en Jared’s Ex-Wife Sues Subway Claiming Corporate Knew about Child Sex Abuse <!-- google_ad_section_start --><p><img alt="Subway interior" src="/sites/default/files/resize/u9/Subway%20interior-321x214.png" style="width: 321px; height: 214px; margin-right: 5px; margin-left: 5px; float: right;" width="321" height="214" /></p> <p>After repeatedly denying it had received any complaints about celebrity pitchman Jared Fogle requesting sex with children while promoting its brand, Subway and its Franchisee Advertising Fund are now facing a lawsuit filed on behalf of Jared&#39;s former wife and children. </p> <!--break--><!--break--><p> The complaint alleges that the multi-billion-dollar chain knew about his depravities for over a decade but failed to take proper action.</p> <p>Jared Fogle was first discovered by Subway in 2000, when a restaurant manager informed the franchisor that his college-student customer was successfully losing weight by&nbsp;only eating Subway sandwiches. The company immediately seized the opportunity to make Jared its official national advertising spokesman, a cash cow in growing the sub-sandwich chain to new heights. Subway, under parent company Doctor Associates&nbsp;Inc., eventually increased U.S. sales under Jared&#39;s tenure from $3.1 billion to $11.5 billion, growing its locations to more than 38,000 stores in 100 countries. Subway touted that was more nationally and globally than McDonald&#39;s Corporation.</p> <p>The lawsuit, filed yesterday in Hamilton Superior Court, Indiana, on behalf of Kathleen &quot;Katie&quot; McLaughlin and Jared&#39;s two children by her, claims that Subway was notified at least three times about Jared&#39;s &quot;sexual interest in and activity with children,&quot; but continued to capitalize on his fame to drive company sales. The complaint states that Subway even launched multiple campaigns that required Jared to visit elementary schools around the country, including Indiana where Jared and his family lived. One, &quot;Jared&#39;s School Tour,&quot; was launched in 2004 as a childhood obesity prevention initiative, requiring the star promoter to visit elementary schools throughout the United States. Another, &quot;Tour de Pants,&quot; had Jared traveling the country wearing the pants he once wore when he weighed 425 pounds.</p> <p>Subway&#39;s chief marketing officer stated in 2013 that &quot;one-third to one-half of Subway&#39;s growth was directly attributable to Jared.&quot;</p> <p>The suit further asserts, &quot;Just months before Jared was arrested and charged with child pornography and sex with minors, Subway signed Jared to a two-year extension of his previous five-year contract with Subway to continue as its spokesman in January 2015.&quot;</p> <p>Business Insider yesterday quoted McLaughlin saying, &quot;Finding out that your husband and the father of your children is a child predator, and knowing that his job involved him visiting schools on a regular basis is devastating.&quot; Jared&#39;s former wife said she filed the lawsuit to get answers from Subway regarding its knowledge of her husband&#39;s sexual attraction to children. A Subway spokesman responded only by stating, &quot;As this is pending legal action, we cannot provide comment.&quot;</p> <p><strong>Subway&#39;s pitchman&#39;s fall from grace </strong></p> <p>FBI agents arrested Jared Fogle on July 7, 2015, in connection with the agency&#39;s child pornography investigation&nbsp;after raiding his affluent home in Indiana. Federal authorities removed documents, computers and DVDs, taking them out to a large mobile forensics lab parked in Fogle&#39;s driveway. His two young children were at home at the time.</p> <p>Jared&#39;s attorney, Ron Elberger, told a CBS reporter he was not aware of the investigation, but said he believed the raid was connected with the April arrest of his Jared Foundation director, Russell Taylor, on charges of possession of child pornography, photos taken secretly at his home. The day of Fogle&#39;s arrest, a Subway spokesperson issued a statement on Twitter regarding the allegations saying, &quot;Subway and Jared Fogle have mutually agreed to suspend their relationship due to the current investigation.&quot; Subway immediately removed pages from its website that referenced &quot;Jared&quot; in advertising.</p> <p>The day of his arrest, Mother Jones reported that in 2007 Fogle was accused of running a porn industry rental service from his dorm room when he was attending college. Subway dismissed those allegations, saying they had &quot;no knowledge&quot; of the report.</p> <p>Russell Taylor, 44-years-old, was sentenced to 27 years in federal prison for producing child pornography that resulted in a criminal case against Fogle, his family watching as he begged for leniency at the hearing on December 10, 2015. Taylor cried, &quot;I&#39;ve been falling asleep in a puddle of tears every night . . . crying out to God.&quot;</p> <p>Jared Fogle was luckier in sentencing for charges against him, those regarding possession and distribution of child pornography and commercial sex acts with a minor. The judge announced November 11, 2015, that he would remain behind bars in federal prison for 15 years and 8 months, and upon his release, he would endure a lifetime of supervision. Fogle was then 37 years old. In court, Fogle sobbed, &quot;Not a day will go by when I don&#39;t think about what I did to (the victims). Members of my family are also victims of my acts,&quot; noting that his wife will be a single mother. He then continued reading from a written statement, &quot;I so regret that I let so many of you down.&quot; The disgraced celebrity had confessed to a psychiatrist and psychologist that he had spent $12,000 a year on prostitutes. One witness told details of Fogle&#39;s &quot;fantasies about pre-pubertal children.&quot;</p> <div class="photoright"><img alt="" src="" style="width: 320px; height: 373px;" /> <div class="caption">Jared Fogle, 2007. (Photo by <a href="" target="_blank">IlliniGradResearch via </a>Wikimedia Commons)</div> </div> <p><strong>Complaints submitted to Subway resulted in little action</strong></p> <p>The legal action describes three complaints that were made to Subway&#39;s corporate office regarding Fogle&#39;s sexual interests and activity with children&nbsp;during his tenure as a company marketing pitchman. With two of those reports, Subway responded by sending a public relations employee to &quot;ask Jared about the allegations.&quot; With the third report, Subway admitted the complaint was &quot;not properly escalated or acted upon.