Moe's Southwest Founder Calls Judge's Ruling Vindication
Martin Sprock, co-founder of Moe’s Southwest Grill and Raving Brands, says he’s back in the franchise sales business after a federal judge last week rejected “100 percent” of the claims against his system.
Sprock says he spent $5 million in legal fees over nearly eight years, fighting allegations by 17 franchisees alleging the franchisor and Sprock were stealing money through a kickback scheme.
“The court could not conclude that plaintiffs suffered actual losses as a result of the actions of defendants,” wrote U.S. District Court Judge Richard Story in his Feb. 3 ruling. “Based on the evidence, it was more likely that defendants actually saved plaintiffs money through their purchasing program.” He ordered judgment be entered in favor of defendants and against plaintiffs.
Robert Einhorn, attorney for the plaintiffs at Zarco Einhorn Salkowski & Brito in Miami, rejected Sprock’s characterization of the ruling as an outright victory. “I don’t think that’s a fair reading of the court order,” he says, adding he’s evaluating over the next 30 days whether to appeal. “The ruling was very disappointing. We fight for our clients until the end and we thought this was a good case. Not every case is going to go our way.”
Sprock says sales of franchises over the last eight years, under the name Big Game Brands after they dropped “Raving” because of all the lawsuits, have been very difficult, with prospects getting almost to signing only to be scared off. “We lose the fish off the hook at the last minute,” Sprock says.
“Having that hanging over your head and your partners’ head and the other brands you’re already doing—it hasn’t been fun,” Sprock says. “It kept dragging, dragging, and it hurt our business. When people read that much about you,” they think “when there’s that much smoke there’s got to be fire.”
Sprock sold Moe’s Southwest Grill to Roark Capital in 2007. Big Game Brands, based in Atlanta, is selling franchises for Flying Biscuit and Monkey Joe’s, and is testing some new concepts to franchise.