UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA 

INTRODUCTION

1. Plaintiffs Elite Advantage, LLC and Edward E. Sell bring this putative class action 

on behalf of themselves and on behalf of similarly situated DirectBuy franchisees 

(“Franchisees”) asserting that Defendants Trivest Fund IV, L.P., Trivest Partners GP, LLC, 

Trivest Partners IV, Inc. (collectively “Trivest”), and Troy D. Templeton (“Templeton”) 

perpetrated a fraudulent scheme, in violation of the Racketeer Influenced and Corrupt 

Organizations Act, 18 U.S.C. § 1961, et seq. (“RICO”), and engaged in unfair, 

unconscionable, and deceptive acts and practices, in violation of the Florida Deceptive and 

ELITE ADVANTAGE, LLC, a Florida 

Limited Liability Company; and 

EDWARD E. SELL, an individual, 

INDIVIDUALLY AND ON BEHALF OF 

ALL OTHERS SIMILARLY SITUATED 

 Plaintiffs, 

v. 

TRIVEST FUND IV, L.P., a Delaware 

limited partnership; TRIVEST 

PARTNERS GP, LLC, a Delaware limited 

liability company; TRIVEST PARTNERS 

IV, INC., a Delaware corporation; and 

TROY D. TEMPLETON, an individual; 

 Defendants.

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Case No. 

COMPLAINT 

JURY TRIAL DEMANDED 

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Unfair Trade Practices Act (“FDUTPA”), Fl. Stat. §§ 501.201, et seq., to enrich themselves 

through the fraudulent and unauthorized taking of the funds of Plaintiffs and the 

Franchisees. 

2. Plaintiffs and the Franchisees are current and former franchisees of DirectBuy, Inc. 

(“DirectBuy”). DirectBuy franchises the right to own and operate members-only buying 

clubs (“Clubs”) under its trade name and trademarks in the United States and Canada. 

Consumers pay a membership fee for the right to join the Clubs, where the members are 

able to purchase products at wholesale-type prices. 

3. The written Franchise Agreements between DirectBuy, on the one hand, and 

Plaintiffs and Franchisees, on the other hand, require Plaintiffs and Franchisees to pay a 

royalty to DirectBuy equal to 22% of the gross amount Plaintiffs and Franchisees charge 

for new memberships sold to consumers. Accordingly, DirectBuy has a strong financial 

incentive to generate new membership purchases at the Clubs. 

4. Because DirectBuy receives royalties based on the gross amounts charged for new 

memberships, regardless of whether Plaintiffs and Franchisees make a net profit, and 

Plaintiffs and Franchisees only put money in their pockets if they generate a net profit, 

there is an inherent conflict of economic interests between DirectBuy and Plaintiffs and 

Franchisees in the way in which each generates its cash flows. 

5. DirectBuy uses marketing and advertising as a mechanism to drive up the number 

of new memberships sold, the cost of which is borne almost exclusively by its franchisees 

(with the exception of a limited amount DirectBuy billed to its corporate stores and the 

amounts for which DirectBuy bills franchisees but does not collect). Therefore, the 

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advertising expense is overwhelmingly placed on DirectBuy’s franchisees, including 

Plaintiffs and Franchisees, while DirectBuy reaps the rewards in the form of increased 

royalties.

6. Because of the disparity in how DirectBuy, versus Plaintiffs and Franchisees, 

generate cash flow and the fact that DirectBuy franchisees almost exclusively bear the 

financial burden of the local marketing and advertising done to increase membership sales, 

the Franchise Agreements limited the contributions Plaintiffs and Franchisees are required 

to make to DirectBuy for national marketing and advertising programs to no more than 

“3% of the gross amounts [the franchisee charges] for new memberships” (referred to 

herein as the “3% Cap”).

7. In November 2007, the Trivest Defendants purchased DirectBuy for $550 million 

through a highly leveraged transaction. This transaction involved DirectBuy Holdings, Inc. 

(“DB Holdings”), a holding company created for the purpose of the transaction that 

became the ultimate parent of DirectBuy, issuing high yield bonds to pay for the vast 

majority of the purchase price. DirectBuy was a guarantor of these bonds, which were 

also secured by the assets of DirectBuy. Additionally, Defendants put into place a system 

whereby DirectBuy funded the payments for the bonds through an undocumented, 

unsecured, non-interest bearing “loan” from DirectBuy to DB Holdings. This resulted in a 

situation where, in order to not default on the bonds, DirectBuy needed to drive substantial 

new membership sales to fund the bond obligations of DB Holdings that had been used by 

the Trivest Defendants to purchase DirectBuy.

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8. Because of the need to drive substantial new membership sales, and the fact that 

the costs for marketing and advertising were primarily borne by DirectBuy franchisees, 

Defendants, through their control of DirectBuy, engaged in a scheme to fraudulently 

induce Plaintiffs and Franchisees into funding DirectBuy marketing and advertising 

programs, by imposing unauthorized charges in excess of the 3% Cap. 

9. Defendants exercised control of DirectBuy through the installment of Templeton as 

the Chairman of DirectBuy’s Board of Directors, soon after Trivest’s acquisition of 

DirectBuy, and by imposing an ongoing requirement that any significant decision 

regarding the operations of DirectBuy would have to be approved by Trivest and 

Templeton.

10. After Trivest’s purchase of DirectBuy, charges to the DirectBuy franchisees for the 

marketing and advertising program ballooned to amounts far in excess of the 3% Cap. For 

example, in 2009, Franchisees were charged, on average, over 6.5 times the amount that 

would have been allowed if the 3% Cap had been honored.

11. Worst of all, Plaintiffs and Franchisees were powerless to stop DirectBuy’s 

collection of these excessive marketing and advertising fees because, in many instances, 

DirectBuy would simply fraudulently claim these excessive and unauthorized amounts 

were due and payable and unilaterally bill these overcharges to Plaintiffs and Franchisees’ 

credit cards, and when they no longer had any credit left, DirectBuy would claim and 

collect as receivables due and owing from Plaintiffs and Franchisees these excessive fees 

in one or more of three ways: (1) by placing franchisees on the “Direct Pay Program” 

under which DirectBuy franchisees were forced to have their customers remit funds related 

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to merchandise sales, including handling fees owed to Franchisees, directly to DirectBuy 

rather than to the franchisee; (2) by retaining amounts due to franchisees under the Beta 

Financing Program, a program under which customers were able to finance their 

membership fees; or (3) by retaining handling fees and renewal fees due to franchisees. 

12. Defendants violated section 1962(c) of RICO by participating in and conducting an 

enterprise through a pattern of racketeering that involved the predicate acts of mail and 

wire fraud, which involved the provision of fraudulent media bills to Plaintiffs and 

Franchisees that misrepresented the amount Plaintiffs and Franchisees were legally 

obligated to pay in marketing and advertising fees via the U.S. mail and over interstate 

wires, and financial institution fraud, which involved the fraudulent charging of Plaintiffs 

and Franchisees’ credit cards for amounts in excess of the 3% Cap, which were not 

approved by Plaintiffs and Franchisees. Additionally, Defendants violated section 1962(d) 

by conspiring with DirectBuy to violate section 1962(c) through the agreement of 

Defendants and DirectBuy to engage in the enterprise through a pattern of racketeering 

activity.

