Jackson Hewitt's Lawsuit Liabilities Found To Be Taxing

The actions of an individual franchisee for Jackson Hewitt, a national tax preparation chain, have created a potential multimillion dollar liability for his franchisor.

  A court found the franchisor must repay a Florida dentist for $575,000 that was pilfered by Daniel Prewett, the franchisee.  This judgment has bolstered the claims of many more clients with liabilities totaling approximately $20 million.

"A new lawsuit against national tax preparation chain Jackson Hewitt claims 66 more investors lost $5.5 million to a scam run out of local franchise offices." - Herald Tribune

This new lawsuit appears to be on top of an already $18 million in claims by an additional 130 people. Jackson Hewitt is appealing the verdict.

"The attorney representing the jilted investors says he will now ask the court to hear all those claims at one time, in a mass trial early in 2011. If the jury finds Jackson Hewitt liable for the losses, each client would have their own hearing to determine their exact losses, Sarasota attorney Robert Turffs said."

This verdict, on top of the Coveralls verdict which declared franchisees to be "employees" of the franchisor, begs the questions:  Is there a sea change by the courts in viewing the relationship between franchisor and franchisee?  Or, should we expect these decisions to be overturned by the higher courts on appeal?  Do franchisors wield so much power over the franchisee and, given the profit the franchisor gains from this relationship, so intertwined with each individual business that the "independent" facade of the franchisee is slowly being whittled away?  

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