IBJNews

Judge tosses Noble Roman's franchisee claims

Back to TopCommentsE-mailPrintBookmark and Share

Noble Roman's Inc. has won a pivotal courtroom victory in a battle with 14 former franchisees of its dual-branded Noble Roman’s Pizza and Tuscano’s Italian Style Subs restaurants.

The Indianapolis-based chain is pursuing a judgment of more than $3.6 million against the former franchisees after a Hamilton County judge in December tossed civil claims that the chain committed fraud.

The franchisees filed a lawsuit in June 2008, saying Noble Roman’s misled them about the costs and profit potential of the restaurants. The former franchise locations, in several states including Kentucky, Missouri and California, have since closed.

The chain argued the franchisees were entirely at fault for their own failures, thanks to “mismanagement and incompetence.” Yet the chain has acknowledged that its effort to quickly open hundreds of stand-alone, dual-branded Noble Roman’s and Tuscano’s locations did not work out as hoped.

"This has been a long and expensive lawsuit but we are pleased the court has recognized that the allegations of fraud against the company and its officers were without merit," company president A. Scott Mobley wrote in an e-mail.

The franchises were seeking more than $8 million in damages, a sum that could have left Noble Roman's insolvent. The chain, which operates in 45 states, has a market value of just $20 million. Noble Roman's shares closed at $1.05 apiece on Friday.

Hamilton County Superior Court Judge Steven R. Nation wrote that the franchisees had "no reasonable right" to rely on the chain's verbal sales pitch.

"There was an acknowledgment in the franchise agreement that plaintiff understood and acknowledged the obligation to conduct an independent investigation and the business involved a substantial risk," Nation wrote in the ruling on Dec. 23, 2010.

Noble Roman’s has reinvented itself several times over the years since launching in the 1970s as a chain of dine-in restaurants. In 1997, after intense competition and rising costs made stand-alone pizza joints difficult to operate profitably, Noble Roman’s turned to franchising and opened about 800 nontraditional outlets in locations such as convenience stores, bowling alleys and hospitals.

The chain sold about 90 dual-format franchises between 2006 and 2008 and 55 of them opened, but at least half have since closed.

“The franchisees were misled into buying a concept that was not sufficiently tested,” franchisee attorney P. Adam Davis of locally based Davis & Sarbinoff LLP told IBJ in August 2009. “They were in fact the guinea pigs. And that’s not what you buy a franchise for. The point is that you’re getting a tested and proven concept."

Davis, who took over the case after Nation revoked the temporary admission of attorney David M. Duree of Illinois, was not available to discuss the judge's ruling.

Noble Roman's latest reinvention involves a new offering of take-and-bake pizzas, pasta sauces, deep-dish lasagna and other retail products in grocery stores.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. With Pence running the ship good luck with a new government building on the site. He does everything on the cheap except unnecessary roads line a new beltway( like we need that). Things like state of the art office buildings and light rail will never be seen as an asset to these types. They don't get that these are the things that help a city prosper.

  2. Does the $100,000,000,000 include salaries for members of Congress?

  3. "But that doesn't change how the piece plays to most of the people who will see it." If it stands out so little during the day as you seem to suggest maybe most of the people who actually see it will be those present when it is dark enough to experience its full effects.

  4. That's the mentality of most retail marketers. In this case Leo was asked to build the brand. HHG then had a bad sales quarter and rather than stay the course, now want to go back to the schlock that Zimmerman provides (at a considerable cut in price.) And while HHG salesmen are, by far, the pushiest salesmen I have ever experienced, I believe they are NOT paid on commission. But that doesn't mean they aren't trained to be aggressive.

  5. The reason HHG's sales team hits you from the moment you walk through the door is the same reason car salesmen do the same thing: Commission. HHG's folks are paid by commission they and need to hit sales targets or get cut, while BB does not. The sales figures are aggressive, so turnover rate is high. Electronics are the largest commission earners along with non-needed warranties, service plans etc, known in the industry as 'cheese'. The wholesale base price is listed on the cryptic price tag in the string of numbers near the bar code. Know how to decipher it and you get things at cost, with little to no commission to the sales persons. Whether or not this is fair, is more of a moral question than a financial one.

ADVERTISEMENT