Litigation between SunFlora, parent company of hemp products retailer Your CBD Store, and former California operator The Natural Solutions was settled for an undisclosed amount in the franchisor’s favor, said CEO Marcus Quinn in an interview in December, ending more than two years of litigation.
It all started with a $250-million lawsuit in 2019 from the franchisee, Natural Solutions, and its principals Steve Pina, Michelle Pina and Fadi Saab, against Your CBD Store. The amount “shows you kind of the mindset of the parties we were dealing with. First off, that’s the craziest number I’ve ever heard of,” Quinn said.
This fall, U.S. District Court Judge Cormac Carney dismissed the case after “a confidential payment from The Natural Solutions to SunFlora, and the parties agreed to end the lawsuit,” according to a press release from SunFlora and Your CBD Store.
The dispute started in 2019, when Your CBD Store was licensing rather than franchising, and Natural Solutions wanted to open in the California market. “We agreed to an exclusivity deal with them, under the pretense they would open 12 stores in 12 months. By about the end of the third quarter they had opened one store, and by December 13 they had two stores, and then by December 30, we had been in contact with them. What’s going on? You should have nine stores open by now and you have two,” Quinn said.
“We weren’t franchising at that point, we were just licensing…through an affiliate licensing model, which is one of the things that they took an opportunity to claim in their lawsuit against us, is we were selling franchises without a franchise registration in California, which was not true,” Quinn said, but it did cause problems for the brand that are now “sorted out.”
“We are an approved franchisor in the state of California. So yes, we are getting ready to move forward with expansion out in the West Coast. Really the sky’s the limit in California,” where they have about 25 stores now. “We think that the market in California can hold 300 or more stores.”
Franchise Times was unable to contact The Natural Solutions or its principals. Brice Bryan, with the law firm Brice E. Bryan & Associates, represented Michelle Pina and The Natural Solutions in a separate but related case brought by State Farm in federal court in California. Bryan did not return a request for comment.
In that lawsuit, in September a State Farm representative said in court that Natural Solutions “is not entitled to coverage for a suit accusing it of breach of contract and trade secret infringement, saying the underlying suit did not allege any claims for which the policy affords coverage,” according to Law360.
Quinn said he felt he had to countersue, but he’s not a fan of litigation. “For us, we always have to do a cost benefit analysis. Is the detriment to the brand, what’s the value of that? How much damage can they do, and then what’s the potential cost of litigation, and what are the chances of prevailing? You have to put that all into a formula and then decide,” he said.
“For us, we never want to litigate. We like to get everything done without lawyers. You can have a conversation, or you can have a conversation with two people sitting in on it that are charging a thousand dollars an hour. At the end of the day, you just burn all that money, and it’s really sad. Because no one wants this scenario.”