Archive for the ‘The Travelhost Litigation You Need To Know’ Category

Is There A Class Action Lawsuit on The Horizon For Travelhost Magazine, James Buerger, and Their General Council John Price?

October 18, 2011

A communication was sent to me a few days ago, by an ex-associate publisher of Travelhost Magazine, in conjunction with other ex-associates who may be considering a class-action lawsuit against Travelhost Magazine, James Buerger, and general council John Price.  I said I would help to relay the message, as we have hundreds of readers here at THE PUBLISHERS ADVOCATE. Many of our readers are ex-associate publishers, and current ones as well, who may be affected by this information.

I would like to remind my readers that I am not a lawyer, nor do I give legal advice.  It is the duty of THE PUBLISHERS ADVOCATE, as a news source, to relay this information, unadulterated, in its original form…the way it was sent to me.

Take a look:

——————-START COMMUNICATION———————

To: All current and former Travelhost Associate Publishers, and current and former national and regional advertisers.

We represent a group of current and former Travelhost Associate Publishers and are considering a law suit against Travelhost Magazine, Travelhost Inc, its Chairman of the board and CEO Jim Buerger, and it’s General Counsel John Price.

We believe that Travelhost has deliberately and knowingly mislead, misinformed and fraudulently induced a number of individuals during the sales and selection process of Associate Publishers and that Travelhost Inc, has knowingly and deliberately mislead, misrepresented and fraudulently induced hundreds of former and current national and regional advertisers to advertise in Travelhost Magazine. It is our opinion that John Price, Travelhost General Counsel, in concert with Jim Buerger has knowingly devised and prepared the necessary documents and marketing strategies and schemes that allowed and encouraged the continuing practice of fraudulently inducing new distributors and associate publishers into the Travelhost network and has thus implicated himself as a co-conspirator in what we believe to be the unlawful misrepresentation of the Travelhost distributorship and optional associate publisher business model as well as the misleading and misrepresented value of placing  national or regional advertisements in Travelhost Magazine.

Our primary grievances include, but are not limited to, come from the “Optional Associate Publishers Agreement”:

Items 2 & 3:

AP shall be entitled to advertising space for use or sale:

We believe that most of you were clearly advised that by purchasing the optional Associate Publisher agreement you would have “$75,000 credit towards the National and/or Regional ad space and that this was the way to “recoup your entire investment” You were probably advised that Travelhost had been printing nationally for 40 +/- years and that many national advertisers were eager to advertise in such a well respected and widely read publication. Some of you were told that Travelhost had a list of national advertising clients waiting for national and regional ad space to become available to them and that Travelhost policy was to allow the AP’s to utilize their unsold ad space and the Associate Publisher would keep all the revenue

The reality that most of you faced was that Travelhost, Inc rarely if ever sells national ads and certainly not at Travelhost rate card pricing and that it was nearly impossible for an AP to do so because Travelhost could not and would not provide accurate, legitimate readership and distribution statistics that are advertising industry recognized, thus causing the promise of reward to be without merit

In addition, to this day Travelhost, after 43 years of operation, has failed to provide ANY type of sales or presentation materials or guidelines or even an honest and clear explanation of the process to the Associate Publisher to have and use to honestly and fairly present the value to a prospective national or regional advertiser. They have never to our knowledge provided even the most basic presentation materials that would allow an AP to even understand the national and regional print cycle nor even an example of what Travelhost, Inc includes as a sales presentation to national or regional advertisers. We believe that Travelhost has knowingly and deliberately induced, by misrepresentation and omission, each Associate Publisher to either commit or attempt to commit fraud on behalf of Travelhost, Inc and we believe that this omission constitutes a level of deceit and misrepresentation to the AP as well as the advertiser. Collectively, after many interviews with former and current associate publishers we have come to believe that Travelhost has misrepresented and exaggerated the value of this and by including it as an enticement to spend the additional $30,000 required for the “optional associate publisher agreement” Travelhost has committed an act of fraud. We believe that Travelhost has offered what the Federal Trade Commission defines as a “Phantom Opportunity”

We are aware of the many advertisers seen in the national and regional sections of your magazines. We estimate the greatest percentage are placed by the AP’s at a drastically reduced price from the published rates found in  the Travelhost National Media Kit which is what Travelhost recommends and in fact insists they themselves do not discount.

Item 5-b

Ad revenue sharing:

We believe that Travelhost, by including the language detailing the commissions to be paid to AP for advertising sold into their market, have suggested that this actually occurs. Collectively, after many interviews with former and current associate publishers we have concluded that this sort of cross-selling does not and has not occurred to the level that it should have been touted as having any value whatsoever. Another “Phantom Opportunity”

Item 6:

Publication discount, Associate Publisher shall be entitled at all times to wholesale pricing:

We are aware that Travelhost has claimed, and testified that their definition of “wholesale pricing” is that the Travelhost pricing schedule identified as “wholesale pricing” is  less than what Travelhost’s  pricing schedule for “retail pricing” is and is therefore “wholesale pricing”. Using the Travelhost formula for definitions, we assume that Travelhost could and may have decided that round is really square, or that blue is now red, or that fraud is now honorable.  It has already been established that Travelhost ‘wholesale” is half of what retail commercial printers will bill for at least equal quality product. We believe that Travelhost testified that they are the ONLY printer in America that will print a magazine and provide the “extras’ such as providing proofs, making sure that the images and text all fit on the page, and providing links to generic information on the web and arranging webinars that help publishers with their publication, and that these services somehow makes them a publisher, not a printer, because no other commercial printer will do these things. We already have a number of commercial printers eager and willing to testify and have provided documentation showing that they do all of these things, and more. They charge retail, which is generally half of what Travelhost charges for their printing services which include the “extras”. Collectively, after many interviews with former and current associate publishers we have concluded that the onerous printing prices represented by Travelhost as “wholesale” have been the leading cause of failure to successfully build a profitable business and in most cases has driven you in to bankruptcy. Furthermore we believe  that   there is a best marginal value to the promise of regional/national ad sales and that there is absolutely no value to the commission sharing scheme represented by Travelhost and that the additional $30,000 for the “optional” Associate Publishers agreement promises “wholesale publishing pricing” which does not occur. We believe and intend to prove in a court of law that Travelhost has knowingly, willfully and deliberately set forth to collect the additional $30,000 with the historical facts proving that Travelhost knew and knows that it would take on average 4.5 years for an AP to recoup the additional $30,000 through the discounted pricing, and that historical data will prove that Travelhost clearly recognizes and knows that rarely does a Travelhost associate publisher even stay in business that long!

Intellectual Property:

We know that each market shown to be represented by Travelhost on the Travelhost website, www.travelhost.com is either a market that is still in production and printing a magazine or that the market has gone out of business and is in actuality not a market being represented by Travelhost with the  majority of the markets shown being “dark” markets. Each market, whether “dark” or live; contain the last or current issue of the Travelhost Magazine that was printed in that market. Travelhost has testified that they, Travelhost Inc, own ALL materials submitted to Travelhost to be printed in each market. The maps you bought and paid for, all images and photographs, the ads you or your client paid to be designed, the feature articles you wrote or paid for are according to Travelhost their property. There is no compensation to either the former or current associate publishers for use of any of this intellectual property. We believe  the Travelhost scheme is to secure enough intellectual property, via the “publication builder” to render the associate publishers and distributors “without value” in the plan to devise and promote www.travelhost.com  as a web based travel publication featuring booking, packaging and advertising opportunities for the sole use and profit of Travelhost, Inc. According to sworn testimony by Travelhost, Inc, the matter of intellectual rights is spelled out to you in their “Production Manual” and by virtue of you receiving the “Production Manual” you have agreed to these terms. We have thoroughly reviewed several Travelhost Production Manuals as well as each version of “Distributorship Agreements” and “Optional Associate Publisher Agreement” and find no language pertaining to the relinquishment of your intellectual property and believe that you are due considerable monetary compensation for its use by Travelhost, Inc and www.travelhost.com.

Franchise Laws

Further, we believe that most of the states represented by former or current distributors and associate publishers will find that Travelhost is in violation of state franchise laws and we are positive that they have violated the spirit of the federal franchise laws. We intend to pursue this vigorously. We are aware that Travelhost tries very hard to hide the fact that they have crossed the threshold of being a franchise, but the courts have already upheld, in some states, that Travelhost has and is in violation of franchise laws. Probably another fact they failed to mention to you.

We have complete confidence that Travelhost has no justifiable defense or precedent to exonerate them from what we believe to be egregious acts of fraud and misrepresentation. There is precedent and it is a fact that Travelhost has already been found guilty of such fraud and misrepresentation and have settled cases with former associate publishers requiring plaintiffs to agree to a non disclosure statement effectively keeping these facts hidden.

We are certain that many of you have joined the Travelhost network and lost your entire investment, after Travelhost had already been found guilty of fraud and that you were not informed that you were spending $60,000 to be part of a brand that was operating and indeed recruiting you under circumstances very similar if not identical to what they were found guilty of.

  National and Regional Advertisers ripped off

We are sending this to all current and past national and regional advertisers because we believe you were and are victims of fraud and misrepresentation  in that you’ve  purchased a national advertisement in Travelhost Magazine naturally assuming  that by paying $36,000 for a full page national ad  or whatever price the associate publisher or Travelhost Inc, could sell it for, were actually going to have their ad in ALL Travelhost markets, nationally, when in reality the ad would run in a maximum of one-third of the publishing markets. The only way to actually have an ad in all Travelhost magazines the advertiser would be required to purchase a minimum of three months of ads, and in some cases four months, a verified fact that many advertisers were unaware of. We are convinced that there no advertisers who would knowingly pay for a “national ad” that was not actually in a national publication, nationally!

 We are currently gathering contact information for all past and current national/regional advertisers in Travelhost Magazine

As a note of caution; Travelhost has recently testified that if a National or Regional advertiser were to challenge the scheme and sue for reimbursement for their ad dollars that the AP who sold the ad would be liable for those damages and re-imbursements, NOT Travelhost, Inc. We intend to seek damages sufficient for ALL associate publishers who may have sold any regional or national ad space to reimburse any advertiser whose challenge to the representation of readership and distribution cannot be satisfied and for advertisers who are part of this suit to be paid directly from forthcoming settlements, if any.

We believe and it is our opinion that as a former or current Travelhost associate publisher you are owed damages at minimum

1. One-half of what you spent on printing with Travelhost. We encourage you to add those numbers up.

2. Your entire $30,000 spent for the Optional Associate Publishers agreement.

3. Considerable punitive damages: the amount of punitive damages, if any is determined by a jury of your peers.

4. an undetermined but substantial amount based on the unauthorized use of intellectual property, likely to be part of punitive damages determined by a jury

We fully expect that Travelhost will challenge each and every claim we are making but send this with extreme confidence that Travelhost has no desire or ability to mount a credible defense when there are at least 100 former and current associate publishers willing to testify to the facts as presented in this letter of notice. We further believe that Travelhost has no desire to attempt to justify to the vast number of national and regional advertisers they have mislead and misrepresented themselves to.