13. Defendants violated the Florida Deceptive and Unfair Trade Practices Act by 

engaging in deceptive and unfair practices in the course of trade or commerce by 

implementing a scheme whereby DirectBuy assessed and collected excessive and 

unauthorized national advertising fees from Plaintiffs and Franchisees outside the scope of 

its legal entitlement in order to benefit Defendants, causing Plaintiffs and Franchisees to 

lose millions of dollars.

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14. To redress the severe economic damage done by Defendants’ repeated RICO and 

FDUTPA violations, Plaintiffs now bring this action on behalf of themselves and other 

similarly situated DirectBuy franchisees. 

PARTIES

15. Plaintiff Elite Advantage, LLC, is a limited liability company with its principal 

place of business at 4019 Roberts Point Road, Sarasota, Florida. Elite Advantage, LLC is 

the assignee of a Franchise Agreement entered into between Rich L and Katherine J. 

Miller, husband and wife, with DirectBuy, Inc., on November 29, 2005, to operate a 

franchise in Sarasota, Florida. Elite Advantage, LLC’s Sarasota franchise did not open for 

business until December 2007. Due to its significant and ongoing operating losses, the 

franchise operated by Elite Advantage, LLC closed its doors on or around July 22, 2014, 

and is no longer in business. By letter dated July 30, 2014, DirectBuy terminated Elite 

Advantage’s Franchise Agreement. Rich L. Miller and Katherine J. Miller are the 

principals of Elite Advantage, LLC and are Guarantors under the Franchise Agreement.

16. Plaintiff Edward E. Sell is an individual and a resident of Indiana. On December 

23, 1997, Plaintiff Sell entered into a Franchise Agreement, as franchisee, with United 

Consumers Club Franchising Corporation, as franchisor, to operate a franchise in and 

around the Tinley Park, Illinois. United Consumers Club Franchising Corporation 

changed its name to UCC TotalHome, Inc., in January 1999, and changed its name to 

DirectBuy, Inc. in October 2004. The franchise operated by Mr. Sell and his wife, I.J. Sell, 

closed its doors on June 30, 2014, at the expiration of its term, and is no longer in business. 

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17. Upon information and belief, Defendant Trivest Fund IV, L.P. is a limited 

partnership formed under the laws of the State of Delaware, whose principal place of 

business is at 550 South Dixie Highway, Coral Gables, Florida. 

18. Upon information and belief, Defendant Trivest Partners GP, LLC is a limited 

liability company formed under the laws of the State of Delaware, whose principal place 

of business is at 550 South Dixie Highway, Coral Gables, Florida.

19. Upon information and belief, Defendant Trivest Partners IV, Inc. is a corporation 

formed under the laws of the State of Delaware, whose principal place of business is at 

550 South Dixie Highway, Coral Gables, Florida.

20. Upon information and belief, Defendant Troy D. Templeton is a resident of Florida 

and an Executive Officer and Director of Trivest Partners IV, Inc., the managing member 

of Trivest Partners GP, LLC, which is the general partner of Trivest Fund IV, L.P. 

Additionally, Mr. Templeton, upon information and belief, is the Managing Partner and a 

Member of the Investing Committee of Trivest Fund IV, LP. Also, Mr. Templeton was the 

Chairman of the Board of Directors for DirectBuy, Inc. and DirectBuy Holdings, Inc., 

while these entities were owned by Trivest. 

JURISDICTION AND VENUE

21. Jurisdiction is proper in this Court pursuant to 28 U.S.C. § 1331 because this Court 

has original jurisdiction over the claims arising under RICO.

22. Jurisdiction is also proper in this Court pursuant to the Class Action Fairness Act, 

28 U.S.C. § 1332(d), because this is a class action where at least one member of the 

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putative class is a citizen of a state different than the Defendants and the amount in 

controversy exceeds $5,000,000, exclusive of interest and costs. 

23. This Court has personal jurisdiction over the Trivest Defendants because their 

principal places of business are located within this district and they transact substantial 

business in this district.

24. This Court has personal jurisdiction over Defendant Templeton because he is a 

resident of Florida and transacts substantial business in this district.

25. This Court also has personal jurisdiction over the Defendants pursuant to 28 U.S.C. 

§ 1965(b), the nationwide personal jurisdiction provision of RICO.

26. Venue is proper in this district, pursuant to 28 U.S.C. § 1391(b)(1), because a 

Defendant resides in this district, and also pursuant to 28 U.S.C. § 1391(b)(2), because a 

substantial part of the events and omissions giving rise to the claims alleged occurred in 

this district. Additionally, venue is proper in this district pursuant to 28 U.S.C. §§ 1965(a) 

and (b), the nationwide venue provisions of RICO.

FACTS

The DirectBuy Franchise System

27. In the DirectBuy Franchise System, DirectBuy franchises the right to own and 

operate members-only buying clubs under its trade name and trademarks in the United 

States and Canada to franchisees such as Plaintiffs. In turn, franchisees operate DirectBuy 

centers that consumers pay a membership fee for the right to join. After joining, the 

members are then able to purchase residential remodeling products (i.e., cabinets, flooring, 

etc.) at wholesale-type prices.

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28. The relationship between DirectBuy and Franchisees, including Plaintiffs, is 

governed by a written Franchise Agreement that details the rights and obligations of the 

parties, including the fees and payments that the Franchisees are required to make to 

DirectBuy. The Franchise Agreements are standard forms, with multiple Franchisees that 

join the system in the same time period having nearly identical agreements. The standard 

form agreements do, however, change over time, resulting in Franchisees that join the 

system at different times having slightly different versions of the form Franchise 

Agreement. 

29. One of the obligations of DirectBuy franchisees, that remained the same 

throughout the time relevant to this dispute, is the obligation to pay to DirectBuy a royalty 

of 22% of the gross amount the Franchisee charges for new memberships sold to 

consumers. Plaintiffs and Franchisees were required to pay this amount to DirectBuy 

regardless of whether Plaintiffs and Franchisees made any net profit on the membership 

sale. Accordingly, there is a fundamental difference between the incentives of DirectBuy 

(and the owners of DirectBuy) versus Plaintiffs and Franchisees because any increase in 

membership sales benefits DirectBuy (and its owners), whereas only an increase in 

membership sales that allows Plaintiffs and Franchisees to receive a net profit benefits 

Plaintiffs and Franchisee.

30. This can lead to a situation, such as the one here, where DirectBuy has taken 

actions, at the direction of Trivest and Templeton, to increase the sale of memberships that 

could provide no benefit, and often result in financial harm, to Plaintiffs and Franchisees.

31. To provide some measure of protection against this, both the Franchise Agreements 

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and the federally mandated Disclosure Documents limit the amounts and types of charges 1

that can be assessed to Franchisees. 

Franchise Agreements and FDDs

32. The Franchise Agreements explicitly address the entire scope of the Franchisees’ 

obligation to fund the creation and placement of national marketing, advertising, and 

related programs. Under paragraph 3.03, Plaintiffs and Franchisees were required to 

contribute to a “Marketing and Legislative Fund” to fund the creation, development, and 

placement of marketing, advertising, and related programs. All aspects of these programs 

were controlled by DirectBuy.