&quot;</p> <p>In 2004&nbsp;Subway&#39;s senior VP of marketing was told that Jared had approached a young girl at a promotional event for a Las Vegas franchise for a sex act. Other than sending a public relations employee to ask Fogle and the franchisee about the incident, no&nbsp;other action was taken. The second complaint was in 2008 when Cindy Mills, a Florida franchisee at that time, notified Jeff Moody, then-CEO of the Subway Franchisee Advertising Fund Trust, by phone that Jared had made disturbing comments about children, saying &quot;he really liked them young,&quot; and that he had sex with minors from ages 9 to 16. She said he had also suggested &quot;Mills prostitute herself.&quot; CEO Moody&#39;s response was, &quot;Please don&#39;t tell me any more.&quot; He then told her not to worry, Jared had met someone, &quot;a teacher and he seems to love her very much, and we think she will keep him grounded.&quot; Mills also said the CEO related that he had dealt with similar complaints in the past. Again, Subway only asked Fogle about the complaint, which he denied.</p> <p>The third complaint which also concerned Jared&#39;s actions around children&nbsp;came from a Florida journalist, Rochelle Herman-Walrond, in 2011 through Subway&#39;s website. Subway admitted that one was not properly escalated or acted upon. The reporter, who was working with the FBI to record conversations with Jared, publicly indicated he made comments to her about his &quot;desire to perform illegal sexual acts with children.&quot; She told that Jared then asked her &quot;for help in getting him access to children.&quot;</p> <p>The lawsuit states, &quot;Subway failed every test of corporate responsibility in its response to each of these complaints.&quot;</p> <p><strong>Former wife claims intentional infliction, emotional stress on her and children</strong></p> <p>Kathleen McLaughlin claims in the lawsuit that her ex-husband&#39;s weight-loss story was &quot;getting stale&quot; by early 2015, so Subway began promoting Jared&#39;s family as a marketing opportunity. The franchise company began airing a commercial that depicted animated versions of Jared&#39;s family, including his wife and children. She states that she is now suing Subway, alleging that it depicted her in the ad without her consent. McLaughlin accuses Subway of negligence and intentional infliction of emotional distress. She states that the franchisor&#39;s &quot;ambition for sales and growth came at the expense&quot; of her and her children.</p> <p>McLaughlin married Fogle in 2010&nbsp;and finalized their divorce on November 16, 2015, four days prior to the sentencing of husband Jared Fogle. News reports state that she received $7 million as part of her settlement&nbsp;and she now has sole legal and physical custody of their two children, ages four and two.</p> <p>Through her attorneys, Church Church Hittle &amp; Antrim, McLaughlin is bringing five counts against Doctor&#39;s Associates&nbsp;Inc. d/b/a Subway Franchise World Headquarters and Subway Franchisee Advertising Fund Trust. They include invasion of privacy &ndash; misappropriation of likeness, negligence&nbsp;and intentional infliction of emotional distress. They are asking for an award for damages suffered as a result of Subway&#39;s violation of Indiana statute, including statutory and treble damages, attorney fees, and pre- and post-judgment interest.</p> <p>Jared Fogle is incarcerated at the Federal Correctional Institution, Englewood, Colorado.</p> <hr /> <p><strong>Related Articles: </strong></p> <ul> <li> <div style="background: #f2f2f2"><a href="" target="_blank"><span style="color:#3a5195; font-family:Times New Roman; font-size:10pt"><strong>Jared Fogle Sentenced to Nearly 16 Years Goes from Pitchman to &#39;Pariah&#39;</strong></span></a><span style="color:#232121; font-family:Times New Roman; font-size:10pt">&nbsp;(INDYSTAR Article) </span></div> </li> <li> <div style="background: #f2f2f2"><a href=";sa=U&amp;ved=0ahUKEwig28-Y2J_JAhWHJh4KHYilA9oQFggLMAI&amp;client=internal-uds-cse&amp;usg=AFQjCNHOy6ZHY_fRDZcx8rsFKeo2uW593Q" target="_blank"><span style="color:#3a5195; font-family:Times New Roman; font-size:10pt"><strong>Fogle&nbsp;Foundation Head Formally Charged on Child Sex&nbsp;</strong></span></a><span style="color:#232121; font-family:Times New Roman; font-size:10pt"> </span></div> </li> <li> <div style="background: #f2f2f2"><a href=";sa=U&amp;ved=0ahUKEwig28-Y2J_JAhWHJh4KHYilA9oQFggFMAA&amp;client=internal-uds-cse&amp;usg=AFQjCNFVKlNlxEZoOcHYEDx_7gQQsJLN9g" target="_blank"><span style="color:#3a5195; font-family:Times New Roman; font-size:10pt"><strong>Subway&#39;s&nbsp;Disgraced Pitchman&nbsp;Jared Fogle&nbsp;Braces for Sentencing</strong></span></a><span style="color:#232121; font-family:Times New Roman; font-size:10pt"> </span></div> </li> <li> <div style="background: #f2f2f2"><a href=";sa=U&amp;ved=0ahUKEwig28-Y2J_JAhWHJh4KHYilA9oQFgggMAk&amp;client=internal-uds-cse&amp;usg=AFQjCNGGh-RSDAXSPy1ES9XC8UJK2q_CgQ" target="_blank"><span style="color:#3a5195; font-family:Times New Roman; font-size:10pt"><strong>Subway&nbsp;Admits to Serious Complaint of&nbsp;Jared&#39;s&nbsp;Interest in Child Sex&nbsp;...</strong></span></a><span style="color:#232121; font-family:Times New Roman; font-size:10pt"> </span></div> </li> <li> <div style="background: #f2f2f2"><a href=";sa=U&amp;ved=0ahUKEwjgu8XKuPbPAhWH4IMKHdaMCoIQFggOMAM&amp;client=internal-uds-cse&amp;usg=AFQjCNGL74AfFO_VEiulq5wL-0r3Y3XnGw" target="_blank">Subway&nbsp;Ex-Pitchman&nbsp;Jared&nbsp;No Longer Living the Good Life</a> <span style="color:#232121; font-family:Times New Roman; font-size:10pt"> </span></div> </li> <li> <div style="background: #f2f2f2"><a href="" target="_blank">Subway CEO DeLuca Dies of Cancer</a> (September 15, 2015)</div> </li> <li> <div style="background: #f2f2f2"><a href="" target="_blank">Subway Gains Control of $600M Advertising Trust Fund</a></div> </li> <li> <div style="background: #f2f2f2"><a href="" target="_blank"><span style="font-family:Times New Roman; font-size:10pt">Jared Fogle&#39;s Ex-Wife Is Suing Subway, Alleging It Ignored Complaints </span></a><span style="color:#232121; font-family:Times New Roman; font-size:10pt">Business Insider </span></div> </li> </ul> <p style="background: #f2f2f2">&nbsp;</p> <p>&nbsp;</p> <!-- google_ad_section_end --> Legal claim & allegation CEO Jeff Moody child sex abuse FBI investigation franchisee Cindy Mills Fred DeLuca Jared Fogle indicted Kathleen McLaughlin Rochelle Herman-Walrond Russell Taylor of Jared Foundation Subway Franchisee Advertising Fund Subway litigation Tue, 25 Oct 2016 23:57:40 +0000 Janet Sparks 15518 at McDonald’s Comps Up, Burger King Down in Q3 <!