A Texas couple that formerly operated a GEICO insurance company office in West Allis is suing the company for fraud and alleging that Maryland-based GEICO has violated several requirements under the Wisconsin Franchise Investment Act.
Balamurali “Bala” Rajaraman and his wife Jacqueline Hill formed ANRI Insurance Agency, Inc. in 2019 in order to operate their GEICO location at 3020 S. 108th St. in West Allis.
A civil lawsuit filed Friday in Wisconsin’s Eastern District alleges GEICO violated federal and state franchise regulations, resulting in the couple losing $1.2 million.
GEICO sells insurance policies to what the company calls “local agents” across the country. Rajaraman and Hill argue that local agents are actually just franchisees. The couple alleges GEICO failed to provide them with any sort of franchise disclosure document before they opened their West Allis location and that the company provided them with an excel spreadsheet with pre-determined formulas as inaccurate projections for the profits they would bring in if they opened a West Allis franchise.
Rajaraman has worked for GEICO in various roles since 2022. In early 2017, the complaint states he was approached by the company to gauge his interest in opening a GEICO field office. He initially declined but changed his mind after being sent financial expectation projections. The complaint states the couple was told they would earn $1 million in their first year.
“The pro forma projections included a number of false statements, including gross understatements of the marketing and overhead costs, and gross overstatements of net income levels of operating the Wisconsin franchise,” according to the complaint.
It was based on these projections that Rajaraman and Hill, who were living in Texas at the time, moved to Wisconsin to open a GEICO field office. The complaint states the couple established a separate business to run the field office -- ANRI Insurance Agency, Inc.
Throughout the process of opening the field office, the couple say they spent thousands of dollars in startup costs, equipment fees and unanticipated build-out costs. Once up and running, the West Allis field office never reached the financial performance projections Rajaraman and Hill were promised, according to the complaint. The couple asked GEICO to increase marketing efforts, but this allegedly never happened, leading to their contract with GEICO being terminated.
“GEICO violated the Wisconsin Franchise Investment Law by entering into a franchise agreement with ANRI and by failing to register with the State of Wisconsin as a franchisor as required by the Act,” according to the complaint. “Finally, GEICO’s unilateral termination of the applicable franchise agreement without good cause is a violation of the WFIL.”
Rajaraman and Hill are seeking damages in the amount of $1.2 million as well as compensation for any work their staff provided GEICO without compensation.
GEICO did not immediately respond to a request for comment on Monday.