33. It is clear from the Franchise Agreements that the Marketing and Legislative Fund 

was to be used for the purpose of placing advertising. Section 7.01 of the Franchise 

Agreements states: “Although any marketing and advertising programs funded by the 

Marketing and Legislative fund are intended to maximize general recognition and 

patronage of the Marks for the benefit of all [DirectBuy] centers, we cannot assure you 

that any particular [DirectBuy] center will benefit directly or pro-rata from the placement

of advertising.” (Emphasis added.)

34. The obligation of Plaintiffs and Franchisees to fund the creation, development, and 

placement of marketing, advertising, and related programs was expressly capped at 3% of 

new membership sales by the Franchise Agreements. Indeed, the Franchise Agreements 

from the relevant time period contained substantially similar language with regard to the 

 Depending on when the franchise was purchased, the disclosure document is called either a Uniform Franchise 1

Offering Circular (“UFOC”) or a Franchise Disclosure Document (“FDD”). Hereinafter, the disclosure document 

will be referred to as an FDD.

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Marketing and Legislative Fund in paragraph 3.03. That language states:

3.03 Marketing and Legislative Fund Contributions. You agree to contribute 

(at such times as we may designate from time to time) to the Marketing and 

Legislative Fund $1,000 during each of our fiscal years, except that you are not 

required to make any contributions during the first 12 months in which you operate 

your Center. We have the right from time to time to increase the amount you are 

required to contribute to the Marketing and Legislative Fund, provided we may not 

increase the amount of your contributions to more than 3% of the gross 

amount you have charged for new memberships (including renewal option fees, 

but excluding renewal fees) sold during the applicable year. DirectBuy center 

businesses owned by us and our Affiliates will contribute to the Marketing and 

Legislative Fund on the same basis as you are required to do.

(Emphasis added.)

35. Apart from contributions to the Marketing and Legislative Fund, which were 

capped at 3%, the Franchisees had no further obligation to pay DirectBuy for the creation, 

development, and placement of advertising or marketing programs.

36. The FDDs likewise disclosed no additional obligation of Plaintiffs and Franchisees 

to pay for the creation, development, and placement of advertising or marketing 

programs.2

37. Prior to entering into the Franchise Agreements, the Franchisees, including 

Plaintiffs, received an FDD that disclosed the following (or something substantially 

similar).

 The FTC Franchise Rule requires franchisor to disclose, in an FDD provided to the prospective franchisee before 2

purchasing the franchise, all of the fees a franchisee will be required to pay upon and after entering into the franchise 

agreement.

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ITEM 6

OTHER FEES

FRANCHISE AGREEMENT

NOTE 1: All fees are payable to us or one of our affiliates. None of the fees are refundable.

38. Item 11 of the FDD, which is titled Franchisor’s Obligations, also stated as follows:

We may, in our sole discretion, establish and administer a fund (“the Marketing 

and Legislative Fund” or “the Fund”) for the creation and development of 

marketing, advertising, and related programs and/or legislative, legal and 

regulatory defense programs relating to buyer clubs and other laws and 

regulations that affect [DirectBuy] centers. The Fund currently is used only for 

legislative, legal and regulatory defense programs and you may be required to 

contribute $1000 annually to the Fund. We voluntarily match your contributions 

to the Fund. We reserve the right to broaden the scope of the Fund to include 

marketing, advertising and related programs and to increase the amounts of 

your contributions to not more than 3% of your new membership fees.

(Emphasis added.)

39. Apart from the disclosures in Items 6 and 11, DirectBuy made no other disclosures 

in its FDD to alert Franchisees that they would be obligated to pay DirectBuy mandatory 

advertising or marketing fees. Specifically, DirectBuy did not disclose to prospective 

franchisees that they could be charged separate additional advertising or marketing fees 

above the 3% Cap. 

40. Plaintiffs and Franchisees understood that the fees they were required to pay to 

TYPE OF FEE 

(Note 1)

AMOUNT DUE DATE REMARKS 

(Note 1)

*** *** *** ***

Marketing and 

Legislative Fund 

Contributions

Not due during your first 

year; $1,000 per year 

thereafter. We may 

increase the contribution 

to 3% of your new 

membership sales.

30 days after the 

beginning of each 

year.

Currently, we are not 

collected (sic) these 

contributions, but may 

do so in the future.

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DirectBuy for advertising and marketing were capped at 3%.

41. Paragraph 3.03 of the Franchise Agreements and Items 6 and 11 of the FDD are the 

only places where DirectBuy has the right to charge Plaintiffs and Franchisees anything for 

advertising.

The Beginning of a “DirectBuy-Controlled Marketing Campaign”

42. Prior to 2003, franchisees were solely responsible for advertising, as they saw fit, at 

the local and/or regional level. During this time, DirectBuy did not provide any 

advertising services locally, regionally, or nationally. Accordingly, franchisees did not pay 

DirectBuy any monies for marketing and advertising programs. Instead, franchisees were 

in control of the amount they chose to spend on marketing and advertising for their 

individual stores. 

43. In 2003, DirectBuy, then operating under the brand UCC Total Home, adopted the 

DirectBuy brand name, established an in-house marketing department, and began 

providing its franchisees with an infomercial promoting the DirectBuy brand for the 

franchisees to use in their local markets. 

44. Shortly thereafter, DirectBuy began placing advertising in franchisees’ local media 

markets. Franchisees were charged for the advertising placed by DirectBuy on a “per lead 

generated” basis. This resulted in the franchisees being charged for nearly all of the 

expenses of the marketing and advertising programs. Franchisees had no control over the 

amount or type of advertising DirectBuy placed or the charges DirectBuy assessed for such 

advertising but these charges, during this initial period of time, did not exceed the 3% Cap. 

45. Plaintiffs and Franchisees were required by DirectBuy to establish and maintain 

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credit cards, which DirectBuy charged for the marketing and advertising expenses 

DirectBuy apportioned to the individual Franchisees. These charges were made on a 

weekly basis and Plaintiffs and Franchisees were sent media bills detailing the charges.

46. In or about October 2005, DirectBuy, for the first time, was able to franchise its 

concept in California due to changes in California’s laws that had previously prohibited the 

operation of buying clubs such as DirectBuy. 

47. In late 2005, DirectBuy implemented a comprehensive marketing and advertising 

program, on a trial basis. In January 2006, DirectBuy’s comprehensive marketing and 

advertising program became mandatory for all franchisees (“the DB Marketing & 

Advertising Program”). The DB Marketing & Advertising Program encompassed creation 

and placement of marketing and advertising both nationally and in Plaintiffs and 

Franchisees’ local markets. Under the DB Marketing & Advertising Program, DirectBuy 

had sole discretion to decide the content of ads, in what type of media and what markets 

they would be placed, and how much would be spent on creating and placing marketing 

and advertising for Plaintiffs and Franchisees.

48. When the DB Marketing & Advertising Program was initially instituted, the 

charges DirectBuy assessed Plaintiffs and Franchisees for marketing and advertising 

increased but were still not in excess of the 3% Cap.