-- google_ad_section_start --><div class="photoright"><img alt="All Day Breakfast, McPick 2 contribute to postive McDonald's sales in Q3" src="" /> <div class="caption">McDonald&#39;s all day breakfast &amp; McPick 2 (Photo by <a href="">Mike Mozart</a>)</div> </div> <p>McDonald&#39;s and Burger King announced the results for the third quarter, which concluded at the end of September. Same-restaurant sales in the United States for McDonald&#39;s was up 1.3 percent. </p> <!--break--><!--break--><p> Unfortunately for Burger King franchisees, owners in the United States and Canada experienced a 0.5 contraction of same-restaurant sales.</p> <p>On its success, McDonald&#39;s president and chief executive officer Steve Easterbrook commented: &quot;Customers today are more informed and demand greater choice and variety when they dine out. That&#39;s why we&#39;re evolving the McDonald&#39;s experience to provide more high quality, affordable food and beverage options and convenient solutions for customers on the go.&quot; The CEO continued, &quot;Our third quarter results, including our fifth consecutive quarter of positive comparable sales across all segments as well as improved restaurant profitability, are a testament to the progress we are making to satisfy the needs of today&#39;s dynamic customers.&quot;</p> <p>McDonald&#39;s attributed its rise in a tough restaurant environment to help from its McPick platform of bundles that revolve around the $4 and $5 price point as well as its All Day Breakfast menu that it introduced last year.</p> <p>The franchisor CEO says that profits are up for its franchised restaurants. &quot;Profitability has increased both for McDonald&#39;s and franchisees,&quot; said Easterbrook in an earnings call to analysts on Friday. &quot;At the restaurant level, franchisee cash flows reached all-time highs in many markets including the U.S. These results are testament to our diligent execution of the turnaround plan as we put customers at the center of everything we do.&quot;</p> <p>McDonald&#39;s has been shifting to join the ranks of its competitor Burger King as an asset light franchising model in which franchises own restaurants and the franchisor owns few. &quot;Since the beginning of 2015, we refranchised nearly a thousand restaurants including 140 in the third quarter,&quot; stated McDonald&#39;s CEO. &quot;The large majority of restaurants refranchised to date have been sold to existing conventional franchisees.&quot;</p> <p><img alt="McDonald&#039;s and Burger King Comp numbers" src="" style="float: right; height: 320px; width: 320px; margin-left: 5px; margin-right: 5px;" width="320" height="320" />Mark Kalinowski, restaurant-sector analyst with Nomura Securities thinks the fourth quarter will be tougher for McDonald&#39;s. &quot;McDonald&#39;s U.S. same-store sales will dip into negative territory in Q4, with our projection remaining at -2.0%,&quot; writes Kalinowski to stock investors. &quot;McDonald&#39;s U.S. laps the nationwide introduction of All Day Breakfast in Q4, which helped the Golden Arches achieve a +5.7% same-store sales gain in Q4 2015. McDonald&#39;s U.S. is promoting All Day Breakfast 2.0 during Q4 &ndash; this features the sale of Muffin, Biscuit, and McGriddle sandwiches all day long at McDonald&#39;s restaurants across the U.S.&quot;</p> <p>In China, McDonald&#39;s is in search of finding the right sub-franchisor to pay the right price for its franchising rights and numerous stores there. Unfortunately, its quarterly result will not help sweeten the pot. Store comparable sales in China were down.</p> <p><strong>Burger Kings store comps down </strong></p> <p>Restaurant Brands International Inc., the holding company of quick service restaurant franchisors Burger King and Tim Hortons, had more chagrin news for franchisees. Store comparable sales for Burger King branded quick service restaurants in Canada and the United States shrank by 0.5 percent in the quarter compared to the same period last year. Despite its problems back home, the franchisor continues to strongly expand internationally, helping it draw more royalties and fees from worldwide system-wide sales that grew by 7 percent in constant currency.</p> <p>Daniel Schwartz, chief executive officer of Restaurant Brands International Inc. stressed how Burger King&#39;s system-wide sales increased through worldwide restaurant development and the brand&#39;s focus on guest satisfaction. &quot;We are encouraged with the progress this quarter and are excited by the long-term growth prospects for our brands,&quot; stated Schwartz today.</p> <!-- google_ad_section_end --> Foodservice Mon, 24 Oct 2016 14:04:21 +0000 Don Sniegowski 15517 at Rave Restaurant Reports a Downer of a Year <!-- google_ad_section_start --><p><img alt="pie five" src="" style="width: 320px; height: 213px; float: right; margin-left: 5px; margin-right: 5px;" />Rave Restaurant Group&nbsp;Inc. (NASDAQ: RAVE), the Dallas-based holding company of franchisors Pie Five and Pizza Inn, reported plummeting same-restaurant sales in its last quarter for the fiscal year ended June 26, 2016. </p> <!--break--><!--break--><p> Last month Rave disclosed a net loss in income of $2.3 million in its fourth quarter and a massive loss of $8.9 million for the fiscal year.</p> <p>Such misfortune comes right on the heels of many franchise owners now opening stores in the newer Pie Five pizza chain, which first began selling franchises in 2013.</p> <p>In January&nbsp;2015&nbsp;Pizza Inn Holdings freshened its name to become Rave Restaurant Group. At the same time&nbsp;it changed its ticker symbol&nbsp;from its old PZZI to sizzling RAVE. Having been around since 1958, Pizza Inn was making room and creating shareholder buzz for the future, which it deemed to be in fast casual. It created Pie Five in 2011&nbsp;and began selling franchises in 2013.</p> <p>Trade journals sang in chorus about how Pie Five was hot, hot, hot &ndash; one of the fastest growing amidst the exploding fast-casual segment.</p> <p>For those searching for the right&nbsp;franchise in their future, Fast Casual magazine rated Pie Five among its &quot;Movers &amp; Shakers&quot; for three consecutive years. QSR magazine rated it in 2015 as its &quot;Best Franchise Deal&quot;&nbsp;and Forbes ranked it one of its &quot;10 Hot New Restaurant Chains from Established Brands.&quot;</p> <p>Unfortunately&nbsp;the passage of&nbsp;time&nbsp;has shown that the reality has&nbsp;not matched the hype.