Franchisees Lose Hundreds of Thousands of Dollars Based on False Claims from Franchisor   

Palm Desert, CA (September 23, 2022) – Cell Phone Repair Independent Owners Association (CPRIOA) announced a class action lawsuit had been filed against Assurant, a Fortune 500 insurance company that owns Cell Phone Repair. Cell Phone Repair is a multi-state franchisor with hundreds of franchisees.  Cell Phone Repair enacted numerous policies that enrich Assurant at the franchisees’ direct expense. Those policies restrict consumer access to less expensive cell phone repair parts.    

CPRIOA franchisees are also calling on their elected representatives to ask the Federal Trade Commission to investigate Assurant and Cell Phone Repair for their unfair and deceptive practices.   

The CPRIOA represents the majority of the franchisee network and has repeatedly suggested policy improvements to CPR. CPR has refused to engage with the association. Consequently, CPR franchisee numbers have dropped since Assurant acquired Cell Phone Repair and CPRIOA expects a wave of store closings this year.   

“Many franchisees are struggling financially now,” says the CPRIOA founder, Shane Mericle, a multi-unit franchisee and CPRIOA board member. “We are disappointed that our franchisor is unwilling to speak with us. We want to find a solution that strengthens the franchise network. But we cannot stand by and watch our members lose businesses that they have invested their life savings into.”  

The lawsuit identifies three distinct and questionable business practices that harmed franchisees’ operations:    

1. Assurant and CPR abruptly changed the franchise business model to require franchisees to install only Apple-manufactured (i.e., Original Equipment Manufacturer or “OEM”) cell phone batteries. OEM batteries are much more expensive than non-OEM batteries. Neither CPR nor Assurant expected the new OEM requirement to benefit the franchisees. The higher costs meant thousands of dollars in losses for franchisees.  
2. CPR forced franchisees to purchase all repair parts from Mobile Defenders, a supplier Assurant partially owns. CPR imposed this policy even though CPR representatives later acknowledged Mobile Defenders’ products cost more than other suppliers’, are lower quality, and are often out of stock. Assurant and CPR sold franchises to owners with assurances that Mobile Defender used “a cost-plus formula” to offer “competitive” prices. That was false. And even when Mobile Defenders does not have parts available, CPR forbids franchisees from buying from other suppliers and requires them to turn away customers.  
3. Assurant, CPR’s owner, started directly competing with CPR franchisees. CPR originally promised franchisees that Assurant would send T-Mobile customers to franchisee stores for insurance repairs. Franchisees opened stores, renovated stores, and hired employees based on CPR’s and Assurant’s representations about the T-Mobile business. They then learned Assurant would be directly servicing the T-Mobile customers itself. Since then, Assurant has opened hundreds of repair kiosks in T-Mobile stores—many located within CPR franchisees’ territory and staffed with employees CPR had franchisees train for T-Mobile repairs.  

CPR franchisees’ struggles have broader implications for consumers and the “Right to Repair” movement.  Earlier this year, Senator Ben Lujan (D-NM) introduced the Fair Repair Act (S.3830). It would require electronic manufacturers like Apple and Samsung to make certain information and parts available to users and repair shops. President Biden’s executive order on promoting competition encouraged rulemaking to address “unfair anticompetitive restrictions on third-party repair or self-repair of items.” The FTC has also made it a priority to protect consumers’ right to repair their products and has filed multiple actions this year. 

“As you think of “Right to Repair,” consumers should compare it to name-brand verses generic medicines,” said Eric Farr, a multi-unit franchisee and CPRIOA president. “Sometimes the generic is not different from the name brand and so the consumer should have the option to pick which one is less costly for them with the same result.”   

If you would like more information about CPRIOA and/or to interview franchisees in your local area, contact Lucila Garcia.  

About Cell Phone Repair Independent Owners Association 

CPRIOA is a national franchisee organization comprised of more than 250 members. It was created to work for the betterment of the brand and its franchisees. Formed in 2019 under the umbrella of the AAFD, CPRIOA gives franchisees a voice to open communication and collaboration. For more information, visit https://cprioa.aafdchapters.org 

About American Association of Franchisees and Dealers  

AAFD is the oldest, largest, and most respected direct member franchisee trade association in the United States. Since 1992, the nonprofit organization has formed and supported exclusive trademark specific chapters for franchisees of hundreds of franchise systems and seeks to foster its vision of Total Quality Franchising—a collaborative franchise culture that respects the legitimate business interests of franchisors and franchisees.  For more information, visit https://www.aafd.org