A former Richmond Freshslice franchisee is suing the parent company after its contract was terminated.
Freshslice on Bayview Street in Steveston opened in December 2023 and was owned by Mohd Rafi Zamani, who is now suing RF Franchising Inc. and S.A. Leasing Ltd. after they took over the location just seven months after it opened.
RF Franchising, however, is calling the lawsuit vexatious and claims there were numerous breaches of the franchise contract, which led to the franchisor taking it over.
According to a civil claim filed by Zamani in B.C. Supreme Court in December, RF Franchising sent a “business coach” to the premises in March 2024 to do a routine inspection. This resulted in an email the next day outlining alleged deficiencies in the way Zamani was operating the business.
Zamani responded a few days later explaining how he’d addressed the deficiencies and which deficiencies had been there when he took over.
He then received a notice of warning about “critical issues of non-compliance.”
After meetings and more paperwork, Zamani was issued a second warning and a surcharge on food supplies.
In June, Zamani told the franchisor he planned to sell the business. On July 1, however, the same inspector came to look at the premises and two days later Zamani received a notice of termination, effective within 24 hours, on July 4, 2024.
In his statement of civil claim, Zamani said the franchisor is profiting from the business after putting him “out of business.”
Zamani claimed he had three offers on the business, ranging from $280,000 to $465,000, all of which fell through, according to his civil claim. (RF claims there were four offers that fell through.)
The franchisor then offered to buy the business for just over $40,000 and sent a cheque to Zamani in this amount even though there was no agreement on the sale, according to the civil claim.
Zamani is asking for $130,000, which the lawsuit claims is equivalent to the increase in value of the franchise and loss of profits and future profits.
In its response, however, RF Franchising claims there were several breaches of the franchise agreement, saying the franchisee is "now vexatiously seeking recourse from their former franchisor in a last-ditch attempt to recoup more of their investment."
The breach claims include a reduction in cheese and toppings on the pizzas, a broken dough proofer and dough stored at the wrong temperature. Furthermore, RF claims Zamani only worked part-time although his agreement said he should be onsite 40 hours per week.
They also claim the restaurant was “in a state of general filthiness and disorganization in both the front- and back-of-house, well below RF’s established standard.”
These alleged deficiencies were sent to Zamani, according to RF's response. After further correspondence, RF Franchising offered to buy back the franchise.
A few weeks later, an inspector came back and noted several deficiencies hadn’t been remedied, for example, the dough proofer was still “defective,” pizza toppings were low and pizzas were kept in the warmer longer than they were supposed to, RF Franchising claimed.
RF said these ongoing “failures” were “unremedied breaches” of the franchise agreement and entitled them to terminate the contract.
RF then took over and around July 26, 2024, started operating the pizzeria.
RF claims they didn’t put Zamani out of business and didn’t assume any profits as the restaurant was operating at a “net loss,” according to the response to the civil claim.
RF doesn’t mention the price it offered Zamani to buy the franchise, but they claim it was based on a formula set out in the original franchise agreement.
The $130,000 for “loss of goodwill” being claimed by Zamani is disputed by RF, which claims a qualified appraiser appraised it at $8,000, “which amount is high considering the poor state of restaurant operations maintained by the Plaintiffs.”
None of the claims from Zamani nor RF Franchising have been proven in court.
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