In the Calabrese case, what did the plaintiffs allege regarding Remax soliciting competing franchise locations?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
On April 10, 2018, former RE/MAX franchise owners Salvatore Calabrese and Michael Calabrese and former franchisee Related Assets LLC d/b/a RE/MAX Metro filed suit against RE/MAX, LLC RE/MAX of New York, Inc. and others relating to the refusal to renew/termination of their three franchise agreements. Plaintiffs allege, among other things, that RE/MAX, LLC and/or RE/MAX of New York Inc. improperly: refused to recognize an alleged verbal agreement to renew the franchise agreements; required Plaintiffs to renew on the then-current form of franchise agreement with allegedly less favorable terms; refused to allow Plaintiffs to renew their existing form of franchise agreement; and solicited, and subsequently granted competing franchise locations to, certain of the sales agents who had been associated with Plaintiffs in an alleged effort to secure certain of Plaintiffs' business despite alleged non-compete agreements of those sales agents. On February 11, 2019, Plaintiffs amended their complaint and dismissed RE/MAX of New York, Inc. Plaintiffs allege in their amended complaint: breach of the franchise agreements; breach of the duty of good faith and fair dealing; promissory estoppel; breach of contract pertaining to non-compete provisions; unfair competition/misappropriation; unjust enrichment; tortious interference with a contract and/or prospective contractual relations; fraudulent inducement; conversion/civil theft; and civil conspiracy. Plaintiffs seek rescission (of the new terms in the franchise agreements) and an unspecified amount of damages, including actual damages, consequential damages, special damages, statutory damages, attorneys' fees, punitive or exemplary damages, pre- and postjudgment interest and costs. RE/MAX, LLC filed a motion to dismiss which was granted in part and denied in part on May 26, 2020. RE/MAX, LLC intends to vigorously defend against all claims.
Source: Item 3 — LITIGATION (FDD pages 21–29)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, the Calabrese case, filed on April 10, 2018, included allegations about Remax soliciting and granting competing franchise locations. Specifically, the plaintiffs, former Remax franchise owners Salvatore Calabrese and Michael Calabrese, along with Related Assets LLC, claimed that Remax improperly solicited sales agents associated with their franchise to secure their business. They alleged that Remax then granted these agents competing franchise locations, despite the existence of non-compete agreements.
This allegation is significant for prospective Remax franchisees as it raises concerns about Remax's practices regarding competition and the protection of existing franchisees' business interests. If Remax is found to have actively solicited a franchisee's sales agents and awarded them competing franchises, it could undermine the value and stability of a franchisee's investment. The existence of non-compete agreements further complicates the matter, suggesting a potential disregard for contractual obligations.
It is important to note that Remax, LLC has stated its intention to vigorously defend against all claims in this case. However, the allegations themselves warrant careful consideration by potential franchisees. They should investigate Remax's policies on awarding new franchises in proximity to existing ones, as well as the company's enforcement of non-compete agreements. Prospective franchisees may want to inquire about the specific circumstances of the Calabrese case and any similar disputes to assess the potential risks to their investment.
For further clarification, a prospective franchisee should directly ask Remax about their criteria for establishing new franchise locations, how they handle potential conflicts of interest between existing and new franchisees, and what measures they take to ensure fair competition within the Remax network. Understanding these aspects will help potential franchisees make an informed decision about investing in a Remax franchise.