The already soured relationship between a Denver coffee chain and a former franchisee continues to curdle in court.
Coffee shop brand Dazbog Coffee sued former franchisee Padbros Enterprises in district court last week, accusing Padbros of violating a non-compete section of a franchise agreement when it suddenly rebranded two Dazbog locations as Genessee Coffees last month. Those shops are at 1200 Clayton St. and 110 16th St.
In its complaint, Dazbog requested that Padbros be forced to close its coffee shops. It also wants anyone working for Padbros to be banned from opening coffee shops within 10 miles of a Dazbog for the next two years.
According to the lawsuit:
“Defendants have access to, and continue to use, the goodwill associated with DAZBOG, its marks and business methods to operate their Competing Businesses, and Defendants are trading on the trade secrets and business methods of DAZBOG within their Competing Businesses in violation of their non-compete (clause).”
Dazbog founder Leonid Yuffa declined to comment when reached by phone. Dazbog’s attorney, William Jones of Moye White, did not return calls for comment.
Douglas Norberg, a lawyer representing Padbros, said in a written statement that Dazbog exploits its franchisees by charging prices that are considerably higher than industry standards for products that must be purchased from Dazbog.
He referenced a prior case involving a different group of franchisees that ruled the franchise agreements weren’t enforceable and released the franchisees from their contracts. One of those franchisees was Genessee Elinoff, who then converted her DTC Dazbog into the first Genessee Coffee in October.
This is not the first time Dazbog and Padbros have sparred in court.
In October, Padbros sued Dazbog over what it claimed were unfair prices on supplies like cups.
Dazbog then sued Padbros last month to terminate its lease at 1200 Clayton St. Both of those cases are still active.
Yuffa founded Dazbog in 1996 with his brother Anatoly. Since then, it’s grown to include 28 locations from Castle Pines to Cheyenne.