On December 11, 2015, Three Fresh Guys Inc. ("TFG") issued a Statement of Claim against Freshii Inc. and several franchisees who are or will be operating Freshii outlets in the Vancouver area. TFG's exclusive territory includes the Greater Vancouver Area, Lower Mainland and the Whistler Corridor in the Province of British Columbia.
The legal action is based on Freshii Inc. entering into franchise agreements with other franchisees for locations within TFG's exclusive territory, despite representations by Freshii that a Master Franchise Agreement (MFA) would be awarded to them for its exclusive territory. Proceedings for the MFA began over five years ago (June 2010) and continued in earnest in March 2014.
Under the agreement, TFG would have responsibility for development and recruitment for all Freshii franchises throughout the Greater Vancouver Area. Ultimately, new franchises would become TFG's sub-franchisees and TFG would split the franchise fees and royalties with Freshii.
Freshii Inc. has now declined to enter into the MFA – Freshii halted negotiations in September 2015, despite the fact that TFG signed an Area Development Agreement (ADA) with territory-exclusivity and paid Freshii $165,000 at the outset of the franchise term in order to secure these exclusive rights to the Greater Vancouver Area.
Since this investment, TFG has always acted as best-in-class franchise partners with financial, operations, marketing, and franchise development and training investment. Freshii now takes the position that it never gave TFG exclusive rights to this area.
Three Fresh Guys CEO, Paul Pelton, commented: "We regret having to take this action against Freshii Inc. as we believe in the brand. However, as alleged in the Statement of Claim, we believe that Freshii has acted in bad faith toward us, and we need to protect our sizeable investment and ensure that we are fairly compensated for other franchisees opened in our exclusive territory."
In the court action, the Plaintiff is seeking interim, interlocutory and permanent injunctions restraining Freshii from, among other things:
i. Authorizing other parties to operate Freshii restaurants within the Plaintiff's exclusive territory;
ii. Terminating any franchisee agreements entered into with any party to operate Freshii restaurants within the Plaintiff's exclusive territory;
iii. Requiring Freshii restaurants operated by persons other than TFGI within its exclusive territory to be closed down; and
iv. Entering into franchise agreements with other franchisees within TFGI's exclusive territory.
Pelton added, "We remain committed to operating Freshii restaurants in the Greater Vancouver Area and to supporting and furthering the brand in British Columbia. We're proud to have created and established the brand in the western market when Freshii was young. For the past five years we have been commended by Freshii for the high standards of service of the franchises under our operation. Our current action against Freshii Inc. will not affect this commitment. We have made multiple attempts to negotiate and reconcile the terms of the agreement in good faith, and have reluctantly filed a Statement of Claim when Freshii abruptly ceased negotiations."
TFG operates five Freshii restaurants in the Greater Vancouver Area.
About Three Fresh Guys
Three Fresh Guys Inc. (TFG) was established in 2010. TFG holds the exclusive Area Development Agreement with Freshii Inc., and owns and operates Freshii restaurants franchise business in Vancouver, Lower Mainland and Whistler Corridor, British Columbia. TFG is mandated to oversee the restaurant and franchise development of the Freshii business and brand concept in the Greater Vancouver Area. Currently, TFG and affiliates own and operate five Freshii restaurants in this territory, with more to come.
SOURCE Three Fresh Guys Inc.
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