A federal court in New York recently denied a franchisor’s motion for summary judgment on a franchisee’s claims for fraudulent misrepresentation. Cmty. Care Companions, Inc. v. Interim Healthcare, Inc., 2025 WL 929407 (E.D.N.Y. Mar. 27, 2025).
Community Care entered into multiple franchise agreements with Interim, a franchisor of medical staffing services and healthcare-related home medical products, for the operation of an existing franchised business. Community Care later sued, alleging that Interim knowingly made misrepresentations and improper financial performance representations that induced Community Care to enter the franchise agreements.
First, Community Care argued that prior to signing the franchise agreements, Interim led Community Care to believe that, based on income statements and financial documents regarding the existing franchised business and alleged statements made by Interim’s former COO and CEO, Community Care could achieve profits of $3 million annually. The court found that the question of what the disclosures represented about Community Care’s future profitability is a factual one that a jury must resolve. Second, Community Care argued that the royalty documents it received were projections of earnings because “one could back into the sales or earnings by using the formulas Interim provided on what the franchise fees would be.” Again, the court found this to be a factual dispute for a jury. The court reasoned that a jury could determine that the spreadsheets were “projections of earnings” because they contained future-looking dollar values and could be used to infer revenue amounts. The court thus denied Interim’s motion for summary judgment on Community Care’s fraudulent inducement claims.