Connecticut Easi Dealers to Get Refund
Dealers who bought Energy Automation Systems, "EASI", dealerships in Connecticut are able to rescind their dealership agreements, thanks to the fine work of the Connecticut Banking Commissioner, 'the Commissioner".
EASI had been selling business opportunity franchises in Connecticut since 2000, but had not registered with the Commissioner, nor had EASI provided to the prospective dealers the required disclosure documents.
In addition, EASI had made representations to the prospective dealers about what sort of income they could make as EASI dealers, but EASI had no reasonable basis for making these earnings claims.
As result, EASI consented to an order requiring that it reimburse any EASI dealer since 2000 and pay restitution. "The amount of restitution to be paid to each purchaser-investor electing rescission shall be determined via binding arbitration conducted in Connecticut under the auspices of the American Arbitration Association ("AAA") and in accordance with the rules of the AAA. The cost of such arbitration shall be borne by EASI. EASI shall file with the Division Director a copy of each demand for arbitration no later than five business days after such demand has been filed with the AAA. "
Note that the order requires the cost of the arbitration to be paid by EASI. This is a very favourable ruling for the EASI dealers in Connecticut, their entire legal costs in the arbitration will be paid by EASI. This allows the dealers to obtain the very best counsel and explore every avenue for restitution.
What happens if EASI conducts the arbitration but doesn't pay? The consent order provides for a sanction. "Should EASI fail to abide by the arbitrator's decision relating to payments due or owing to any affected purchaser-investor, the Division, in its discretion, may impose sanctions, including, without limitation, a monetary penalty of up to $100,000 against EASI, and EASI, through its execution of this Consent Order, knowingly waives notice and an opportunity for a hearing in connection with the imposition of any such sanction"
In addition to allowing all EASI dealers, from 2000, to rescind their contract with EASI, EASI also has to pay a $25,000 fine and agree to abide by Connecticut's Business Opportunity Law.
All in all, this is a terrific result for those dealers who were mislead by EASI and its agents about the profitability of the EASI dealership. The one difficulty is that order provides only for restitution and not for damages the dealer incurred trying to make the EASI dealership profitable. But that could depend upon how arbitrator rules on what constitutes restitution.
The order obtained by the Commissioner should be a model order for not only the other 20 states which regulate business opportunities, but also the FTC.
