A second group of franchisees has issued a lawsuit against Papa Murphy’s, claiming that the company didn’t disclose Southern climate struggles when they purchased their locations. According to Forbes, the first group that filed a suit against the now-public take-and-bake chain included more than 20 franchise owners, and the most recent plaintiffs include 16 owners.
Both groups claim that their franchisees have to spend more on local advertising than the 5 percent required in their contracts. They claim the taken-and-bake concept doesn’t translate well in warmer climates.
Papa Murphy’s CEO Ken Calwell told Forbes that the franchisees are instead “inexperienced and operating in newer, developing markets where there’s lower awareness of the brand.”
The claim that they have to spend more for advertising, he added, is “simply not true.”
Calwell pointed to a Nashville, Tenn.-based franchisee that has grown to 18 locations as weekly sales have increased from $7,000 to $8,000.
One of the franchisees’ attorneys, Caroline Fichter, told the publication:
“The chances that 28 different franchise owners in eight different states would decide to take on the emotional and financial stress of major litigation without a solid basis for their claims is unlikely.”
Topics: Franchising & Growth