</p> <p>Pie Five restaurants experienced a 5.1 percent decline in&nbsp;same-store sales for&nbsp;the year. The drop&nbsp;was worse in the company&#39;s fourth quarter, when same-restaurant sales were down&nbsp;12 percent.</p> <p>It was not just franchisees who have struggled. Pie Five itself has not figured out how to operate profitable stores. Despite collectively being able to squeeze out a positive cash flow&mdash;if marketing and advertising expenses aren&#39;t paid, Pie Five&#39;s 31 company-owned stores lost $6 million before taxes&nbsp;from continuing operations for the fiscal year.</p> <p>Even Rave&#39;s older, well-established Pizza Inn branded restaurants decreased domestically in comparable sales by 1 percent for the year, although same-store sales in its fourth quarter managed to increase by a thin-crusted 0.3 percent.</p> <p>Despite plunging sales at its stores, the newer Pie Five continues to be able to sell franchises. This month alone the small pizza chain announced the opening of restaurants in Illinois, Tennessee and North Carolina. For franchisor Pie Five, royalties boost its revenues the more franchises that it can open for business. Its system-wide sales rose by a whopping 110 percent for the franchisor in its fiscal year 2016, growing&nbsp;by 59.2 percent in the fourth quarter.</p> <p>&quot;The Pie Five system continues to grow across the country with a strong pipeline of restaurant openings scheduled for the next several quarters,&quot; said Clinton Coleman, interim chief executive officer for Rave Restaurant Group&nbsp;Inc.&nbsp;Coleman became acting CEO in July on the heels of&nbsp;the year&#39;s poor performance,&nbsp;replacing Randy Gier.</p> <p>Unfortunately&nbsp;just because a company increases its revenues does not mean its profits increase. The net losses for Pie Five&#39;s parent company are mounting up. Rave lost nearly $2 million in the fiscal year that ended on June 28,&nbsp;2015. It reported a few weeks ago that its net loss for 2016 was worse:&nbsp;$8.9 million.</p> <p>That worsening loss of money has made Wall Street nervous. After the release of the bad news, Zacks Investment Research downgraded Rave Restaurant Group to a&nbsp;&quot;sell,&quot; warning stockholders that company shares are overvalued.</p> <p>A franchisor losing money should make franchisees nervous as well. That is because franchisors that are in financial stress must find ways to cut costs. That can mean fewer staff and less support to franchise owners. It can also hint at a franchisor who is clueless on how to develop profitable franchises. The market will pay much less in a troubled brand when a franchisee wants to sell its franchised restaurant. Worse, if losses continue, it can mean an insolvent franchisor. That brings a whole host of other problems to franchisees.</p> <p>At the end of September&nbsp;Pie Five&#39;s franchise development leader&nbsp;Mark Ramage&nbsp;moved to Denver to try his luck with Smashburger. On September 28&nbsp;Rave announced it had hired Brett Heinen as its new director of franchise development.</p> <!-- google_ad_section_end --> Foodservice fast casual pizza Pie Five Pizza Inn Rave Restaurant Group Sat, 22 Oct 2016 05:44:10 +0000 Don Sniegowski 15515 at Volvo Truck Franchisee Asks Court to Uphold $6.5M Jury Award <!-- google_ad_section_start --><div class="photoright"><img alt="" src="" style="height: 180px; width: 320px;" width="320" height="180" /> <div class="caption">Volvo 2016 VNL 670 Model (Photo: Thecohorts, CCBY-SA 4.0,</div> </div> <p>After a jury in Indiana district court awarded a truck dealership $6.5 million last year, finding Volvo Trucks North America breached its franchise agreement through price discrimination, the franchisee is now asking the federal appeals court to uphold the award while the U.S. Court of Appeals for the Seventh Circuit in Chicago is hearing the appeal of the lawsuit.</p> <!--break--><!--break--><p>Earlier this month, U.S. District Court, Southern District in Indiana, granted Volvo&#39;s motion to stay enforcement and execution of the $6.5 million judgment, and other costs, pending resolution of Mohr&#39;s appeal. While Mohr did not object to the stay, the franchisee dealership asked for a bond to be posted by Volvo to assure payment while the appeal was being decided. Judge William T. Lawrence stated, &quot;In this case, the Court has a high degree of confidence in the Defendant&#39;s [Volvo&#39;s] ability to pay the judgment, and there does not appear to be any impediment to timely collection if the appeal is resolved in the Plaintiff&#39;s [Mohr] favor.&quot;</p> <p>Judge Lawrence said in his October 4, 2016 ruling, &quot;Rather, the Court determines that this case falls into the category of cases in which the defendants&#39; ability to pay the judgment is so plain that the cost of a bond would be a waste of money.&quot;</p> <p>The legal battle erupted in 2012 when Volvo Trucks filed two federal lawsuits against Andy Mohr Truck Center, a veteran auto dealer in Indiana that the company signed on in 2010, to grow its market share. In the complaints, Volvo asserted the franchisee breached its contract when it did not live up to its commitment to build a new dealership facility and purchase $1 million in Volvo truck parts. It also alleges Mohr did not sell the 500 trucks per year or buy 5 new parts-delivery vans, which the franchisee promised to do. Because of that, Mohr did not achieve his anticipated market gains. Volvo claimed the dealership fraudulently induced it to enter into the five-year franchise agreement, by making promises that he was unable to fulfill.</p> <p>Volvo was seeking unspecified damages for lost market share and lost profits of more than $100,000, and asked that its contract with Andy Mohr Truck Center be rescinded, according to the lawsuit.</p> <p>The Andy Mohr dealership fought back, filing a countersuit against Volvo. The Indiana franchisee alleged Volvo did not live up to its promise to award him the Mack Trucks franchise, which Volvo owned and controlled. Mohr also claimed the truck franchisor failed to provide the same price discounts on its trucks that it offered to similar franchisees elsewhere. The countersuit stated that Volvo &quot;intentionally lowballed price concessions causing his dealership to lose out on approximately 1,300 truck sales because it did not receive the same discounts as rival Volvo dealerships.&quot;</p> <p>The district court ruled in Mohr&#39;s favor in August 2015, after the jury found Volvo Trucks violated the Indiana Deceptive Franchise Practices Act for price discrimination.