Trivest Acquires DirectBuy and Advertising Fees Soar Out of Control

49. In or about November 2007, Trivest acquired a primary ownership interest in DB 

Holdings. At that same time, United Consumer Club, Inc. (“UCC”), of which DirectBuy is 

a wholly-owned subsidiary, was acquired by and became a wholly-owned subsidiary of 

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DB Holdings. Trivest maintained its primary ownership interest in DB Holdings at all 

times relevant to this dispute. 

50. Upon information and belief, Trivest paid $550 million to purchase DirectBuy, 

through its acquisition of DB Holdings, in a highly leveraged deal. Indeed, upon 

information and belief, Trivest caused DB Holdings to issue $375 million in high yield 

bonds to finance the majority of the purchase price. Trivest also caused DirectBuy to 

guarantee this debt of DB Holdings for the entire amount and term of the bonds, with all of 

the assets of DirectBuy acting as security. Further, Trivest caused DirectBuy to make the 

required payments on the bonds through an unsecured, undocumented, non-interest 

bearing “loan” from DirectBuy to DB Holdings, with the “loan” principal increasing over 

time as interest payments were made on the bonds.

51. Trivest structured its purchase of DirectBuy in such a manner so that the vast 

majority of the financial risk would be placed on the DirectBuy system itself, rather than 

on Trivest. Its actions were targeted at the Plaintiffs and the Franchisees who bore the 

brunt of Trivest’s efforts to shift the risk of its investment.

52. Upon information and belief, Trivest planned and executed this transaction 

predominantly or entirely from its offices in Florida.

53. After Trivest purchased DB Holdings, Trivest installed Templeton as the Chairman 

of the Board of Directors for DirectBuy and DB Holdings, Inc. However, rather than 

limiting his actions to those typical for a Board Chairman and allowing DirectBuy’s thenpresident Scott Powell to handle the operations of DirectBuy, Templeton was actively 

involved in the strategic and tactical decision-making, to the point that Mr. Powell needed 

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Trivest and Templeton’s approval before taking action on any significant operational issue.

54. After Trivest purchased DirectBuy and began, through Templeton, controlling 

DirectBuy’s activities, Plaintiffs and Franchisees’ costs for marketing and advertising 

increased exponentially. DirectBuy charged Plaintiffs and Franchisees many times the 

amounts the Plaintiffs and Franchisees had been spending when they placed their own 

advertising, and far more than 3% of Plaintiffs and Franchisees’ new membership sales 

fees, as allowed under the Franchise Agreements. Upon information and belief, Trivest 

and Templeton conceived and perpetrated this plan predominantly or entirely in Florida.

55. For example, in 2009, when DirectBuy had approximately 135 franchisees systemwide, franchisees were collectively billed approximately $71,000,000 for marketing and 

advertising. Had the 3% Cap been honored, franchisees would have been billed no more 

than $10,873,000. The amount franchisees were billed for marketing and advertising in 

2010 was even greater than in 2009. 

56. Indeed, the charges levied on Plaintiffs and Franchisees escalated to the point 

where franchisees persistently and repeatedly complained that their businesses would be 

financially ruined if they were required to continue to pay the excessive charges that 

DirectBuy was imposing. 

57. A number of franchisees asked to withdraw from participation in DirectBuy’s 

national marketing and advertising program. 

58. DirectBuy, however, rather than recognizing the plight of the franchisees, 

responded that participation was mandatory and refused to allow Plaintiffs and Franchisees 

to withdraw. Upon information and belief, DirectBuy gave these directions at the 

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instruction of Trivest and Templeton. Trivest and Templeton conceived of and issued these 

instructions predominantly or entirely in Florida.

59. At multiple DirectBuy annual conferences, and on other occasions, DirectBuy’s 

then-President Scott Powell, and General Counsel, C. Joseph Yast, fraudulently informed 

franchisees that DirectBuy had the right to impose the charges it was assessing for national 

marketing and advertising, which exceeded the 3% Cap. 

60. For example, DirectBuy made such statements to franchisees on January 19, 2009, 

at a joint meeting of DirectBuy’s Sales & Marketing and Service & Merchandising Task 

Forces. This meeting was attended by 18 franchisee-representatives elected by the 

franchisees in each of their regions; Trivest Managing Partner and DirectBuy Chairman, 

Troy Templeton, and Trivest Partner, Forest Wester; and 12 Senior Management 

Executives of DirectBuy, including, but not limited to Scott Powell, DirectBuy President 

and CEO, and Joe Yast, DirectBuy Vice President and General Counsel. 

61. At the January 19, 2009 meeting, Mr. Yast gave a presentation, with handouts, in 

which he went through the most recent version of DirectBuy’s Franchise Agreement, 

provision by provision, claiming that each fee DirectBuy was charging, or proposing to 

charge franchisees, including the excessive fees that DirectBuy was imposing for the 

creation, development, and placement of national marketing and advertising, was justified 

by the express terms of DirectBuy’s Franchise Agreement. The franchisee representatives 

present at the meeting understood Mr. Yast to be accurately stating the rights granted to 

DirectBuy under their own Franchise Agreements, and he did not inform them otherwise. 

However, Mr. Yast’s presentation materially misrepresented DirectBuy’s rights to charge 

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for national marketing and advertising for the following two reasons:

• Mr. Yast did not inform franchisees that he was referencing specific provisions in the 

October 2008 version of the DirectBuy Franchise Agreement that were not present in 

earlier versions of the Franchise Agreement. Most DirectBuy franchisees in business at 

that time operated under earlier versions of the DirectBuy Franchise Agreement that did 

not contain the provisions Mr. Yast claimed permitted DirectBuy to impose the excessive 

national marketing and advertising charges it was billing its franchisees. 

• The specific provisions of DirectBuy’s 2008 Franchise Agreement that Mr. Yast relied 

upon did not give DirectBuy the right to impose the disputed charges. Instead, the 

provisions Mr. Yast referred to merely authorized DirectBuy to charge for the franchisee’s 

use of DirectBuy sales and marketing tools and materials, such as infomercials, Internet 

marketing tools, sales videotapes and sale materials. Indeed, every version of the 

Franchise Agreement limits, to 3% of the franchisee’s gross new membership revenue, 

DirectBuy’s right to charge franchisees for DirectBuy’s discretionary development and 

placement of national media advertising. 

62. The decision by DirectBuy, at the direction of Templeton, to ignore the 

contractually mandated 3% Cap was driven by Trivest’s need to drive membership sales at 

the Clubs, so that DirectBuy could generate the revenue necessary to “loan” to DB 

Holdings to service the bonds that Trivest had caused DB Holdings to issue, so that Trivest 

could buy DirectBuy. Trivest needed substantial funds to continuously flow from new 

Club members’ purchases of memberships to Franchisees, from Franchisees’ payment of 

22% royalties to DirectBuy, from DirectBuy to DB Holdings, and from DB Holding to the 

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bondholders, to make the payments due to bondholders, so that the veritable house of cards 

built by Trivest would not collapse. 