We believe that we have many things in our favor.

We have the truth, we have the facts, we have documentation, we have investigative journalists and reporters in the media and press that are eager to learn more and anxious to publicize their findings, and we have Travelhost with a clear track record of what we believe to be fraudulent operations over many years, and we have many of you who will be part of this fight for justice.

If you are in agreement with any of these assertions and feel as though you too were fraudulently induced into the Optional Associate Publishers agreement or that your market was not profitable because of the onerous printing costs which were represented as “Wholesale”, and that if your printing costs were half what you paid Travelhost until you went broke that you would have been profitable and probably still in business, or that you are now struggling to meet the print costs charged by Travelhost, or that you would like to add considerable profit to your business by paying “fair market” pricing for your printed materials than please contact THE PUBLISHERS ADVOCATE or Randy Duplecion. We will gather all contacts and comments to be delivered to the legal team selected to handle the “multi-plaintiff complaint.

If you have purchased either “National” or “Regional” ads to be placed in Travelhost Magazines it is very likely that you have reimbursements and damages due to you as well, you too may contact us randy@getaway-media.com

If you feel as though the allegations detailed in this memo are truthful and if you desire to stop Travelhost from continuing these predatory practices I urge you to contact the FTC and the Attorney General of your state and to also write a letter to your congressional representative to file an official report and complaint. We also suggest you consider joining us in this lawsuit.

——————–END COMMUNICATION———————

THE PUBLISHERS ADVOCATE

PS>I can be contacted via email by clicking the “Uncle Sam” icon to the right of your screen, or by clicking here.

An Open Letter Of Testimony For Those Ex-Associate Publishers Facing Travelhost Magazine and James Buerger In Court…

September 29, 2011

For all the ex-AP’s who are facing court battles fighting Travelhost Magazine and Jim Buerger & John Price and their efforts to put innocent entrepreneurs out of business, I have been asked to summarize my thoughts about your valid complaints with Travelhost…my thoughts on your behalf are as follows:

To Whom It May Concern:

I was a defrauded Travelhost Magazine Associate Publisher (AP) that closed my business in 2010 after basically working for free for Travelhost (TH) for the better part of 5 years. Yes, I eked  a small wage, but would have done as well with less stress at my local McDonald’s…and would not have been out of pocket $65,000 for the “privilege” of doing so. However, I was a lucky one, as I got out only losing: my initial investment of $65K, 5 years of actual profitability, and the value of my business when I was ready to sell it.

So lets say I was only out about $350K or so…to start.

AP’s were all originally sold by TH, through express promises an “independent business” with “major marketing support at any time,” and up-to-date (namely, not straight out of the 1950’s) magazine format, a high-end quality of print and publication in a “national network of 135+ markets, including the majority of the large US cities.” We were promised that this national footprint would lend itself to highly profitable regional and national ad sales that would be a major cornerstone of success.

None of this was true, in fact, things turned out to be just the opposite.

Travelhost also promised “wholesale pricing” if an AP would pay $30,000 extra to become an “Associate Publisher” instead of a mere “distributor.”  This and the (so-called) highly valuable rights to sell regional and national ads are expressly stated in writing in the Associate Publisher agreement Travelhost Magazine and Mr John Price created.

I never sold one regional or national ad in 5 years, because there was no significant regional or national penetration of Travelhost Magazine to speak of in the New York Metro Area.

These were all blatant lies by Travelhost. Perhaps the most blatant lie was the fact that TH charged 2.5 times retail for printing as opposed to “wholesale,” resulting in a $50,000 per year overcharge (franchise fee?) on my business that barely grossed $100,000 per year before all expenses.  Also, through  breaching all these promises to other APs who quickly failed, (repeatedly in each city) there was a much smaller geographical publication footprint than repeatedly promised…not “135 large markets and growing to 300+ with a state of the art web channel.” Rather a 90 market publication that was rapidly contracting because Travelhost Magazine was in breach of all the above promises to all AP’s at the time of the sales pitch and thereafter.

Currently, Travelhost is in less than 50 markets and very few are large cities.  Everyone has gone broke repeatedly in these markets. The website is a total joke that has less hits than this blog by new queries.

I and the AP’s repeatedly asked Travelhost to live up to its end of the deal…to no avail. Travelhost promised: “wholesale pricing,” a marketing plan, including ongoing support that was not forthcoming, and an up-to-date magazine that was competitive in the market place.  (orally they promised this, and if they said they were not going to provide any marketing support as the contracts so state…why is Travelhost so intent on dictating the form and content of the magazine, including paper quality and layout?)

Having discovered that Travelhost Magazine was not in as many markets as they repeatedly claimed in all its sales materials, the sale of “national” or “regional” ads was and is totally impossible.  This “benefit” given to AP’s to induce the sale, valued at $70,000 by TH (at the time I was sold the region) was completely worthless, crippling the value of my (and each investor’s) business.

(Of course, Travelhost never tells prospects that selling regional or national ads virtually never happens and is more or less impossible)

The combination of all these TH lies led me to a $65,000 purchase of a business in a franchise sytem where 95% of the investors fail and were burdened with: no support, marketing or otherwise, no capability of selling important regional or national ads, and a cost to put magazines out that is about $50.000 per year higher than retail printing cost by any other vendor, let alone promised “wholesale” pricing. I and 90% of those defrauded by Travelhost were forced to work for free for Travelhost. Many unfortunates have had it worse, much worse…continuing to go out of pocket each month after years building up the business that was handicapped by all of TH’s breached promises. In many cases people have lost everything: 401K’s, life savings and their homes.

