Fraud and Misrepresentation

Fraud in connection with the sale of franchises is so serious that the Federal Trade Commission and a third of the states have singled it out for special treatment under the law. In some states, it is a criminal violation. In all states, fraud is unlawful.

What is Fraud or Misrepresentation?

If your franchisor did not deliver the franchise that it told you it was selling, or if what you got is not what you bought, you may have a claim against your franchisor for fraud. Ask yourself these questions:

Did the franchisor, a broker or someone on the franchisor’s behalf talk about how much money you could make in order to get you to buy the franchise?

Did the franchisor tell you it had a “proprietary,” “unique” or “patented” system, product or service when it did not?

Did the franchisor tell you that its system was “proven,” but you’ve since found out it’s not – or the franchisor has changed the system so that it’s different from what you were told?

Were you promised training, support and assistance that never materialized?

If the answer to any one of these questions is yes, or if you feel you’ve been misled in some other way, then you very well might be the victim of fraud.

What are my rights?

If you’ve been victimized by franchise fraud, you have the right, in most cases, to obtain damages in an amount that will put you back to the position you were in before you bought the franchise. In some states, you may have the right to multiple or punitive damages. In many states, you have the right to sue not only the franchisor, but also its owners and officers.    

What Experience does Michael Garner have with Fraud Cases?

Michael loves to track down and uncover franchise fraud!  He’s exposed, and recovered damages, for fraud involving financial projections, “patented” technologies (that weren’t patented), the hidden dirty laundry of the owners of franchisors, fake promises of “unique” and “proprietary” methods and systems…..the list goes on, and you can see more at our Case Studies page.

How can you help me?

In consultation with you, we will study your situation thoroughly and, if you have a case, deploy an arsenal of tools including, potentially, litigation or arbitration; negotiation; complaints to state regulatory authorities and the Federal Trade Commission; complaints to industry associations; and public relations.

If you’ve been defrauded, you deserve to be made whole. We can help you get back on the way to recovery and help you get what you deserve. Contact us for more information.

Frequently Asked Questions About Franchise Fraud and Misrepresentation:

• Q. What kinds of damages has Michael Garner gotten for franchisees who have been defrauded?

  A. The awards he has obtained have generally ranged between half a million dollars to three million dollars. 

  Q. Who can I sue for fraud?

  A. Usually, you can sue the company that made the misrepresentation as well as any individuals who actually made, or participated in making, the misrepresentation.  Under some state laws, you can sue the owners, officers or executives who defrauded you.

  Q. Can I start a criminal case for fraud?

  A. Criminal cases are usually handled by the local state or federal prosecutor’s office in conjunction with other state or federal agencies. You may want to file a complaint with that office, a consumer affairs office in your city or state, with the Federal Trade Commission or with a state franchise office, if your state has one. A criminal prosecution may result in penalties for the wrongdoers, but does not have as its objective the recovery of your losses. Our objective is to assist you to recover those losses.

  Q. What are the most typical kinds of fraud that franchisors engage in?

  A. The most frequent types of misrepresentations are those relating to the money franchisees can make, the uniqueness or proprietary nature of the franchise being offered, the performance of the system, and the adequacy of the franchisee’s location.

  Q. Here’s my problem:  The franchisor didn’t actually say anything false.  They just didn’t tell me the full story.  If I had known everything, I wouldn’t have bought the franchise.

  A. Fraud comes in many forms, including fraudulent omission – the knowing failure to tell you something that you should have been told. Not all omissions rise to this level. If you think you weren’t told something that you should have been told, contact us for an evaluation. 

  Q. Okay. I think my franchisor lied to me. How do you prove that?

  A. If it’s not obvious, usually a lie will fall apart over time; the evidence of the truth will come out; there will be people (ex-employees, other franchisees) who will know the truth and will tell it; or documents in the franchisor’s files, which can be obtained through discovery, will show the truth.