</p> <p>Mohr&#39;s attorney, Robert MacGill of Barnes &amp; Thornburg LLP, said at the time they filed the countersuit that Volvo Trucks was to blame for the broken relationship, not his client. He then stated, &quot;Andy Mohr Truck Center has notified Volvo of its claim for damages arising from Volvo&#39;s conduct inducing the sale of the franchise.&quot; Baker Hostetler is representing Volvo Trucks North America.</p> <hr /> <p><strong>Related Articles:</strong></p> <ul> <li><a href="" target="_blank"><strong>VolvoTruck Dealer Wants Court to Uphold $6.5 Million Award</strong></a><strong> </strong></li> <li><strong><a href="" target="_blank">Andy Mohr Target of Volvo Trucks Lawsuit</a> </strong></li> <li><a href="" target="_blank"><strong>Andy Mohr Truck Center Wins $6.5M Judgment against Volvo</strong></a><strong> </strong></li> </ul> <!-- google_ad_section_end --> Legal claim & allegation fraudulent inducement price discrimination Volvo dealership litigation Thu, 20 Oct 2016 23:01:54 +0000 Janet Sparks 15513 at IFA Sponsored Expo West Blindsided by Colorado Beer Fest <!-- google_ad_section_start --><div class="photoright"><img alt="West Franchise Expo in Denver" src="/sites/default/files/resize/DenverExpo-321x180.jpg" style="width: 321px; height: 180px;" width="321" height="180" /> <div class="caption">Franchisors sell to an empty room at Franchise Expo West</div> </div> <p>The International Franchise Association, franchising&#39;s largest worldwide trade organization, came away from MFV Expositions&#39; Franchise Expo West&#39;s three-day event&nbsp;last weekend confounded and disappointed in Denver, Colorado&#39;s Convention Center&nbsp;site.</p> <!--break--><!--break--><p>After researching the location for over a year, MFV&nbsp;determined that Denver&#39;s strong economy, explosive population and job growth were major factors in bringing 200 franchisors into the Mile High City for its largest franchising convention in the western United States. The&nbsp;firm&nbsp;invested big bucks in radio, television advertising and a Denver Post four-page promotion section prior to the expo.</p> <p><a href="http://MFV Expositions">MFV Expositions</a>, producer of major franchise shows, IFA and some of their exhibitors closed up&nbsp;the franchise expo event on October 6 with little to show for it.</p> <p>What was the problem? The&nbsp;West Franchise Expo had to compete with Denver&#39;s Great American Beer Festival for all three days of its event, right next door, bringing in 65,000 beer-drinking aficionados to the convention center. After identification&nbsp;checks and passing through metal detectors, the crowds pushed their way into the beer festivities to take advantage of &quot;the largest collection of U.S. beer ever served in a public tasting event,&quot; all at an advertised price of $80 a ticket. As beer festival spots&nbsp;sold out, scalpers sold tickets for as much as $120, Blue MauMau sources stated.</p> <p>MFV Expositions president Tom Portesy said it was no secret that he was disappointed in the attendance numbers at this year&#39;s Franchise Expo West, formerly branded as the West Coast Expo while it was in&nbsp;Southern California. He was also chagrined at&nbsp;the way they were treated by the Colorado Convention Center and the City of Denver. &quot;I&#39;ve been putting on these shows for 30 years and I do not feel we, or anyone else I know in the trade show industry, have ever been misled to the degree that we were in terms of the venue and what was happening.&quot; He didn&#39;t stop there. In regard to the first-time event for the franchise&nbsp;expo&nbsp;in Denver,&nbsp;Portesy exclaimed, &quot;For the convention visitor bureau in Denver not to disclose to MFV the magnitude of the Great American Beer Festival event, what it does, what happens at the convention center building, and what happens in the downtown during the Beer Fest was just atrocious. It resulted in our show getting half of what we and the exhibitors expected.&quot;</p> <div class="photoright"><img alt="" src="" style="width: 255px; height: 320px;" /> <div class="caption">Escalator to Beer Fest is consistently&nbsp;filled</div> </div> <p>​Portesy emphasized that the City of Denver and the convention center had the opportunity to shine in front of 200 franchisors, all of which put on their own annual conventions. He said Denver can now forget about that business. &quot;They really blew it,&quot; he said, explaining, &quot;We don&#39;t know where the breakdown was in planning our event. We go through a certain process a year-and-a-half before the expositions to find out what&#39;s going on in the city and the surrounding area. For Denver officials not to tell us that this is not just a beer fest, this is the largest beer fest in the United States, bringing in 65,000 people from around the world. And everyone in Denver knows it. That&#39;s the bad part of what happened,&quot; Portesy said.</p> <p>Portesy told how they had spent a lot of dollars locally, after national and regional advertising on television and radio. But he said most people in the city knew, with this beer festival going on, to stay away from downtown Denver. &quot;So, it&#39;s very disappointing. We&#39;re disappointed in the numbers, in the building, in the hurdles the exhibitors had to get through to get into the convention center building. And we&#39;re disappointed with the reaction to the building onsite. It was horrible for them to mislead us the way they did. It&#39;s worse for them to be tone deaf onsite. They were asking attendees for badges while they were trying to make their way to our registration booths.&quot;</p> <p>The MFV president said that was the bad part of what happened at the event last week, but there was a very positive side. Many of the exhibitors came up to him during the franchise show to say while there were&nbsp;less people than they expected, and less than they wanted, they had some very qualified candidates. &quot;Considering the hurdles they cleared and the effort they made to get down to our event&nbsp;is indicative of their seriousness.&nbsp;This sentiment was made over and over&hellip;so our hope and expectation is that the conversions will be even higher than at one of our other events,&quot; he stated.