There are many others, some who have told their story on my blog (www.publishersadvocate.wordpress.com)

Having been repeatedly stalled by Travelhost after many complaints on all these extremely pressing issues, the APs, including me, were faced with two extremely difficult choices: 1) They could let their business fail because TH refused to rectify these false promises, or 2) they could seek another printer and stay alive in business in order to continue to feed their families.

In my case, I simply let my business fail out of fear that Travelhost Magazine would wrongfully sue me like it has done many times before to other entreprenuers.   However, I have spent hundreds of hours operating a blog that tells investors the truth about this scam. I’m hopefully saving a few people from suffering this same tragedy.

Others have taken a rightful path of getting the printing done elsewhere to survive. The costs are vastly reduced, the magazines are much higher quality and they survived…only to be suedwrongfully by Travelhost Magazine and James Buerger via John Price, Jim’s staff council.

These entrepreneurs should be allowed to continue publishing.

Since Travelhost claims it’s nothing but a “printer” and “publisher,” how can it be irreparably harmed pending trial for damages?  What a judge ought to be thinking about in these cases, rather than shutting down these surviving entrepreneurs, is how to refer the matter to the prosecuting attorney and how to shut the 43 year old TH scam down for good.

*The Publisher’s Advocate will not stop warning unsuspecting investors and collecting evidence on the Travelhost Magazine Business Opportunity SCAM until this has been accomplished.*

THE PUBLISHERS ADVOCATE

PS>

I’d be glad to testify about this at any time, in any state, by phone or otherwise…and also put this in affidavit form upon request.

***PPS>*** Looks like Travelhost Magazine has a new Vice President of Marketing…***

A Congratulations Is In Order, And Then Another Notice…

February 8, 2010

First off, I’d like to congratulate Dave Portener, Chief Marketing Officer of Travelhost, for promptly quitting his job last Friday after reading my blog post two days earlier

By abruptly quitting Travelhost as CMO last Friday, before he accomplished anything he set out to do, or telling us who his replacement is…Dave is (IMHO), without a doubt feeling guilty for watching Travelhost defraud people for the last year an a half while he was CMO.

It seems rather obvious to me that David Portener is denouncing Travelhost for what they’re doing!

Dave has taken the first step toward redemption, and limiting his jail time. He must have consulted an attorney, and I commend him for that…I’m sure it wasn’t an easy step for him.

There is another problem, however, other than the people who are paid to work the Travelhost “scheme.” These people apparently continue to “volunteer” to support the Travelhost fraud even after the “cat has been let out of the bag.”

Dear Travelhost Advisory Board members,

Don’t you think that the Travelhost Advisory Board at this point is just putting a “cloak of legitimacy” on Jim Buerger’s Travelhost swindle?

In my experience as a member of the Travelhost Advisory Board, it was a total waste of time listening to Jim Buerger’s rambling about the same B.S. every time, so as to not even allow any real time for meaningful discussion. This must be continuing, or even worse now that Travelhost has no executive staff (with any real publishing experience) to talk at the meetings!

Guess what Travelhost Advisory Board members?

This “waste of time” could make you personally liable for the Travelhost franchise violations, and plain old fraud that is perpetrated on so many people that come in contact with this network!

Don’t you think Buerger will point his finger at you when he goes down?

He’ll probably say that you helped him, and encouraged him, and that it was all your fault!

If you don’t think so, you better think again…we’re talking about a guy who has been scamming for decades.  Wait until you read a future posting on his political career as a councilman and as a candidate for mayor in Dallas!

The bottom line is you have been on an “Advisory Board,” advising Jim Buerger on how to do business at Travelhost.

This can very easily translate to personal liability for you, and at worst, Jim Buerger blaming it all on you.

Your only defense previous to this information being made public:

“We didn’t know what Buerger was doing, nor could we do anything about it.”

Well, you all know what he is doing NOW! You know about the fraud, franchise violations, and overcharges.

Dave Portener seems to have figured it all out, finally, and he left…perhaps the Advisory Board ought to do the same?

In my opinion, you should all leave the Advisory Board and WARN new investors being suckered into taking over these Travelhost markets that have repeatedly failed because of Travelhost over-charges.

You should join Dave Portener in publically showing his disgust for what Travelhost is doing to it’s AP’s and prospective Franchisees.

(Hint to Dave and The AB…Don’t sign one of Buerger’s patented “Gag Agreements,” so you continue to help him with this scam.)

Members of the Travelhost Advisory Board should either force Travelhost to obey the law, or you ought to publicly quit…because you too, can be held personally liable for what Travelhost is doing.

You’ve now been warned…TALK TO YOUR OWN ATTORNEYS! As usual, I only suggest that you look into this with your own lawyer. Don’t take my word for it.

Note:  Dave Portener took a critical first step toward exonerating himself by quitting last Friday.  Hopefully his attorney will advise him to go public with the Travelhost Fraud as well…because by not warning people, he’s just furthering the cause.  He’s not off the hook just because he quit, he should now tell the world what’s going on in Dallas!

(The AB members might be safe to stay on the Advisory Board if you would be willing to force Travelhost to change…NOW….not in 20 years…which I bet is as long as Travelhost is willing to wait for this whole storm to clear up.)

And, it’s also as long as this AP network is willing to fight Travelhost, until they finally do the right thing.

