Pizza Marketplace - Winter 2007 - (Page 24) RedBrick saga shows perils of franchising By Richard Slawsky If the road to success is paved with good intentions, then the road to a successful franchise operation is paved with legal filings. Palmdale, Calif.-based RedBrick Pizza Worldwide Inc. is walking down such a road. Redbrick and its founder Jim Minidis are the subject of four lawsuits filed by disgruntled franchisees. Unfortunately, court battles between parent companies and franchisees are a common part of the business. “If you look at a franchisor’s Uniform Franchise Offering Circular and you don’t see litigation, you are probably looking at a franchisor that is doing something wrong,” said Chris Bright, founder of Fransmart, a Newport Beach, Calif.based franchise-development company. “The point being that sometimes you are likely to have challenging relationships,” he said. The UFOC is a legal document that franchisors must furnish to potential franchisees. The UFOC outlines details of the transaction and provides information about the history of the franchisor. Ironically, failing to disclose previous litigation is the basis of pending litigation against Redbrick. According to James Denison, the attorney for former RedBrick master developer Jay Bharat Investment Inc., the company failed to disclose in its UFOC pending litigation against Minidis over a previous venture that could have bankrupted the company. RedBrick’s growth model involves selling territorial rights to master developers, who recruit franchisees within those territories. According to Denison, RedBrick’s failure to disclose the litigation delayed the company’s certification by the California Department of Corporations, in turn hampering Bharat’s ability to sell franchises. An attorney representing RedBrick disputed Denison’s version of events, saying that much of the delay with the California DOC was due 24 WINTER 2007/SPRING 2008 | PIZZ A MARKETPLACE REPORT
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