Deposition Notes Flashcards
Recognized Brands avail to JG:
Rock Revival, Miss Me, AG, MEK, Melie Bianco, David & Young, Nubra, Big Star, Veronica M., Humanity, Anama, Elan, Trinity, Yellow Box, Laguna, Alternative Apparel, Free people, 1921 Denim
Identification of CVI’s exclusive lines:
Private Label Program launched on July 11, 2011: Miss Me exclusive 9/11, Whitney Eve exclusive 5/12, AL Exclusive Tees/Private label 7/11, AL Exclusive belts & handbags 7/11, Some of our Must Have’s ere also Exclusive tees:
The fabric is the same Ultra Premium cotton that James Perse uses and you will be able to retail them for more than half off what James Perse retails their tops while maintaining a 66-69% margin! James Perse suggested retail provides only a 56% margin. For example: Our short sleeve top will cost $16.50 and retail for $49 (66.33% margin) vs a similar James Perse cost of $33 that retails for $75. Our 3/4 & long sleeve will cost $18.50 and retail for $59 (68.64% margin) compared to Perse 3/4 and long sleeve at $41 & $59 with retail prices of $95 & $135 respectively.
Information in Ops Manual that is proprietary or confidential:
The entire manual is confidential. The entire Home/Corporate/Store Opening process, POSIM manual and exclusive reports/procedures, store design criteria, visual merchandising manual, 4th quarter guide, many forms and procedures written specifically for our stores, grass roots promotions, marketing campaigns, inventory management, markdowns, OTB, customer service, store & staff surveys, customer surveys, exclusive videos, return policy, markdown strategy, Social Media Policy, Vertical Response manual, Shoptiques procedures, Shopify procedures, conference call recaps, etc.. (All in Discovery CVI)
FA:
CVI has provided a business system in which the franchisee agrees to undertake to conduct business to sell product in accordance with methods and procedures prescribed by the Franchisor and is considered confidential information, to the Franchisee, and includes, but is not limited to: trade names, associated names, trademarks, service market, all provided materials, knowledge and know-how, computer systems, software, inventory knowledge, training and vendors, merchandising techniques, fixtures, signage, advertising, drawings, equipment, fixtures, customer information and lists, all data accrued by provided methods, any information derived from methods using trade names and associated names, any information in social media, all vendors and associated contractors.
Identification of coordinated product purchasing or distribution by CVI:
Miss Me, Must Have Program, Whitney Eve, Premium Tees, Ada belts and Handbags, all packaging, bag, boxes, the entire LA Buying Program
CVI monitoring of quality standards among franchisees:
Monitoring social media posts and photos, visits, facetime meetings, mystery shops, vendors in store, customer complaints, sales margin, inventory levels, category reports, capture rate, average sale, IPT, customer counts, POSIM reports, Stock Turn reports, Inventory and vendor reports, Howdy calls, Monthly franchisee conference calls, store visit programs which evolved thru time and technical capabilities., Monthly Statistics Records, Productivity reports, marketing and promotion purchases and reporting.
CVI volume discounts on merchandise:
Provided in Discovery. IMAX 12%, 10-20% on apparel, 5-10% on Jewelry, 5-10% and free shipping on décor/fixtures, receipt paper up to 37%, POSIM and Boutique Window 45%, Credit card processing 10 pts above wholesale, Mood Media 10-15%, Cambeo FREE, large format printing 15%, bags/boxes/tissue free freight, Vintage Havana 10%, Ocean Drive 10%, and others at least 10%: Surf Gypsy, Basically Me, I-Madelline, On the Road, Gypsy Heart, Jacob Davis, Dear John, Suzette Elan, Black Swan, Others Follow, White Crow, Z Supply, Golden Stella, Bijoux, Creative Co-op and our exclusive LA Buyer 0-20%.
CVI research and development of product lines, promotions, operating procedures and techniques:
Product Lines: Exclusives & buying team researches lines for quality, celebrity status and trends. Networking and NOW feedback, MOBS Private Facebook.
Promotions: Primary, secondary and grass roots by in-house marketing department
Operating Procedures: All throughout Ops Manuals
Inspections, visits to and feedback by CVI of JG stores:
Feedback: 90 day program which includes trainer and merchandiser on site for openings, Ongoing: Review and analysis of reports, operations divisions analysis of vendor and stock turn reports, phone calls to managers and owners and follow ups.
Visits: Ken & Tom & Melinda
National Advertising Campaign:
Black Swan in Life & Style Magazine.