Godspeed…

THE PUBLISHERS ADVOCATE

P.S.

A note about the way I see things on The Travelhost Advisory Board:

Keep in mind that the Travelhost Advisory Board is constructed of what they perceive to be the most successful APs in the country. The Travelhost system was created so that the new people (who invest and go broke every year) SUBSIDIZE the people who are actually making money with the current business model.

Make no mistake, this is not capitalism at work here, it’s Travelhost fraud. I guess you could call it a PONZI SCHEME of sorts…and they’re not playing by the rules.

These AP’s who are making a couple of bucks with this model seemingly have every reason to support the status quo, where Travelhost makes it’s money by churning and over-charging new APs, rather than charging a royalty of 10% of ad revenues. (as Travelhost contractually has every right to do!)

Meaning, the AB members (and a few others) directly benefit from the way Travelhost does business, so they might not be so quick to want Travelhost to change. With a normal system in place, they would end up paying more in royalties!

Of course these people don’t have much incentive to rock the boat…the scam works for them! But, does this stature make these Advisory Board members more liable?

How about their repeated testimonials that help Travelhost “sell” new markets to unsuspecting investors?

(Especially when they know that 90% of new AP’s FAIL, and Travelhost doesn’t disclose that?)

What about the AB members that were privy to the “satisfaction and financial survey” that the AB did a year ago? That survey had incredibly dismal results, yet they go on misleading potential investors with testimonials???

Travelhost Advisory Board members must know that they are unrepresentative of the AP network as a whole? No???

How can the AB members, and other people in the Testimonials, attach their name and face (and credibility) to the Travelhost business model, when they know that 90% of all new AP’s will be recruited without any kind of disclosure…and eventually go broke from overcharges?  Why do you help Travelhost with the FRAUD?

Doesn’t anyone there have a conscience, or at least feel the obligation to report the “rape” that’s being committed?

This Posting Is Dedicated To David Portener, Chief Marketing Officer Of Travelhost

February 3, 2010

Dear Mr. CMO of Travelhost,

I’m no attorney, nor do I give legal advice, but I don’t believe it’s necessary to be a lawyer in order to recognize fraud when you see it. I suggest you and the other executives at Travelhost Magazine in Dallas pay close attention to this posting, because what I’m about to suggest could be vital to your careers and the way you spend the next few years of your lives.

Mr. Portener, your company violates franchise laws in 15 states, including the state of California where you operate Travelhost of Palm Springs. This violation is a felony in several of these states, and the law is crystal clear when it comes to identifying a business as a franchise. Travelhost meets these qualifications hands down, yet you do not follow the law requiring disclosure of failure rates for investors.

Why does Travelhost advertise itself as a franchise on the internet? And, why did Travelhost take down the internet ad on “Todaysbestfranchises.com” two days after I posted a link to it on my blog? Why do you continue to mislead people, Mr. CMO?  Dave Portener, YOU as the CMO are responsible for this posting (and others like it) marketing Travelhost as a franchise:

www-todaysbestfranchises-com_FranchiseDetail-asp_2t3f3bmv

If I were you, I would consult an attorney about the implications of your actions at Travelhost Magazine. Have the attorney read my blog posts about: fraud, deception, franchise laws, and non-disclosure. I also suggest your attorney reads Jeff Loudon’s blog from early 2009. I have a copy if you need one.

Dave, I wouldn’t consult your in-house attorney, because I don’t believe that he would give you the same advice that your own private attorney would. Mr. Price obviously believes that the way you operate Travelhost is completely lawful, or he would not be a part of the operation at all, as his bar affiliation relies on him following the law at all times.

Furthermore, you and Travelhost perpetrate fraud on investors, which is also punishable under state AND federal law. Dave, you and your “market expansion staff” will not be protected by the corporate veil that Jim Buerger and Mr. Price lead you to believe you’re protected by. You are liable personally for what you’re doing down there in Dallas, and you will likely be prosecuted for it this year. Though some current and past Travelhost employees can legitimately plead innocent, you Dave, can no longer plead ignorance to these laws.  You know what you’re doing is wrong.

Dave, I’m suprised that you didn’t accomplish what you originally set out to do…change Travelhost for the better. You convinced everyone in the network that Travelhost needed to change in order to survive, and that you were the guy that could make it happen. We all believed in you. In reality, all you did was become Jim Buerger’s partner-in-crime.  Now you’re just a liar and a thief.

Perhaps Jim Buerger would like to know how you REALLY feel about him, Dave?

Consider this your official notice that members the Travelhost network of associate publishers intend to hold you personally liable, and go find yourself personal counsil. Ask this person if they think you’re liable, you’ll be surprised at their answer. Or, maybe you won’t be…perhaps you realize that it’s only a matter of time before you’re prosecuted along with the rest of the brass at Travelhost HQ.

Good Luck,

THE PUBLISHER’S ADVOCATE

P.S.

For those who are interested in reporting Travelhost for violating your consumer rights, contact:

Richard Cleland
Bureau of Consumer Protection
202-326-3088

It won’t take long, I’m sure he’ll be familiar with your call.  In the message you can say Travelhost has been ripping off people for decades, hiding their nearly 100% failure rate. They don’t comply with franchise laws, but they advertise themselves as a franchise.  Proof is in the link above.

When this guy gets enough calls he’ll have to do something about it.  And, so will Travelhost!

Does This Story Sound Familiar To Anyone?

January 1, 2010

Hello Everyone, happy new year!

