The Entrepreneur's Source, Terry Powell, CEO The Entrepreneur's Source Continues Fraudulent, Dishonest, & Deceptive Business Practices!! Southbury, Connecticut

Over on the Blue Mau Mau site I read about how Mr. Greenspan won his lawsuit against TES, and used Mr. Franchise, a franchise expert and attorney with Franchise Foundations, as his franchise expert in the case against TES. Franchise experts play an increasingly important role in these types of cases, educating arbitrators about what's right and wrong in various franchise practices and relationships. They help to level the playing field in arbitration, which generally favors the franchise companies.

Some of the most important things I've learned from looking into the TES and other similar cases are the following: (1) franchise litigation is very expensive and takes a long time to get a final result; (2) almost all of the franchise buyers who are victims failed to hire a franchise attorney up front, before investing hundreds of thousands (and in some cases millions) of dollars in their franchise; and (3) had they done adequate due diligence by a competent professional for a couple thousand dollars up front, they wouldn't get involved in questionable franchises to begin with.

I also found some very informative articles about these issues on the Franchise Foundations website at:

http://www.franchisefoundations.com/franchisearticlesii.html

THE ENTREPRENEUR'S SOURCE LITIGATION UPDATE

THIS IS JUST THE TIP OF THE ICEBERG. DOZENS OF OTHER TES FRANCHISEES HAVE FILED LAWSUITS AGAINST THE ENTREPRENEUR'S SOURCE AND CEO TERRY POWELL. YOU WILL NOTICE THAT POWELL IMMEDIATELY FILES A COUNTERSUIT AGAINST THE FRANCHISEE AS A MEANS OF INTIMIDATION. THIS IS NOT THE KIND OF FRANCHISE YOU WANT TO INVEST YOUR FUTURE! THEY HAVE HUNDREDS OF FAILURES! READ THE OTHER RIPOFF REPORTS ON THIS FRANCHISE!

Item 3
LITIGATION
Except as follows, no litigation is required to be disclosed in this Offering Circular.
In a civil action entitled Betty A. Campbell, Plaintiff v. TES Franchising LLC d/b/a The
Entrepreneur's Source, Defendant, Court of Common Pleas, Butler County, State of Ohio, Civil
Action No. CV-2001 06 1341, June, 2001, Plaintiff Betty A. Campbell (Campbell) commenced an action against Defendant TES alleging, among other things, unfair and deceptive practices, misrepresentation and conversion in connection with Campbell entering into a Consultant Franchise Agreement with TES. Campbell alleged losses in an amount that exceeds $25,000. TES denies the substance of Campbell's claims and has made a motion to stay litigation and compel arbitration in Connecticut, as required by the terms of the franchise agreement. The Court of Common Pleas
ruled that arbitration could not be compelled. TES appealed to the 12th District Court of Appeals. The appeal is pending.

On November 13, 2001, a Demand for Arbitration was sent by TES to Franchisee T. Barry
Stephens, TES v. T. Barry Stephens (Case No. 1211496701) pursuant to the American Arbitration
Association's Commercial Dispute Resolution Procedures. The Demand alleges breach of the
franchise agreement. Equitable relief and damages in excess of $100,000 Dollars are sought. On August 19, 2005, the arbitrator ruled in favor of TES on all counts stating that there was substantial testimony and significant proof in the record to indicate that the franchise system or product sold by TES is a workable product and that other Franchisee's have had success in purchasing and using the product and services of the franchise system. There was no award of monetary damages.

On November 13, 2001, in a nearly identical case filed by the same counsel as in T. Barry
Stephens, Plaintiff v. TES Franchising, LLC, The Entrepreneur's Source and Terry Powell,
Defendant, with identical issues, a Demand for Arbitration was sent by TES to Franchisee Steven
Zaks (Case No. 1211496801) pursuant to the American Arbitration Association's Commercial
Dispute Resolution Procedures. The Demand alleged breach of the franchise agreement. Equitable relief and damages in excess of $100,000 were sought. Zaks brought suit in the United States District Court for the District of Connecticut entitled Steven Zaks, Plaintiff v. TES Franchising,LLC, The Entrepreneur's Source and Terry Powell, Defendant, (Case No. 301 CV 2266 (JBA)).Zaks, like Stephens above, attempted to litigate the issues in court to avoid arbitration. Zaks'lawsuit was nearly identical to that of Stephens, filed by the same attorneys. On September 23, 2005, Mr. Zaks agreed to dismiss the District Court Case; and, in response to his request, TES agreed to a limited reinstatement of his franchise agreement for the purpose of transferring the franchise.

Mike Nadeau v. The Entrepreneur Source ("TES") v. Nadeau Consulting, LLC (Case Number 12 E
114 00374 04). On May 28, 2004, a Demand for Arbitration was sent to TES by Mike Nadeau, a
TES franchisee ("Nadeau"). Nadeau alleged, among other things, fraud, negligence, breach of
contract, violations of the Connecticut and Maine unfair trade practices acts, and violations of Maine's business opportunities law, each relating to the purchase of his franchise from TES. He sought damages not to exceed $75,000, rescission, restitution, costs and attorney's fees. TES filed a counter-claim against Nadeau and his company, Nadeau Consulting, LLC, alleging breach of the
franchise agreement. TES sought damages in excess of $150,000, interest, attorneys' fees and
costs. On or about November 18, 2004, the parties entered into a settlement agreement, under which they agreed to a mutual release of all claims, dismissal of the arbitration, and entry of a confidentiality and non-disparagement agreement. TES also agreed to reinstate Nadeau's
franchise agreement in order that he may transfer it to a third party, and to pay to Nadeau a $13,125 placement fee for the transfer of his franchised business. On November 19, 2004, the American Arbitration Association, the body selected by the parties to arbitrate this dispute, closed its files on the matter.

