Franchise News
Franchisees of the shrinking brand allege mismanagement of marketing funds and violations of the Florida Deceptive and Unfair Trade Practices Act and seek full accountability.
A coalition of Hurricane Grill & Wings franchisees, representing 19 of the remaining 38 locations, has filed a significant legal complaint against franchisor Hurricane AMT, LLC, alleging widespread mismanagement and deceptive practices, Restaurant News reports. The lawsuit, brought in Palm Beach County, Florida, claims that Hurricane AMT violated a prior settlement agreement and jeopardized the brand's future through financial misconduct.
The core of the franchisees' complaint centers on the alleged misappropriation of marketing funds. Franchisees were required to contribute 3% of their weekly gross sales for marketing purposes, but these funds were reportedly diverted to unrelated expenses and “personal enrichment of executives.” The failure to provide promised marketing support led to a decline in the brand's presence that decreased unit count and impacted franchisee profitability.
Adding to the allegations, the SEC has accused Andrew Wiederhorn, former CEO of Hurricane Grill & Wings’ parent company FAT Brands, and other executives of misappropriating over $27 million, including franchisee marketing contributions, for personal luxuries.
The lawsuit also points to negligent supervision by Hurricane AMT, allowing executives to conceal financial misconduct and mislead franchisees about the financial health and operational support of the company. The franchisees claim these actions violate the Florida Deceptive and Unfair Trade Practices Act (FDUTPA).
The plaintiffs are seeking a full accounting of marketing fund contributions, reimbursement of misappropriated funds and royalties, compensation for financial losses, and coverage of legal fees. “This lawsuit is about accountability. We believe that Hurricane AMT has failed in their obligations, and we are seeking justice for the damage caused to our businesses,” a spokesperson said.
Read the full article here.
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