Good Olde Fashioned Whistle Blowin' from the Crows Nest
Sea Tow's lawyers filed four pages explaining why nobody may see the franchise sale records. Along the way, they described the entire franchise sale operation. Meanwhile, the SBA Franchise Directory has an empty line where Sea Tow used to be.
Six years and two months ago, Sea Tow filed a lawsuit claiming some $2.2 million in damages across its counts. What survives today, after Judge Seybert's rulings and six years of attrition, has been reduced to its essence: a dispute over sixty days of billing and a paint job. As for the Jaegers' countersuit — it has traveled in the opposite direction. Their New York Franchise Sales Act claims under §683 survived Judge Seybert's September 2022 gauntlet intact, along with their Florida claims and their third-party claims against Mitchell Stein and Joseph Frohnhoefer III personally — the general counsel and the CEO, named in their individual capacities, still on the hook as the case sails toward dispositive motions. (One count, the §687 fraud claim, was dismissed in the same ruling; we keep our ledgers honest.) Sea Tow's case shrank. The case against Sea Tow's people did not.
This month, the company's lawyers sat down to write a letter to Magistrate Judge Steven I. Locke. The assignment was simple: convince the Court that the Jaegers should not be allowed to see documents about the sale and valuation of comparable Sea Tow territories. And so did the Jaegers' attorneys — but we can't read that document. (We'll explain that later.)
The letter — Docket Entry 322, filed August 25, 2026, signed by Daniel Gildin of Kaufmann Gildin & Robbins LLP — makes certain procedural arguments. We'll get to those, because fairness demands it.
But to make those arguments, the letter had to describe the thing being hidden. And the thing being hidden, described in Sea Tow's own counsel's own words, sure sounds a lot like a franchise system.
We remind you, as always: Sea Tow's official litigation position is that the Jaegers never had a franchise. They had, per this very letter, merely "agreed to manage the Sea Tow Tampa Bay business owned by STSI."
A Frochise™, if you will. Now watch what the same four pages concede.
STSI-2675. Produced four years ago. It contains, in Sea Tow's counsel's words, "the methodology and multiples for calculation of franchise territory value based on sales over the previous eight (8) years and twenty eight (28) transactions."
Read that again. Twenty-eight transactions. Eight years. Standing valuation multiples. That is roughly three and a half territory deals per year — a routine, systematized secondary market in Sea Tow territories, complete with a formula. The letter adds: "Those multiples have not changed since production." The formula isn't historical. It's current.
We ask, as an open question for sworn testimony: What kind of company that does not sell franchises maintains a standing franchise-territory valuation formula derived from twenty-eight franchise-territory transactions?
The letter uses "franchise," "franchised territories," and "franchise territory value" throughout — no scare quotes, no "so-called," no hedging. The Jaegers' request is described as seeking documents about "comparable A-Tier Sea Tow franchised territories," and STSI's objection is timeliness, not vocabulary.
By opposing on timeliness and comparability grounds — rather than saying "no such documents exist" — the letter implicitly confirms that Sea Tow maintains a tiered territory classification system with "A-Tier" as a formal category, and that A-Tier transactions occurred in the 2019-to-present window. You don't argue about whether documents should be produced if the documents aren't real.
The letter argues the Jaegers don't need comparable sales because they already have "the documents and testimony showing the amount paid by H2FRO, Inc. to purchase the franchise in 2022. This is the best possible evidence of the value of the Tampa Bay franchise."
H2FRO, Inc., faithful readers will recall from the Crew Dossiers, is the Florida entity (Doc. P22000014445, of Gibsonton) whose President and Secretary is Joseph Frohnhoefer III — Sea Tow's own principal — with Kristen Frohnhoefer as Vice President and Treasurer. So the "best possible evidence" of the territory's market value is a transaction in which the boss's company bought the territory from the company the boss runs.
Open question for sworn testimony: Is a related-party purchase — buyer and seller controlled by the same family — really "the best possible evidence" of fair market value? Or is that precisely why one might want to see the twenty-eight arm's-length comparables?
