TOLEDO, Ohio (June 20, 2010)—Sofo Foods, one of the largest food distributors in northwest Ohio, filed a lawsuit last month against Marco’s Pizza Franchising and its principals, and now concerned franchisees are weighing in on the legal fight.
Sofo and its entity A&M Cheese allege that Marco’s and its executives fraudulently induced Sofo into a business relationship, while the franchisor had no intention of entering into the promised contract. Instead, Marco’s started a competing vendor business through a scheme to defraud and eliminate Sofo as Marco’s preferred supplier, in spite of its 30 years of service to the pizza chain. Because Marco’s is officially cutting Sofo off as of June 30, the supplier has now asked the court for injunctive relief, and for a hearing on the matter prior to that date.
The suit filed in Ohio federal court brings thirteen counts, including tortious interference, defamation, fraud, conspiracy and racketeering violations, against the company and the principals named individually in the litigation. Sofo alleges that the enterprise formed under the direction of Marco’s Pizza’s president Jack Butorac, vice president Ken Switzer and CFO Don Vlcek recruited the company’s franchise development VP John Stephens and other employees to participate in racketeering. They assert that the executives enlisted others to make false and disparaging representations about Sofo Foods and A&M Cheese for the purpose of destroying the business relationships with franchisees, so that Marco’s newly established vendor Marco’s Pizza Distribution (MPD) could commence operation with a solid customer base taken from Sofo and A&M.
One undisclosed source, familiar with the case, said he feels the RICO charges could very well go forward if Sofo’s allegations are proven. He also thinks that the quality of the Marco’s pizza products will not be the same without Sofo. “The Sofo Foods network is one of the finest food purveyors in the country, if not the world. They were integral in the growth of the company from the beginning and I don’t think the great Marco’s pizza will remain the same without Sofo Foods.” He gives founder Pasquale Giammarco the credit, who entered into four master franchise agreements for Indiana, Florida and Ohio after the 2004 acquisition of his company. In an affidavit, Giammarco expressed his concern over the current management’s threat to cut Sofo off as its preferred supplier.
Other franchisees have also weighed in on the matter. In a May 24, 2010 letter addressed to Marco’s president John Butorac, attorney Graham A. Bluhm of Eastman & Smith stated, “The impact of the dispute between Marco’s Franchising, LLC and Sofo Foods on the franchisees should not be ignored or taken lightly.” He said franchisees were deeply troubled by the litigation because they rely on their strong relationship with Sofo for consistent service, quality and competitive pricing. Bluhm and his law firm are representing the Association of MPS Franchisees.
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