(FranchisePick.com) 10 Geek warriors have donned legal armor and challenged their franchisor to engage them on the battlefield of the Norfolk Circuit Court.
These bold Geeks on Call franchisees claim their franchisor, Geeks On Call Holdings, has impuned the integrity of their noble brand. They claim GOCH is competing with its own franchises via its remote CalltheGeeks.com service. They accuse Geeks On Call Holdings of overall mismanagement, and implementing a call routing system that negatively affects their sales.
These bold 10 are suing for $1M to $5M each.
Geeks On Call Holdings is striking back. The company denies these claims and contends it is the treasonous plaintiffs who seek to build a competing business model. GOCH points out that many of these franchisee’s sales are, in fact, up over last year. Instead of working constructively with the franchisor to help seize opportunities, the plaintiffs are waging a campaign of disparagement that is harming the entire Geeks on Call franchise community.
Will these franchisees topple the Geek Empire?
There’s no doubt that the Geek Empire is on shaky ground. A Geeks on Call franchisee website estimates that the number of franchise locations has declined from 350 in 2005 to approximately 260 in 2008. As we pointed out in yesterday’s post (GEEKS ON CALL: Beware of Geeks Baring Rifts), Geeks On Call Holdings Inc. reported a net loss of $4.96 million on revenue of $5.24 million for the fiscal year ended Aug. 31. Part of the financial strain was the cost of the Geeks On Call reverse merger earlier this year to become a publicly traded company (GOCH). Its financial report contains the ominous caveat: “These factors among others may indicate that the Company will be unable to continue as a going concern for a reasonable period of time.”
The franchisee lawsuits put additional strain on the already troubled company. So why would a group of franchisees sue at this vulnerable moment and risk toppling their own chain? The answer may lie in the franchisor’s contention that some of the plaintiffs, on behalf of the group, “approached a former employee to assist them in building a competitive business model in violation of the franchise agreement.”
At least Greek tragedies had a hero
Could it be that these plaintiff franchisees true motives are to get out of their franchise and non-compete agreements, with a mil or two seed money, so that they can compete with their ailing former chain with their own concept?
Are they leading the charge and championing accountability on behalf of their fellow Geek franchisees, or are they intentionally sabotaging the system from within?
It’s hard to tell, at this point. But two things are clear:
This is franchising at its ugliest.
Like many tragedies, the stage will be strewn with bodies when the final curtain goes down.
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