A federal judge gave a New Jersey man until April 17 leave to amend his complaint that alleges Medinexo USA and three of its top executives misled him about finances for a franchise investment.
Medinexo USA LLC, its founder, president and CEO Jorge Toro and Senior VP of Sales and Marketing Ron Adelman were sued by Charles Fabius in U.S. District District Court for Eastern District of Missouri. The New Jersey man said in his complaint that Toro and Adelman made false statements, causing Fabius to sign a Medinexo franchise agreement, only to be forced to close it two years later after a major financial decline.
U.S. District Court Judge Jean C. Hamilton granted the defendants’ motions in part and denied without prejudice.
The judge agreed that statements made by Toro and Adelman committed fraud when they allegedly exaggerated how much money Fabius would make were no more than “mere puffery.” Judge Hamilton agreed and said Fabius’ claims weren’t enough to establish fraud claims. She gave Fabius leave to update his complaint with specific misrepresentations the defendants allegedly made.
As for Fabius’s allegation that the defendants infringed on the New York Franchise Sales Act, Fabius was also given leave to amend this portion of the complaint since there’s an issue of fact of whether the act applies to the agreement. He was also given leave to file an amended complaint to show damages he allegedly suffered because defendants didn’t register with the state.
Fabius’s breach of contract claim fell short because he didn’t prove that he actually kept up his end of the bargain via the Franchise Agreement, so he was granted leave to amend this complaint as well.
Fabius first met Toro and Adelman during a yearly Franchise Expo in June 2017, the complaint states. He alleges Toro and Adelman claimed that he would make about $75,000 in the first year, and $400,000 in the second year. They claimed he “would make so much money” that he would agree to five-year franchise agreement with no hesitation, his complaint alleged. But Fabius alleged Toro and Adelman knew they were falsifying the statements because they didn’t have any proof from previous franchise sales to back up their claims.
Fabius invested and formed FabCorpNY as a Medinexo franchise. He entered a franchise agreement and paid a franchise fee of $49,500.
But during the time of operation, from September 2017 to September 2019, Fabius said he had to cover several costs from advertising to travel fees and payroll. He claimed the defendants did not follow their end of the agreement by failing to provide proper training and failing to make payments to him on time. Fabius seeks $190,000 in damages, including the franchise fee.
U.S, District Court Missouri Eastern District case number 4:19CV2526 JCH