63. DirectBuy’s primary source of revenue was from the royalties paid by Franchisees 

upon the sale of membership by the Franchisees. DirectBuy received a royalty of 22% of 

the gross amount charged to consumers by Franchisees for new memberships, regardless 

of whether the Franchisee made any net profit. Accordingly, Defendants, acting 

predominantly or entirely in Florida, utilized the control they had acquired over DirectBuy 

to require DirectBuy to engage in a course of increasing marketing and advertising 

spending to drive the sale of more and more new memberships without concern as to 

whether the increased marketing and advertising charges made the membership sales 

unprofitable for Plaintiffs and Franchisees.

64. To make matters worse, Defendants’ scheme was initiated and carried out on the 

cusp of the Great Recession and the burst of the housing bubble. The prevailing economic 

conditions reduced potential customers for new memberships at the Clubs, resulting in 

Defendants instructing DirectBuy to increase the amount spent on marketing and 

advertising in an attempt to increase new membership sales to, ultimately, service the debt 

Trivest caused DB Holdings to incur to fund Trivest’s purchase of DirectBuy.

65. In January 2011, Trivest caused DB Holdings to sell $335 million in high interest 

bonds to replace the bonds that had originally been sold to finance Trivest’s purchase of 

DirectBuy. Similar to the original bonds, these bonds were guaranteed by DirectBuy and 

secured by DirectBuy assets. Also, Trivest continued its practice of requiring DirectBuy to 

fund the $10 million quarterly interest payment through the ongoing unsecured, 

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undocumented, non-interest bearing “loan” from DirectBuy to DB Holdings. Rather than 

restructuring the debt so that the 3% Cap could be honored and DirectBuy could be in a 

sound financial position, Trivest merely transferred the risk from one set of bondholders to 

another and continued its scheme to finance its purchase of DirectBuy through transferring 

the excessive cost of marketing and advertising to Plaintiffs and Franchisees. Upon 

information and belief, Trivest and Templeton conceived of and perpetrated this aspect of 

the plan predominantly or entirely in Florida.

66. These new bonds rapidly dropped in value and were downgraded by Moody’s and 

Standard & Poor’s over the subsequent year as membership sales continued to decline and 

DB Holdings defaulted on the bond covenants and missed interest payments. 

67. Finally, after years of overcharging Plaintiffs and Franchisees for the marketing and 

advertising programs, which drove many Franchisees out of business, and after some 

DirectBuy franchisees sought legal counsel to assert their contractual right to pay no more 

than the 3% Cap, DirectBuy, effective January 1, 2012, discontinued its excessive 

overspending on marketing and advertising programs, and thereafter resumed honoring the 

3% Cap.

68. Yet, DirectBuy continued to insist it had a contractual right to impose unlimited 

charges for national media advertising. As recently as February 21, 2013, Mr. Yast sent a 

written communication to all DirectBuy Club Owners (franchisees) informing them that, 

among other things, there was no 3% cap on media charges in DirectBuy’s Franchise 

Agreement.

69. Throughout the entire time that DirectBuy engaged in marketing and advertising 

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programs, and charged the Franchisees for such programs, DirectBuy has submitted 

weekly media bills to Plaintiffs and Franchisees and automatically charged Plaintiffs and 

Franchisees’ credit cards. DirectBuy did this regardless of the fact that, from when Trivest 

first acquired DirectBuy and, through Templeton, controlled DirectBuy, up until January 1, 

2012, the amount charged exceeded the 3% Cap. 

70. When a franchisee no longer had any credit left, DirectBuy would take the 

franchisees’ receivables, either by placing the franchisee on the “Direct Pay Program” 

under which franchisees were forced to have their customers remit funds related to 

merchandise sales directly to DirectBuy rather than to the franchisee, including handling 

fees owed to Franchisees; by retaining amounts due to franchisees under the Beta 

Financing Program, a program under which customers of franchisees were able to finance 

their membership fees; or by retaining handling fees and renewal fees due to franchisees. 

In any event, Plaintiffs and Franchisees were powerless to prevent DirectBuy from taking 

the excessive marketing and advertising fees. Accordingly, DirectBuy could continue to 

increase expenditures on marketing and advertising to drive increased membership sales 

and increased royalties to DirectBuy with little financial disincentive or risk.3

71. Upon information and belief, DirectBuy took these actions at the instruction of 

Trivest and Templeton. Trivest and Templeton conceived of and issued these instructions 

predominantly or entirely in Florida.

 The marketing and advertising charges in excess of a Franchisee’s available credit and receivables was recorded in 3

a “General Bills” account due to DirectBuy from the franchisee. Some “General Bills” amounts went unpaid as 

DirectBuy’s overspending on marketing and advertising drove franchisees out of business.

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72. DirectBuy did this regardless of the fact that, between November 2007, when 

Trivest, through Templeton, took control of DirectBuy, and January 1, 2012, the amount 

charged exceeded the 3% Cap, resulting in literally thousands of fraudulent media bills 

sent to Plaintiffs and Franchisees and thousands of fraudulent charges on Plaintiffs and 

Franchisees’ credit cards.

CLASS ACTION ALLEGATIONS

73. Plaintiffs Elite Advantage, LLC and Edward E. Sell propose a Class consisting of 

all Franchisees in the United States who were in business at any time between Trivest’s 

purchase of DirectBuy in November 2007 and January 1, 2012, and who paid marketing 

and advertising fees exceeding the 3% Cap.

74. This case may be appropriately maintained as a class action under Rule 23 of the 

Federal Rules of Civil Procedure because all of the prerequisites set forth under Rule 23(a) 

and 23(b) are met.

Rule 23(a) Factors

75. Numerosity: Members of the Class are so numerous that joinder of all such 

members is impracticable, if not impossible. Although the exact size of the Class is 

unknown to Plaintiffss at this juncture, it is believed and alleged that there are more than 

160 Franchisees who were in business at any time between November 2007 and January 1, 

2012 and paid marketing and advertising fees that exceeded the 3% Cap. 

76. Existence of Common Questions of Fact and Law: There are issues of law and 

fact common to the Class with respect to the liability issues, relief issues, and anticipated 

affirmative defenses, which are likely to have common answers. These common issues of 

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law and fact predominate over questions affecting only individuals. Fed. R. Civ. P. 23(b)

(3). Specifically common issues include, but are not limited to:

a. Whether and to what extent Defendants’ practice and conduct violated federal 

law.

b. Whether Defendants have engaged in mail and/or wire fraud by fraudulently 

misrepresenting, to the Franchisees and/or Franchisees’ credit card companies, 

the amount of marketing and advertising fees rightfully owed by the 

Franchisees.

c. Whether Defendants committed financial institution fraud by fraudulently 

misrepresenting to Franchisees’ credit card companies that Franchisees had 

approved the charging of the marketing and advertising fees in excess of the 

3% Cap.

d. Whether the DirectBuy franchise system is an enterprise within the meaning of 

18 U.S.C. § 1961(4).

e. Whether Defendants conducted or participated in the affairs of the enterprise 

through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c).

f. Whether Defendants’ overt and/or predicate acts in violation of 18 U.S.C. § 

1962(c) proximately caused injury to the Plaintiffs’ and Class members’ 

business or property.

g. Whether Defendants, in violation of 18 U.S.C. § 1962(d), engaged in a 

conspiracy to violate 18 U.S.C. § 1962(c).

h. Whether Defendants’ conspiracy in violation of 18 U.S.C. § 1962(d) 

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proximately caused injury to the Plaintiffs’ and Class members’ business or 

property.

i. Whether the common scheme alleged in this Complaint constitutes unfair, 

deceptive, and unconscionable acts or practices in violation of the Florida 

Deceptive and Unfair Trade Practices.

j. Whether Plaintiffs and Class members are entitled to recover compensatory, 

exemplary, trebled, statutory, or punitive damages based on Defendants’ illegal 

conduct.

k. Whether Plaintiffs and Class members are entitled to an award of reasonable 

attorneys’ fees, prejudgment interest, and costs of suit. 

