Honey Dew Donuts has faced multiple legal challenges in recent years, with allegations ranging from fraud and misrepresentation to breach of contract. These cases have raised concerns about the company's business practices and its treatment of franchisees.
Court filings in various lawsuits have alleged that Honey Dew Associates, Inc. has utilized related entities to obscure its financial performance and reduce its reported net income. The following related parties have been identified in court documents:
■ Bowen Investments, Inc. – A real estate holding company that owns properties leased to Honey Dew franchises and other businesses.
■ BRI, Inc. – Another real estate entity associated with Honey Dew's founder, Richard J. Bowen, which manages franchise property investments.
■ Honey Dew Operations, Inc. – An entity that operates a training store for franchisees. It has been alleged that this entity helps shift income and expenses away from Honey Dew Associates, Inc., reducing the company's reported net income.
Franchisees and other parties have claimed in court filings that this arrangement benefits the Bowen family while making Honey Dew Associates, Inc. appear less profitable than it truly is. These allegations suggest that this structure places additional financial burdens on franchisees while limiting transparency into the company's true financial health.
Allegations Against Marc Cohen, CPA
Court filings have also accused Marc Cohen, CPA, of serving simultaneously as the company's auditor and Chief Financial Officer (CFO) for Honey Dew Associates, Inc. Plaintiffs in lawsuits have argued that this dual role constitutes a conflict of interest, undermining the independence of the company's audits. Specific allegations include:
Manipulation of Financial Statements – Claims that financial statements prepared under Cohen's oversight were designed to mislead franchisees and potential investors. Lack of Transparency – Accusations that Cohen concealed or failed to disclose transactions between Honey Dew Associates, Inc. and its related parties, such as Bowen Investments, Inc. and BRI, Inc. These allegations have been raised in lawsuits such as Leigh Holdings, LLC et al. v. Honey Dew Associates, Inc. and Goldman et al. v. Honey Dew Associates, Inc., where franchisees claimed to have suffered financial harm due to these practices.
Ouroboros Group Lawsuit
One prominent lawsuit was filed by Leigh Holdings, LLC d/b/a Ouroboros Group and its affiliates against Honey Dew Donuts, founder Richard J. Bowen, and associated entities. The plaintiffs accused the company of:
■ Falsifying financial documents.
■ Misrepresenting income.
■ Violating federal franchise regulations (16 CFR 436.6(a) & 16 CFR 436.5(u)(1)).
The lawsuit further alleged that Honey Dew Donuts, through its legal and financial representatives, fabricated evidence, submitted perjured affidavits, and committed wire fraud (18 U.S.C. § 1343). Discovery revealed claims of unethical practices, including the manipulation of advertising funds, the presentation of false audited financials, and the fraudulent inducement of franchisees into agreements. This case ultimately settled out of court (Leigh Holdings, LLC et al. v. Honey Dew Associates, Inc., Civil Action No. 2284cv01901-BLS1, Suffolk Superior Court).
Franchisee Lawsuits
In addition to the Ouroboros Group case, several other franchisees have filed lawsuits against Honey Dew Donuts. For example, in Goldman et al. v. Honey Dew Associates, Inc., filed in Norfolk Superior Court (Civil Action No. 2482CV00149), franchisees alleged that the company provided false financial statements to induce them into purchasing franchises. The plaintiffs claimed that Honey Dew Donuts knowingly misrepresented its financial condition, violating Massachusetts state laws and causing significant financial harm.
Impact on Reputation
The growing number of lawsuits, combined with allegations of financial manipulation through related parties and conflicts of interest, has raised concerns about Honey Dew Donuts’ business practices. These controversies could potentially harm the company's reputation and its standing as a leading regional coffeehouse chain in New England.