In arguing that other territories are "too far removed" to be comparable, the letter lists what makes territories different: "number of members, customers, assets, equipment and seller motives." That is an admission that Sea Tow territories are valued as going-concern businesses with transferable member bases and customer relationships — the kind of value an operator builds. Which sits awkwardly beside the claim that the Jaegers built nothing and merely minded the store.
To justify confidentiality, the letter states the requested documents "include information that relates to other present and former franchisees, all of whom are relying on STSI to maintain individual and collective confidentiality."
Sea Tow, in a case where its central position is that its arrangements are not franchises, here describes itself as the trusted custodian of confidential financial data for a body of "present and former franchisees." That is franchisor language, describing a franchisor relationship, in a franchisor's own court filing.
Thirty days from expert disclosures, STSI told the Court: "STSI does not even know the Jaegers' damages theory, so it does not yet know what documents, if any, it will use to counter that theory."
We invite you to read that alongside what the same letter says one page earlier. Arguing relevance, Gildin writes that the Jaegers "have the formula and they have the documents and testimony showing the amount paid by H2FRO, Inc. to purchase the franchise in 2022. This is the best possible evidence of the value of the Tampa Bay franchise" — and that prices for other territories "are too far removed to be relevant" to "their alleged damages."
Hold both in your head at once. Page three identifies the best possible evidence for the Jaegers' damages theory and argues what is and is not relevant to it. Page four says STSI does not know what the theory is. You cannot rank the evidence for a theory you do not know. You cannot rule comparables irrelevant to a theory you do not know.
And the docket keeps score. On March 19, 2024, Judge Locke ordered that "the parties will exchange damages documents" to further settlement talks — talks that ran through three court-ordered mediation stays across 2024. On December 29, 2025, the Court catalogued, by Bates range, the monthly and yearly P&Ls and federal and state tax returns the Jaegers had produced, while affirming that STSI "is entitled to discovery as to Defendants' purported damages." And on February 25, 2026, Judge Locke overruled the Jaegers' objections to STSI's seventeen-subpoena campaign against their business contacts for one stated reason: "Plaintiffs are entitled to test the Jaegers damages assertions in this regard, which is what the subpoenas are directed toward."
Six months ago, STSI aimed seventeen subpoenas at the Jaegers' damages theory and told the Court that was the point. This month, STSI told the same Court it does not know what that theory is. You cannot aim an armada at a target you cannot see. Open question for the record: which filing does STSI stand behind?
We repeat our standing caveat: Judge Seybert already ruled in ECF No. 216 (Sept. 30, 2022) that Sea Tow's 15% revenue-share structure "fits comfortably within" the statutory definition of a franchise fee under New York law. Every fresh use of the F-word in Sea Tow's own filings is another plank in that deck.
The Management Agreement's payment structure fits comfortably within [the statutory definition of a franchise fee].ECF No. 216 at 28 · Sept. 30, 2022 · Seybert, J. — law of the case, whoever holds the gavel
And yet Sea Tow is still clinging to the argument that it is NOT a franchise — which, as we detail below, may well be why it no longer appears on the SBA's Franchise Directory. Understand why the company grips that position with white knuckles. If Sea Tow is a franchise, then it sold franchises — for decades, from New York — without the registration and disclosure the New York Franchise Sales Act requires. And the NYFSA is not a statute that shrugs. If that violation is adjudicated (a question still before the court, and we frame it as nothing more), the menu of consequences includes: private damages and rescission under GBL §691 — the unwinding of franchise sales, money back, with attorneys' fees on top; willfulness multipliers; enforcement by the New York Attorney General under §689, the office that already extracted an Assurance of Discontinuance from this same company, signed under oath by the founder, in 1989; and — we accuse no one of any crime, and we mean that — the Act does contain provisions addressing willful violations that no franchisor ever wants to read twice. Nor would the exposure necessarily stop at Tampa Bay: a finding that the system is an unregistered franchise is not a finding about one territory. It is a finding about a system — the same system with, per Sea Tow's own filing, twenty-eight territory transactions in the last eight years.
