Stark Raving CEO Martin Sprock on How to Handle Franchise Lawsuits
May 13, 2008 by Sean Kelly
Filed under Business
(FranchisePick.Com) Dane Carlson reports that the Atlanta Journal Constitution reports that despite franchisee failures and franchise lawsuits Raving Brands “is undeterred in its efforts to build new franchise concepts.”
Yes, Raving Brands CEO Martin Sprock has served us up with another steaming helping from the all-you-can-swallow smorgasbord at the How-Not-To-Franchise Buffet:
Under fire? Start a new concept!
Raving, former owner of Moe’s Southwest Grill, has six brands left — Planet Smoothie, Doc Green’s, Shane’s Rib Shack, Flying Biscuit, Boneheads and Monkey Joe’s.
Atlanta-based lawyer Robert Casey of Casey Gilson is working on five lawsuits against Raving Brands involving franchises in California, Georgia, North Carolina, Tennessee, Florida, Alabama, Kansas and Wisconsin. Casey says that Sprock’s Raving Brands “failed to provide the right backing and groundwork for the brands,” and that “With Mama Fu’s and Doc Green’s, Raving may have gotten ahead of itself, rolling out the concept before it was ready.”
“Sprock tried to do Moe’s all over again without doing all the requisite development and perfection of the system that he should have done,” Casey said.
A lesser man might consider refining his existing operations. Sprock’s solution: Sell one or more of his brands in the next 12 to 18 months, and launch a new brand. The new brand, says Sprock, could be announced in the next three to six months
Under fire? Change your name!
Lesser men might consider working hard to improve your companies image in the marketplace through improved support and by addressing franchisee concerns. However, Sprock’s has a simpler solution:
The company also is considering changing its name for a fresh start from the negative press attracted by the lawsuits, he said.
“It doesn’t make you happy and it doesn’t make you feel good,” Sprock said about the lawsuits. “It’s disappointing. But we’re not going to allow a small group of people to get in the way of doing something great.”
Under fire? Blame the naysayers!
The franchisee lawsuits allege that Raving Brands set up improper kickbacks from suppliers and, in the Mama Fu’s and Doc Green’s cases, misled prospective franchisees its operational experience and degree of support it would provide. Sprock blames the complaints on a “small group of franchisees” who are “blaming Raving for their own mistakes.”
“We know that we over-support people and we do a fantastic job,” Sprock said.
“There will always be more. My lawyer just says to plug in a certain amount of money each year to defend lawsuits.”
Lesser CEOs let those pesky little franchisee lawsuits bother them. But Sprock takes them in stride, just another line item in the expense column. Regarding lawsuits:
“Oh, there’ll be more,” Sprock said. “There will always be more. My lawyer just says to plug in a certain amount of money each year to defend lawsuits.”
You just have to admire a man who stands by what he believes, even in a major interview. Unless, of course, you’re a Raving franchisee.
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Sean-
as I stated in a previous post: the future holds closing or “selling” at least doc green’s. obviously, sprock wants to get rid of more and wipe his slate clean…new name, etc. my guess is he’ll keep shane’s and flying biscuit and monkey joe’s and “sell” the rest. the “new” concept? my guess is pizza…
sprock=slimeball. don’t people see this?
joe said: sprock=slimeball. don’t people see this?
I don’t know, joe.
I was amazed at the experienced restaurant people who bought into Moe’s… even former successful franchisors. It was an interesting concept, but so clearly premature, unrefined… but they committed big money then were all ready to sue a year later…
Seems to me he should just develop lively prototype restaurant brands and sell them to large multi-concept chains that know how to run them… that seems to be what he’s good at.
Over-support people? Hmm.
I guess that it is what these lawsuits are really about, then.
Hi Sean, Apologies ahead of time if I offend any of your readers, but this guy sound like an operational cousin of GWB:)
Miki wrote: Hi Sean, Apologies ahead of time if I offend any of your readers, but this guy sound like an operational cousin of GWB:)
No worries, Miki. I ran off any easily offended readers I had with my Porno Pizza and Sexpresso posts. And my insensitivity to disabled people who sue McDonald’s because they won’t take money from their feet.
If they didn’t want to hear criticism of GWB, they shouldn’t have voted for him.
Heh! Now I know why we get along so well, Sean!
Hi Sean!
Just plug in some money to fight lawsuits –knowing that current regulation of franchising and law and process makes it tough to be put out of business by franchisees.
Another day and another concept will always save the day for those greedy and predator franchisors who make their living by using the trust, the labor, and the capital of franchisees
who don’t really understand how the game is played, and how the deck is stacked against them.
Sean-
Developing prototypes is not where the big money is for these crooks, as you know. Accumulating contracts for cash (franchise agmts) and then selling these contracts at a large multiple (10x earnings) is where it’s at…try ~$120-130 million (on a ~$12-13m royalty stream) for Moe’s, for example. And Sprock owned 2/3 of moe’s…not bad for the ponzi-scheme artist.
re: “over-support”
I did not see a corporate rep for over 1 year, while begging for support/help. Moreover, numerous times, I asked our “business consultants” and Matt Andrew, Raving exec and former president of Moe’s (i think Focus fired him): How do we make $$$ at our revenue level? We never got a straight answer. Why? Because with ONE corporate store (not much/if any skin in the game), so many stores’ revenues all over the map, and completely inadequate/incompetent system-wide support/info, they really did not know–i.e., incomplete or no business model. Result for Raving and Sprock? Lawsuits. See Mama Fu’s and Moe’s and Doc Green’s and…????? And this does not even address the improper marketing “kickbacks,” err
rebates…
joe wrote: re: “over-support” I did not see a corporate rep for over 1 year, while begging for support/help…
In the past 10 years I’ve worked with thousands of franchisees, but was always hired by the franchisor. One of the few times I worked directly for a franchisee group was as a favor to a long-time client who happened to buy in to Moe’s in the earlier days and was having trouble at all three of their locations.
I liked the concept, but thought it was franchised prematurely. I also was a bit taken aback by their strategy of not hiring a marketing company until they had 50 units open. But I spent a good amount of time assessing the units and putting together some proposed fixes. I also raised concerns, including the use of unlicensed celebrity images as part of the trade dress (long before they got sued for the same) which seemed like rookie mistakes.
We redesigned the menuboard layout to make it vastly simpler and customer-friendly, without losing the look, feel or cutesy, cumbersome names. We proposed a system that made it cheap and easy to change prices, etc rather than ordering an entirely new board. As I know a franchisor’s need for control, we proposed a no-risk, no-cost test of the new approach with a clear test period and end date. If it worked, they would be free to use it throughout the chain.
The franchisee went to Atlanta with the presentation, and they were not even allowed to test any of the changes or programs we proposed. The stores limped along and eventually closed. I’ll never forget the plane trip back, opening up a restaurant trade mag and reading how they had just won a hot new concepts award while the franchisees were all interviewing litigators.
Do Sprock and Schaden have the same golf memberships?
I think Sprock caddied for Schaden once upon a time.
(I shouldn’t talk. I once caddied for Donald Rumsfeld. I did not, however, wash his… Titleists)
Lucky you didn’t caddy for Cheney.
Be still pulling buckshot out of your “Titleists”
buyer beware
Sean-
Were you working with the Moe’s Texas (Hooters) boys? That lawsuit settled, as you may know, but I could not get any final info ($ damages, punitive $, etc.) on it…you have any?
Were you working with the Moe’s Texas (Hooters) boys?
No. It was in the South, but not TX and I think they got out with only threatening to litigate. There was a group buying them up for a while from the initial owners who were eager to move on.
I don’t have any info on those settlements.