(BPRW) Golden Krust Sued in Federal Court
(Black PR Wire) Golden Krust Caribbean Grill & Bakery, Inc. is being sued in the Federal Court by one of its former Franchisees, Keith Clayborne.
In a cringe-worthy case, Clayborne, who was Golden Krust’s largest franchise owner in the U.S., alleges that the embattled company defrauded him by knowingly misrepresenting that its Franchise Agreements were fair and equitable when, in fact, they favored and treated family-owned Franchisees and others differently to the detriment of Clayborne owned franchise restaurants located throughout South Florida.
The factual allegations in Clayborne’s claim are based upon information uncovered in an arbitration against Golden Krust by another GK franchisee in South Florida, the Auctus Group, Inc. Auctus Group prevailed against Golden Krust by proving that Golden Krust engaged in deceptive and unfair trade practices related to its unequal imposition of franchise fees, royalties, and a discriminatory pricing scheme intended to benefit family-owned franchises. The Auctus Group, Inc. was awarded $1.6 million dollars, as reflected in public filings. According to Golden Krust’s 2022 FDD, they settled with the Auctus Group, Inc for $1.95M after losing the appeal to vacate the arbitration decision.
Clayborne discovered that Golden Krust family-owned stores and other selected franchises did not pay royalties and marketing fees even though the franchise agreements stated “all franchisee royalty and advertising fees are ‘uniformly’ imposed” across its franchise system. This representation was patently false.
Shockingly, to add insult to injury, Clayborne discovered that Golden Krust, for over 10 years had discriminated against him in its pricing policy and significantly undercut the profits of Clayborne’s seven restaurants in South Florida. Other Franchisees within proximity to Clayborne’s restaurants were allowed to purchase required products outside the terms required by their own franchise agreement “directly” from Golden Krust Corporate HQ in New York at a lower price than Clayborne while he was forced to buy the same products from a third-party vendor at a higher price.
Golden Krust family-owned restaurants not only bought their products at a lower price, but Golden Krust intentionally created circumstances that enabled family-owned restaurants to sell at a lower price point than Clayborne owned restaurants.
Clayborne owned restaurants also bore the full cost burden for all advertising activity in South Florida while getting less visibility in marketing and advertisement for his franchise stores while family- owned franchises paid nothing contrary to the franchise agreements that all parties were to abide by. Clayborne is seeking $10 million dollars and the recission of the fraudulent franchise agreements with Golden Krust dating back to 2006.
Christopher Lomax, Esq. and Akivia Bassaragh, Esq. of the Law Firm, Lomax Legal PLLC are representing Clayborne. For Further Information please contact by Email only Akivia P.A. Bassaragh, Esq. at Akivia@lomaxlegal.com Lomax Legal, PLLC, 95 Merrick Way, 3rd Floor, Coral Gables, FL 33134
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