Michael Greenspan v. The Entrepreneur Source v. Sign Media Inc., (Case Number 12 E 114 00373
04). On May 28, 2004, a Demand for Arbitration was sent to TES by Michael Greenspan, a TES
franchisee. Greenspan alleges claims substantially similar to those asserted in the Mike Nadeau action described above and seeks substantially the same relief in the same amounts. TES has filed a counter-claim against Greenspan and his company, Sign Media, Inc., alleging breach of the franchise agreement. TES seeks equitable relief and damages in excess of $150,000, interest, attorneys' fees and costs.


In the matter of Ronald Bott, on January 21, 2003, a Demand for Arbitration was sent to TES by
Franchisee Ronald Bott (Case No. 03-01017-P). The Demand alleges wrongful termination of the
franchise agreement between TES and Mr. Bott. Prior to the agreement to arbitrate having been
ratified, Ronald Bott filed suit in the Superior Court of Connecticut for Fairfield County (Case No.CV-03-0198370-S). TES, having no objection, did not oppose the suit and, as of the date of thisOffering Circular, is scheduling arbitration. TES has, however, removed the suit from Fairfield County to New Haven County in compliance with Article 23.01 of the Franchise Agreement. The arbitrator has withdrawn for Mr. Bott's failure to comply with the arbitration rules.

In re: Fred Krastel, et al. and TES Franchising, LLC & Terry Powell, (American Arbitration
Association case number 12 114 000320 05). On February 8, 2005, a group of former franchisees
filed a Demand for Class Arbitration with the American Arbitration Association claiming that the respondents violated the Connecticut Unfair Trade Practices Act, Connecticut General Statutes
sections 42-110a, et seq., in connection with the sale of its franchises. The Demand alleges
deceptive and unfair disclosure to and solicitation of prospective franchisees, and impropriety in thefranchise opportunity validation process. The demand requests declaratory relief, damages,rescission, restitution, disgorgement and attorneys fees and costs. The respondents oppose theclass proceeding on the basis that the relevant franchise agreement does not permit class arbitration, that class arbitration is not an appropriate procedure for such claims and that the claimants are not adequate representatives of the putative class. The arbitration is pending, and no award has been made with respect to construction of the arbitration clause or the appropriateness
of class arbitration in this matter.

In the matter of Mitchell Pinckney, on April 14, 2005, a Demand for Arbitration was filed by Mitchell Pinckney, a TES franchisee, for administration by the American Arbitration Association (Case Number 12 114 Y 00213 05) alleging that TES breached his franchise agreements and terminated him without proper notice or requisite cause and that TES violated Connecticut General Statutes sections 42-110b and 42-133f. TES has asserted counterclaims against Mr. Pinckney alleging that he breached the franchise agreements and that he tortiously interferred with TES's contract rights.
On April 19, 2005, Mr. Pinckney filed an action in the Connecticut Superior Court for the Judicial District of New Haven (Docket Number CV-05-4009919) based on the claims contained in the
Demand for Arbitration and seeking an Order to Show Cause why TES should not be enjoined from
terminating the franchise agreements. On September 6, 2005, Mr. Pinckney agreed to dismiss the Demand for Arbitration and Connecticut Superior Court claims; and, in response to his request, TES agreed to reinstate his franchise agreement and pay him for certain placement fees.

TES Franchising, LLC v. Walter Porterfield, (AAA Case Number 121140014505). On March 10,
2005, TES filed a Demand for Arbitration under the American Arbitration Association Commercial
Dispute Resolution Procedures against its franchisee Walter Porterfield, seeking relief from Mr. Porterfield for numerous breaches of his Consultant Franchise Agreement, and for tortuous interference with TES' contractual rights. On October 7, 2005, Mr. Porterfield filed an answer in this matter and asserted counterclaims against TES alleging violations by TES of the Connecticut Unfair Trade Practices Act. No further action has taken place in this matter. TES intends to pursue its claims against Mr. Porterfield, and to vigorously defend against his counterclaims.

TES Franchising, LLC v. Richard Feldman, (Case Number CV05-4013191). On July 20, 2005, TES
filed a complaint in the Connecticut Superior Court for the Judicial District of New Haven seeking injunctive relief and damages against a former franchisee, Richard Feldman, as a result of Mr. Feldman's breach of a confidentiality and non-disclosure agreement with TES. Mr. Feldman filed an answer in this matter on August 9, 2005 and asserted counterclaims against TES alleging
violations by TES of the Connecticut Unfair Trade Practices Act, and breaches by TES of the
confidentiality and non-disclosure agreement. On October 14, 2005 after a full hearing, a temporary injunction was issued against Mr. Feldman ordering him to comply with all of the terms of the agreement between the parties. The court found that there is a reasonable probability that TES will succeed at trial in proving its claim that Mr. Feldman violated the confidentiality and non-disclosure agreement and that Mr. Feldman has caused irreparable harm to TES. No further action has taken place in this matter. Other than these 10 actions, no litigation is required to be disclosed in this offering circular. Neither we, nor any franchise broker in Item 2 have been convicted of or pleaded Nolo Contendere to a felony within the last 10 years or is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities Exchange Act of 1934, 15 U.S.C.A. 78a et seq., suspending or expelling these persons from membership in this association or exchange.