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$1.8 MILLION JURY VERDICT AGAINST ARBY'S

Jun 28, 1990

Mobile, Ala. – Shortly after noon today, a U.S. Federal District Court jury awarded $1,883,000 to Kitchens Foods, Inc. of Gulf Shores, Ala. in a federal fraud case brought against Arby’s Inc. and Fred Bartliff, an Arby’s employee. The plaintiff was represented by Dick Bounds and Greg Breedlove of Cunningham, Bounds, Yance, Crowder and Brown and Mike Youngpeter of Sirote Permutt.

Kitchen Foods, Inc., a family-owned food service business, filed the suit claiming misrepresentation and fraudulent concealment of information on the part of Arby’s Inc. and their regional franchise manager.

“The Arby’s representative told our clients that an average Arby’s franchise generated annual sales in the range of $750,000 to $1 million, and that the franchise our clients were considering opening in Gulf Shores would produce gross annual sales in excess of $1 million, based on its projected location,” said Dick Bounds. “This was later found not to be the truth. The defendants admitted at trial that the average gross annual sales for an Arby’s franchise is only around $500,000.”

The defendants claimed that no discussion of projected gross income occurred prior to the sale of the Gulf Shores franchise.

To validate their claim of fraud, the plaintiff’s attorneys presented testimony from four Arby’s franchise owners. Each owner relayed a similar story of misrepresentation and fraud with regards to the projected gross annual sales for Arby’s franchises.

Dr. Douglas Southard, a statistician and financial consultant, provided expert testimony that based on sales information obtained from Arby’s Inc., after the filing of the law suit, there was approximately a one in 1000 chance of the Gulf Shores franchise producing gross annual sales of $1 million.

“Based on the testimony of the franchise owners and Dr. Southard’s financial analysis, we presented what I believe to be overwhelming evidence that Arby’s Inc. and its appointed representative, were guilty of misrepresentation and fraudulent concealment of information,” said Greg Breedlove. “I am pleased that the jury agreed with our arguments, and that they deemed it appropriate to award the Kitchens both compensatory and punitive damages.”

The case was tried in Judge Virgil Pittman’s courtroom.

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