Make & Take Gourmet, Michele Bellso Accused of Franchise Fraud (AG)

On the heels of a multi franchisee lawsuit and stores defecting and/or closing, Michele Bellso and her ill-fated Make and Take Gourmet meal assembly kitchen franchise chain have taken yet another hit – this time from the Maryland Attorney General.

After conducting a thorough investigation, the Securities Division of the Office of the Attorney General of Maryland “finds grounds  to allege that Respondents Make and Take Holding, LLC and Michele Bellso violated the registration, disclosure, and antifraud provisions of the Maryland Franchise Law, in relation to the offer and sale of a Make and Take Gourmet franchise in Maryland.”  The Maryland AG has issued an Order to Show Cause, giving Bellso and Make & Take Gourmet an opportunity to “show cause” why a final order should not be entered against them.

Make & Take Gourmet Sold Unregistered Franchises

…section 14-228 of the Maryland Franchise Law makes it unlawful for any person to offer or sell a franchise in Maryland or to a Maryland resident unless the offering has been registered with the Commissioner before the person offers to sell, through advertisement or otherwise, or sells the franchise in Maryland…

The Maryland AG alleges that Terri Morgan, a Maryland resident, visited the Take & Bake Gourmet website in January 2007 and requested franchise information.  She was then contacted by Jim Bellso, Michele Bellso’s brother-in-law and a Make and Take employee, and discussed the Make and Take Gourmet franchise opportunity.

Despite the fact that the Make & Take Gourmet franchise was not registered either in Maryland or New York, as required, Dave Menapace, Make and Take’s Franchise Sales Manager, conducted meetings and store tours with Morgan.  Michele and David Bellso also met with Morgan despite not being registered to offer franchises.

Make & Take Gourmet Violated Franchise Disclosure Laws

…section 14-223 of the Maryland Franchise Law makes it unlawful for any person to offer or sell a franchise in Maryland or to a Maryland resident without first giving a prospective franchisee a copy of the offering prospectus and a copy of each proposed agreement that relates to the sale of the franchise at the earlier of: (1) the first personal meeting of the franchisor and the prospective franchisee to discuss the possible sale of the franchise; or (2) 10 business days before the execution of a contract or payment of any consideration that relates to the franchise relationship…

Even though they had not provided the required disclosure documentation and offering prospectus, Make & Take Gourmet personnel aggressively recruited franchisee Terri Morgan;  Michele Bellso discussed with her various details of the Make and Take franchise opportunity, including the business concept, the costs to open a franchise, build-out expenses, using contractors to construct the space, and finding an appropriate location…

On July 7, 2007, Terri Morgan signed a Franchise Agreement to operate a Make and Take Gourmet franchise in Pasadena, Maryland.  The document allegedly left out mandatory language regarding the requirement that Make and Take Gourmet defer receipt of all initial fees and payments from franchisees until Make and Take completed its material pre-opening obligations to the Maryland franchisees.

Make & Take Gourmet Made Illegal Earnings Claims

…section 14-229 of the Maryland Franchise Law and COMAR 02.02.08.16(D) prohibit any person, in connection with the offer or sale of a franchise, directly or indirectly, to make any oral or written statements concerning the potential earnings from operation of a franchise (“Earnings Claim”) if that Earnings Claim has not been included in the franchise disclosure document required to be filed with the Commissioner…

The Maryland AG alleges that Michele Bellso told Terri Morgan that a franchise owner could earn “$400 – $500 a day” just in sales of pre-packaged meals “grab and go” meals.  On February 21, 2007, salesperson Dave Menapace emailed Morgan a document named One Year Revenue Projections for Make and Take Gourmet that includes a column projecting “gross income” of $1,185,740 in one year and an annual net income of $287,596.  In March 2007, a Make and Take representative directed Morgan to an article that appeared in the Central New York Business Journal that quotes David Bellso as stating that the Make and Take Gourmet store in Cicero, New York expected that year to “generate annual revenue of $1.2 million to $1.5 million.”

After operating a year, Morgan has not begun to approach the revenue figures represented in the Revenue Projection nor earned anything close to $400 – $500 a day in sales of grab and go meals at her Make and Take Gourmet franchise.

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