April 16, 2020
The Franchise Times recently recognized Garner, Ginsburg, & Johnsen, P.A.’s efforts to hold franchise brokers liable in more than a dozen lawsuits the firm filed against brokerage firm FranChoice and some of its individual brokers. The article notes that these are the first cases in which courts have ruled that franchise brokers can be held liable under state franchise laws and deceptive trade practices acts. These cases are paving the way for franchisees to hold brokers accountable for their representations, and serve as a red flag to brokers that they cannot simply recite what franchisors tell them verbatim.
In the cases, franchisees represented by Garner, Ginsburg, & Johnsen allege that FranChoice brokers made several material misrepresentations, and acted as franchise sellers in inducing them into purchasing ILoveKickboxing.com franchises. After opening and operating the franchises, the franchisees discovered that the representations the brokers made were false, and many of their businesses could not survive. Garner, Ginsburg, & Johnsen filed these lawsuits on behalf of their clients to hold the brokers liable for their role in selling the franchises, and to seek redress for their clients’ injuries.
The article notes that the Franchise Brokers Association and franchise brokerage agencies are watching the lawsuits closely. Thanks to Garner, Ginsburg, & Johnsen’s work, franchise brokers may have to reevaluate their processes and validate representations before they make them. If they don’t, these lawsuits have opened a door to make sure that brokers can be held accountable and to make it more difficult for franchisors to commit fraud by proxy.