A group of Geeks on Call franchisees are suing their franchisor for essential competing against with an telephone/online service. I’m sure the FDD permits this.source
All of the suits were filed by the counsel for a recently formed franchise association. The suits, all substantially identical, claim that Geeks on Call is responsible for a financial downturn allegedly experienced by the Plaintiffs. The suits point to the recent introduction of CalltheGeeks.com as a cause of diminished revenue.CalltheGeeks.com, remote technical support, is not offered in areas currently served by franchises. Company records show that many of the franchisees who filed suit are, in fact, showing year to date revenue exceeding prior year revenue. Current economic data indicates that the small business community is choosing to repair rather than replace computers, a trend that bodes well for our franchisees within the IT sector. Unfortunately, rather than working with the Company to seek out and capitalize on this opportunity, these franchisees chose to file suit.
Mark Baumgartner, General Counsel for Geeks On Call Holdings, Inc. stated “the allegations in the Complaint are without merit. Numerous Plaintiffs had previously been notified that they were in breach of their franchise agreements. We know that many of these Plaintiffs have been more focused on disparaging the Company than on building their business. Unfortunately, their disparagement harms the Company and the Geeks on Call franchise community as a whole.”
It’s always hard franchisees to imagine the nice salesman’s boss would ever dilute your sales by competing against you, but it happens all the time. If you see a clause permitting the franchisor to compete with you even though they won’t open a location within your territory, negotiate that point before signing!! Insist on restrictions on how they sell in your territory, even when the zor claims their lawyers require that language. Ask for a percentage of sales generated within your territory at the very least.I’m not surprised the franchisor chose to not own a single store. For a different perspective, here is an apparently happy franchisee.
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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 312-212-3423.
That information came directly from the corporate PR. They are just covering their butts. The lawsuit is about several things. Including massive amount of advertisement fees that weren’t paid to other companies. They were used to promote company stores, advertisement of company products, etc.
The franchisees are suing based off the contract they signed. They read the contract and Geeks on Call is violating it.
One of the things I encourage people to do is read the franchise agreement with a eye toward what if scenarios. In this case you need to imagine what could someone with no morals or no sense of right and wrong legally do under the agreement. IMNTBMFHO, you need to balance those scenarios against the USP and other qualitative factors or negotiate them out.
Remember the zor you have today may very well not be the zor you will have in the future. If a concept has durability, with certainty, father time will ascertain an ownership change.
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