Franchisee sues cell phone retailer Wireless Toyz
Farmington Hills-based cellular telephone retailer Wireless Toyz is accused of fraud and deceiving its franchisees — accusations the company denies, according to Oakland County Circuit Court filings.
The company was founded in 1995 by Joe Barbat, a 2005 Crain’s 40 Under 40 honoree. Barbat was the subject of a WDIV-Channel 4 investigative report Thursday that stems from the accusations.
In a Feb. 4 circuit court filing, former Wireless Toyz franchisee Raad Kello accused the company of deception and fraud in violation of Michigan’s franchise investment law and other statutes that led him to “several hundreds of thousands of dollars” in losses and to close or sell his suburban Chicago stores.
The complaint specifically alleges that Wireless Toyz made false claims about profitability of the franchise, hid important details and failed to provide adequate training and support.
It doesn’t seek a specific amount in damages, but Kello’s lawyer, Norman Yatooma of Birmingham-based Norman Yatooma & Associates, said it likely would be in the millions of dollars.
A trial date is set for Jan. 7, 2010.
Another Yatooma client and Wireless Toyz franchisee — David Abbo, based in Colorado — filed a similar complaint in Oakland County on May 7, court records show, and Yatooma said two others dropped litigation because they could no longer afford the legal bills.
Crain’s left a message for Barbat on Friday afternoon.
Wireless Toyz is being defended by Bloomfield Hills-based Hertz Schram P.C. Attorney Jonathan Sweik said no statement would be made now on the case.
However, in a statement posted on WDIV’s Web site on Thursday, which Wireless Toyz later tried to withdraw from the Detroit NBC affiliate, Barbat wrote that “claims asserted by Mr. Kello and 75th/Grand Inc. are absolutely without merit for a minimum,” and he termed the lawsuits “frivolous.”
Kello previously released Wireless Toyz for all claims against it, and Kello’s 75th/Grand Inc. was never part of the franchise or development agreements, Barbat wrote.
“The lawsuit brought by Mr. Kello and 75th/Grand Inc. clearly amounts to nothing more than after-the-fact buyer’s remorse,” he wrote.
WDIV posted a response it said was from Wireless Toyz, saying Barbat’s statement was sent out erroneously.
“An unauthorized statement was previously sent in error concerning litigation involving Wireless Toyz Franchise L.L.C. Wireless Toys Franchise L.L.C. continues to adhere to its longstanding policy of not commenting on pending litigation concerning the company.”
Also named as defendants in the suit are Richard Simtob and Jack Barbat as officers of the company, and JSB Enterprizes Inc.
According to the company’s online history, the first Wireless Toyz store opened in 1998, in Ypsilanti, and today has approximately 200 locations nationwide. It began franchising in 2001.