Press Release: Whitney Eve exclusive In Style, Style MTV, Elle, Google News, TV, Online & Newspapers across U.S. (All in Discovery).
Mothers Day Campaign: Picked up all across the U.S.
Others: Entreprenuer Magazine, Hot Fashion Retailer of Year, Disney stores, Southwest Magazine
Meaning of the phrase “same or similar to the types of merchandise being sold through the specialty stores” in the FA:
All franchisees understand our brand is a specialty boutique catering to mom’s and daughters and we used to make them get pre-approval on all new vendors. Stopped doing that because everyone understood the brand and if someone is deviating from merchandise mix (plus sizes, men’s, all gift, etc) we would bring them back into the fold. The normal standard can be found at the bi-annual fashion show Magic, LA Showroom, Dallas Showroom and fashion-go, along with LA market.
Identification of home accessories and “the assortment of merchandise similar to the assortment of merchandise carried in the SS”:
Home accessories are small décor items, candles, throw pillows, pictures, signs and additional items whose purpose is to decorate the home.
Identification of uniform types of merchandise carried across the AL brand:
Fashion and seasonal tops, bottoms, dresses, denim, outerwear, shoes, handbags, hats, jewelry and accessories.
CVI procedure and mechanisms for approval of the clothing zees sell:
All franchisees understand our brand is a specialty boutique catering to mom’s and daughters and we used to make them get pre-approval on all new vendors. Stopped doing that because everyone understood the brand and if someone is deviating from merchandise mix (plus sizes, men’s, all gift, etc) we would bring them back into the fold.
We start each new store with the initial recommended merchandise plan and our Open-To-Buy Program. We give them all the vendors and contact information and we place many of the orders after we review together. We make appointments for our stores at the major vendor shows and liaison between the vendors and franchisees to get line sheets, seasonal picks and best seller recommendations. We have monthly conference calls which all stores are invited to share new vendors that are doing well. We have bi-annual conventions where we get all of the participating stores involved in multi-day buying, new product introductions, training and specials. We give updated vendor lists, recommendations and negotiated discounts, but allow each store to uniquely buy for their particular demographic.
CVI guidelines for the clothing that franchisees sell:
We put together the merchandise plan for all new stores. This sets the standard, guidelines and approval process for merchandise carried. Zees have flexibility to carry new vendors within those categories. Again, We start each new store with the initial recommended inventory and the Open To Buy Program. We give them all the vendors and contact information and place any orders when requested. We have them meet our LA Buying team and understand the LA buying techniques and vendors. We teach how to manage inventory, purchasing, pricing, discounting, marketing, tracking and re-ordering products. We make appointments for our stores at the major vendor shows and liaison between the vendors and franchisees to get line sheets, seasonal picks and best seller recommendations. We have monthly conference calls which all stores are invited to share new vendors that are doing well. We have Bi-annual conventions where we get all of the participating stores involved in multi-day buying, new product introductions, training and specials. We give updated vendor lists, recommendations and negotiated discounts, but allow each store to uniquely buy for their particular demographic.
Any trade dress that CVI claims is distinctive or protectable under common law or trademark law:
Store design standards: Slat wall, chandeliers, paint colors, cash wrap, flooring, lighting, fixtures, dressing rooms, lounge areas. These designs and combinations were all developed in house and shared as needed to individual stores and their contractors. We continue to evaluate and evolved our store design to keep current with the times and needs. We set up individual conferences with the franchisees to discuss construction specifics and requirements, options where flexible, signage, wrap desk specifics, As-Builts, floor plans, and fixture orders.
Identification of any confidential information that relates to sources for buying:
LA exclusive buyer program headed by– Angela Myers.
Identification of any merchandise the public readily identifies with AL name:
Trendy fashion tops and dresses through tons of PR and media placements: TV segments, National business and fashion magazines, National Blogs, National Newspapers, Social Media.
Of course, trendy women tend to shop in boutiques and each local boutique tries to identify and carry local trends unique to that area. AL buyers constantly update and recommend fashion that meets the local needs and, most of the time, customers and their friends are repeat customers wanting that unique fashion top that is not normally carried in large quantities like the larger chains.
9/14-9/15: Print, Online, TV, Online Magazines – Total reach 287,978,571 with publicity value of $2,663,802.
2011-2012: Average 5 TV spots per month – Broadcast exposure $240,000 – Print, online and blogs $892,244 (does not include national magazine hits: People Stylewatch, Entrepreneur, In Style, etc)
CNN Documentary: Ran CNN International and Domestic
Disney Anaheim and Orlando stores: International brand awareness.
