Tim Tebow, pictured far left with Clean Juice founders Kat and Landon Eckles, is a brand ambassador for the company.
Amid arbitration filings from dozens of franchisees, Clean Juice is suing franchisees in Charleston, South Carolina, and Philadelphia for allegedly violating contracts and using trade secrets to operate a competing business, CraveWell Cafe.
The juice bar franchisor filed the complaint December 22 in the U.S. District Court for the Western District of North Carolina against Debra and Morgan Manchester, Richard Kline and Roy Crain.
The complaint lists Crain as the owner of three Clean Juice stores, and the Manchesters also own three. According to the complaint, the franchisees reportedly closed their stores “years before expiration” of their contracts, stopped paying royalties and used Clean Juice’s trade secrets to operate a competing juice brand in their existing stores.
Clean Juice took measures to keep its trade secrets private, such as with confidentiality agreements for franchisees, the complaint says. Clean Juice, based in Charlotte, North Carolina, had 132 stores open by the end of 2022. Landon and Kat Eckles founded the company in 2014. Systemwide sales hit $64.5 million in 2022.
Crain owned three Clean Juice bars in the Charleston area through three separate franchise agreements, two of which were signed January 5, 2017, and the other on December 23, 2017. Each agreement had a 10-year term.
Clean Juice reports one of Crain’s stores closed April 28, 2023, and the other two stopped paying royalties and other required fees October 25 and stores ceased operations November 21 and reportedly re-opened as CraveWell Cafés November 28.
Clean Juice sued franchisees in South Carolina and Pennsylvania in December, stating the owners violated their franchise agreements and unlawfully used the company’s trade secrets to run a competing brand.
According to the complaint, CraveWell Café is “nearly identical” to Clean Juice.
The Manchesters owned three Philadelphia area stores, per a multi-unit development agreement effective June 1, 2018, with 10-year terms for each store.
The Manchesters shut down their juice bars September 23. Clean Juice alleges they opened a competing juice bar called CraveWell Café in the three former Clean Juice locations. CraveWell’s website lists five open locations in Pennsylvania and South Carolina. The brand sells fresh and bottled juices, wellness shots, sandwiches, salads and other health-focused options.
Clean Juice terminated the Pennsylvania franchise agreements October 17 and South Carolina agreements December 6 via letter.
Attorney Leon Hirzel represents the defendants in this case, plus a group of more than 50 franchisees who filed an arbitration suit against the company in September that alleges Clean Juice deceived franchisees by selling a faulty business model. The suit follows franchisee bankruptcies, evictions and profit losses. Franchisees say a switch from fresh juice to bottled juices dwindled sales.
“Clean Juice’s recent lawsuit is a transparent attempt to distract from their own unethical practices,” Hirzel said in a statement to Franchise Times January 3. He called the claim that the franchisees violated trade secrets false.
“It must be understood that there is nothing inherently distinctive, unique, or secret about Clean Juice’s franchise business system,” he continued. “Hinting at these practices as proprietary is akin to claiming exclusivity over the combination of strawberries and bananas in a smoothie. Furthermore, suggesting a unique method for such widely recognized practices is as misplaced as implying one holds a distinct method for squeezing oranges. The information that Clean Juice alludes to as ‘proprietary’ is not only available widely in the public domain but is as fundamental to the juice cafe business as blenders are to smoothies. To assert ownership over such universally practiced methods is, at best, audacious.”
Clean Juice did not respond to request for comment.
Clean Juice franchisees cannot operate a competing business during operation or within two years. The franchise agreement notes doing so would lead to termination, according to the lawsuit.
If agreements are terminated for any reason, owners need to return all Clean Juice information, stop using Clean Juice’s system methods and for two years they cannot operate or associate with a competing business at the former store, within 10 miles of that store or within 10 miles of any Clean Juice store, according to the complaint.
Franchisees whose agreements are terminated early due to breach of contract must pay “the average monthly royalties payable to us for the twelve months preceding the date of termination, multiplies by the less of 24 or the number of months remaining in the term at the time of termination,” according to the complaint. None of the franchise owners have followed post-termination requirements, Clean Juice alleges.
The lawsuit also lists defendant Richard Kline, an apparent “longtime” employee of the Charleston franchisees. Kline reportedly worked as a Clean Juice franchisee trainer. The complaint alleges Kline based CraveWell off the Clean Juice franchise system and “induced” the franchisees to violate their agreements so “Kline could manage the CraveWell Café venture.”
The lawsuit states Clean Juice has suffered “irreparable harm” following the alleged violations.
Clean Juice is asking for a preliminary and permanent injunction to require the defendants to comply with post-termination agreements and stop using the company’s trade secrets, as well as damages “in an amount to be determined at trial,” according to the suit.
“Cravewell’s business takes nothing from Clean Juice. CraveWell Café is not an Organic Juice bar, CraveWell Café uses a completely different menu, different supply chain, different products, different vendors, different recipes, and different equipment,” Hirzel wrote. “Moreover, Clean Juice’s selective persecution of Mr. Crain, Mr. Kline, and the Manchesters, while ignoring other former Clean Juice franchisees who have also rebranded, blatantly exposes their duplicitous standards.”