So here is where six years of litigation has actually delivered us. Sea Tow tells the court it is not a franchise. The court rules that its fee structure fits comfortably within the definition of a franchise fee. Sea Tow says no, still not a franchise. And then — in a single four-page letter, filed this month, on the public docket — Sea Tow describes its tiered franchise territories, its franchise valuation multiples, its twenty-eight franchise transactions, its franchise purchase by the CEO's own company, and its duties of confidentiality to its "present and former franchisees." As a bonus, that same letter shows the company monitoring — and, one might fairly ask, attempting to police — how its franchisees communicate and organize, the precise territory where the FTC's 2024 policy statement planted its flag. Whether any of that puts Sea Tow in hot water with the Federal Trade Commission is an open question, and we pose it as one. But every word of the predicate is on the record. In their own filing. Over their own lawyer's signature.
Buried at the end of DE 322 is the most remarkable passage of all — and we frame it carefully, because it is unsworn attorney assertion, not evidence.
Sea Tow's counsel told the Court that the Jaegers' lawyers are "actively involved in representing other Sea Tow franchisees," and that — per unnamed franchisee informants ("STSI has been advised by Sea Tow franchisees that...") — those lawyers have "formed an entity to compete with" FeNAC, the Franchisee National Advisory Council established under the Franchise Agreement itself. STSI "does not know precisely how many franchisees are participating."
Sit with what this passage concedes, even if every word of it is accurate:
Multiple Sea Tow franchisees have engaged, or are working with, the same counsel now suing Sea Tow's principals personally.
Enough franchisees are organizing outside the franchisor-controlled advisory council that Sea Tow felt compelled to report it to a federal magistrate judge.
Sea Tow is gathering intelligence on its own franchisees' legal organizing — through other franchisees — and deploying that intelligence as a reason to withhold discovery.
And here is where the regulators may wish to pay attention. The Federal Trade Commission's July 2024 policy statement took the position that franchisors may not use contract provisions — including confidentiality provisions — to restrict franchisees from communicating with government agencies, and expressed concern about franchisor retaliation against franchisees who organize or complain. We accuse no one of violating anything. But we pose the open question: When a franchisor characterizes its franchisees' collective retention of counsel as an "improper purpose" and a "fishing expedition" in a federal filing — how does that square with the FTC's stated concerns about chilling franchisee association?
(Franchisees with concerns of their own know where the channels are: the NY Attorney General's franchise complaint portal at ag.ny.gov/franchise-complaints, and the FTC at reportfraud.ftc.gov. We are a newsletter, not your lawyer.)
Now study the docket itself, because the shape of it tells a story the filings can't.
Rewind to DE 320, the July 27 minute order we covered in Episode XX. Judge Locke closed fact discovery but for one issue — this one — and set a precise schedule for it: the Jaegers serve their letter August 14, STSI serves its opposition August 24, and both get filed together on August 25. That's E.D.N.Y. bundling, executing exactly on time. And the docket confirms exactly what landed: DE 321 is the Jaegers' "Letter MOTION to Compel Damages Documents," filed by Brian Looser of Rosen Karol Salis — docketed as SEALED DOCUMENTS — and DE 322 is STSI's opposition, the four public pages we dissected above.
So there is no mystery about what is in the envelope — the docket names it. The mystery is why the envelope is sealed at all. We can offer informed speculation on that narrow question, clearly labeled as such — the following is our reading of the procedural posture, not a statement of fact:
To argue why the A-Tier comparables matter, the Jaegers presumably had to quote the confidential evidence they already hold — the STSI-2675 valuation spreadsheet, the H2FRO purchase documents, and quite possibly the March 2026 deposition testimony of Mitchell Stein, Joseph Frohnhoefer III, and Kristen Frohnhoefer. Recall from Episode XX that Sea Tow slapped a blanket confidentiality designation on its own deposition transcripts — a dispute DE 320 routed to Judge Kuntz, where it has not yet been resolved. Until it is, any brief quoting that testimony must travel in a sealed envelope. The Jaegers' motion is, on this reading, a hostage of Sea Tow's own designations.
The motion arguing for transparency about franchise territory sales is locked in a sealed envelope — likely because of the other side's confidentiality stamps. The opposition calling it a "fishing expedition" sits on the public docket for all the world to read.
