The Investigating Court 52 of Madrid investigates the owner of the Restalia Group, José María Fernández Capitán, the company itself and several of its subsidiaries such as 100 Montaditos and The Good Burger as well as twenty other people in charge of the group for allegedly defrauding dozens of franchisees in Spain.
Judge David Suárez has issued an order, advanced by the Efe agency, in which he agrees to open preliminary proceedings against 29 companies belonging to or linked to Restalia, including Pepe Taco, Panther Juice & Sandwich Market and La Sureña, in addition to those already mentioned . But also against 24 managers of group companies, including advisers, directors and administrators, after a complaint filed by the Rafael Franco Lawyers office for continued crime of fraud, criminal organization, coercion and computer crimes.
In the letter, 31 franchised establishments are represented that correspond to the brands The Good Burger, 100 Montaditos, La Sureña and Sureña Blue located in various towns of nine autonomous communities that have suffered an “initial damage” that amounts to 19.7 million of euros.
The brief considers those denounced as part of a “criminal organization” that, under the Restalia brand, which has a network of 780 establishments, acted “with enough deception and enough” towards the franchisees, many of whom were forced to “economic ruin”, by virtue of a model that has already been prosecuted by the US Justice for practices close to fraud.
The complaint states that “the defendants deliberately hid from the franchisees the existence of agreements with suppliers that meant, ultimately, that the franchise was unfeasible.” And, prior to the signing of the contracts, he continues, “some unrealistic feasibility studies were added with which they managed to make them believe that their franchises would give benefits that, in reality, they could never achieve, an extreme that, certainly, those denounced know ” and that explains that “the average number of franchise closures in the Restalia group is about 100 per year.”
Their modus operandi It started with “the indiscriminate recruitment of new franchisees”, who “were offered misleading pre-contractual information and with concealment of data and essential elements of the franchise”. To do this, “they were offered a whole range of advantages and guarantees of success (high profitability, prompt recovery of the initial investment, better prices for merchandise) that turned out to be false.”
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Immediately afterwards, the signing of pre-contracts and development contracts took place with the delivery of notable amounts in order to precipitate the signing of the franchise contract. Later, the signing of the contract that “imposed an unviable business model with all kinds of extra costs” (furniture or machinery) that were hidden from them at the time of signing the contract.
And, also, with “the unilateral fixing of prices by the criminal organization” in the purchase of merchandise and services from the franchisee, as well as in “unchangeable prices for sale to the public” at low cost, which imply an enormous rotation of the merchandise , which is one of the main sources of money for the group, but an extra cost for the franchisee who, on top of that, is “trapped” because these prices are imposed by those who have been denounced. Likewise, the criminal network imposed “the obligation to exclusively supply merchandise from approved suppliers”, but without having direct contact with them, since for this purpose there were two companies (Havi and Logirest) that had made a “closing of ranks” with the group Restalia.
For example, in an audio, two Restalia advisers recognize the owner of a franchise that they could not defend the group because they admit that they could find cheaper meat in the market. And, in another audio, an owner asks a Restalia advisor: “But if I’m showing you that I can buy cheaper and make my company viable and that I don’t have to close, aren’t they going to let me either?” To which they reply: “If it is not the approved product…”.
To this was added the “serious coercion” towards the franchisees through cuts in the supply of merchandise and the computer program, as well as coercion of the members of the Board of Directors of the Spanish Association of Restalia Franchisees. But also in full execution of the business, “there are multiple complaints from the franchisees about the serious deficiencies of the works or the immediate breakdowns of the machinery that entail serious problems to keep the premises open to the public” and that “aggravate the precarious situation of the franchisees.