Hollywood Tans Franchise Lawsuit Documents

Four operators of Hollywood Tans franchises located in three states allege that Hollywood Tans and its leasing company induced them into “entering into unconscionable franchise agreements, defrauded them by sending them deceptive and inflated invoices, and violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”).” 

They have sued the franchisor company, Hollywood Tanning Systems, Inc. (“HTS”); two of its officers, Ralph Venuto, Sr., (now deceased) and Ralph Venuto, Jr., the company to which HTS assigned its interest in the franchise contracts, HT Franchising, LLC; and Highline Capital Corporation, which provided three of the franchisees with equipment leasing and financing services in connection with the operation of their Hollywood Tans franchises.

The Hollywood Tans franchisee lawsuit suit makes 10 allegations:

1. Plaintiffs made substantial investments of time, money and effort into the franchise opportunities marketed by Hollywood Tans.
2. As described more fully below, Plaintiffs were sold their respective Hollywood Tans franchises through false and misleading representations.
3. Hollywood Tans also omitted from their representations numerous material facts that were necessary in order to make its other representations not misleading.
4. In order to induce Plaintiffs to sign their respective franchise agreements, Hollywood Tans made a host of unlawful “earnings claims”, verbally, in writing, and by video presentation, and made false promises regarding training, support, advertising assistance, equipment and supplies.
5. Plaintiffs reasonably relied on the representations by Hollywood Tans and, accordingly, made substantial monetary investments in their respective Hollywood Tans franchises.
6. However, Plaintiffs did not receive the promised financial returns on their Hollywood Tans franchises.
7. Hollywood Tans also failed to deliver on the promised training, equipment and on-going support.
8. Upon information and belief, Hollywood Tans also unlawfully accepted undisclosed benefits from the Plaintiffs’ purchases and financing arrangements.
9. Hollywood Tans also conspired with Highline Capital to fraudulently take money that they were not entitled to receive from improperly disclosed and fraudulent leasing transactions.
10. Hollywood Tans fraudulently concealed its wrongdoing and Plaintiffs did not, and could not have been expected to discover the existence of the majority of their claims until recently.
11. Plaintiffs bring this action to recover from Hollywood Tans the actual damages suffered as a result of the wrongful and fraudulent conduct of Hollywood Tans, including the money that Plaintiffs invested in their Hollywood Tans franchises.
12. Plaintiffs also seek to recover their damages from Hollywood Tans’ executive officers, Ralph Venuto, Sr. and Ralph Venuto, Jr., who, upon information and belief, knowingly and willfully directed the unlawful conduct of Hollywood Tans’ sales team.

Here are the public legal documents:

Hollywood Tans amended_complaint1

Hollywood Tans_opinion

Over at the Hollywood Tans debate at Franchise Pick, current Hollywood Tans franchisee Jamie contends:

I will point out that the lawsuit that was cited is a year old, and refers to events that happened over 3 years ago, and for what it’s worth EVERY HT employee named in it no longer work for the company (at least one of them is actually deceased). I don’t know the validity of the lawsuit nor do I personally know of any of the former franchisees who filed it, but as to former owners being named in it, HT has been under new ownership since long before the lawsuit was filed, so I don’t see how it all pertains to Hollywood Tans as a franchisor today…

What do you think?  Are these alleged misdeeds relevant to Hollywood Tans franchise today?  Share a comment below.