I stumbled upon this article (below) on the internet earlier, from this web address: 

http://openjurist.org/813/f2d/689/zar-v-omni-industries-inc

It seems as if this story, of a husband and wife, is a very familiar one.  Even though it occured over thirty years ago, it continues to happen the same way today.

42 years in business.  Same plan, same story.

Now if you read this article to the end, Travelhost prevailed in this case.  They’ve got a lot of experience at this.  Sad, but true.

If you can relate to this story in any way, please email The Publisher’s Advocate and let us know.  I’ve received so many messages from people out there, and hope to continue to try and help.

813 F2d 689 Zar v. Omni Industries Inc

813 F.2d 689

James and Betty ZAR, Plaintiffs-Appellants,
v.
OMNI INDUSTRIES, INC., Defendant-Appellee.

No. 86-1176.

United States Court of Appeals,
Fifth Circuit.

April 1, 1987.

W. Randolph Elliott, Pullman & Schendle, Dallas, Tex., for plaintiffs-appellants.

John A. Price, Greg Sivinski, Winstead, McGuire Sechrest & Trimble, Dallas, Tex., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before VAN GRAAFEILAND,* HIGGINBOTHAM, and JONES, Circuit Judges.

EDITH H. JONES, Circuit Judge:

1

In this diversity action, Plaintiffs-Appellants, James and Betty Zar (“the Zars”) challenge the district court’s directed verdict against them on their claims of misrepresentation and wrongful termination of their distributorship rights. We affirm.

I. BACKGROUND

2

Appellee Omni Industries, Inc., now known as Travelhost Magazine, Inc. (“Travelhost”), publishes and produces a “travelers’ magazine” containing information on local lodging, restaurants, entertainment, TV schedules, and similar information of interest to the traveler. Travelhost distributes the magazine through a system of local distributors, who are in charge of selling local and national advertisements in the magazine and distributing the magazine, free of charge, to area lodgings. The local distributor is contractually obligated to purchase a certain minimum number of magazines each week or month from Travelhost, and receives a percentage of the advertising revenue generated from his advertising sales and his local edition of the magazine.

3

In early 1977, the Zars became interested in purchasing the Travelhost distributorship for part of the state of Colorado from J. Elliot Knoll, who at that time held the distribution rights for the entire state. Negotiations culminated in a March 21, 1977 assignment to the Zars of Knoll‘s Distribution Agreement for the state of Colorado, excepting the Denver metropolitan area (the “Colorado Springs edition”). In September 1977, the Zars purchased Knoll‘s rights in the Denver metropolitan area as well (the “Denver edition”), thus giving them exclusive distribution rights for the state of Colorado.

4

In the course of their initial negotiations with Knoll, the Zars received “Travelhost Distributor Information” and “Travelhost Profit Projection” booklets, which contained various estimates of profits possible from a distributorship. After signing the March 21, 1977 assignment of Knoll‘s rights and paying $6,000 of the $22,500 purchase price, the Zars met with Travelhost executives, at which time they received additional materials containing the same profit projections. The Zars also claim that Travelhost executives represented that the Zars’ share of national advertising revenue (i.e., those advertisements appearing in Travelhost magazines nationwide) would be enough to cover the costs of buying the magazines, and that only one Travelhost distributorship had failed in the past.

5

Unfortunately, the venture was not as successful as the Zars had hoped. Although they combined their editions to produce one magazine for the entire state, the Zars received less than $4,000 in national advertising revenue while paying over $100,000 for magazines. The Zars suffered a total net operating loss of approximately $8,000 for the first three years of operation, as opposed to the minimum annual profit of $45,000 they claim Travelhost represented they would make. Additionally, the Zars claim that there was a yearly turnover rate of 30% of Travelhost distributorships, as opposed to Travelhost’s claim that only one distributor had failed.

6

In 1979, Mr. Knoll filed suit in Colorado state court to recover amounts owed from the sale of the Denver distributorship. In response, the Zars counterclaimed for fraudulent misrepresentation and breach of contract in the sale of the Denver edition, claiming that Knoll had misrepresented the number of advertisements and the amounts of revenue under contract in the Denver edition. In April 1980, the state court held against the Zars on all claims and granted judgment for Knoll in the amount prayed for.

7

At about this time, a dispute between the Zars and Travelhost arose over the minimum number of magazines the Zars were required to purchase under the Distribution Agreements. In May 1980, Travelhost informed the Zars that they were in default of their Distributorship Agreements because they had not picked up or paid for the last three issues of the magazine, and gave them ten days to correct the default. The Zars did not correct the default, and Travelhost terminated the Zars’ distributorships on June 5, 1980.

8

The Zars filed suit against Travelhost in Colorado state court in November 1980, claiming wrongful termination of their distributorship, that Travelhost was responsible for Knoll‘s misrepresentations, and that Travelhost itself had made material misrepresentations. Travelhost thereafter removed the case to federal court based on diversity of citizenship. In February 1981, the federal district court of the District of Colorado granted Travelhost’s Motion for a Change of Venue, and the case was transferred to the Northern District of Texas.

9

At trial, the district court granted Travelhost’s motion for a directed verdict on the wrongful termination and agency claims at the close of the plaintiffs’ case, and granted Travelhost’s motion for directed verdict on the remaining misrepresentation count at the close of the defendant’s case. The Zars now appeal.

