FTC Files Lawsuit Against Burgerim Restaurant Franchise for Violation of Federal Trade Commission Act

Monday, the United States deposit a complaint in the Central District of California against Burgerim Group USA, Inc., Burgerim Group, Inc. and Oren Loni alleging a violation of the Federal Trade Commission Act.

The costume was accompanied by A press release.

According to the complaint, Burgerim Group USA, Inc. is a California corporation and Burgerim Group, Inc. is a Delaware corporation and advertises, markets, distributes and sells Burgerim hamburger restaurant franchises to consumers across the United States. United. The complaint further states that Oren Loni is the managing director of Burgerim Group USA, Inc. and Burgerim Group, Inc.

The complaint alleges that opening a Burgerim franchise requires a substantial investment of time and money and requires franchise fees between $50,000 and $70,000. In addition, the complaint states that the defendants targeted military veterans by offering a $10,000 to $15,000 discount on franchise fees and offered discount incentives to veterans and other consumers to open multiple Burgerim franchises.

The Complaint alleges that in exchange for the Franchise Fee, the Defendants provided the Franchisees with the right to establish and operate a Burgerim restaurant, but the fee does not include other costs of opening or operating the franchise, the cost of which is estimated at more than $60,000. Additionally, the complaint alleges that the franchisees who paid the defendants came from different backgrounds and business experiences, with many having no previous experience running a restaurant.

The United States alleges that the defendants attempted to persuade potential franchisees by presenting the franchise as a “business in a box” while ignoring the risk associated with the considerable investment and claiming to offer refunds in the event that the franchisee could not open the restaurant. The complaint states that the defendants sold more than 1,500 Burgerim franchises, but the vast majority of Burgerim franchisees never launched their businesses and, in many cases, the defendants failed to honor their promise to reimburse.

The Complaint alleges that, through the sale and advertising of the Burgerim Franchises, the Defendants misrepresented and failed to provide material information required by the Franchise Rule which requires a franchisor to provide prospective franchisees with a basic document on the disclosure of the deductible. The lawsuit argues that the defendants’ illegal activities have harmed people across the country and that many franchisees have found themselves burdened with substantial debts or ruined credit due to their misrepresentations and broken promises.

In addition to the current lawsuit, the complaint states that the Maryland Attorney General’s Office, the Washington Department of Financial Institutions, and the Indiana Secretary of State each issued orders against BIMGUSA that prohibit it from selling franchises. . Further, the Complaint states that in February 2021, the California State Financial Protection and Innovation Commissioner issued a citation and cease and desist order against Defendants for their breach of California law.

The United States brings four causes of action against the defendants, including violation of the Federal Trade Commission Act and franchise rule disclosure requirements, dissemination of financial performance statements not included in the disclosure document of the franchise and claims or statements that contradict a required disclosure. For these causes of action, plaintiff is seeking a permanent injunction to prevent future violations of the FTC Act and the Franchise Rule and monetary civil penalties.

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Cecil N. Messick