AAA Franchise Arbitrator Kaufmann Flaunts Pro-Franchisor Bias

David J. Kaufmann, the self-appointed franchisor-biased arbitrator in the PIRTEK USA litigation against its former top franchisee, Jim Lager, claims there are no problems in franchising.

But there IS a problem in franchising:  That franchisor-biased David J. Kaufmann arbitrates franchisee vs. franchisor disputes. by Sean Kelly, publisher, UnhappyFranchisee.Com.

This post is part of the series:  PIRTEK USA v Jim Lager Series: The Perils of Franchising.  Read: PIRTEK USA v. Lager Series: DISCLAIMER & Clarification

(UnhappyFranchisee.Com)  The arbitrator in PIRTEK USA’s continued campaign to destroy its former top franchisee, David J. Kaufmann, has left no doubt that he should NEVER have been in a position to arbitrate franchisee vs. franchisee disputes.

His latest New York Law Journal article,  Is the FTC Cracking Down – Or Cracking Up?  the amusingly pompous King David makes no effort to hide his contempt for franchisees, franchisee advocates, the Federal Trade Commission (FTC) and The Franchise Rule.

Kaufmann’s latest proclamation is a condescending response to a previous column in the NYLR authored by his “colleague and good friend,” [I bet], respected  franchisee attorney Ronald Gardner (“The Giant Has Awoken: Franchisors in FTC’s Crosshairs“).

Kaufmann pronounces that there is no evidence of any problems in franchising, and no ““growing concern around unfair and deceptive practices in the franchise industry.”

He condescendingly tells advocates of fair franchising to “stop twirling their batons and put down their pom-poms.”

David Kaufmann’s article oozes contempt for the Federal Trade Commission (FTC), which he acknowledges is “the primary federal agency governing franchise sales activity.”

At one point, David Kaufmann states “perhaps the FTC wants to reacquaint itself with the Lanham Act.”

King David even threatens the FTC  to “to stay in its lane,” or risk the public embarrassment of a legislative defeat promulgated by him and his big-money franchisor lobbyists.

David J. Kaufmann’s overly demeaning chest-thumping and condescension seems to be for the benefit of his true audience:  The big money franchisors whose interest he serves.

I believe that the true, underlying message of this exaggerated and ridiculous article is:

Your money’s been well spent.

We are in control and that’s not going to change.

You are free to continue to do whatever you want to whomever you want, and no one will hear about it.

How Franchisor-Biased David Kaufmann Silences Franchisee Dissent

Despite his dedication to serving only franchisors in his law practice at Kaufmann Gildin & Robbins, Kaufmann is somehow allowed to mediate and arbitrate franchisor-franchisee disputes for the American Arbitration Association (AAA).

How is it that one who has represented the best interests of franchisors for decades & openly expresses contempt for franchisees, franchisee advocates & the FTC would be allowed to arbitrate franchisor vs. franchisee disputes.

As made public in unsealed documents submitted by PIRTEK USA attorneys in their attempt to get their arbitration claims exempted from Lager’s bankruptcy, Kaufmann’s bias and double-standard applied the franchisor and against franchisee Lager seems apparent:

