Patrick Leddy Oversight Hearing

Many franchisees I know that have lost their businesses, are going to lose there businesses, or are just plain hanging in there because there's nothing else they can do. I am extremely fortunate that I have another profession to fall back onto, while others suffer from intimidation, or being afraid to stand up and say anything, for fear that they will be strong-armed into submission, as Baskin-Robbins has attempted to do to me.

USHouseofRepresentatives.png

U.S.A. House of Representatives
June 24, 1999

Oversight Hearing on the Franchising Relationship
Patrick J. Leddy, Jr., franchise

United States of America
House of Representatives
Subcommittee on Commercial and Administrative Law

PATRICK J. LEDDY, JR.

My name is Patrick James Leddy Jr. I have owned and operated a Baskin-Robbins 31 Flavors franchise in Newhall, California since August 1, 1986, a total of 13 years. I am also a 26 year veteran firefighter with the Los Angeles City Fire Department. I purchased my franchised business to supplement my income, and to prepare my wife and I for our retirement. In 1996 my wife and I became very discouraged with the manner in which our Franchisor, which is a wholly owned subsidiary of a foreign corporation, was treating its franchisees. After careful consideration and after seeing sales at our fellow franchisee's stores plummet as a result of the placement of new stores and drastic changes to the system which we had originally purchased, we decided to sell our store.

In February of 1997, three months after notifying Baskin-Robbins that we were interested in selling our store, we received a notification that Baskin-Robbins was considering a location for a new store located in a shopping mall, a mere two miles from my store and well within the market from which we draw a large number of our customers.

Later that month my wife and I met with our district manager to discuss our ability to sell our store and the tremendous impact the new store would have on our existing store. To our surprise the representative from Baskin-Robbins agreed with us, and suggested that if Baskin-Robbins were to go forward with this plan, how would we feel if they were to purchase our store, and then sell both our store and the new store as a package to a new buyer? We agreed that this would be acceptable to us. Whereafter, the Baskin
Robins representative offered us $40,000 dollars less than what I had paid for this store seven years earlier, and after an additional $70,000 dollars I paid for improvements which were required by
Baskin-Robbins. We were appalled at this offer, but were advised by the Baskin-Robbins representative that we really should consider his offer, because if Baskin-Robbins does elect to place this new store at the proposed location, our store wouldn't even be worth that amount.

Thereafter in April of 1997, and pursuant to an internal policy of Baskin-Robbins, which is not binding on
Baskin-Robbins, and which is rarely followed by the company, I submitted to my district manager my response to this Baskin-Robbins proposed new location. He assured me that he would notify me of any developments as they occur, and that we would be notified promptly, once a determination had been made.

In June of 1997, after several unsuccessful attempts to learn whether Baskin-Robbins would proceed with the new store my wife called our district manager and explained to him that we needed immediate information on what the company intends to do about this new site, because we have had several prospective buyers for our store that were disinterested once we disclosed to them Baskin-Robbins' plan.
The Baskin-Robbins representative advised us not to disclose the information about the new store to our prospective buyers.

In July of 1997, our local neighborhood magazine publications reported that a new Baskin-Robbins would be open two miles from our store. We were shocked. Two days after this news story appeared, and after numerous telephone calls to Baskin-Robbins on our part, we finally received official notification from
Baskin-Robbins about the new store.

We later learned that Baskin-Robbins signed the lease for this new store on May 13, 1997.

On August 5,1997, after the underhandedness that we had felt from Baskin-Robbins, my wife and I decided that in our best interest we should retain legal representation to help us resolve the matter with
Baskin-Robbins regarding the encroachment issue and the subsequent issue of our inability to sell our store.

In June of 1998 the new store opened, with their grand opening celebration following in August. As you can see on the enclosed charts, sales at our store have drastically declined as a result, and have effectively terminated our ability to sell the store at a reasonable price.

While attempting to resolve matters through our attorney, Baskin-Robbins has become increasingly hostile towards us. They have begun arbitrarily rating us as "C" franchisees, when in the past we had always maintained an "A" or "B" rating. In addition, they have brought against us a lawsuit, contending that we were poor operators. One week before the inspection that is the basis for their lawsuit however, a mystery shopper trained and employed by Baskin-Robbins rated our operation superior, as did the LA County
Health Inspector.

In closing, I would ask your full support in addressing the obvious imbalance in the relationship between
franchisor and franchisee through legislation. I am one Franchisee of many that are so frustrated in the way that we are literally forced to do business. Many franchisees I know that have lost their businesses, are going to lose there businesses, or are just plain hanging in there because there's nothing else they can do. I am extremely fortunate that I have another profession to fall back onto, while others suffer from intimidation, or being afraid to stand up and say anything, for fear that they will be strong-armed into submission, as Baskin-Robbins has attempted to do to me. Please, give us the tools that we need to survive in this giant corporate world, so that us little guys can continue making those big guys who they are.

Thank you

Patrick J. Leddy Jr.

PATRICK JAMES LEDDY, JR.

Patrick James Leddy Jr. is a graduate of Temple City High School in the Los Angeles area of California.
He served four years in the United States Air Force during the Vietnam era. He went into the fire service immediately after discharge. He has owned and operated a Baskin-Robbins 31 Flavors franchise in
Newhall, California since August 1, 1986, a total of 13 years. He is a 26 year veteran firefighter with the
Los Angeles City Fire Department.

http://judiciary.house.gov/legacy/ledd0624.htm


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Risks: U.S. Oversight Hearings on the Franchise Relationship, 1999, Retaliation, Encroachment (too many outlets in area), Bad faith and unfair dealings, Fraud, lies, misrepresentations & half truths, Intimidation, Lease controlled by franchisor, Resale permission unreasonably withheld, Cash grab, United States, 19990624 Patrick Leddy

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