Kirin Hawley was drawn to the promise of healthy profits when she opened a Nautical Bowls franchise in Chanhassen in December 2022. But after suffering steady monthly losses, Hawley closed her store in October 2023.

Now Hawley is suing Nautical Bowls Franchising LLC, seeking to recover her losses of more than $500,000 for her short-lived smoothie-bowl outlet.

Her lawsuit claims Nautical Bowls misrepresented the financial possibilities of operating a franchise and opened a corporate-owned location and another franchisee-run location less than three miles away. Hawley charged she was promised a 22% profit margin on a Nautical Bowls franchise.

Because the lawsuit is active, Hawley declined to comment. Franchisees in Arkansas and California have raised similar issues in other lawsuits; the company denies the accusations.

Bryant and Rachel Amundson founded Minnetonka-based Nautical Bowls in 2018. They later brought in Peter Taunton, founder of Snap Fitness, to lead the company and start franchising the concept beginning in 2021. The Amundsons declined to comment on the specifics of the litigation.

There are now 72 Nautical Bowls locations in more than a dozen states, including 16 in the Twin Cities. There are plans for another 100 locations.

Bryant Amundson said twelve locations closed in 2023 after several opened the year before.

Taunton is no longer with the company and said he was voted out as CEO in June.

"As a minority shareholder, you can be voted out without cause," he said.

Taunton said his departure, first reported by Fox 9, was unrelated to lawsuits against the company, which predated his exit.

"This business was built on a set of values on how we operate and treat people to create the culture that this business was founded," Amundson said. "Peter did not live up to those values, so we parted ways."

Nautical Bowls sells acai bowls, which it promotes as a healthy, plant-based food.

Hawley's lawsuit said her business brought in $21,000 in sales per month, or annual revenue of $252,000. Hawley's complaint states Nautical Bowls Franchising advised the store could generate sales of $16,000 per week, which would be the equivalent of $832,000 a year.

A company brochure describing a "top performer" in 2022 listed about $1.1 million in sales and a $207,000 profit. A more recent brochure lists a sales range of $261,000 to $641,000 among two dozen locations.

"In 2022 there was a downturn in the economy; consumer spending habits changed," Taunton said. "There were a lot of things that created headwinds for the business, and that's unfortunate."

He said the cited 22% profit margin was accurate in 2022 franchise disclosures as a reflection of numbers from 2021.

Nautical Bowls Franchising did not turn a profit between 2020 and 2022, according to franchise disclosure documents. The franchisor, which is paid a royalty by franchisees, had about $930,000 in revenue in 2022 and reported a $47,000 loss.

In a July court filing Nautical Bowls Franchising LLC denied Hawley's allegations and made a breach of contract counterclaim against her for not signing a franchise termination agreement.

"As a result of franchisees' breach of the franchise agreement by this early termination, Nautical Bowls has suffered damages, including loss of royalties and franchise fees for the duration of the term of the franchise agreement," the filing says. The company did not specify an amount for its alleged damages.

Hawley's case is currently scheduled for trial in October 2025.

Meanwhile, Amundson said Nautical Bowls is continuing to focus on growth.

"We are doubling down on our franchisees and our support and training and marketing that we provide with the sole goal of franchisee profitability."