There are a few categories of claims that we handle, and one category of claim would be – around here we just have a label for it, we call it category one claims just at Dady and Gardner, a moniker, meaning the franchise opportunity oversold to you. There are very specific laws. There are federal laws and state laws and common law principles that apply to the sale of a franchise opportunity. And if those laws are not honored, if the franchise is not lawfully sold with full and fair disclosure of all material facts without overstating anything or without misrepresenting anything or without failing to disclose some material fact.

If those laws are not followed, then we have an opportunity to get our clients out of the relationship and recover what are frequently referred to as restitution damages. That is the amount of money that is sufficient to make them whole as if they’ve never invested in this opportunity in the first place. That would be a category one claim, and we refer to those often and we’ve handled hundreds of category one claims getting people out of relationships when we can. Because we can improve some violation of an applicable legal principle, get their money back, and if there is a statue that applies or a fee-shifting provision in their franchise business, we can also get their attorney fees paid for.

A second category of dispute that we get often is what we call, again, at Dady and Gardner just our moniker, it’s not in any law book or anything; a category two dispute. That’s again just a moniker that we use to refer to something is wrong once the relationship is up and running. It may be that the goods that our clients are required to purchase to remain in the franchise system are overpriced, and so they can’t make any money at it. Is there something they might do about that? It may be that the franchisors opened another location or is about to very close to our clients operation, and is therefore gonna diminish or eliminate the profitability of that location.

Or it may be, and this has happened more recently, that the franchisors decided to compete in a different way with our clients, such as Internet marketing. We had the first internet encroachment case in America, at least the first published decision, where we had a franchise system, a drugstore system called Drug Emporium, they gave our clients exclusive territorial rights to operate their drugstores, but they decided what we’re gonna do is we’re gonna start marketing our Drug Emporium drugstores on the Internet.

And we said you can do that, but you can’t do it within the specified radius of our stores because we have exclusive rights. They said, “No, no, it’s a different system.” Michael Dady said, “What’s the different if you enter the drugstores through the doors or through the windows?” Get it? Trying to be funny about that. And, indeed, the three arbitrator panel agreed with us and entered an injunction stopping them from marketing to clients who lived within the protected radius of our drugstore saying it didn’t make a difference because a drugstore on the internet is the same thing as a bricks and mortar type of drugstore.

And so those would be examples of category two claims that we have, and when we have a category two claim, we’re looking at what does the writing say, might there be some common law or judge-made principles that come into play like good faith and fair dealing, might there be some statutes that come into play as well that we can evoke to offer our clients the kind of protection or remedies that they appear to be entitled to.