The Federal Trade Commission (FTC) has filed a complaint against Miami-based coffee franchise Qargo Coffee, alleging violations of franchise laws and the accumulation of $1.25 million in fees from 59 franchisees across several states. The complaint was submitted to the U.S. District Court for the Southern District of Florida following a detailed investigation.
The FTC claims that Qargo Coffee and its owners failed to furnish prospective franchisees with essential information required in the franchise disclosure document (FDD). Additionally, the complaint highlights that the company referred to California franchisees as “licensees” without providing any FDD.
Established in May 2020, Qargo Coffee has rapidly expanded, opening numerous locations in at least ten U.S. markets. Efforts to contact the company’s owners were unsuccessful, and an attorney representing Qargo did not respond to inquiries for comment.
The complaint also revealed that Qargo Coffee neglected to disclose owner Mark Bastorous’s previous involvement with another franchise, BurgerIM, which was banned from selling franchises after the FTC found it defrauded over 1,500 individuals. Bastorous served as BurgerIM’s area developer in Florida, a fact undisclosed to Qargo franchisees.
The FTC is proposing a $1.25 million judgment against the owners—Mark and Bernadette Bastorous, along with Samir Shenouda. However, due to their inability to pay the full amount, the order has been adjusted to a $30,000 fine, with the remaining balance suspended.
Moreover, the order mandates that Qargo Coffee and its founders must notify franchisees and licensees in writing about their right to rescind contracts without incurring penalties.
According to its website, Qargo Coffee offers a variety of beverages, including coffee from Italian giant Lavazza, as well as breakfast items, baked goods, teas, and grab-and-go options. The chain features traditional coffee shops with indoor seating and smaller store formats, including drive-through locations.
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