What specific laws did the AKT Plaintiffs allege Bft violated regarding pre-sale disclosure obligations?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
Chordock, Elizabeth "Liz" Batterton Cooper, Alexander Cordova, Lance Freeman, Ryan Junk, Megan Moen, John Meloun, Sarah Luna, Tori Johnston, Justin LaCava, Bobby Tetsch, Brandon Wiles, Jason Losco, Brittney Holobinko, Amy Wehrkamp, Scott Svilich, Sarah Nolan, Emily Brown, Rachel Markovic, and Brenda Morris (collectively, the "AKT Defendants"): (a) violated pre-sale disclosure obligations under the California Franchise Investment Law, the Michigan Franchise Investment Law and the Florida Franchise Act by failing to provide a compliant Franchise Disclosure Document and failing to disclose certain information they contend was required to be disclosed by, and making certain statements they contend were incorrect and prohibited under, those laws some of which they contend were erroneous (the "Pre-Sale Disclosure Claims"); (b) fraudulently induced them to purchase franchises; (c) breached the implied covenant of good faith and fair dealing (the "Covenant Claim"); (d) breached a purported agreement to provide certain financing; and (e) engaged in unfair and deceptive trade practices. The AKT Plaintiffs seek rescission of various franchise agreements, actual and special damages, attorneys' fees, costs and interest. AKT Defendants have been served with the complaint, and each AKT Defendant has filed a demurrer to the complaint and/or a motion to quash the complaint.
Source: Item 3 — LITIGATION (FDD pages 14–18)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the AKT Plaintiffs alleged violations of specific franchise investment laws related to pre-sale disclosure obligations. The plaintiffs claimed that the AKT Defendants failed to provide a compliant Franchise Disclosure Document (FDD) and did not disclose certain information that the plaintiffs believed was required under these laws. They also contended that some statements made were incorrect and prohibited by these laws.
The specific laws mentioned in the lawsuit include the California Franchise Investment Law, the Michigan Franchise Investment Law, and the Florida Franchise Act. These laws are designed to protect potential franchisees by ensuring they receive all necessary information to make an informed investment decision. The plaintiffs sought remedies such as rescission of franchise agreements, actual and special damages, attorneys' fees, costs, and interest, indicating the seriousness of the alleged violations.
This type of litigation is not uncommon in the franchise industry, as franchisees often rely heavily on the information provided by the franchisor before investing. The outcome of such cases can significantly impact both the franchisor and other franchisees within the system. Prospective Bft franchisees should carefully review Item 3 of the FDD, consult with legal counsel, and conduct thorough due diligence to understand the potential risks and implications of these legal claims.