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Lawsuit Alleges Edible Arrangements Founder Is Self-Dealing


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Tariq Farid is the founder and CEO of Edible Arrangements. The franchisee association is suing him and the brand, with association board members claiming retaliation since filing the complaint March 20.

February 14, 2020, has been dubbed the "Valentine's Day disaster" by an association of franchisees for Edible Arrangements that is suing the franchisor in Superior Court in Georgia. 

Called EA Group Advancement Association and said to represent 500 stores, the group has a long list of grievances. They include "self-dealing" by the franchise's founder, Tariq Farid, and his affiliate companies, and alleged improper use of the advertising fund for operations.

Ben Hiner, association president, said the fee for EA Connect, for example, the system for online ordering that the lawsuit says crashed on V-Day, increased from 6.2 percent to 10 percent late last year. Adding royalties, advertising and other fees, "We get a 20 percent haircut right off the beginning, and stores are closing," he said.

Through an outside spokesperson, Edible Arrangements declined an interview request and sent this statement: "As a matter of policy, we do not comment on pending litigation." 

Robert Zarco of Zarco Einhorn Salkowski & Brito is pressing the lawsuit, filed on March 20, on behalf of the franchisee association. "We are seeking a remedy that will provide a complete and total relief to franchisees, including compensation for business losses as well as a change in the business model going forward," Zarco said.

Today, in a hastily arranged phone call with two of the association's board members, he said the franchisor is retaliating against the seven members of the association's board. "I'm expecting greater retaliations. I think it is absolutely unjustified. I believe it is illegal," he said, adding he expects to amend the complaint to include the latest allegations.

He cited Cohn. v Taco Bell, a case from the 1980s in which the franchisor terminated the contract of an association president. "This is not a recent case, so it's probably not something that's top of mind on these highly emotionally charged defendants," Zarco said, "who thought, 'I want to show them,' who didn't realize they were stepping into very deep poop."

Hiner, the association president who operates four Edible Arrangements stores in Kentucky, said yesterday board members were blocked from participating in calls, including town halls in which Farid gave information on navigating the COVID-19 crisis.

Kim Constant, who owns six stores in the Nashville area and is board vice president, was similarly blocked. "I sent in a ticket to the corporate office, asking for an explanation as to why we've been unable to participate in this. And the response was, because I was an EA board member, and I was one who authorized the lawsuit," she said. She's been an operator for 12 years. "It was a slap in the face."

Farid's latest venture, called Incredible Edibles, is another target of the lawsuit. Incredible Edibles sells the same products as Edible Arrangements stores, but infused with CBD extracted from hemp. The lawsuit alleges, "Farid is improperly funding this new venture with the monies paid by the members and other Edible Arrangements franchisees." 

Affiliates of the franchisor, including Berry Direct, Edible Connect and Netsolace, "have unfairly and capriciously increased fees," the lawsuit continues. Members are required to purchase products and materials from the franchisor and affiliates, and the "unreasonable" cost increase " have caused financial devastation" to the members' stores.

A more detailed article about the lawsuit will appear in the next print edition.

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The latest news, opinions and commentary on what's happening in the franchise arena that could affect your business.

Laura MichaelsLaura Michaels is editor of Franchise Times. She can be reached at 612.767.3210, or send story ideas to lmichaels@franchisetimes.com.
 
Beth EwenBeth Ewen is senior editor of Franchise Times. She can be reached at 612.767.3212, or send story ideas to bewen@franchisetimes.com.
 
Nicholas UptonNicholas Upton is restaurants editor at Franchise Times. He can be reached at 612.767.3226, or send story ideas to nupton@franchisetimes.com.
 
Mary Jo LarsonMary Jo Larson is the publisher of Franchise Times Magazine and the Restaurant Finance Monitor.  You can find her on Twitter at
 twitter.com/mlarson1011.
 

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