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Log In / Register | May 21, 2018

Franchise Systems Are Making Headlines for the Wrong Reasons, Franchisees Deserve Change

In recent months, Panera Bread has experienced a massive data breach, Domino’s Pizza has been embroiled in a visa fraud scandal, Waffle House's former CEO has gone on trial for alleged sexual extortion, and there have been reports of "mayhem" within the Subway franchise system.

When franchises make headlines for the wrong reasons, what are the implications for franchisees, and what rights, if any, do they have available?

When Bad Publicity Affects the Entire Franchise System

While it may have previously been the case that there was no such thing as bad publicity, that old adage does not necessarily hold true today. In today’s world of click-bait headlines and instant social media backlash, bad news (or apparent bad news) can spread quickly, and this can have devastating impacts for businesses. Particularly when customers do not understand the nature of franchising, when the franchisor – or even a single franchisee – does something to cause an uproar, it can affect sales at franchised outlets across the country, if not around the world.

Take, for example, the recent data breach at Panera Bread. According to the Washington Post, some experts are estimating that as many as 37 million customers may have had their personal information compromised due to a vulnerability in the franchisor’s website. With its premium pricing and notoriously long lunch lines, Panera Bread’s loyalty program and online ordering have become key benefits for many customers. But, will customers be willing to put their privacy at risk to save time and a few dollars at Panera Bread? Time will tell; and, if they are not, the system’s franchisees will be the ones to suffer the primary consequences.

Then, there is the story about alleged visa fraud at Domino’s Pizza last year. With headlines blaming the “Domino's Pizza chain” and referring to the “Domino’s scandal,” it is easy to draw the assumption that the issue is much larger than it is: In reality, it appears that the alleged scandal involved a single multi-unit franchisee. Yet, as reported by Business Insider, when the story broke, Domino’s corporate stock price fell by more than six percent.

What Options Are Available to Affected Franchisees?

When national headlines negatively impact local franchisees, determining what options are available requires a careful assessment of the facts and law involved. If franchisees lose sales because of a data breach at the corporate level or because the company’s former CEO appears on a sex tape, this is certainly a loss that justifies a remedy. However, whether it makes business sense to seek damages in court is another question entirely. Can the losses stemming from the bad publicity be quantified? If so, do they exceed the costs of arbitration or litigation? Maybe, maybe not. But, for franchisees who are suffering financially due to factors beyond their control, these are certainly questions that deserve to be answered.

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About Jeffrey M. Goldstein

Jeffrey M. Goldstein's picture

Public Profile

Jeffrey M. Goldstein represents clients in commercial complex litigation matters across the country. Mr. Goldstein is recognized as one of the top franchise litigators in the country. Mr. Goldstein has extensive experience in representing clients in state and federal courts in cases involving fraud, RICO, antitrust, encroachment, and wrongful termination. Mr. Goldstein also has an active practice in state and federal appeals cases. Mr. Goldstein practices as a franchise lawyer in complex litigation cases representing only franchisees and dealers. Although Mr. Goldstein appears in courts in a pro hac vice capacity depending on the state, he also has direct access to New York, Pennsylvania, Massachusetts, and the District of Columbia (DC), Washington, where holds Bars for those states. 

In addition to his litigation practice, Mr. Goldstein counsels and advises clients in franchise and distribution matters. Mr. Goldstein has represented clients across the United States in almost every leading franchise system. Mr. Goldstein also is retained to counsel many national independent franchisee associations. Mr. Goldstein has also served as an expert witness in several federal court franchise cases.

Mr. Goldstein graduated magna cum laude from Bucknell University with dual degrees in Philosophy and Economics in 1979. In 1983, he obtained his Juris Doctorate from Boston University School of Law, where he also simultaneously received his Masters Degree in Economics.

You can reach Jeffrey M. Goldstein at (202) 293-3947 or email jgoldstein@goldlawgroup.com. His firm's website is www.goldlawgroup.com. 

The Goldstein Law Firm is one of a handful of law firms in the country that represents only franchisees & Dealers. Not every franchise lawyer is a franchisee lawyer. Almost all law firms specializing in franchise law represent either solely franchisors or both franchisors and franchisees, but not solely franchisees & dealers. The philosophy of The Goldstein Law Firm is that all of our franchise attorneys' effort should be focused on advocating for the rights of franchisees, not on cutting new law for franchisors who are very ably represented by the largest law firms in the world. The Goldstein Law Firm offers its franchisee and dealer clients a consistent and unclouded commitment to the cause of franchisees. On a national basis there are merely a handful of franchise lawyers who truly represent only franchisees & dealers. As a franchisee lawyer, Jeff Goldstein is one of these rare franchise lawyers who does not also represent manufacturers and franchisors. 

GLF specializes in: 

General Franchise and Distribution Antitrust violations
Franchise Price-Fixing claims
Wrongful franchise terminations
Franchise Encroachment claims
Franchise Territorial violations
Franchise Dual Distribution competition
Franchise Menu Pricing disputes
Unfair Franchisor competition
Franchise and Distribution Trademark violations
Franchise and Distribution Post-term covenant not to compete restrictions
Wrongful franchise default cases
Franchise Supplier overcharging claims
Franchisor tying arrangements
Franchisor Fraud and Misrepresentation Claims
Franchise Disclosure Document Defects

(202) 293-3947

www.goldlawgroup.com

jgoldstein@goldlawgroup.com

In those cases in which Jeff is retained to litigate franchise law questions, he appears in courts around the country either in a Pro Hac capacity, or through his direct membership in the Bars of New York, Massachusetts, District of Columbia, Washington, and Pennsylvania.

Area of Interest
Franchise Consultant