Franchisee Sues Planet Fitness

A Planet Fitness franchisee has filed a lawsuit against her franchisor, seeking at least $10 million in damages for violations of the Maryland Franchise Registration Disclosure Law, the Maryland Antitrust Act, and fraud and civil conspiracy. 

In 2006 Diana Dutt became the first woman to open a Planet Fitness franchise and the first Planet Fitness franchisee in the state of Maryland.  She currently operates two Planet Fitness clubs, one in Lutherville, MD, and one in Ellicott City, MD. 

Victor and Lynn Brick, owners of Brick Bodies purchased a Planet Fitness development deal in 2007.  They paid $850,000 the largest Planet Fitness deal at the time.  The agreement required the Bricks to open 34 Planet Fitness clubs in a 10 year period.

The complaint claims that Planet Fitness did not disclose in the UFOC that Planet Fitness had area development agreements (ADAs) in exclusive territories with franchisees in other states and could enter into ADAs in Maryland.  An ADA with another franchisee in Maryland would block Dutt's ability to open new clubs or move her existing clubs because of the franchise agreement's non-compete clause, according to the complaint.  Also, when Dutt opened her franchise in Ellicott City, the franchise agreement violated Maryland Franchise Law by not including a passage stating that Dutt has the right to sue Planet Fitness according to the complaint.

"The Maryland Franchise Law was created to protect franchisees like my clients from the type of behavior that we content Planet Fitness engaged in." says David Ross attorney for the Dutts.  "Planet Fitness, who agreed to do business (in Maryland) in conformity with the Maryland Franchise Law is now trying to worm away from that obligation."

The ADA with the Bricks included the Dutt's and Bricks were suppose to open 27 clubs over a 10 year period in most of Maryland and part of Delaware according to the Dutts.

Two months later, Planet Fitness announces its ADA deal with the Bricks that excluded the Dutts.  The ADA with the Bricks includes the 10 most populated counties in Maryland, including the counties that the Dutts help to develop. 

End result is the Dutt's are not allowed to open additional Planet Fitness clubs. The Bricks will be able to keep their original chain of seven competing Brick Bodies clubs, but they can also expand without limitation.  (Up to 34 Planet Fitness clubs.)

The Dutt's believe Brick Bodies has an interest in keeping low-priced competitors away from Brick Bodies.  There are laws prohibiting this.

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