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The Edible Arrangements Lawsuit: What Happens When the Interests of the Franchisor and Franchisees are Not Aligned

by Franchise Chatter on July 23, 2011

in Franchise News, Franchise Reviews



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In an article posted on Inc. Magazine’s website on July 22, 2011, Elizabeth Sile discusses the ongoing legal battle between Edible Arrangements and its franchisees.  This is what I learned:

In 2009, Edible Arrangements implemented a new policy that requires franchisees to extend their hours of operation and remain open seven days a week.  In reaction, the franchisees organized the Edible Arrangements Independent Franchisee Association (EAIFA).

EAIFA sent letters from 300 franchisees requesting Edible Arrangements to reconsider this new policy and detailed their reasons for opposition, but the company refused to budge.

In September 2010, EAIFA, on behalf of 170 franchisees, filed a lawsuit against the company for allegedly altering its business agreement and unfairly imposing new system-wide mandates.

Edible Arrangements Photo by Edible ArrangementsMore specifically, EAIFA alleges that Edible Arrangements imposed the following damaging policies:  requiring franchisees to use specific online product ordering and fulfillment software, imposing new fees, changing the wholesale business model by imposing higher costs and extending hours of operation, and creating dippedfruit.com, an affiliate of Edible Arrangements that competes directly with franchisees.



The latest development:  A Connecticut judge ruled that the lawsuit may proceed in the U.S. District Court for the District of Connecticut, after the judge denied Edible Arrangement’s motion to dismiss the complaint for lack of standing by the EAIFA to file the complaint.

This case reminds me a lot of the conflict between UPS and its franchisees back in the day when I was still a franchisee of the The UPS Store.  I can totally relate with the franchisees of Edible Arrangements — it is extremely disheartening to feel that the people you’ve partnered with for your livelihood have chosen to prioritize their own interests to the detriment of your own.

But the really sad part is that I can also see where the franchisor is coming from — they have their own business interests to consider, their own employees to take care of, and their own bottom line to defend.  But the creation of dippedfruit.com is a low blow and, in my opinion, completely unacceptable.  This is a clear case where there is lack of alignment between the interests of the franchisor and franchisees.  With each side vigorously defending its own survival, the entire system is severely weakened.

This, my friends, is the nature of the franchise relationship — for better or worse, this tension always exists.  You need to be prepared for this before entering into any franchise agreement.  I still believe that franchising is the best route for 95% of new entrepreneurs because it really does increase one’s chances for success.   But success is never guaranteed, and neither is a consistently smooth relationship with your franchisor.



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{ 2 comments… read them below or add one }

Tom October 6, 2011 at 3:47 pm

The saddest thing is Edible Arrangements is it’s a GREAT product but the problem sadly is that the franchise doesn’t care about the product, they care about one thing-MONEY!!! Edible Arrangements International is so smart that they have done the math to figure out how to keep a store open while continuing to raise fees. Our fees have only gone up as we have gained more stores. I see this as backwards just using basic economics. More buying power shouldn’t raise cost.
I’m on the FRESH program and have seen my fruit quality diminish though EAI claims that it increases the quality. They say they talk to the buyer but I don’t think they talk about the quality of the fruit, it is more kickback related meetings. If it were about the quality then when I switched to the program, my fruit quality would not of decreased sadly which hurts mainly the store’s reputation and the customer. Edible Arrangements corporate has nothing to lose.

Reply

Ambrosio October 6, 2011 at 4:11 pm

Hi Tom,

Sorry to hear about your experience with Edible Arrangements. I’ve heard similar complaints from other franchisees. Having been a franchisee myself (of The UPS Store), I know it’s so frustrating when you feel that the franchisor is not on your side. It really is supposed to feel more like a partnership, rather than a constant battle. If I had to do it over again, I’d still prefer to go with a franchise (versus starting out completely on my own), but choosing the right franchisor is key. Best of luck to you.

Ambrosio

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