77. Typicality: Plaintiffs Elite Advantage, LLC and Edward E. Sell are members of 

the Class. Defendants acted in the same way toward the Plaintiffs and Class members 

when engaging in the illegal and fraudulent practices. If brought and prosecuted 

individually, the claims of each Class member would necessarily require proof of the same 

material and substantive facts, rely upon the same remedial theories, and seek the same 

relief. 

78. Adequacy: Plaintiffs Elite Advantage, LLC and Edward E. Sell will fairly and 

adequately protect the interests of the Class because Plaintiffs Elite Advantage, LLC and 

Edward E. Sell and their counsel possess the requisite resources and experience to 

prosecute this case as a class action. Plaintiffs’ interests do not conflict with the interests 

of the members of the Class they seek to represent.

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Rule 23(b) Factors

79. The prosecution of separate actions by Class members would create a risk of 

inconsistent or varying adjudications with respect to individuals that would establish 

incompatible standards of conduct for parties opposing the Class. Fed. R. Civ. P. 23(b)(1)

(A). The prosecution of separate actions would create a risk of adjudication with respect 

to individual members of the Class that would, as a practical matter, be dispositive of the 

interests of the other members that were not parties to the adjudication, and substantially 

impair, or impede their ability to protect their interests. Fed. R. Civ. P. 23(b)(1)(B). A 

central issue in this case is whether the Defendants violated the RICO statute by 

conducting or participating in the affairs of the enterprise through a pattern of racketeering 

activity in violation of 18 U.S.C. § 1962(c), and/or engaged in a conspiracy to violate 18 

U.S.C. § 1962(c), in violation of 18 U.S.C. § 1962(d). The Defendants’ actions in relation 

to the violation of the RICO statute were identical to all Class members. It would be 

unfair and wasteful to obtain multiple, and potentially conflicting or inconsistent, judicial 

resolutions of the primary questions in this litigation. The same can be said for Plaintiffs 

claims under FDUPTA.

80. A class action is superior to other available methods for the fair and efficient 

adjudication of the controversy. Fed. R. Civ. P. 23(b)(3). In addition, questions of law or 

fact common to the class members predominate over any questions affecting individual 

members. Fed. R. Civ. P. 23(b)(3). The only even arguably individual question in this 

case is damages. However, the damages are comprised of the marketing and advertising 

charges unlawfully extracted and retained from Plaintiffs and Class members in excess of 

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the 3% Cap, which can be easily derived through a mechanical application of simple 

arithmetic for all members of the Class based on the gross revenues generated from new 

membership sales and the amount paid to DirectBuy in excess of the 3% Cap.

81. Members of the Class have little or no interest in individually controlling the 

prosecution of separate actions. Fed. R. Civ. P. 23(b)(3)(A). Plaintiffs are not aware of 

any other litigation concerning the claims contained in this complaint. Fed. R. Civ. P. 

23(b)(3)(B). It is desirable to concentrate the litigation of the claims in this Court because 

Defendants are located here. Fed. R. Civ. P. 23(b)(3)(C). Finally, this action is 

manageable as a class action because, compared to any other method such as individual 

interventions or the consolidation of individual actions, a class action is more fair and 

efficient. Fed. R. Civ. P. 23(b)(3)(D).

82. The stakes and difficulty of individual Franchisees bringing individual claims in 

Florida, far from most of their home states and cities, means that the only realistic 

alternative to a class action is likely to be no suits at all, and, therefore, Defendants will 

never be called to account for their misconduct.

83. Plaintiffs know of no difficulty that will be encountered in the management of this 

litigation that would preclude its maintenance as a class action. The names and addresses 

of the potential members of the Class are available from publicly available documents (i.e., 

the FDDs from the relevant time period). Plaintiffs contemplate providing a notice or 

notices to the Class, as approved by the Court, to be delivered through the United States 

mail or as otherwise directed. The notice or notices shall, among other things, advise the 

Class that they shall be entitled to “opt out” of the Class if they so request by a date 

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specified within the notice, and that any judgment, whether favorable or not, entered in 

this case will bind all class members except those who affirmatively exclude themselves 

by timely opting out. 

CLAIM I

VIOLATIONS OF RICO ACT

18 U.S.C. § 1962(c)

84. Plaintiffs reallege and incorporate by reference all of the allegations set forth in the 

preceding paragraphs as though fully set forth herein.

85. Defendants have violated 18 U.S.C. § 1962(c) because they have conducted or 

participated, directly or indirectly, in the conduct of the affairs of an enterprise through a 

pattern of racketeering activity.

86. The Defendants, together with DB Holdings, UCC, DirectBuy, their affiliates and 

subsidiaries involved in the activities of the DirectBuy franchise system, and Franchisees, 

comprise an “association-in-fact” enterprise (the “DirectBuy Enterprise”) within the 

meaning of 18 U.S.C. § 1961(4). The DirectBuy Enterprise is separate and distinct from 

the individual Defendants that participate in it and direct its affairs.

87. The structure of the DirectBuy Enterprise is imposed by and consists of, among 

other things: (1) the terms of the Franchise Agreements Franchisees sign in order to be 

entitled to operate a Club; (2) the terms of the agreements between Franchisees and Beta 

Finance Company, Inc., a subsidiary of UCC, regarding the financing of customers’ 

purchases of club memberships; (3) the terms and conditions of the DirectBuy operations 

manual that purports to allow DirectBuy as franchisor to dictate certain aspects of Club 

operations; (4) the ownership structure of the DirectBuy franchise system that, at all 

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relevant times, consisted of the Trivest business entities, DB Holdings, UCC, and 

DirectBuy, whereby each business entity was involved in and directed the strategic 

decision-making of its subordinate entities in the ownership structure; and (5) Defendants’ 

active involvement in the operations of DirectBuy.

88. The contractual and ownership rights of Defendants allow Defendants to control 

the Franchisees’ actions in the manner of a classic top down hierarchy, in which decisions 

are made by Defendants, dictated to DB Holdings, UCC, and DirectBuy, and then imposed 

on Franchisees, who have no choice but to follow the orders or risk termination and 

thereby lose their investment in the Club.

89. Each Franchisee is a person or legal entity separate from any and all of the 

Defendants, DB Holdings, UCC, and DirectBuy. Further, each Defendant is a person or 

legal entity separate from any and all other Defendants, DB Holdings, UCC, and 

DirectBuy. Because Franchisees were, during the relevant period, subject to the control of 

Defendants, through Defendants’ exercise of control over DB Holdings, UCC, and 

DirectBuy, in the service of a common purpose, all are part of the same association-in-fact 

enterprise.

