Franchisees Say Window Firm Hid Kickbacks

OMAHA, Neb. (CN) - In a federal antitrust complaint, franchisees claim Window World, a replacement window franchisor with more than 200 affiliates nationwide, fails to disclose million of dollars and kickbacks and rebates it gets from its sole supplier.

Mike Bendfeldt and Betty Muhr-Bendfeldt, who ran 18 Window World outlets in 10 states, claim that "Window World knowingly, intentionally, and in bad faith failed to make the disclosures required under the federal Franchise Disclosure Rule."

They accuse the franchisor of fraud, breach of contract, breach of licensing agreement, and violating the Robinson-Patman Act, a 1936 amendment to the Clayton Antitrust Act, which prohibited price discrimination.

The Bendfeldts say Window World violated federal and state laws that require it to disclose to franchisees its close financial ties to its "sole source" supplier of vinyl replacement windows, co-defendant Associated Materials LLC.

The fraud inflated the prices franchisees paid because Window World misrepresented its own costs and violated its own licensing agreement, which promised that its buying power would guarantee the lowest price, the complaint states.

The Bendfeldts claim that Window World received $24 million in annual revenue from 2011-2013 from supplier kickbacks and rebates alone.

"These undisclosed rebates can total, in the aggregate, more than $30 per window and thus in some cases may exceed the Window World franchisee's margin on the sale of the window at retail," the complaint states.

Window World, based in North Wilkesboro, N.C., has come under fire in several states for selling unregistered franchises , with civil penalties imposed in some cases.

The Bendfeldts seek more than $100,000 in damages. They are represented by Jonathan Fortman of Florissant, Mo., and Larry Welch Jr. of Omaha, neither of whom could be reached for comment over the weekend.

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