II. DIRECTED VERDICT

A. Fraudulent Misrepresentation

10

The Zars allege that the profit projections contained in the Travelhost literature, along with the oral representations of Travelhost executives on the amount of national advertising revenue and the number of distributorship failures, fraudulently induced them to purchase the Colorado Springs and Denver distributorships. The district court granted Travelhost’s motion for directed verdict on these claims on the grounds that (1) the profit projections were not affirmative representations as to profitability, (2) there was no affirmative representation as to the amounts of national advertising revenue, and (3) there was no evidence of misrepresentations made as to the number of prior failures, but even if such misrepresentations had been made, they were not made with the intent to deceive or induce the Zars to enter into the contracts. Furthermore, the court held that any misrepresentations by Travelhost could not have induced the Zars to purchase the Colorado Springs edition because the Zars had already entered into a binding contract to purchase it, and any issue of misrepresentation concerning the purchase of the Denver edition was collaterally estopped by the Colorado judgment in favor of Knoll. We review the district court’s directed verdict on the Zars’ claims under the familiar standard set forth in Boeing Co. v. Shipman:

11

On motions for Directed Verdict and Judgment Notwithstanding the Verdict the court should consider all the evidence–not just the evidence that supports the non-movers case–but in the light and with all reasonable inferences most favorable to the party opposed to the motion. If the facts and inferences point so strongly and overwhelmingly in favor of one party that the court believes that reasonable men could not arrive at a contrary verdict, granting the motion is proper.

12

411 F.2d 365, 374 (5th Cir.1969) (en banc).

13

The district court’s view of the evidence before him has been confirmed by our perusal of the record. Despite their protestations to the contrary at trial, the Zars had committed to buy the Colorado Springs distributorship from Knoll and had paid him $6,000 of the purchase price before they attended Travelhost’s business training program in Dallas. Although the sales agreement required, as did Knoll‘s distributorship agreement with Travelhost, the prior approval of Travelhost for an effective assignment, the applicable clauses further require that such approval shall not be unreasonably withheld. In any event, the Zars’ execution and down payment on the contract bound them to its performance except in the event that the assignment was not approved. See generally Restatement (Second) of Contracts Sec. 230 (1981) (discussing the operation of conditions subsequent). Approval of the Zars as distributors was perfunctorily given at the outset of the Dallas training program. The Travelhost executives testified that the training program was designed only for actual distributors, not simply prospective purchasers. We therefore agree with the district court’s conclusion that there could be no fraudulent inducement by Travelhost to enter a contract which had already been made by the Zars. See Hazle v. McDonald, 449 S.W.2d 343 (Tex.Civ.App.–Dallas 1969, no writ).

14

Alternatively, we also agree with the district court that the alleged statements of Travelhost could not constitute actionable misrepresentation as a matter of law. We examine each alleged misrepresentation in turn.

15

1. Profit Projections. The Travelhost profit projections purportedly relied on by the Zars nowhere guarantee or represent that a Travelhost distributor will make a certain level of profit or income. Rather, they show what income and expense levels can be expected based on several variables, such as magazine size or whether national ads are sold into 10 or 30 local magazines. Lest there be any misunderstanding, all such profit summaries and projections introduced in evidence contain the following italicized disclaimer: “The above are projected figures and in no way reflect a guarantee on the part of the company, nor do they act as a minimum sales requirement on the part of the Distributor.” Mr. Zar is an experienced certified public accountant, and he and his wife and daughter testified that they knew these projections were ballpark figures and not guarantees.

16

The generally accepted rule in Texas jurisprudence is that future predictions and opinions, especially those regarding the future profitability of a business, cannot form a basis for fraud as a matter of law. Maness v. Reese, 489 S.W.2d 660, 663 (Tex.Civ.App.–Beaumont 1972, writ ref’d n.r.e.); National Newspaper Enterprises, Inc. v. Chitwood, 68 S.W.2d 264, 267 (Tex.Civ.App.–Dallas 1934, writ dism’d). As stated in Lloyd v. Junkin, 75 S.W.2d 712 (Tex.Civ.App.–Dallas 1934, no writ):

17

In order to effect a sale, induce the making of a contract, or place a proposed investment in a favorable light, it is quite common to make representations as to future value, productiveness, efficiency, or economy, or as to expected earnings or profits. But since that which lies in the future cannot be a matter of certain knowledge, it is held that all such representations must be taken and understood as mere expressions of opinion, and therefore their nonfulfillment cannot be treated as fraud.

18

Id. at 714.

19

Such is the case here. The profit projections estimated a distributor’s potential advertising revenue and income, but because they projected and did not affirmatively promise, they were not fraudulent representations. The district court properly directed a verdict for Travelhost on this issue.

20

2. National Advertising Revenue. The Zars next claim that, while in Dallas, they were informed that their share of the national advertising revenues, as indicated on the profit projections, would be enough to cover the cost of the magazines. Travelhost executives deny making any such representation. The Zars contend that the district court erred in directing a verdict on this issue.

21

We disagree. The record demonstrates that any comparison of the cost of the magazines with the Zars’ share of national advertising revenue would have been based on and in reference to Travelhost’s profit projections. We have concluded that nothing in those projections could serve as the basis of an action for fraud. The projections, in fact, estimate a range of potential national advertising sales revenue starting at zero. Moreover, Mr. Zar admitted at trial that he never requested, nor was he shown any actual national advertising sales figures, and that Travelhost executives had not expressly told him that his share of the national revenues would be enough to cover the costs of the magazines. Assuming, arguendo, that Travelhost personnel made a representation apart from the profit projections that the national advertising revenues would cover the costs of the magazines, such a statement would have been, like the profit projections, a future prediction or opinion of future condition. As the statements in this record form the basis for a claim of fraud under Texas law, the district court properly directed a verdict on this issue.

