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Log In / Register | Apr 19, 2014

Jackson Hewitt Fight With Zees Heats Up

Who's your Daddy? A federal court wants to know.

Franchisee Richard Barnes was a South Carolina franchisee of Jackson Hewitt, the tax preparation company.

After being terminated, he was sued by Jackson Hewitt for violation of his post-term non-compete provisions, and for failing to turn over the client files (tax returns, W2s, 1099s, etc) to Jackson Hewitt. The franchisor is also seeking $1,034,714.44 in past due royalties and fees.

Purely by coincidence, the former locations from which Richard Barnes operated were allegedly to be taken over by a new tax-prep franchise named "Customers First" which was owned by one "Scott Barnes." Again it is pure coincidence that Scott is Richard's daddy.

The federal judge was not amused. While acknowledging that there were issues of fact yet to be determined, the judge listed the factors for issuance of a preliminary injunction:

  1. A likelihood of success on the merits,
  2. that [the franchisor] will not suffer irreparable harm if the injunction is denied,
  3. that granting preliminary relief will not result in even greater harm to the nonmoving party [f'zee],
  4. that the public interest favors [injunctive] relief.

The court was particularly peeved by the failure of Richard Barnes to turn over the customer's tax records, and by indications that not all Jackson Hewitt signage had been removed.

The franchisee has filed an appeal.

An interesting side note is that in the complaint just filed in the consolidated action by franchisee attorney Michael Einbinder, an allegation is made that Jackson Hewitt has used franchisee ad fund money to buy back Jackson Hewitt stock, pay for operating expenses, and build kiosks in Wal-Mart stores.

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http://www.bluemaumau.org/files/Jackson Hewitt v. Barnes OPN 18 Jan 2011.pdf" target="_blank">Jackson Hewitt Inc v. Richard Barnes & Barnes Enterprises, D. NJ, January 18, 2011

AttachmentSize
Jackson Hewitt v. Barnes OPN 18 Jan 2011.pdf77.68 KB
Jackson Hewitt v. Barnes ANSR 8 Nov 2010.pdf424.82 KB
Jackson Hewitt v. Barnes COMPLNT 4 Oct 2010.pdf2.33 MB
Jackson Hewitt Consolidated Einbinder Dunn COMPL 4 Feb 2011.pdf246.17 KB
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