The Original Brooklyn Water Bagel Franchise Co. Sued for Franchise Fraud
Franchisee attorney Robert Zarco says marketing claim doesn’t hold water.
Could it be that the bagel franchise with big name celebrity spokesman Larry King is all wet?
Franchisees Florida Bagels LLC, Arsenal Holdings LLC and Egg Ventures LLC, are suing Brooklyn Water Enterprises, Inc. (f/k/a The Original Brooklyn Water Bagel Co.), Brooklyn Water Bagel Franchise Co., Inc., Steven Fassberg, Scott Harris and Ira Marcus, in Palm Beach County Circuit Court.
Represented by Miami franchise firm Zarco, Einhorn, Salkowski & Brito, P.A., the plaintiffs are seeking damages over Two Million Dollars ($2,000,000.00), plus treble and punitive damages, as well as their attorneys’ fees and costs.
The lawsuit alleges that the company flat out lied in its Franchise Disclosure Document (“FDD”) when it stated that the “[O]riginal Brooklyn Water Bagel Restaurants use specially purified water according to a patented 14 stage water purification and treatment process that replicates the make-up and taste of water from Brooklyn, New York, where the world’s finest bagels are made”
According to the press release distributed by his firm (see below), Robert Zarco states “”There is nothing unique and distinctive about using a reverse osmosis water filtration system to purify water as it is commonly available in almost all restaurants and hotels… Not only did the Company intentionally and knowingly deceive my clients, but it continues to mislead the public at large, including investors, through its continued false, misleading claims that its water purification and treatment process is allegedly “proprietary.”
Brooklynite talk show host Larry King became national spokesperson for the Company in 2010. According to the press release, “Mr. King’s conduct is currently being investigated to determine whether, and to what extent, if any, he played a role in carrying out the Company’s false, misleading and fraudulent advertising and marketing strategy in print, radio and Internet promotions, the lawsuit alleges.”
Here’s the press release:
The Original Brooklyn Water Bagel Company and Its Founders at the Heart of Massive Alleged Fraud Scandal; Franchisee Represented by Zarco Einhorn Salkowski & Brito Contends ‘Patented’ Water Purification and Treatment Process a Well-Known Farce
BOCA RATON, Fla., March 14, 2012 /PRNewswire/ — The Original Brooklyn Water Bagel Co., whose franchisees include well-known celebrity Larry King, along with two of its Founders, Steven Fassberg and Ira Marcus, a south Florida trial attorney and also the former Senior Vice-President and General Counsel of the Company, have been sued by a south Florida development agent who claims that the Company’s “patented” water purification and treatment process is nothing more than a commonly-used process that the Company promoted through false and misleading advertising and fraudulent misrepresentations.
Plaintiffs Florida Bagels LLC, Arsenal Holdings LLC and Egg Ventures LLC, are suing Brooklyn Water Enterprises, Inc. (f/k/a The Original Brooklyn Water Bagel Co.), Brooklyn Water Bagel Franchise Co., Inc., Steven Fassberg, Scott Harris and Ira Marcus, in Palm Beach County Circuit Court. Plaintiffs are seeking damages over Two Million Dollars ($2,000,000.00), plus treble and punitive damages, as well as their attorneys’ fees and costs.
As alleged in the lawsuit, “this allegedly exclusive, patented 14-stage water purification and treatment process used to replicate Brooklyn, New York water anywhere in the world was a ruse used to deliberately, intentionally, knowingly and willfully trick prospective franchisees into making outrageous financial investments in the Company,” said Robert Zarco, founding partner of Zarco, Einhorn, Salkowski & Brito, P.A., the Miami franchise firm representing the Plaintiffs. “Defendants’ own marketing materials boast that ‘It’s all about the water.’ Yet, the water itself is allegedly no different than any other filtered water,” says Himanshu M. Patel, a partner with Zarco, Einhorn, Salkowski & Brito, P.A. “There is nothing unique and distinctive about using a reverse osmosis water filtration system to purify water as it is commonly available in almost all restaurants and hotels,” opines Mr. Zarco. “Not only did the Company intentionally and knowingly deceive my clients, but it continues to mislead the public at large, including investors, through its continued false, misleading claims that its water purification and treatment process is allegedly “proprietary,” says Mr. Zarco.
