A lawsuit over contract agreement and competition disputes between the state licensee of ActionCOACHand former franchisees Tom and Jim Palzewicz has been settled.
The lawsuit was filed in September 2019 by Canal Winchester, Ohio-based Buji Inc. against the Palzewicz brothers, who opened ActionCOACH of Elm Grove in 2004 and rebranded the business coaching firm to Strategic Business Center in May 2019.
"The parties have come to an amicable agreement and are parting ways with mutual respect and on good terms," according to a joint statement by both Tom Palzewicz and Craig Hohnberger, who is the sole owner of Buji LLC. Palzewicz sent the statement to BizTimes Milwaukee via email. Additionally, Hohnberger thanked the Palzewiczs for their "leadership and vision" as ActionCOACH franchisees and wished them well "on their new ventures." Palzewicz said they are proud of their work and thanked ActionCOACH for the "invaluable knowledge and strong relationships" gained over the past 15 years.
According to court documents, the case closed on Feb. 14 in the U.S. District Court for Eastern Wisconsin Milwaukee Division.
The original complaint alleged the Palzewiczs had been "ignoring their contractual commitments” since 2015 and “fraudulently failed” to report revenue and misrepresented information in an attempt to reduce royalty payments, which resulted in underpayment of more than $120,000 excluding late fees and interest.
The complaint alleged the Palzewiczs made misleading claims that Tom Palzewicz would no longer personally coach clients, first in 2015 to instead focus on managing his separate limited liability company, ThreeP LLC, and other coaches, and later in 2017 while he campaigned for Congress.
It also alleged the partners broke a contractual non-competition agreement when ActionCOACH Elm Grove rebranded in May 2019 without corporate approval, months before the franchise agreement was set to terminate on September 30, 2019.
The Palzewiczs filed a counterclaim on Dec. 2, 2019 denying the allegations and citing several instances of communication with Buji, in an attempt to demonstrate both parties had been on the same page about certain services offered at the Elm Grove franchise location and the Palzewiczs' plans to continue the business coaching firm without ActionCOACH intellectual property.
According to the counterclaim, Tom worked as an independent contractor for the franchisor, ActionCOACH North America LLC from January of 2015 through August of 2016, with the full knowledge of Buji. His worked focused on helping the company create "efficient and effective systems and tracking in preparation of creating a world-wide firm."
"This firm idea was abandoned and ActionCOACH North America, LLC still owes Tom $190,000," the counterclaim reads.
It appears the Strategic Business Center website has been taken down.