Case Study | Non-Compete Violation | False Fitness
Non-Compete Violation | False Fitness
Franchises let corporations expand the reach of their business throughout the country, but sometimes the misbehavior of the franchisees can lead to disastrous results.
Lauth was contacted by a fitness conglomerate based in Massachusetts who had suspicions that their franchise, branding, and business model had been compromised by one of their franchisees, the Subject, local to the area. She claimed that she had sold her franchise to another owner and was only communicating with the new owner as a consultant, but the Client believed she still owned it, and had simply put her sister’s name on the LLC document.
Lauth reviewed court complaints and documents against the Subject, claiming that she had infringed upon a non-compete agreement that she signed when she agreed to be a franchisee.
Lauth investigators spoke to the Client, gathered information about the fitness studio, their business model, and the branding and markings associated with the franchise. The Client wished to have an investigator infiltrate the business as a customer, document the interior of the studio, learn about the employees, and what the Subject’s involvement was in daily operations. Lauth sent in an undercover operative to speak to the Subject about membership fees and programs, but the Subject was deliberately evasive. Investigators photographed the inside of the studio and confirmed that the Subject was still heavily involved in the daily operations of the studio.