Raving Brands Faces Copyright, Employee Litigation
COPYRIGHT CL AIM: Raving Brands’ legal troubles go beyond three franchisee lawsuits that allege fraud, misrepresentation, and undisclosed kickbacks. The holding company, which recently sold Moe’s Southwest Grill to FOCUS Brands, faces copyright and former employee disputes. In January, under the radar, federal courts ruled in favor of artist Janie Atkinson, who claimed Moe’s used her paintings—“Lady John†and “Sir Johnâ€â€”without permission. Both sides are currently arguing damages.
EMPLOYEE LITIGATION: In August 2005, former franchise sales director Anne Wheatley filed suit, alleging she was denied promised stock options in Moe’s and Mama Fu’s…Wheatley requested 50,000 shares of Moe’s stock and 50,000 shares of Mama Fu’s stock. According to her 2004 Schedule K-1 (IRS Form 1120S), Wheatley indeed had deductions taken from her accounts, with a 0.43 percentage of stock ownership for the tax year. The tax documents do not say, however, whether the deductions were for restricted stock. In February 2005, two months before Wheatley requested her dividends, Raving Brands’ tax accountant advised management to revise shareholder options to help franchise expansion goals.
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Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-715-8115.
This doesn’t say much about how Raving Brand would treat its franchisees, though it may be a window in their character.