Consumer surveys that show the public associate the AL name with particular types of merchandise, assortment, trade dress:
Just some local store customer surveys – mostly based on service and merchandise mix. We were awarded Hottest Retail Store award which malls were surveyed and responded. We were so well received that Disney asked us to open AL boutique showcase stores in both USA Disney locations.
CVI systems for detecting and monitoring unauthorized disclosure of trade secrets or confidential info:
We do google searches and have identified unauthorized uses of our trademark and have followed up with those to cease and desist. It is in our FA to not share or use any of our manuals and they are all copyrighted. In addition, our relationship with vendors tell us when someone is attempting to use our systems for their own stores not under an FA. These are from our slatwall company, lease negotiators, POSIM and software, CAMBEO, some LA Vendors, designers, other vendors (when asked for the AL discounts), and other contractors.
Any system to monitor, detect or police any violation of CVI trademarks:
We do google searches and have identified unauthorized uses of our trademark and have followed up with those to cease and desist.
Any written restrictions on what merchandise zees can advertise, offer or sell:
Nothing outside of the descriptions within the FA.
Identification of any trade secrets or confidential info used in or associated with the operation of AL:
The entire manual and system within is confidential. The entire Home/Corporate/Store Opening process, POSIM manual and exclusive reports/procedures, store design criteria, signage criteria, training, conventions, LA buying, OTB< Vendor lists, customer service training, in store associate training, Mood Music system, Gift Card program, visual merchandising manual, 4th quarter guide, many forms and procedures written specifically for our stores, grass roots promotions, marketing campaigns, inventory management, markdowns, OTB, customer service, store & staff surveys, customer surveys, exclusive videos, return policy, markdown strategy, Social Media Policy, Vertical Response manual, Shoptiques procedures, Shopify procedures, conference call recaps, etc.. (All in Discovery)
Any lines of clothing that are unique, proprietary or specific to AL:
Private Label Program launched on July 11, 2011: Miss Me exclusive 9/11, Whitney Eve exclusive 5/12, AL Exclusive Tees/Private label 7/11, AL Exclusive belts and handbags 7/11, Some of our Must Have’s era also exclusive.
Exclusive tees: The fabric is the same Ultra Premium cotton that James Perse uses and you will be able to retail them for more than half off what James Perse retails their tops while maintaining a 66-69% margin! James Perse suggested retail provides only a 56% margin. For example: Our short sleeve top will cost $16.50 and retail for $49 (66.33% margin) vs a similar James Perse cost of $33 that retails for $75. Our 3/4 & long sleeve will cost $18.50 and retail for $59 (68.64% margin) compared to Perse 3/4 and long sleeve at $41 & $59 with retail prices of $95 & $135 respectively.
The enforcement of covenants not to compete by CVI including policies, procedures, investigations and identification of zee who have violated those provisions:
We know of nobody (can’t recall anyone) who has violated this except for Dixon’s and Lancaster’s.
Any and all support and assistance provided to the Lancaster by CVI after they became zees:
A ton of support and resources provided to Lancaster’s. CAMBEO (free), marketing, social media, monthly conference calls, store visits, phone support, annual inventory on-call, 4th quarter planning guides, learning guides, window displays, Must Have program, OTB system, all ops manuals, in-store signage program, trends, technology updates, forms, continuing education conferences, MAGIC conventions, stat comparisons, private label program, exclusives, discounts, custom POS reporting, Boutique Window, national PR brand recognition, just to name a few!
Allegation that Lancasters had a “plan from the beginning” to open Blu Spero boutiques:
That is coming from them saying it in a press release announcing BS and other conversations can’t recall right now.
Allegation “This attempted sham separation does not match reality”.
Can’t recall specifics right now
Allegations Lancasters are seeking to cripple CVI financially, and that their claims that CVI has breached its contractual obligations are false.
Cripple financially: This is from a phone conversation with Craig Young in July 2016 - Made him real mad when Rod called him and asked him to join in the NB suit. Rod said that it would be Rod and Craig on the lawsuit and that Art would be in the background because he has so many stores and they each would pay 1/3 the legal costs. Rod said that Art mentioned all they needed to do was to keep funding the attorney’s until we fold.
Claims CVI breached our contractual obligations are false: Because we have not.
Allegation that Lancaster’s promised other franchisees that they would fund any lawsuits they file against CVI:
Ron Miller was approached by Art and his attorney to join the lawsuit and share the costs. Craig also said echoed the same type of comments coming from Rod Dixon.
