Rita's Water Ice says franchisee selling unauthorized sweet treats

A popular Italian ice franchise alleges a Florida business is misleading customers during the sale of its sweet treats by attempting to pass knock-off brands as the franchise’s own.

Rita’s Water Ice Franchise Company filed a lawsuit April 17 in U.S. District Court for the Eastern District of Pennsylvania against Annie L. Bobenreith, Keith E. Bobenreith and Ronald Henkel.

In its complaint, Rita’s alleges it has discovered that the Bobenreiths have continued to sell unauthorized products, such as custard, bottled water and waffle cones, under Rita’s name, even though the company has prohibited the defendants from doing so.

The defendants had been given authorization to sell Rita’s products when they entered into a 10-year franchise agreement with Rita’s. Under the terms of the agreement, the defendants agreed to use only Rita’s mixes, “recognizing that the Rita’s mixes ‘are essential to the preparation and taste of the proprietary products’ and that the use of the Rita’s mixes is an ‘essential part’ of the operation of the franchised business,” according to the complaint.

However, when Rita’s management visited the Florida establishment on Sept. 22, they discovered that the defendants were using non-authorized items under the guise of Rita’s products, the suit states. The defendants continually hid and lied about their use of the unauthorized merchandise in record books, which they were required to supply to Rita’s on a regular basis, the complaint says.

After its discovery, Rita’s owners claim they decided to terminate their franchise agreement with the defendants on Sept. 17. In their termination notice, the defendants were told that they had to take down the Rita’s sign from the front of their business, had to stop using Rita’s confidential information to run their business and had to refrain from operating a competing business.

Although they were given frequent requests following the termination notice, the defendants allegedly refused to take down the Rita’s sign from the front of their premises and to stop using Rita’s trademarks, according to the complaint.

In November, Rita’s learned that a competing business named Aloha Ice was offering similar products, such as Italian ice, soft serve ice cream, custard, milkshakes and gelati, for sale at the same location as the old Rita’s franchise, the suit states. When Rita’s questioned the defendants about their involvement with Aloha Ice, the defendants denied having anything to do with the company, the complaint says.

However, Rita’s later learned that Annie L. Bobenreith was selling Italian ice out of an Aloha Ice cart at an event in Rita’s franchise territory. Therefore, Rita’s was prohibited from selling its products at the event, according to the complaint.

“Following further inspection by Rita’s, it was discovered that defendant Annie L. Bobenreith works at Aloha Ice regularly despite defendants’ assertions that they have no involvement with Aloha Ice,” the suit states. “When Rita’s personnel asked an Aloha Ice employee if their company was new, the employee replied, ‘We just changed the name.’”

During additional visits, Rita’s workers found out that Aloha Ice was continuing to use Rita’s signs at the front of its business and its custard machines, the complaint says.

Rita’s alleges the defendants engaged in trade dress infringement and unfair competition and violated their non-compete clause. In addition, they breached their contract, according to the complaint.

In its complaint, Rita’s seeks a preliminary and permanent injunction that would order the defendants to immediately stop operating their Aloha Ice business and another injunction that would prohibit them from using Rita’s name and from violating the terms of their non-compete clause. It also seeks costs, attorneys’ fees and other relief the court deems just.

Henry E. Van Blunk and Bianca A. Roberto of Stark and Stark in Yardley will be representing it.

U.S. District Court case number: 2:13-cv-2051.