• Jim Lager was a top-selling, award-winning franchisee of PIRTEK USA, was a mentor to other franchisees and was prominently featured in PIRTEK USA franchisee recruitment programs
• PIRTEK USA was sold to new owners, who refused to renew Jim Lager’s franchise agreements without adequate justification
• In 2020, Kaufmann oversaw mediation that resulted in a settlement agreement between franchisor PIRTEK USA & a top franchisee, Jim Lager.
• The Franchisor & Franchisee mutually agreed to remove all Internet content referring to their prior relationship.
• Franchisee Lager was required to remove content with his complaints about his treatment as a franchisee & PIRTEK’s franchise practices.
• PIRTEK USA was required to stop using Lager’s likeness, success story & military service to promote & sell PIRTEK franchises.
• Franchisee Lager complied and removed his content, as agreed, including a series of posts on a 3rd party website.
• PIRTEK USA did not comply, & continued to promote Lager’s success story via previously placed stories.  At least one of the promotional placements included Lager’s 1st & 2nd year sales as a PIRTEK franchisee which allegedly constitutes an illegal “earnings claim” in violation of the FTC Franchise Rule.
• Lager’s attorneys repeatedly appealed to Kaufmann to have PIRTEK remove the non-compliant content from the Internet.
• Kaufmann repeatedly refused, claiming the franchisor is under no obligation to comply with removing content on 3rd party sites (even though Lager was required to do so).
• Lager’s franchisee attorneys provide irrefutable evidence, including affadavits from 2 former PIRTEK employees, that the franchisor has the power to remove the content from the Internet.
• Kaufmann refused to require (or even suggest) that PIRTEK to remove Lager’s PIRTEK success story & earnings claim content from the Internet – even from promotions residing on PIRTEK USA’s own webpage and on marketing accounts PIRTEK controlled.
• Yet Kaufmann forbade franchisee Jim Lager from submitting his opinions or participating in the open comment invitations by the Federal Trade Commission (FTC) in 2020 and the National Association of (NASAA) in 2021, even though neither submission referred to PIRTEK by name.
• In fact, David Kaufmann issued a Temporary Restraining Order (TRO) prohibiting Jim Lager from submitting his opinions to state administrators.
• Kaufmann justified prohibiting Lager from sharing opinions (that didn’t mention PIRTEK USA) by referring to the very content he refused to make PIRTEK USA remove(!)
• Kaufmann stated that although Jim Lager’s letters did not name PIRTEK, “anyone with Google can figure out the company he’s referring to.”
• Franchisee Jim Lager reached his limit with Kaufmann’s alleged coddling of the franchisor while simultaneously cudgeling his rights.  He rejected the legitimacy of the proceedings and Kaufmann as mediator/arbitrator and is speaking out publicly.

That’s right:  Kaufmann defended the right of franchisor PIRTEK USA to continue to promote its relationship with Jim Lager on the Internet, but denied Jim Lager’s right to participate in public proceedings because PIRTEK USA self-identifies through illegal and non-compliant content.

David Kaufmann Issued a Temporary Restraining Order (TRO) to Keep Franchisee Complaints From State Administrators

An abundance of credible complaints and ideas were submitted to the FTC despite King David’s exhortations:

Public Comments on Provisions of Franchise Agreements and Franchisor Business Practices

David J. Kaufmann’s article provides his big franchisor base with conspiracy-theory, election-denier-level deflection of the public complaints submitted to the FTC:

…the FTC will receive hundreds (if not thousands) of coordinated identical letters advancing complaints against franchisors…

Unfortunately, Kaufmann and his cohorts have suppressed the experiences and opinions of innumerable franchisees through forced arbitration, NDAs, confidentiality and non-disparagement clauses, bullying and intimidation.

Hopefully, enough will have leaked through to awaken the Giant that the FTC could truly be – but so far has not been.

Also read:

Franchise Arbitrator David Kaufmann’s Credibility on Trial After Kangaroo Court Hearing

Arbitration on Trial: How Franchisor Attorneys Undermine the FTC Franchise Rule

Franchise Attorney, Mediator David Kaufmann Ethics Accusations

NASAA Advisor Forbids Franchisee Participation in NASAA Public Comments

WHAT DO YOU THINK?  ARE YOU FAMILIAR WITH THE ARBITRATION PROCESS?   WHAT WAS YOUR EXPERIENCE? PLEASE SHARE YOUR OPINION BELOW OR EMAIL US AT UNHAPPYFRANCHISEE [at] GMAIL [dot] COM

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Tags:  Arbitration, AAA, American Arbitration Association, David Kaufmann, attorney David Kauffman, Franchise attorney David Kaufmann, mediator David Kaufmann, attorney Michael Joblove, PIRTEK, PIRTEK USA, Glenn Duncan, CEO Kim Gubera, Jim Lager, franchisee Jim Lager, Texas Hose Pro, Franchise NDAs, Federal Trade Commission, FTC, the Franchise Rule, NASAA, Franchise Legislation,