Nearly two-dozen franchisees and their financial backers are suing Moe’s Southwest Grill and its parent company, alleging the Tex-Mex chain improperly took advertising dollars from them and failed to give money collected from restaurants to a charity as promised.
The suit, filed March 30 in federal court in Atlanta, accuses Moe’s Southwest Grill LLC and its Atlanta-based parent company, Raving Brands Inc., of fraud, breach of contract, racketeering and other offenses.
The plaintiffs are seeking unspecified damages following a jury trial, a temporary receiver to be appointed to run Moe’s and the payment of attorneys’ fees.
The plaintiffs say in court papers they are especially concerned because they believe that Raving Brands plans to sell Moe’s assets to an unnamed third party.
In a statement Wednesday, Stephen M. LaMastra, president and chief operating officer of Raving Brands, said he would not discuss the pending litigation in detail, but he did address the sale allegation.
“Raving Brands is frequently approached by prospective buyers and, as part of our ongoing commitment to our franchisees and the long-term success of our brands, we have evaluated these offers and will continue to do so,” the statement said.
The privately held Moe’s relies solely on franchising for its growth. In 2004, Moe’s officials said the chain planned to expand to 1,000 locations in 45 states by 2008.
As of Wednesday, there were 344 Moe’s locations in 38 states, according to a spokeswoman.
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