90. There are numerous aspects of the DirectBuy Enterprise that did not involve 

conduct that was intrinsically criminal or illegal, including, but not limited to: (1) the sale 

of Club memberships and the provision of service to Club members; (2) the actual 

advertising of Club memberships and services to members of the public; (3) the hiring of 

employees by Defendants, DB Holdings, UCC, DirectBuy, Inc., and Franchisees to 

perform ordinary business functions that have no relation to the fraudulent scheme alleged; 

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(4) the ownership of DB Holdings by Trivest; and (5) many other day-to-day business 

activities.

91. All of the members of the DirectBuy Enterprise share the common purpose of 

selling and servicing Club memberships to generate positive cash flow. Franchisees 

shared this goal with Defendants despite the fact that Defendants defrauded Franchisees 

into paying excessive marketing and advertising fees. It would have been possible for 

Defendants to work within the law and not fraudulently induce Franchisees, through 

Defendants’ control of DirectBuy, into paying excessive marketing and advertising fees. 

Defendants’ and DirectBuy’s fraudulent scheme to induce Franchisees into paying 

marketing and advertising fees in excess of the 3% Cap transformed the DirectBuy 

Enterprise from a legitimate business enterprise into an ongoing criminal organization.

92. Defendants conducted the affairs of the DirectBuy Enterprise, as opposed to merely 

their own affairs, by, among other things, directing DirectBuy to engage in advertising and 

marketing programs to drive new membership sales, thereby increasing royalties, without 

regard to the cost of such programs, and pass the cost of such programs along to Plaintiffs 

and Franchisees through media bills and charges that fraudulently overstated the amounts 

lawfully due from Plaintiffs and Franchisees, and fraudulently made charges to Plaintiffs 

and Franchisees’ credit cards in amounts in excess of those authorized.

93. If it were not for the separate legal existence of Plaintiffs and Franchisees, 

Defendants would not have been able to effectuate their scheme of directing and 

conducting the affairs of the DirectBuy Enterprise so as to defraud Plaintiffs and 

Franchisees of money and/or property. For example, only by virtue of the separate legal 

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existence of Plaintiffs and Franchisees could Defendants fraudulently induce Plaintiffs and 

Franchisees to pay marketing and advertising fees in excess of the 3% Cap and effectuate 

Defendants’ goal of having Plaintiffs and Franchisees, through royalty payments to 

DirectBuy, pay for Defendants’ acquisition of the DirectBuy franchise system. This 

outsourcing of costs would be impossible if DirectBuy operated exclusively through 

company-owned Clubs.

94. Defendants participated in the conduct of the DirectBuy Enterprise by directing 

DirectBuy to fraudulently induce Franchisees into paying marketing and advertising fees 

in excess of the 3% Cap, through both the fraudulent media bills sent to Plaintiffs and 

Franchisees and the fraudulent charges on Plaintiffs and Franchisees’ credit cards.

95. The predicate crimes committed by Defendants are mail fraud, as defined by 18 

U.S.C. § 1341, wire fraud, as defined by 18 U.S.C. § 1343, and financial institution fraud, 

as defined by 18 U.S.C. § 1344.

96. In violation of 18 U.S.C. § 1341 and 18 U.S.C. § 1343, Defendants devised and 

effected a scheme to defraud Plaintiffs and Franchisees by knowingly and deliberately 

directing DirectBuy to induce Plaintiffs and Franchisees to pay marketing and advertising 

fees in excess of the 3% Cap through the provision of fraudulent media bills.

97. The execution of the scheme to defraud Franchisees involved a voluminous 

number of individual instances of the use of the United States mails and interstate wire 

facilities in furtherance of the scheme, which uses of the United States mails and interstate 

wire communications were reasonably foreseeable by Defendants and were essential parts 

of the fraudulent scheme. Specific instances of the uses of the United States mails and 

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interstate wire communications in furtherance of the fraudulent scheme include sending 

media bills to Plaintiffs and Franchisees through the United States mail and over the 

internet via email, transferring receivables rightfully owned by Plaintiffs and Franchisees 

to DirectBuy via interstate wire transfers, transmitting fraudulent charges to the Plaintiffs 

and Franchisees’ credit card companies via interstate wire, and receipt of sales leads by 

Plaintiffs and Franchisees through interstate wire communications and/or the United States 

mail.

98. Over the years that the fraudulent scheme was perpetuated, thousands of fraudulent 

communications were transmitted through the United States mail and via interstate wire. It 

is Defendants, not Plaintiffs, who have, or have access to, the records of these thousands of 

communications that contained fraudulent representations or were essential parts of the 

scheme to defraud Franchisees.

99. In violation of 18 U.S.C. § 1344, Defendants knowingly attempted to execute, and 

did execute, a scheme to defraud Plaintiffs and Franchisees’ credit card companies, each a 

financial institution insured by the Federal Deposit Insurance Corporation, by knowingly 

and deliberately directing and causing DirectBuy to submit fraudulent charges to such 

credit card companies that were not authorized by Plaintiffs and Franchisees and were 

based on marketing and advertising fees that were in excess of the 3% Cap.

100. The predicate acts committed by Defendants constitute a “pattern of racketeering 

activity” within the meaning of 18 U.S.C. § 1961(5).

101. The acts of mail and wire fraud alleged herein are related because they involve 

repeated instances of the use of the United States mails and interstate wire facilities to 

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defraud Plaintiffs and Franchisees through the provision of fraudulent media bills for 

marketing and advertising fees in excess of the 3% Cap, and the fraudulent overcharging 

of Plaintiffs and Franchisees’ credit cards, resulting in Franchisees unwittingly funding 

Defendants’ purchase of DB Holdings. Additionally, all Franchisees in operation during 

the relevant period were victimized by the fraudulent scheme. Further, the repeated acts of 

mail and wire fraud occurred over a time span in excess of four years.

102. Similar to the acts of mail and wire fraud, the acts of financial institution fraud are 

related because they involved the repeated defrauding of Plaintiffs and Franchisees’ credit 

card companies, were in relation to credit accounts of all Franchisees in operation during 

the relevant period, and occurred over a span of more than four years.

103. Plaintiffs and Franchisees have been damaged by reason of Defendants’ having 

conducted the affairs of the DirectBuy Enterprise through the pattern of racketeering 

alleged herein. In particular there is a direct and proximate chain of causation from the 

fraudulent media bills sent to Franchisees and the fraudulent charges submitted to 

Plaintiffs and Franchisees’ credit card companies to the economic losses suffered by 

Plaintiffs and the Franchisees. The economic losses suffered by Plaintiffs and Franchisees 

are the natural and expected consequence of fraudulent schemes perpetrated by 

Defendants. Also, there are no other parties who have more directly suffered the economic 

losses that have been incurred by the Plaintiffs and Franchisees. The damages arising from 

the mail and wire fraud were directly aimed at Plaintiffs and Franchisees. The damages 

arising from the financial institution fraud directly damaged Plaintiffs and Franchisees 

because Plaintiffs and Franchisees were required to, and did, pay their credit card 

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companies for the fraudulent charges. Further, Plaintiffs and Franchisees are best 

equipped to prosecute the financial institution fraud claims because Plaintiffs and 

Franchisees’ credit card companies are likely unaware that the fraudulent scheme has 

occurred, as Plaintiffs and Franchisees’ credit card companies were not privy to the 

Franchise Agreements that contain the 3% Cap.

