RedBrick lawsuits reflect dangers of UFOC disclosure

When the frachisor of the 64-unit RedBrick Pizza concept files for renewal of its Uniform Franchise OFfering Circular in California this spring, the UFOC document likely will disclose nine lawsuits–enough, some franchise lawyers say, to give a potential frachisee pause.

The article said:  Some of the cases have been settle, but among those that would be disclosed are four pending lawsuits filed by master developer-franchisees who allege fraud, misrepresentation and other charges against RedBrick Pizza Worldwide and its owners, Jim Minidis and his wife. 

Minidis said that the charges have no merit and are motivated by former area developers who are conspriring to take over the brand.  The bitter disputs with the developers appear to stem in part from the company’s nondisclosure in earlier UFOCs of another lawsuit, also pending, that at one point resulted in a $6.2 million judgment against Minidis.  A judge later invalidated the award, but that ruling is now under appeal.

The article said:  The legal battles have taken a financial toll.  Financial statements filed with the state show that the company’s revenues for 2005 were $1.6 million, yielding a net loss of $3,381 after almost $350,000 in legal fees.

The article said:  RedBrick has continued to grow nevertheless.  ZThe brand now has 16 master developers in good standing and all of htem also operate some of the chain’s 64 units in eight states.  Within the next year, RedBrick expects to expand to a total of 90 to 100 stores, based on existing agreements.