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Luxury Danish furniture-maker BoConcept has formally requested a federal court to compel arbitration in Denmark regarding a $25 million fraud lawsuit filed by two businessmen who purchased franchise rights to three Southern California stores.

In a recent court filing, BoConcept emphasized that plaintiffs Michael Webster and James Lunsford, described as “sophisticated businessmen,” were fully aware of the arbitration clause embedded within their franchise agreement before initiating litigation two months ago.

The plaintiffs allege that BoConcept misrepresented the profitability of the Southern California stores, which were reportedly losing money. BoConcept’s filing refutes this, asserting the existence of a clear contractual agreement to arbitrate any disputes under Clause 27 of the franchise agreement and related appendices. Additionally, BoConcept noted that a prior agreement to litigate disputes in Kansas was waived under the terms of the parties’ deal.

“We maintain that there was a clear meeting of the minds: all claims raised by plaintiffs are subject to arbitration pursuant to the franchise agreement,” BoConcept stated in its brief.

Webster and Lunsford initiated the lawsuit in May, accusing BoConcept and its executives of concealing critical financial information, overstating store profitability, and misrepresenting cost of goods sold. The complaint also highlights issues with product quality, including furniture manufactured in China that suffered damage during transit.

As a result of these alleged misrepresentations, the plaintiffs claim they face significant financial losses and operational challenges under the franchise agreement.

The case, Exceptional Capital Inc. et al. v. 3i Group PLC et al., is currently pending before the U.S. District Court for the Central District of California under case number 2:25-cv-05457.