Meineke Car Care Center

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Meineke is a company which runs a franchise chain of automotive service centers. Sevices offered at Meineke include replacing mufflers, brake work, oil changes, and other basic automobile maintenance. George Foreman has been the spokesperson for Meineke since 1993. [1]

The company was started in 1972 in Houston, Texas by Sam Meineke, and the company was originally named "Meineke Discount Muffler Shops". In 1986, the company moved its headquarters to Charlotte, North Carolina. In 2003, the company changed its name to "Meineke Car Care Centers" to reflect a broadening of services provided. [2]

In 1993, a group of Meineke franchisees filed a class-action lawsuit against Meineke, its in-house advertising company and several corporate officers, as well as its parent company, the British conglomerate GKN plc. Under its franchise contracts, Meineke promised that it would serve only as a conduit of the advertising funds and would use all the money to place ads. However, in 1986, Meineke brought the advertising in-house with the establishment of a subsidiary, New Horizons Advertising. The class-action suit alleged that Meineke misappropriated millions of dollars by secretly retaining discounts on advertising as commissions. The franchisees claimed that money contributed by them (the franchisees) was fraudulently diverted to GKN plc and GKN Parts Industries Corp. The franchisees claimed they were defrauded because Meineke had led them to believe that New Horizons would not be charging commissions and would not be operating at a profit. Judge Robert D. Potter said that Meineke had a fiduciary duty to ensure that franchisee’s funds were properly managed. In 1996, in Broussard v. Meineke Discount Muffler Shops, a North Carolina federal court jury ruled that Meineke had a fiduciary duty to insure that franchisee advertising funds were properly managed. The award of $347 million (the largest verdict in the history of franchising) was subsequently set aside by an appeals court on the technical issue regarding the combination of ‘classes” within the lawsuit. However, rather than face the retrial of the case, the parties settled the case for an undisclosed amount. The issues in this landmark case continue to be pertinent and is often cited in franchise and contract cases.