</p> <p>The Franchise Expo West is already booked for Denver next year, but Portesy is still in conversations with the convention center representatives. He said he can&#39;t imagine that the people for the event venue would do these things intentionally. &quot;I hope they didn&#39;t put us and our exhibitors and our industry in this situation knowingly for the cost of the Denver convention venue. This type of thing just doesn&#39;t happen. The convention business bureau in every city I have been to in my 30 years of doing this are always transparent. They want everybody leaving their conventions with a good taste, for obvious reasons.&quot;</p> <p>Portesy said, &quot;Knowing what we know now, if we decide to do it again in Denver, we are going to have to feel very, very comfortable prior to the expo. We are not going to put our exhibitors in a situation again that we can&#39;t control. But if it happens again, then shame on us.&quot;</p> <!-- google_ad_section_end --> Franchising Denver beer fest Franchise Expo West franchisor exhibitor Great American Beer Festival International Franchise Association MFV franchise shows selling franchise units Tom Portesy Fri, 14 Oct 2016 19:46:06 +0000 Janet Sparks 15506 at Workers File 15 EEOC Complaints against McDonald’s Claiming Sexual Harassment <!-- google_ad_section_start --><div class="photoright"><img alt="" src="" style="height: 248px; width: 670px;" width="670" height="248" /> <div class="caption">(Photo from FightFor$15 Facebook page)</div> </div> <p>While McDonald&#39;s promotes its zero tolerance for workplace sexual harassment in its 14,000 restaurants across the country, 15&nbsp;female workers claim the hamburger chain is not enforcing its policy. To prove it they have filed complaints with the Equal Employment Opportunity Commission, not only against the franchisor but also against franchisees.</p> <!--break--><!--break--><p>The employees state on videos and in street protests that they are tired of being victims of groping, lewd comments and propositions from store managers and supervisors offering cash in exchange of sexual favors. They demand that McDonald&#39;s take action against the perpetrators instead of ignoring their verbal complaints.</p> <p>Kendall Fells, organizing director of the &quot;Fight for $15&quot; advocacy group, stated, &quot;As the country&#39;s second-largest employer, McDonald&#39;s has a responsibility to set standards in both the fast-food industry and the economy overall. Cooks and cashiers are going to keep on joining together, speaking out and taking every step possible to make sure McDonalds follows its own policies and gets sexual harassment off the menu.&quot;</p> <p>One complaint by a worker in Folsom, California alleges that her supervisor grabbed her breasts on several occasions and intentionally rubbed against her in a very sexual manner. He then sent her a text message offering $1,000 for oral sex and became hostile to her when she complained to her general manager. She states that after he cut her hours she quit her job because she could no longer make a living at McDonald&#39;s. &quot;The lesson was clear: Speak out and you&#39;ll face the punishment,&quot; she said.</p> <p>EEOC defines sexual harassment as a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964. Title VII applies to employers with 15 or more employees, including state and local governments, and applies to employment agencies and labor unions, as well as the federal government. It also states that it is unlawful to retaliate against an individual for opposing employment practices that discriminate based on sex or for filing a discrimination charge, testifying, or participating in any way in an investigation, proceeding or litigation under Title VII.</p> <h3><span style="color:#800000;"><strong>Past practices of sexual harassment and labor law violations </strong></span></h3> <p>While the franchisor&#39;s operations and training manual reads, &quot;McDonald&#39;s has zero tolerance for any form of sexual harassment of any employee,&quot; McDonald&#39;s and its franchise owners have past experience with sexual harassment charges. A franchisee of McDonald&#39;s in 2012 agreed to pay $1 million to 10 workers and provide substantial injunctive relief to resolve a sexual harassment class action lawsuit filed with the EEOC. The 25-store owner, Missoula Mac, violated federal civil rights laws at its Reedsburg, Wisconsin McDonald&#39;s shop by permitting male employees to create a hostile work environment of sexual harassment against female co-workers, some of whom were teenagers, and by retaliating against those who complained.</p> <p>Another franchisee settled a 2008 EEOC lawsuit with similar claims for over a half million dollars. The Durango, Colorado McDonald&#39;s restaurant owner refused to take action even though he was aware of the violations of policy, RT International News Channel reported. The victims were between 16 and 17 years old.</p> <p>These latest cases are different in that McDonald&#39;s Corporation has also been named as a defendant. While most of the complaints were filed by employees at franchised restaurants, all complaints state that McDonald&#39;s corporate is also responsible because it controls working conditions at shops, and it provides sexual harassment policies for the franchise locations.</p> <p>The issue is whether or not McDonald&#39;s is a &quot;joint employer&quot; with its franchisees. Currently, the hamburger chain is facing a class action lawsuit in federal court in San Francisco by 800 workers at several franchise restaurants. They are alleging that they are owed back pay for working overtime and for being required by franchisees to skip their meal breaks. McDonald&#39;s vehemently denies that it is a joint employer, a decision that could render the franchisor liable for labor violations of its franchisees and require it to bargain with workers.</p> <p>And in a National Labor Relations Board case, Fight for $15 claims McDonald&#39;s is a joint employer of franchise workers who allege they faced retaliation for joining nationwide strikes. Again, McDonald&#39;s firmly denies the accusations.</p> <h3><span style="color:#800000;"><strong>Devil in the survey details</strong></span></h3> <p>The complaint filings and protests come as a trio of women&#39;s advocacy and anti-violence organizations released survey results last Wednesday, showing that 42 percent of women in the fast food industry experience unwanted sexual behavior on the job. The current results from <a href="">Hart Research Associates</a> are 60 percent higher than a 2011 ABC News/Washington Post poll found in workplaces overall. Hart Research conducted a nationwide online survey from July 22 to 27, 2016, among 1,217 women ages 16 and older who work in fast food restaurants in non-managerial positions. The survey also reveals that more than one in five women who face sexual harassment, 21 percent, report that after raising the issue, their employer took some negative actions.