Noble Roman’s wins latest round in fight with franchisees

A group of former franchisees of Noble Roman’s Inc. has hired a new attorney to represent them in a case against
the chain after a Hamilton County judge tossed their old lawyer.

The case—which pits 14 former franchisees
of dual-branded Noble Roman’s Pizza and Tuscano’s Italian Style Subs against the locally based chain that sold
the franchises—came to a virtual standstill for three months after Judge Steven R. Nation on March 31 revoked temporary
admission for David M. Duree of Illinois. Duree had notarized statements from franchisees who were not in his presence, as
required by law.

The decision was a victory for Noble Roman’s, which had attacked Duree in court filings
as shady and unethical. Duree, notorious for taking on Subway parent Doctors Associates Inc., had argued that Noble Roman’s
acted in “bad faith.”

The new attorney for the former franchisees, P. Adam Davis of locally based Davis
& Sarbinoff LLP, now plans to file another lawsuit, this time against Duree to recover part of a retainer the franchisees
paid him. Davis made his first appearance in the Noble Roman’s case in July.

The franchisees say Noble Roman’s
misled them about the costs and profit potential of operating its stand-alone restaurants. The former franchise locations,
in several states including Kentucky, Missouri and California, have since closed.

Davis said he has spoken to at
least 10 more franchisees that closed their restaurants and now are eager to join the case. The franchises are seeking at
least $8 million—about 70 percent of the company’s total stock market value.

“The franchisees
were misled into buying a concept that was not sufficiently tested,” he said. “They were in fact the guinea pigs.
And that’s not what you buy a franchise for. The point is that you’re getting a tested and proven concept.”

In an e-mail, Noble Roman’s President A. Scott Mobley said the accusations are baseless.

“As
we have stated from the beginning, the company believes the case to be without merit, and believes it will receive a favorable
disposition,” Mobley wrote.

The chain has claimed in court that the franchisees were entirely at fault for
their own failures, thanks to “mismanagement and incompetence.” Yet the chain has acknowledged that its effort
to quickly open hundreds of stand-alone, dual-branded Noble Roman’s and Tuscano’s locations did not work out as
hoped.

The chain sold about 90 dual-format franchises between 2006 and 2008 and 55 of them opened. At least half
have since closed.

The company lately has been shifting its focus back toward adding nontraditional locations with
lower startup costs and overhead such as convenience stores, bowling alleys and hospitals.

Noble Roman’s
has reinvented itself several times over the years since launching in the 1970s as a chain of dine-in restaurants. In 1997,
after intense competition and rising costs made stand-alone pizza joints difficult to operate profitably, Noble Roman’s
turned to franchising and opened about 800 nontraditional outlets in 44 states.

The suit poses a serious risk to
Noble Roman’s, which has $7.5 million in debt and whose shares recently traded for 53 cents apiece. Without a victory
in court or a favorable settlement, the company could face insolvency.

The next hearing in the case is scheduled
for Sept. 2.•