Three franchisees of Carle Place-based 1-800-Flowers.com have sued the online florist and gift company, alleging it tried to maximize profits at the expense of its franchisees.
The suit claims breach of contract and seeks more than $5 million in damages.
The franchisees, Arizona Family Florists LLC of Phoenix, South Florals DC LLC of Miami and Water Mill Flowers Inc. of Fort Lauderdale, filed the lawsuit last week in U.S. District Court in Brooklyn. The three are also members of BloomNet, an international floral wire service owned by 1-800-Flowers.
The suit also alleges that 1-800-Flowers retaliated against franchisees that placed more orders through competing wire services, such as Teleflora and FTD, than through BloomNet.
“We believe the claims are without merit and we will vigorously defend against them,” 1-800-Flowers spokeswoman Yanique Woodall said in a statement.
Michael Einbinder, an attorney with Einbinder Dunn & Goniea LLP, who represents the three franchisees, said “We plan to aggressively pursue the claims.”
In the suit, the franchisees claim that 1-800-Flowers implemented a “reciprocity surcharge” in spring 2015 that automatically deducted as much as 3 percent from the amount owed to a franchisee who placed more orders through other wire services than through BloomNet. They also allege that 1-800-Flowers consistently failed to pay 2 percent to 3 percent of the commissions owed.
When 1-800-Flowers receives an order, the company can choose to fill the order itself, permit another non-franchisee florist to fill the order, or forward it to the local franchisee, they say in the suit. 1-800-Flowers manipulated and redirected order volume away from them to the company’s “direct ship” program or to other BloomNet network members, the suit alleges.
The practice has pit the franchisees against 1-800-Flowers and other BloomNet florists. It is more profitable for 1-800-Flowers to send orders to florists that are not franchisees and collect BloomNet fees based on order volume than to send the orders to franchisees, the franchisees allege.