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last updated 28/04/2010

Simon Lord

Class action possible in Green Acres case

last updated 28/04/2010

Simon Lord

March 2010 - With the case against Green Acres master franchisee Keith Lapham due to come to court shortly, some of his alleged victims are threatening a class action against the franchisor

A report in The Truth Weekender newspaper suggests that the victims of the alleged fraud involving Green Acres’ master franchisee Keith Lapham are about to file a major lawsuit against the Green Acres franchise itself. It quotes a spokesman for FranchiseWatch, the group set up to represent the victims as saying that as the government had essentially ruled out any sort of compensation package the only option left was to target Green Acres with a class action. This is a civil action brought by one or more individuals on behalf of themselves and others similarly situated.

According to Litigationnz.com, the purpose of a class action is ‘to secure a judicial remedy which not only eliminates a wrong committed against an individual, and compensates him or her for the effects of that wrong, but which also provides such remedies for all others in a definable class who have suffered as a result of the same practice or practices.’ The FranchiseWatch case, if brought, would be the first class action of its size in franchising in New Zealand.

Class actions are apparently a growing trend in Canada , although the actions there mainly involve the franchisor changing the terms of the agreement, breaching a duty to franchisees or being accused of misrepresentation. The situation in the Lapham case, where the franchisor was apparently ignorant of the actions of its master franchisee, is rather different. The Serious Fraud Office has brought charges against Mr Lapham on three counts of fraud alleging he obtained $3.59 million by deception from 172 people to whom he granted sub-franchises. He is also accused of defrauding Green Acres itself of $250,000 which makes the franchisor another victim. The SFO has not brought any charges against the franchisor.

Green Acres’ director Andrew Chisholm told Franchise New Zealand that despite its concerns the company has been pleasantly surprised at the lack of damage to the brand. ‘I think most Kiwis can see this for what it is and our franchisees haven’t suffered as a result – in fact, the number of referrals into the system is staggering.’

Green Acres offered a rescue package to those people affected by the scam provided they met the franchise’s normal entry criteria. Andrew Chisholm says that while some of those who took up the package only stayed for long enough to earn their money back, ‘Many are still in the franchise and doing well – some have even referred others to us as new franchisees.’

The SFO case against Keith Lapham is now apparently likely to come to court in April.

26 April 2010 - See latest: Green Acres faces $8m compensation claim

Simon Lord

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