22

3. Number of Failures. The Zars assert that during the Dallas meeting they inquired into the number of distributorships that had failed and were told that only one had. In fact, as Travelhost executives testified at trial, two or three and perhaps more distributorships had failed. The Zars assert that this statement is an actionable misrepresentation which should have been sent to the jury.

23

However, we are inclined to agree with the district court that even if such a misrepresentation was made, it could not have been made with the requisite intent to induce the Zars to do anything. At the time of the Dallas meeting, the Zars had not yet contemplated buying the Denver edition, hence the representation could not have been made with the intent to induce them to do so. Further, as noted above the Zars’ contract with Knoll for the Colorado Springs edition was a fait accompli by that time, precluding any fraud recovery from Travelhost.1B. Wrongful Termination

24

The Zars also allege that the district court erred in directing a verdict against them on the issue of wrongful termination. The Zars contend that Travelhost’s position that the Zars were obligated to purchase 8,000 magazines per week (3,000 of the Colorado Springs edition and 5,000 of the Denver edition) constituted anticipatory repudiation of the distributorship agreements, and/or that Travelhost’s termination of the distributorships was not based on any breach of the distributorship agreements, but was done so Travelhost could rid itself of irritating distributors and appropriate the Colorado market for itself.

25

These arguments are devoid of merit. Under the assignment of the Colorado Springs edition, the Zars were obligated to purchase 3,000 magazines each week. The Denver Distributorship Agreement required a minimum purchase of 5,000 magazines each week. The Zars testified that they combined the Denver and Colorado Springs editions into one magazine because they felt that it was more economical to deal with 8,000 copies of one magazine rather than two magazines.

26

When the Zars asserted, in early 1980, that they were required to purchase only 3,000 magazines, Travelhost responded that they must either purchase the 8,000 minimum or supply documentation to support the entitlement to fewer copies. Despite the Zars’ failure to comply with these alternatives, Travelhost made a number of other offers, such as to provide the Zars with magazines at no charge for one year, in the hope of avoiding trouble. The Zars rejected all overtures. It was not until May 1980, after three shipments of magazines had literally been left sitting on shipping docks, that Travelhost exercised its contractual right to terminate the Zars’ distributorships.

27

Nothing in the record supports the Zars’ claims of anticipatory repudiation or ulterior motives in connection with their termination: on the contrary, the record indicates that Travelhost made numerous efforts to keep the Zars as distributors and ended the association only after the Zars refused to deal with Travelhost at all. As Travelhost did not breach the distributorship agreement, there was no fact issue on wrongful termination requiring resolution by the jury.

28

The judgment of the district court is AFFIRMED.

*

Circuit Judge of the Second Circuit, sitting by designation

1

As this disposes of this issue, we need not consider the Zars’ contention that the district court improperly excluded evidence of a 30% rate of turnover in Travelhost distributors. Such evidence, even if probative of the falsity of the representation, would not have shown any intent to induce, and thus a directed verdict on this issue would have been necessary in any case

THERE’S NOTHING WRONG WITH WHAT TRAVELHOST DOES I GUESS, EVEN THIS PARTICULAR FEDERAL JUDGE LET IT GO.  NO ONE IS OUT THERE TO PROTECT INNOCENT PEOPLE FROM TRAVELHOST MAGAZINE! 

THE PUBLISHER’S ADVOCATE HOPES TO HELP BY PROVIDING THE INFORMATION YOU NEED TO PROTECT YOURSELF.

Has Travelhost been in court over any of this?

November 19, 2009

They just may have. Another question best answered by pasting a copied portion of Jeff Loudon’s “Travelheist Investor’s Blog” from earlier this year:

“Travelhost has been beaten in Court before…Badly
This is a follow-up to my May 3rd post as it relates to the Barton case where Travelhost was sued in 2005. The outcome disappeared, but I seem to have some new friends. An anonymous writer sent me this press release. (below)

I specifically disclaim any representation that this is in fact accurate. However, I spoke with Theodore Anderson, the managing partner of the law firm, who confirmed that a jury did make a substantial award against Travelhost in 2006. He also did not deny the sum of $588,000. He said it’s a matter of public record. He also said that they later settled the case and can’t say anymore….sounds like a typical TH arrangement to me.

“DALLAS, TX – April 12, 2006 – The Dallas County District Court for the 101st Judicial District a judgment for an award of $588,000 plus court costs in damages for fraud, fraudulent inducement, and negligent misrepresentation in favor of John E. Barton and J. Barton Associates, Inc. against Dallas based TravelHost, Inc, whose Founder and Chairman, James E. Buerger, served one term on the Dallas City Council from 1989 – 1991.

TravelHost, Inc., a 38 year old, national publishing corporation based in Dallas with over 100 markets in the United States, filed suit accusing Mr. Barton, an individual associate publisher with a long and honorable military record, and his company of breach of contract and breach of a non-compete agreement. A jury found that Mr. Barton and his company did not breach the agreement, and found in Mr. Barton’s favor on the counterclaims that he had been fraudulently induced into entering into the agreement with TravelHost,

Ted Anderson, Managing Partner with Kilgore Kilgore and lead defense counsel in the case, remarks, “With the economic utility of non-compete cases a subject of much discussion in the media recently, this case sets in motion an important precedent. David has triumphed over Goliath.””

So, it appears that Travelhost HAS been questioned about past business practices. Thanks, Jeff, for explaining this to us. Was anyone made aware of this before they bought into their local market?

Anyone?