International Franchise Association announced yesterday that it had now taken its argument against Seattle&#39;s new $15 an hour minimum wage hike to the <a href="http://www.franchise.org/sites/default/files/IFA%20Petition%20for%20Cert.pdf" target="_blank"><span style="color:#003b6e; background-color:white"><strong>U.S. Supreme Court</strong></span></a> because it discriminates against franchise owners.</p> <!--break--><!--break--><p>The IFA filed its lawsuit against the city in June of 2014, with five Seattle franchisees also named as plaintiffs. It was seeking to block portions of the city&#39;s law, arguing that it was treating franchisees as large, national companies rather than small, locally-owned businesses.</p> <p>The association lost. After a federal judge denied the association&#39;s first request for the injunction last March, Seattle&#39;s first mandatory minimum wage increase went into effect on April 1, 2015.</p> <p>The new law states that businesses with fewer than 500 employees will have seven years to reach $15 for all workers. But large businesses and franchises would only have three years and an additional one-year grace period if they provide health insurance to their workers. The judge explained that the IFA &quot;did not raise serious questions going to the merits on any of its claims, nor did it show that an injunction is in the public interest.&quot;</p> <p>&quot;The controlling Supreme Court precedent and the conflict among the decisions of the federal circuit courts have proven that a Supreme Court review of the Ninth Circuit&#39;s decision is the appropriate next step,&quot; said IFA President &amp; CEO Robert Cresanti. &quot;Our appeal has never sought to prevent the City of Seattle&#39;s wage law from going into effect.&nbsp; Our appeal to the Supreme Court will be focused solely on the discriminatory treatment of franchisees under Seattle&#39;s wage law and the motivation to discriminate against interstate commerce.&quot;</p> <p>IFA said yesterday that the Employment Policies Institute issued a&nbsp;<a href="https://www.epionline.org/studies/whats-in-a-brand-name/?utm_content=buffer32f88&amp;utm_medium=social&amp;utm_source=twitter.com&amp;utm_campaign=buffer" target="_blank">report last week</a>&nbsp;showing that raising the minimum wage to $15 an hour will hurt franchise businesses disproportionately compared to non-franchise businesses.&nbsp;The association said, &quot;The survey found that 64 percent of franchise businesses would likely reduce hours compared to 46 percent of non-franchise businesses. The EPI survey concluded that there is no rationale behind treating franchise businesses differently than other small businesses. More than half of those surveyed, 65 percent of franchise businesses, said would likely need to reduce staff in response to a $15 minimum wage.&quot;</p> <p>News reports today stated that Seattle Mayor Ed Murray, a Democrat who championed the wage hike, made this comment: &quot;Rather than investing in lawyers to prevent workers from earning higher wages, it is time for these large businesses to begin investing in a higher minimum wage for their employees.&quot;</p> <p>Seattle is not the only city making a change to minimum wage laws. Boston&#39;s mayor now says he backs the $15 an hour minimum wage. &quot;We&#39;re starting to see the momentum going that way, so I felt it was the appropriate time,&quot; he stated. New York Governor Andrew Cuomo also made his decision. &quot;Last year, I proudly raised the minimum wage for airport workers to $10.10 per hour and this year, I&#39;m fighting for $15. Now the Port Authority must get on board and do the same,&quot; Gov. Cuomo declared. And in California, Long Beach and Santa Monica have also made the move to the higher wage.</p> <p>IFA said it expects the U.S. Supreme Court to decide in the spring whether it would take the case.</p> <hr /> <p><strong>Related Reading</strong>:</p> <ul> <li><span style="color:#7a7a7a; background-color:white">&nbsp;<a href="http://www.franchise.org/sites/default/files/IFA%20Petition%20for%20Cert.pdf" target="_blank"><span style="color:#003b6e"><strong>IFA Petition for a Writ of Certiorari</strong></span></a></span> <strong> </strong></li> <li><a href="http://www.bluemaumau.org/14703/ifa_appeal_rejected_again_seattle%E2%80%99s_15_minimum_wage_law" target="_blank">IFA Appeal Rejected Again on Seattle&#39;s $15/Hour Wage Law</a></li> <li><a href="http://www.seattletimes.com/business/economy/franchise-group-appeals-seattle-wage-law-to-supreme-court/" target="_blank">Franchise Group Appeals Seattle Labor Law to Supreme Court</a></li> </ul> <!-- google_ad_section_end --> http://www.bluemaumau.org/14925/ifa_takes_fight_against_seattle_wage_hike_us_supreme_court#comments Legal claim & allegation Fast-food worker strikes Seattle minimum wage $15 an hour SEIU U.S. Supreme Court Tue, 26 Jan 2016 23:29:12 +0000 Janet Sparks 14925 at http://www.bluemaumau.org