As alleged in the lawsuit, Messrs. Fassberg and Marcus sought a professional opinion as far back as the fall of 2007 seeking professional advice as to whether the Company could obtain a patent on their water purification and treatment process. “Upon information and belief, [they] were advised that they NOT pursue a patent for their invention . . . ,” the lawsuit alleges. Instead, Messrs. Fassberg and Marcus were allegedly advised that their water purification and treatment process was commonly used and that there was nothing “novel” or “non-obvious” about their invention. Despite being armed with this knowledge, the Company, acting through Messrs. Fassberg and Marcus, ignored professional advice and, instead, embarked on a false and misleading advertising and marketing campaign contending that the Company had a “patented” 14-stage water purification and treatment process in order to induce Plaintiffs to enter into development agent agreements with the Company and tender large sums of money to the Company.
Indeed, in the federally-mandated Franchise Disclosure Document (“FDD”) that the Company provided to Plaintiff’s principal in March 2010, the Company stated, in relevant part, that the “[O]riginal Brooklyn Water Bagel Restaurants use specially purified water according to a patented 14 stage water purification and treatment process that replicates the make-up and taste of water from Brooklyn, New York, where the world’s finest bagels are made. . . . Our system, in addition to the patented water purification process, also uses a proprietary seeding technology, which provides for consistent and complete coverage of the product with the desired seeds or seed combinations, while virtually eliminating any waste.” In reliance on the Company’s intentional false representation in Item 1 of its FDD that it possessed the rights to an exclusive, patented water purification and treatment process, which was unbeknownst to Plaintiffs at the time, Plaintiffs made a substantial investment in the Company, the lawsuit alleges.
Eventually, talk show host Larry King joined the Company in 2010. As the national spokesperson for the Company, Mr. King’s conduct is currently being investigated to determine whether, and to what extent, if any, he played a role in carrying out the Company’s false, misleading and fraudulent advertising and marketing strategy in print, radio and Internet promotions, the lawsuit alleges. The Company currently continues to represent that it has rights to a “proprietary” 14-stage water purification and treatment process, the lawsuit further alleges.
Plaintiffs are seeking an award of compensatory, punitive and treble damages against the Company and its Founders as a result of their unlawful and predatory conduct. Plaintiffs also seek to rescind the Development Agent Agreements and operating agreements executed with the Company on grounds that Plaintiffs were fraudulently induced into signing the agreements based on the known false, misleading and fraudulent representations that were made by Defendants.
SOURCE Zarco Einhorn Salkowski & Brito, P.A.
ARE YOU FAMILIAR WITH THE ORIGINAL BROOKLYN WATER BAGEL CO. FRANCHISE? WHAT DO YOU THINK? SHARE A COMMENT BELOW.
The plaintiffs are negligent in not realizing that the water process is generally available. Is the company loosing money? Defendant should change its FDD. I think the defendants almost have a case to counter for frivolous law suit.
I laughed at the overly exaggerated headline above: “Massive Alleged Fraud Scandal.”
The plaintiffs are insane. The water issue is merely the marketing “secret sauce.” At the worst, it’s slight advertising puffery. The important point is that the bagels are fantastic. They do taste like bagels you would find in Brooklyn that are made by real bagel makers. These bagels can not be found anywhere else; certainly not at Einstein Bros., Baltimore Bagels, Noah’s, Western Bagels, Bruegger’s, Panera’s, or any supermarket bakery. Even Wegman’s doesn’t have bagels this good.
Keith Foster wrote: “I laughed at the overly exaggerated headline above: ‘Massive Alleged Fraud Scandal.’”
Yep. ;) No one ever accused Mr. Zarco and his group of subtlety.
I’m sure he was smiling when he approved it (or wrote it).
If you want to eat REAL NY bagels, come to our store in Pembroke Pines: NY Bagel, Cafe & Deli. http://www.nybagelcafedeli.com
We ship our dough from Brooklyn, NY and bake our bagels on premises daily. You get the Real deal: Authentic NY bagels right here in Florida. No water purification here…we have the REAL NY water in our bagels.