A Michigan investor, who bought into the Roasting Plant coffee shop franchise, is suing the company for fraud. The investor purchased and paid to build two new locations for the coffee shop, one in Dearborn Heights and the other in Ann Arbor, paying over $3.1 million to set up the stores.
Six hundred thousand dollars of the investment was spent on Roasting Plant’s proprietary “Javabot” automatic coffee roasting and brewing system. However, the stores have not churned the kind of profit the investor was hoping for.
According to court documents filed with the U.S. District Court in Detroit, the franchisee has not had the kind of profits that the founder of the company convinced him he would make. Allegedly, the founder touted million dollar revenues generated by other Roasting Plant coffee shop locations. One spreadsheet projected that earnings for the Ann Arbor coffee shop would reach $1.4 million.
Unfortunately for the investor, the projections did not pan out. Instead, the investor has suffered financial losses and he is now accusing the founder of Roasting Plant of fraud. The lawsuit is asking for a total of $9.5 million in compensation, which includes the initial cost of the investment and damages.
An attorney representing Roasting Plant has denied the allegations, saying that the claims are frivolous, without merit and that Roasting Plant and other named defendants will vigorously defend themselves.
This business dispute, like many business-related lawsuits pursued by Michigan residents, involves millions of dollars in damages. Due to the high-dollar amount involved with many business disputes, those involved in this kind of litigation will want to make sure that they fully understand their legal rights — so they can appropriately defend them in court when necessary.
Source: Detroit Free Press, “Franchisee sues Roasting Plant coffee for $9.5M, alleging fraud,” JC Reindl, Jan. 27, 2018