WSI - Worldsites ripoff Legal actions Toronto Ontario

A couple of people have asked about litigation against WSI. If I had known about UFOC's and taken the trouble to get one I would not have bought a WSI franchise! The following is out of the current UFOC (Uniform Franchise Offering Circular)ie disclosure documents. They can be bought from several websites although I think the franchise should supply them free. "LITIGATION "California residents should note the California Appendix to this Offering Circular when considering Item 3 following. "PAST LITIGATION "Worldsites International, Inc v. Korving C.P. No. 286-SW01 (High Court of New Zealand,Auckland Registry). In June 2001,Worldsites International, Inc. ("WII") filed a suit against the following franchisees in New Zealand: (15 franchisees listed) "WII is a former subsidiary of WTG and has granted franchises for Worldsites businesses outside the U.S.A. "WII's complaint was based on the fact that the New Zealand franchisees had sent WII and its employees disparaging and threatening e-mails and had developed a website disparaging WII. WII sought an injunction to enjoin these actions, U.S.$70,611 in compensatory damages, and exemplary damages in an amount to be determined. In June 2001, the New Zealand court issued an interim injunction against the franchisees prohibiting the franchisees from disparaging WII,and requiring the franchisees to remove from the Internet the website that they had developed.

One of the franchisees failed to defend and another was permitted to withdraw from the suit and remains as a WII franchisee. "In July 2001, the New Zealand franchisees filed a counterclaim against WII and certain individuals including Quentin Haines (the Master Franchisee in New Zealand), Dan Monaghan and Nigel Mayne, claiming that WII and/or its representative had misrepresented the profitability of the franchise system in New Zealand and seeking damages. As a result of mediation that took place in May 2002, WII agreed to withdraw its claims against the franchisees and the franchisees agreed to withdraw their counterclaims, thereby minimizing the future costs associated with litigation by the parties. None of the parties acknowledged any liability by virtue of this agreement. Pursuant to this agreement, the parties have agreed to terminate the franchise agreements of the New Zealand franchisees and the franchisees will return their territories to WII, Also, WII will retain the right to resell the New Zealand territories, and certain plaintiffs will pay to certain of the remaining 15 individuals and entities named above approximately U.S.$175,000 in ten monthly payments, the last of which is due on April 1, 2003, which is 23 months after the start of this action. The parties agreed to be responsible for their own legal costs. The parties have agreed to stay the claim and counterclaim. The court-ordered injunction against the franchisees remains in place at this time. "Other than the action listed above, no litigation is required to be disclosed in this offering circular." ANOTHER CHECK ALSO in the UFOC is the last 3 years accounts. A rough and ready check is to take the royalties (management fees)declared, gross it up (ie if royalties are 10%, multiply by 10). Then divide this sum by the number of franchisees the company is supposed to have. If their gross average income is $10,000 (before ANY expenses) why would you want to buy a franchise? Sure, there may be some successful ones but most must be out of business, like me! Hope this is useful for any potential franchisee of any franchise - buyer beware! Mike London
United Kingdom