</p> <hr /> <center><iframe allowfullscreen="true" allowtransparency="true" frameborder="0" height="315" scrolling="no" src=";show_text=0&amp;width=560" style="border:none;overflow:hidden" width="560"></iframe></center> <p><strong>Related Articles:</strong></p> <ul> <li><a href="" target="_blank">&#39;McDonald&#39;s, Hands Off My Buns&#39;: Employees Protest Sexual Harassment in more than 30 States</a> (RT International News Channel)</li> <li><a href="" target="_blank">Hart Research Associates</a> (Survey)</li> <li><a href="" target="_blank">Owner of 25 McDonald&#39;s Restaurants to Pay $1 Million in EEOC Sexual Harassment Suit</a> (EEOC July 18, 2012)</li> <li><a href="" target="_blank">Happy Meals, Unhappy Workers</a></li> <li><a href="" target="_blank">What You Ought to Know about the Blockbuster McDonald&#39;s Hearing Today in New York</a></li> <li><a href="" target="_blank">Video: Sexual Harassment- Fight for $15</a></li> </ul> <!-- google_ad_section_end --> Legal claim & allegation EEOC fast food worker complaint Fight for $15 McDonald's zero-tolerance policy SEIU sexual harassment Tue, 11 Oct 2016 00:49:14 +0000 Janet Sparks 15500 at UK Restaurant Visits Up while US Dips in Q2 <!-- google_ad_section_start --><p>Just at the end of the second quarter of 2016 Britain voted to leave the European Union. But at that point, United Kingdom consumers had already made enough foodservice visits to give the United Kingdom the strongest global foodservice market for the quarter, reports The NPD Group. Britain&#39;s foodservice growth in the quarter ending June was driven by a balanced mix of traffic and average spend per eater increases, according to NPD Group&#39;s CREST, which continually tracks consumer use of foodservice outlets in Australia, Brazil, Canada, China, France, Germany, Great Britain, Italy, Japan, Russia, Spain, and the United States.</p> <p>In addition to Great Britain, Australia, France, Japan, and Spain posted foodservice traffic gains. Consumer visits to restaurants in Germany held stable in the second quarter compared to the same quarter in 2015. China posted a rare decline in the quarter and visits were down in Canada, Italy, Russia, and the United States. As it prepared to host the Summer Olympic Games, Brazil couldn&#39;t overcome the country&#39;s economic woes and posted the steepest foodservice traffic decline in all countries tracked by NPD&#39;s foodservice market research.</p> <p>Visits at the morning meal are growing broadly. But it is still a relatively small day part in terms of traffic share in most global markets. It is not able to drive overall growth like the other day part juggernauts can. The strongest markets, Australia and Europe, saw growth from all three main day parts of morning meal, lunch, and dinner. In Spain the main day parts are morning meal and PM snack, which is dinner time, and both day parts increased traffic. Japan, China, and the U.S. all showed growth at each country&#39;s peripheral day parts.</p> <p>&quot;Last quarter&#39;s exciting, broad growth around the world proved to be ephemeral because this quarter is much weaker,&quot; says Bob O&#39;Brien, senior vice president, global foodservice at The NPD Group. &quot;Things are still growing in most of Europe, but our global analysts are wary of their near-term prospects. Chains are not as broadly strong and main day parts are weak outside of the strongest markets. And, in the U.S., Europe, Russia and Canada, there is great uncertainty about the direction of the overall environment.&quot;</p> <!-- google_ad_section_end --> Trends Tue, 04 Oct 2016 20:13:11 +0000 Don Sniegowski 15494 at Lawsuit Unsealed Accusing El Pollo Loco of Stock ‘Pump and Dump’ Tactics <!-- google_ad_section_start --><div class="photoright"><img alt="" src="" style="height: 250px; width: 320px;" width="320" height="250" /> <div class="caption">El Pollo Loco HQ, Costa Mesa, Calif. (photo: El Pollo Loco website)</div> </div> <p>COSTA MESA, California &ndash; An investor lawsuit in Delaware was unsealed last month alleging that directors and officers of fast food chain El Pollo Loco concocted a &quot;pump and dump&quot; stock scheme in 2015, allowing them to pump up the value of stock through false public statements and financials, and then dumping over six million shares before the true dismal numbers were released.</p> <!--break--><!--break--><p>Kevin Diep, a stockholder since November 18, 2014, alleges in his complaint that the executives breached their fiduciary duties when they collectively sold approximately $132 million of the company&#39;s stock at $21.85 a share, all at a contrived opportune time to personally profit from their transactions. The complaint states, &quot;These sales were all extremely favorably timed.&quot; It reveals that on May 14, 2015, just five days before the officers sold their stock, El Pollo Loco&nbsp;(Nasdaq:LOCO) announced its results for the first quarter of fiscal year 2015. At that time CEO/president Stephen J. Sather, chief marketing officer Edward J. Valle and chief financial officer Laurance Roberts discussed El Pollo Loco&#39;s slower same store sales growth, compared to prior quarters, and the even lower same store sales growth projected for 2015 second quarter.</p> <p>&quot;The three officers denied that these trends were attributable to recent price increases on various items of El Pollo Loco&#39;s value menu, and instead blamed other factors,&quot; the derivative (stockholder) lawsuit states. The three officer then reiterated guidance for 2015 full year store sales growth of between three percent and five percent. As a result, investors believed that El Pollo Loco&#39;s customers continued to view its menu offerings as good value, and that the company could continue to increase prices with no adverse effect on customer traffic.&quot;</p> <p>The &quot;public version&quot; of Diep v. El Pollo Loco Holdings, Inc. states that Sather, Roberts and Valle&#39;s reassuring statements inflated El Pollo Loco&#39;s stock price. When responding to direct questions from analysts on the May 14, 2015 conference call, the three officers denied any impact caused by the company&#39;s abandonment of the value-priced menu and the increase in prices, and again attributing any emerging signs of slow-down in the 2015 first quarter to other factors. In addition, the company and its officers repeatedly reassured investor that the company&#39;s three percent to five percent sales growth guidance for the rest of 2015 remained intact.