In Madrid, a judge from Education Court number 52 examined a complaint brought by a minority of former Restalia franchisees. The ruling found no evidence of guilt and did not summon any defendants to testify, including individuals who were never part of the case.
Through documents accessible to Servimedi, the claim is described as frivolous and something that could be better suited to civil action if pursued. The court also clarifies that, under its criteria, competition matters would stay within its own jurisdiction rather than moving to the National Court, as requested by the complainants’ lawyers.
The lawsuit attracted media attention last June, roughly a year after it was filed. It involved complaints from 31 franchisors and more than 700 parties in total against Restalia, its subsidiaries, and its directors. Allegations included criminal organization, fraud, and computer crimes, tied to the allegedly fraudulent conduct that supposedly drove franchisees toward financial ruin. The complainants claimed unrealistic feasibility studies and claims that Restalia concealed agreements with suppliers, rendering the franchise unworkable. The initial amount sought for alleged fraud was 20 million euros, according to statements from those involved.
One of the legal keys in the case is the denial of a charge of fraud based on the idea that the franchisee must purchase certain products or meet specific prices as part of the franchise model and network. There is no fraud attached to contracts between Restalia and suppliers, with the court noting that it is akin to a supermarket omitting to disclose supplier prices to customers.
The proceedings at the 52nd Investigation Court involved nearly two years of work, including an expert report on the agreements between the parties and the basic economic data presented by the complainants. The report, issued last November, revealed serious shortcomings in the complainants’ expert submissions. It also highlighted that the potential impact of the pandemic on the complainants’ businesses had not been adequately considered, and questioned intent to hold the franchisor accountable for the economic consequences of the extraordinary event on its premises.
The judge noted that Restalia’s estimates are merely projections and do not guarantee any financial return under the franchise agreement. The franchisee remains autonomous in managing its business and bears the associated risks.
Additionally, the chain’s uniformity suggests that the obligation to purchase approved products according to taste, quality, and service standards is clearly laid out in the franchise agreement.
Restalia maintained that the accusations in the complaint were unfounded and that the aim was to damage the reputation and business of an affiliated company. The case file, Restalia argued, shows that neither Restalia nor any of its directors committed a crime, and that all actions were conducted in full compliance with the law. The company emphasized that it and its subsidiaries were never involved in the process and were not summoned to testify, stating that none of the group companies, their employees, or managers were implicated or served with court notices. This absence is cited as a reason for feeling vulnerable.
“smear campaign”
In response, Restalia indicated that it would pursue appropriate measures to remedy damages arising from what it calls a smear campaign.
The company also pointed to its two decades of experience in offering entrepreneurial opportunities via a proven business model, supported by a broad network of stores operating under five brands both in Spain and internationally. In a sector like organized catering, which accounts for more than 31% of the food service market and employs over 200,000 people in the country, Restalia notes steady growth since its founding and positions itself as Spain’s largest organized restaurant company at the national level.
The Restalia case is not the first time franchisees have pursued criminal action against franchisors without success. A parallel example was the Granier case, where the bakery chain faced similar allegations and almost identical facts. The file was first closed in 2018, only to be reopened by the Provincial Court in 2020 following a new administration statement.
The McDonalds lawsuit began in 2016, involving the company that distributes products for the American fast-food firm, brought before Investigation Court No. 2012 in Madrid. The 17th ruling by Madrid’s State Court found no criminal evidence, a decision that drew attention when Cremades Calvo Sotelo argued that the investigation had been unfair and sued the investigators and the Supreme Court for judicial bias. In November 2019, the Madrid High Court of Justice filed a complaint against the judges involved.
Complaints against chains like Dia and Carrefour supermarkets show a range of alleged offenses, typically fraud for not delivering the promised financial estimates to franchisees or coercion due to supply cutbacks and unpaid monthly royalties. All such cases to date have been archived, and similar themes recur in other chains like Burger King, Tecnocasa, Mailboxes, and several others where franchisors faced allegations such as fraud or coercion due to supply interruptions.
The recurring legal theme is the notion that a franchisee operates as an independent businessperson who must manage risks inherent to any venture, including those arising from a pandemic. In many aging cases, there has been debate about preferring criminal proceedings over civil actions to resolve disputes between brands and franchisees. In Spain, the Spanish Franchise Association notes a relatively low litigation rate of about 0.09%, suggesting that franchising disputes are less litigious than media coverage might imply.
Given trends in similar lawsuits, observers expect the complainants to challenge the filing decision, potentially extending the process beyond five years. If an appeal to reform is pursued, it typically involves the court and the prosecutor’s office, with the Madrid court deciding within a couple of months. If the appeal routes to the Provincial Court or another body, the timeline could extend well beyond five years for a final decision.