MRINetwork Breach Franchise Contracts


Read how Management Recruiters International breached my franchise contract and how they did the same for most, if not all MRI Network franchisees, giving grounds for franchisees to terminate their franchise agreements.

As explained in About Franchises, a franchise is a contractual arrangement between two parties, i.e. the franchisor and a franchisee. In this case the franchisor is MRI Network owned by CDI Corporation. The franchisee is any one of the people or companies that purchased a franchise from the franchisor. When a franchise is entered into, there are contractual obligations on both sides.

An important example of such a contractual obligation is shown here. It is an extract of my franchise contract and because this was initially taken before CDI Corporation acquired Humana International Group (HIG), it reflects HIG as the franchisor. Of course post April 1999, when CDI Corporation purchased HIG, they became the franchisor with the same contractual obligations. The original extract states:

"Franchisor’s Continuing Obligations. Operate a system of co-operation between the Franchisee and other franchisees of the Franchisor to facilitate the interchange of candidates and position openings to enable the Humana Network to maximise business opportunities."

(Extract taken from my franchise agreement that predates the CDI acquisition of Humana and the renaming of it to MRI, but also ran over the period in question under CDI Corporation and MRI control).

I believe that CDI Corporation and MRI Network failed in their continuing obligation to ‘operate’ that system of co-operation between franchisees by falsely representing Mr JW as a regular franchisee. The truth about Mr JW is that only CDI Corporation and Management Recruiters International and their management team knew that Mr JW was in serious and growing financial difficulty for years. Only CDI Corporation and MRI Network and their management knew that Mr JW's franchise agreement had expired in November 1999. Despite this dire situation, CDI Corporation and Management Recruiters International chose to continue to repeatedly represent Mr JW as a regular franchisee even after his franchise agreement had expired. This was not a transitory issue by Roger Ballou and his subordinates, it went on for years. During that time there is also evidence that CDI Corporation were intimately involved in this. For example: I am now also aware that this growing and uncontrolled debt was of concern to both MRI Inc and to CDI Corporation, and had been for years. For example, shortly after CDI Corporation's acquisition, Mr Doug Bugie, (Mr Mills predecessor) wrote to Mr JW on 13th June 2000 were he said:

"Needless to say, the size of the arrearage is balance sheet destroying, it would wipe out our bad debt reserves. CDI, not only MRI is very concerned and looking for answers."

It is worth noting that this ‘balance sheet destroying’ debt referred to in 2000 was relatively modest compared with the amount that CDI Corporation and MRI Network allowed it to grow to over the following three years.

Additionally Jonathan Taylor (MRI's Financial Controller) wrote to Mr JW on 12th May 2000 about a repayment plan stating:

"Please also remember that the agreement included a commitment to pay current royalties as they fall due. Without this you will find that the overall debt will continue to rise, instead of going down. We are being pressed very hard by both MRI and CDI on this so I would be grateful if you would confirm the above in writing."

(Mr Steve Mills has declared in his sworn affidavit that this and other repayment plans was not adhered to by Mr JW.)

Breach of Franchise Contract - Management Recruiters International

In the case discussed here, there is a contractual obligation on the franchisor is to 'operate' the network to facilitate interchange of candidates and position openings... This is the role of the franchisor that enables the network to work together as a functional unit. all working to the same rules, methodology and ethical standards. It underlines the IOR system - i.e. the Inter Office Referral system. Without the franchisor fulfilling this contractual obligation, the offices are simply single offices out of control and there is no real network.

Relate this obligation to what CDI Corporation and MRI Network actually did.

1) They allowed a franchisee to stay in the network without paying the Royalties due.
2) They allowed his debts to grow year-on-year, to an astonishing magnitude of at £170,477:60 UK Pounds (approximately $316,626 USD) in March 2003.
3) They allowed this situation to continue for several years (1999 - 2003) after his original franchise agreement had expired.
4) They continuously and repeatedly represented Mr JW as a regular franchisee to the rest of the MRI Network / MRI Network / Management Recruiters International throughout all of this period.
5) They facilitated the situation where work was completed in good faith by Inter Office Referral (IOR) partners with with concealed knowledge that Mr JW had a track record of non payment. This resulted in the IOR partner not receiving money that the client paid to Mr JW.
6) Steve Mills had full knowledge that this IOR was in place through monthly returns. He even sent out a congratulatory email to me, on wining the work with Mr JW.

I believe that their actions and inactions over these issues represent breach of my MRI Network / MRINetwork franchise contract as they failed in their continuing obligations for years.

What is more devastating is that their chosen path also impacts on every other franchisee in the MRINetwork. I believe that MRI Network also breached the franchise contract of every other Management Recruiters International franchisee worldwide who has the same or similar clause in their franchise contract. That point could be devastating for the revenue streams of CDI Corporation as I believe that all other MRI Network franchisees could justifiably terminate their franchise agreements for this breach of contract. That would have a devastating effect on the revenue streams of CDI Corporation and my fellow shareholders.



Also read:

S