Our knowledge of Lancasters involvement with BS including allegations in PP 4-7 and 21-34 of the Counterclaim:
- Because they knew that this conduct breached the terms of the Apricot Lane Franchise Agreements, the Lancaster’s attempted to set up their Blu Spero boutiques so that it would appear that another entity, Love Grace, operated the Blu Spero boutiques with only Art Lancaster’s involvement. This attempted sham “separation” does not match reality. Among other things, the Lancasters have issued a press release entitled “Blu Spero Clothing Boutique to Open”which describes Stacie Lancaster as a “Founder” of Blu Spero and Stacie Lancaster has her own phone extension at Love Grace.
- Realizing the danger they now face with CVI discovering the true nature of their wrongful and fraudulent enterprise, the Lancasters have gone on the offensive, seeking to cripple CVI financially so that this matter will never go to trial and CVI will let them out of their commitments just to survive. The Lancasters have attempted to do this by, among other things, withholding royalties that are due under the parties’ Franchise Agreements, starting multiple lawsuits in multiple jurisdictions based on false claims that CVI has breached its contractual obligations, encouraging other franchisees to do the same, and ceasing use of CVI’s Point of Sale System so that CVI cannot track Joli Grace’s merchandise sales. On information and belief, the Lancasters have even promised other franchisees that they would fund any lawsuits that they filed against CVI.
- On August 18, 2016, after Joli Grace failed to cure a material default of the Hattiesburg Franchise Agreement, CVI terminated the franchise agreement for the Hattiesburg franchise location. The Franchise Agreement between the parties requires the turnover of the lease in the event of termination of the Franchise Agreement. Despite the termination of the agreement, Joli Grace, by and through its officers, agents, members and/or employees, has improperly refused to the turn over the lease and continued for a period of time to operate the store under the trademark “Apricot Lane”. Moreover, Joli Grace improperly assigned the lease to Love Grace, who has begun operating the store as a Blu Spero while still selling Apricot Lane tagged items.
- CVI brings these counterclaims against Joli Grace and Stacie Lancaster for the various breaches of the Franchise Agreements, for Counter-Defendants’ fraud and deceit; to end the sham and require Counter-Defendants to honor the non-compete obligations; for the harm they have caused CVI in converting their Apricot Lane boutiques to Blu Spero boutiques and diverting customers, business, and leases to Blu Spero; and failing to pay overdue royalties. CVI also brings this counterclaim to recover damages from Counter-Defendant’s wrongful continued use of the trademark “Apricot Lane” after termination of the franchise agreement for the Hattiesburg location; an injunction to prevent any further improper use of the trademark; and an injunctionrequiring the turn-over of the Hattiesburg lease as required by the Franchise Agreement, lease, and Collateral Assignment of Lease.
The “support, knowledge and services provided to JG by AL systems as alleged in PP 16:
A ton of support and services and resources provided to Lancasters. CAMBEO (free), marketing, social media, monthly conference calls, store visits, phone support, annual inventory on-call, 4th quarter planning guides, learning guides, window displays, Must Have program, OTB system, all ops manuals, in-store signage program, trends, technology updates, forms, continuing education conferences, MAGIC conventions, stat comparisons, private label program, exclusives, discounts, custom POS reporting, Boutique Window, national PR brand recognition, just to name a few!
A ton of knowledge from years of history and experience operating retail businesses along with lessons learned and applied into our program.
We start each new store with the initial recommended inventory and the Open To Buy Program. We give them all the vendors and contact information and place any orders when requested. We make appointments for our stores at the major vendor shows and liaison between the vendors and franchisees to get line sheets, seasonal picks and best seller recommendations. We have monthly conference calls which all stores are invited to share new vendors that are doing well. We have Bi-annual conventions where we get all of the participating stores involved in multi-day buying, new product introductions, training and specials. We give updated vendor lists, recommendations and negotiated discounts
We are available to assist them with everything from site selection, store design, custom cash wrap, signage, lighting recommendations, contactor, architect, lease negotiator recommendations, applying for licenses, vendors, insurances, bookkeeping, supplies, floor plans, merchandise plans, in store marketing, display and fixtures ordering, all the way down to stockroom supplies, bags and even labor law posters.
PP16: The Lancasters thrived within the Apricot Lane system, and benefited from the support, knowledge and services provided by the Apricot Lane system. The Lancasters learned from CVI how to be successful boutique operators. The Lancasters achieved so much success that, over the next five years, the Lancasters (through their entity Joli Grace) entered into additional franchise agreements for Apricot Lane stores in:(Lists all stores)