</p> <p>Just five days after these positive, reassuring statements were made to investors,&quot; the company insiders sold approximately 6 million shares for $132 million in proceeds, the complaint states, adding, &quot;It was not until approximately three months after the May 14 conference call that this unusually large volume of insider sales began to make sense.&quot;</p> <p>It states that on August 13, 2015, after the market closed, El Pollo Loco stunned the market by revealing that customer traffic had been adversely affected by the decision in 2015 first quarter to depart from the value-priced menu offerings and raised prices. The company announced that comparable store sales growth for the 2015 second quarter was just 1.3 percent, or more than 50 percent lower than the three percent to five percent range company officers had led the market to expect.</p> <p>In reaction to this announcement, the price of El Pollo Loco stock plummeted 20 percent, from a closing price of $18.36 per share on August 13, 2015 to $14.56 per share on August 14, 2015, the lowest closing price since the company went public on July 14, 204, and some 33 percent below the price at which the company&#39;s insiders sold their shares back on May 19, 2015.</p> <h3><span style="color:#800000;"><strong>Securities lawsuit key players and events </strong></span></h3> <p>El Pollo Loco, Spanish for &quot;The Crazy Chicken&quot;, is a Delaware corporation founded in 1980. It has 433 restaurants comprised of 186 company-owned/operated and 247 franchised restaurants. They are located in California, Arizona, Nevada, Utah and Texas. Approximately 80 percent are located in California. El Pollo Loco headquarters is located in Costa Mesa, California.</p> <p>Prior to taking the company public in July 2014, the State of California raised its minimum wage 12.5 percent from $8 to $9 per hour. California was set to again increase its minimum wage by an additional 11.1 percent to $10 per hour, effective January 1, 2016. In Los Angeles, where El Pollo Loco generates 80 percent of its revenues, minimlum wage was set to increase to $15 by 2020. The wage increases not only affected minimum wage workers, it had a ripple effect throughout the company&#39;s entire work force, the complaint states.</p> <p>Lead plaintiff Kevin Diep, a stockholder in El Pollo Loco since November 18, 2014, first filed the lawsuit on June 28, 2016. On September 16, 2016, El Pollo Loco produced 572 pages of books and records in response to Diep&#39;s lawsuit demand.</p> <p>Lead defendant Stephen J. Sather, CEO and president and board member since 2006, had extensive experience in the restaurant industry. He created the company&#39;s operations dashboard through which executives and management track and monitor the company&#39;s sales metrics, including comparable store sales, on a real-time basis. The lawsuit describes the &quot;elaborate and extensive metric tracking system&quot; as one that utilized the point-of-sale computers at each restaurant to gauge its business. Diep expressed in his complaint that as a result of this system that measures sales and metrics, Sather and other company officials realized the menu and pricing changes were having a negative impact on customer service. As a result, El Pollo Loco officials decided in February 2015 to raise prices on its menu items and remove the company&#39;s popular $5 combo meal, both in response to rising labor costs due to minimum wage hikes.</p> <p>Another key defendant, Trimaran Pollo, founded in 2005, is owned by Trimaran Capital Partners, a private asset management firm in New York, and Freeman Spogli &amp; Co., a private equity firm based in Los Angeles. They are referred to in the lawsuit as &quot;controlling stockholders.&quot; The complaint states that on July 2014, after several years of staging a company turnaround, the &quot;controlling stockholders&quot; took the El Pollo Loco company public in an underwritten initial public stock offering, selling approximately 8.2 million shares of common stock at $15 per share and raising more than $123 million in gross proceeds.</p> <p>Under the stockholders&#39; agreement, El Pollo Loco remained a subsidiary of Trimaran Pollo following the IPO. After the IPO, the &quot;controlling stockholders&quot; continued to collectively own more than 70 percent of El Pollo Loco&#39;s equity. In November 2014, the company commenced a secondary offering, selling 5.6 million shares of common stock. Collectively, they maintained 60 percent of the company&#39;s shares, &quot;sufficient for majority votes over all matters requiring stockholder votes, including election of directors.&quot; Currently, the controlling stockholders account for three of El Pollo Loco&#39;s nine-member board of directors.</p> <p>In this stockholder derivative action, investor plaintiffs, on behalf of El Pollo Loco, seek a declaration that the officers named in the lawsuit breached their fiduciary duties by allegedly misleading investors on the May 14, 2015 conference call. Plaintiffs ask for an award of damages sustained by the investors, disgorgement of the profits of the stock sales, and an order to the company to improve its corporate governance practices. They state that plaintiffs seek a return of the &quot;illicit insider trading profits made through the use of confidential company information.&quot;</p> <p>Investor plaintiffs are represented by Peter B. Andrews, Craig J. Springer and David M. Sborz of Andrews &amp; Springer in Wilmington, Delaware.</p> <p><strong>Update:</strong> In August 2015 El Pollo Loco was hit with a putative shareholder class action lawsuit, <em>Daniel Turocy, et al. v. El Pollo Loco Holdings, Inc.,</em> filed in California district court, central district, listing similar claims against the company officers and directors. On July 25, 2016 Judge David O. Carter granted El Pollo Loco&#39;s motion to dismiss without prejudice, allowing investor plaintiffs to file an amended complaint. A consolidated second amended complaint for violations of federal securities laws was filed on August 22, 2016.</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=" El Pollo-Public Version of Complaint (stamped).PDF">2016.09.23 El Pollo-Public Version of Complaint (stamped).PDF</a></td><td>1.23 MB</td> </tr> </tbody> </table> Legal claim & allegation CEO Stephen J. Sather El Pollo Loco class action securities litigation franchise securities lawsuit Investor Kevin Diep pump and dump stock scam Tue, 04 Oct 2016 19:37:41 +0000 Janet Sparks 15493 at