ST. LOUIS (CN) - Franchisees claim in a class action that Simpatico violated FTC rules, misled them about the terms of its office-cleaning agreements, and churned franchises, terminating them without cause to get fees by re-selling them.
St. Louis-based Simpatico sells office building-cleaning franchises. Simpatico means "nice" or "friendly" in Spanish.
"Plaintiffs allege that defendant fraudulently induced plaintiffs to enter into franchise agreements by failing to disclose all costs associated with the franchise, failing to disclose the identities of all franchises who had there [sic] franchises terminated, failing to comply with the disclosure requirements of the Federal Trade Commission, providing earnings claims to the class without proper documentation, and by failing to disclose the turnover rate of its franchises," according to the complaint in City Court.
The three named plaintiffs say had to pay undisclosed administrative fees and that Simpatico did not give them notice when it terminated their franchises.
"Plaintiffs allege that defendant engaged in 'churning' in which the franchisor cancels the franchise agreement without just cause for the sole purpose of re-selling the franchise location, thus obtaining more upfront franchise fees," the complaint states.
The class consists of all Missourians who have bought a franchise from Simpatico in the past 10 years and did not earn the monthly income they were guaranteed, and/or had their franchise terminated due for unjustifiable reasons and/or with improper notice or no notice.
They seek actual and punitive damages for fraud, breach of contract and violation of the Missouri Franchise Termination Statute.
They are represented by Jonathan Fortman of Dardenne Prairie.
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