Plaintiffs and Franchisees have been damaged by Defendants operating and conducting the 

affairs of the DirectBuy Enterprise through a pattern of racketeering, with predicate acts 

consisting of mail fraud, wire fraud, and financial institution fraud, in an amount to be proven at 

trial, which shall also be trebled via 18 U.S.C. § 1964(c). Additionally, Plaintiffs and 

Franchisees are entitled to their attorneys’ fees and costs.

CLAIM II

VIOLATION OF RICO

18 U.S.C. § 1962(d)

104. Plaintiffs reallege and incorporate by reference all of the allegations set forth in the 

preceding paragraphs as though fully set forth herein.

105. Under 18 U.S.C. § 1962(d) it is unlawful:

for any person to conspire to violate any of the provisions of subsection (a), (b), 

or (c) of this section.

106. Defendants have intentionally conspired and agreed with DirectBuy to directly and 

indirectly conduct and participate in the affairs of the DirectBuy Enterprise in a pattern of 

racketeering activity, as described above, through Defendants’ direction and control of 

DirectBuy after Defendants purchased DB Holdings and Templeton was installed as the 

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Chairman of DirectBuy Board of Directors, thereafter requiring DirectBuy’s executive 

leadership to receive approval for all significant operational decisions. 

107. Defendants participated in the conspiracy by being actively involved in the 

significant decisions of DirectBuy, including the decision to increase the marketing and 

advertising fees charged to Franchisees above the 3% Cap.

108. Plaintiffs and Franchisees have been injured in their business and property as a 

result of the violations of 18 U.S.C. § 1962(d). As a direct and proximate result of 

Defendants’ violations of 18 U.S.C. § 1962(d), Plaintiffs have suffered damages in an 

amount to be demonstrated at trial which shall also be trebled via 18 U.S.C. § 1964(c). 

Additionally, Plaintiffs and Franchisees are entitled to their attorneys’ fees and costs. 

CLAIM III

VIOLATION OF FLORIDA DECEPTIVE AND 

UNFAIR TRADE PRACTICES ACT

Fla. Stat. §501.201, et seq.

109. Plaintiffs reallege and incorporate by reference all of the allegations set forth in the 

preceding paragraphs as though fully set forth herein.

110. By the acts described above, Defendants have engaged in unfair, deceptive, and 

unconscionable acts or practices in violation of the Florida Deceptive and Unfair Trade 

Practices Act, Fl. Stat. § 501.201, et seq.

111. Defendants’ unconscionable and deceptive acts and practices were designed to 

inflict injury and harm upon Plaintiffs and Franchisees and to gain an unfair business 

advantage at Plaintiffs and Franchisees’ expense.

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112. Defendants acquired DirectBuy and its affiliated companies in a highly leveraged 

transaction with the intent that the revenues generated by DirectBuy would cover the debt 

service on the bonds issued to cover Trivest’s purchase of DirectBuy. When the revenues 

generated by DirectBuy proved insufficient to cover the debt service on the bonds, Trivest 

masterminded a scheme to drastically increase the amount that DirectBuy spent on 

national advertising to increase franchisees’ membership sales and, thus, the royalties that 

flowed from the franchisees to DirectBuy, and from DirectBuy to Trivest. The cornerstone 

of this scheme was that virtually the entire amount DirectBuy spent on national marketing 

and advertising, which averaged between $1 million and $1.5 million per week, would be 

charged back to the franchisees, grossly exceeding the amount that DirectBuy was 

permitted to charge franchisees for national marketing and advertising under its Franchise 

Agreements. Franchisees who objected to these excessive and unauthorized charges were 

threatened with termination of their franchise agreements and the loss of their substantial 

investments in their DirectBuy Clubs. 

113. As a result of these excessive charges, many franchisees, including Plaintiffs, who 

once operated successful and lucrative businesses, could not sustain the ongoing operating 

losses and were forced to close their doors. Those franchisees that remain in business are 

struggling to survive.

114. Defendants have injured Plaintiffs and Franchisees through their deceptive, unfair, 

and unconscionable trade practices in violation of Fla. Stat. § 501.205 in an amount that is 

currently unknown, but in excess of $5,000,000, exclusive of interest and costs.

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115. Additionally, Plaintiffs and Franchisees are entitled to recover their attorneys’ fees 

and court costs pursuant to Fla. Stat. §§ 501.2105 and 501.211.

WHEREFORE, Plaintiffs, individually and on behalf of all others similarly situated, 

pray for judgment against Defendants as follows:

1. For a determination that this action may be maintained as a class action under Rule 

23 of the Federal Rules of Civil Procedure;

2. For a finding that Defendants violated the RICO Act and for an appropriate damage 

award thereunder;

3. For a finding that Defendants violated the Florida Deceptive and Unfair Trade 

Practices Act and for an appropriate damages award thereunder;

4. For compensatory damages in an amount not less than the jurisdictional minimum 

of this Court in an amount to be proven at trial;

5. For exemplary damages against each Defendant;

6. For pre-judgment interest, as allowed by applicable law;

7. For attorneys’ fees and costs, as allowed by Fla. Stat. §§ 501.2105 and 501.211 or 

other applicable law; and 

8. For such other relief as the Court deems just and equitable.

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JURY DEMAND

 Plaintiffs, on behalf of themselves and all other current and former DirectBuy franchisees 

similarly situated, demand a trial by jury for all matters that may be tried before a jury.

Dated: June 5, 2015 Respectfully submitted,

THE LAW OFFICE OF STEPHEN JAMES

 BINHAK, P.L.L.C.

Attorneys for Plaintiffs

 2 South Biscayne Blvd. 

 Suite 3570

 Miami, Florida 33131

 Telephone: (305) 361-5500

 Facsimile: (305) 428-9532 

By: /s/ Stephen James Binhak ____

 Stephen James Binhak, Esq.

 Florida Bar No. 0736491

binhaks@binhaklaw.com

Attorneys for Plaintiffs

OF COUNSEL:

J. Michael Dady

Barbara A. Bagdon

Kristy Zastrow

Keith A. Marnholtz

DADY & GARDNER, P.A.

5100 IDS Center, 80 South 8th Street

Minneapolis, MN 55402

Telephone: (612) 359-9000

jmdady@dadygardner.com

bbagdon@dadygardner.com

kzastrow@dadygardner.com

kmarnholtz@dadygardner.com

Joseph S. Goode, Esq.

Mark M. Leitner, Esq.

Jessica L. Farley, Esq.

PIA, ANDERSON, DORIUS, 

REYNARD & MOSS 

400 N. Broadway

Suite 303

Milwaukee, Wisconsin 53202

Telephone: (414) 792-9667

jgoode@padrm.com

mleitner@padrm.com

jfarley@padrm.com

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