The popular ice cream retail chain Cold Stone Creamery has had many problems with maintaining successful franchises. Many of the franchise owners have found themselves financially insolvent over the last few years, some even filing for bankruptcy to resolve their debt troubles. While many franchise store owners fight to negotiate lease agreements and contractual terms, one particular franchise now finds themselves in the middle of a lawsuit.
A franchise owner in New York has filed a lawsuit against their attorney for dual representation. Aaron and Karin Tzamarot are pursuing the lawsuit citing they were not informed that their attorney also represented Cold Stone Creamery in a prior lease negotiation. The conflict of interest presumed from the dual representation violates a New York law that states that attorneys must (a) first determine if there is any potential for a conflict of interest, (b) disclose any dual representation to both clients and (c) allow the clients to determine whether or not they wish to use the attorney’s services after the disclosure.
The lease negotiation came after the franchise filed for Chapter 11 in 2010 in order to resolve non-payment and default issues over the expense of the lease. The Tzamarot’s claim their attorney never informed them of the dual relationship with Cold Stone and now questions the attorney’s ability to be partial in the franchise lease negotiation. However, the attorneys representing both the Tzamarots and Cold Stone Creamery hold that there was never any “active concealment” of the dual relationship and deny any claim of a conflict of interest, saying both parties had a “united interest” in the lease negotiation.