DALLAS (CN) - A franchisee of debt-resolution firm Legal Helpers claims in court that the company fired it without cause, in violation of franchise law, after it helped build the law office into a national organization.
Frisco, Texas-based Velocity Processing Debt Resolution sued Illinois-based Legal Helpers Debt Resolution in Dallas County Court.
Velocity also sued the law firm of Macey, Aleman, Hyslip & Searns, partners Thomas Macey, Jeffrey Aleman, Jeffrey Hyslip, Jason Searns, and Dallas attorney C. Bryan Fears.
Velocity claims the defendants sold franchises to debt-resolution firms, such as the plaintiff, to take advantage of state and federal laws that make it difficult for firms that are not law offices to provide debt settlement services.
In exchange, franchisees would get to market and service debt settlement clients under the Legal Helpers brand, but would also take on most of the financial risk, according to the complaint.
"Once Legal Helpers built its national law firm up to a level that had between 15,000 and 20,000 clients nationwide, it terminated its relationship with each and every one of its franchisees on the same day with the same form letter without any notice and without establishing good cause for termination," the complaint states. "By failing to provide notice and to establish good cause for termination, Legal Helpers violated the Illinois Franchise Disclosure Act.
"Then, to the shock of everyone, Legal Helpers instructed Global Client Solutions, the payment processor, to stop all contract payments owed to Velocity Processing and its various marketing affiliates," the complaint states. "Indeed, given that all of the marketing work performed by the various marketing affiliates of Velocity Processing was completed at the time of termination, Legal Helpers' unlawful misappropriation of the money constitutes outright theft. For Velocity Processing, it is estimated that Legal Helpers has misappropriated between $800,000 and $1 million from Velocity Processing and its marketing affiliates. Of this amount, Legal Helpers was only entitled to $4,900 for outstanding 'retainer fees.' Because Legal Helpers' actions will destroy Velocity Processing's business reputation with its various marketing affiliates and cause significant disruptions to its business operation, this court should grant Velocity Processing's application for a temporary restraining order and a temporary injunction to ensure that the status quo remains in place while Velocity Processing established its claim for, among other things, wrongful termination and the reinstatement of its franchise operation."
Velocity seeks damages for wrongful termination of franchise, conversion of personal property, money had and received, and personal liability under the Illinois Franchise Act.
It is represented by John Walsh of Dallas.
Legal Helpers is the country's largest debt-resolution law firm, with offices in all 50 states, according to its website.