One side's papers can be examined; the other side's cannot — and the side that can be examined is the one that got to characterize what's inside the envelope.
Whether those blanket designations survive scrutiny — courts in this Circuit require particularized, document-by-document justification to keep judicial records sealed, and "we'd rather you didn't read it" is not the standard — is, we'd wager, the next great fight of this case.
Judge Locke's July 27 order set this briefing at three-page letters. STSI's opposition — the letter arguing, at length, that the Jaegers must be held strictly to the Court's deadlines and limits — runs four pages.
We said without comment. We lied. That's the comment.
Longtime readers know the drift of our Dead Reckoning dispatches: every franchise brand listed on the SBA Franchise Directory as of May 11, 2023 had until June 30, 2026 to execute the SBA's Franchisor Certification — a signed representation about the brand's franchise documents — or be removed from the Directory. Per the SBA's own guidance, removal means the brand's franchisees lose eligibility for SBA-guaranteed loans.
The deadline has passed. We have checked the current, post-deadline SBA Franchise Directory.
Sea Tow is not on it.
Now think about what staying on the list would have required. An authorized Sea Tow representative would have had to sign a federal certification describing the Sea Tow system — its agreements, its franchisee-facing documents — as a franchise. Sea Tow would have had to put that signature on file with a federal agency in the same summer its lawyers filed papers in a federal courthouse arguing that its Tampa Bay operators "never purchased a franchise in the first place." The same summer Judge Seybert's ruling that Sea Tow's fee structure "fits comfortably within" the statutory franchise-fee definition sits as binding law of the case. The certification wasn't a form. It was a trap of Sea Tow's own construction — because the Frochise™ position and the federal signature cannot both be true.
We do not know — and we say so plainly — whether Sea Tow deliberately declined to certify, or whether the lapse was administrative. We have documented ourselves that the SBA's franchise inbox runs a stale autoresponder; bureaucratic entropy is real. Sea Tow is welcome to tell its franchisees which it was, and we will print the answer.
But notice that the fork only has two exits, and both are stories:
Then the company weighed its franchisees' access to SBA-backed capital against its litigation position — and the litigation position won. The empty line on the Directory is the receipt.
Then a company that describes itself in DE 322 as the trusted custodian of confidential data for "present and former franchisees" let the recertification deadline for those same franchisees' lending channel sail past unattended.
Diligence or design. Pick one. Neither is a compliment.
And here is what does not depend on which exit was taken. If you are a Sea Tow franchisee — or someone financing the purchase of one — the practical consequence is identical: SBA-backed capital is, as of now, off the table for Sea Tow franchise transactions. In a system where, per Sea Tow's own August 25 filing, territories trade hands roughly three and a half times a year against standing valuation multiples, losing the lending channel most small-business buyers use is not a footnote. It is a change in the market for the very A-Tier territories this month's discovery fight is about — the ones Sea Tow is fighting to keep the valuations of under wraps.
One more open question, and then we'll let it lie: is it coincidence that franchisee organizing — reported to the Court by Sea Tow itself in DE 322 — is surfacing on the docket now, in the first summer the Directory question has a hard answer?
Check the Directory yourself at sba.gov. Don't take our word for it. That's rather the point of this publication.
Our corrections policy demands we play this straight, so here is the honest state of the fight.
Discovery law has a cold rule at its core: once a scheduling order's deadlines pass, reopening requires "good cause" under Rule 16(b)(4), and the controlling question is not how important are the documents but how diligent was the party asking. If materiality alone could reopen discovery, no case would ever end. Judge Locke has enforced his deadlines ruthlessly for four years — against both sides. It was that very ruthlessness that denied Sea Tow's late motions to compel, produced the December 2025 "fishing expedition" ruling, and beached the subpoena armada. The deadline shield that has protected the Jaegers all this time is the same one Sea Tow now holds up. That is the sword-cuts-both-ways problem, and pretending it away would insult our readers.
Judge Locke already declined to kill this on timeliness. At the July 27 conference, he could have denied the request from the bench as untimely — he has done exactly that to late requests before, in far fewer words. Instead, he preserved it as the single carve-out from the fact-discovery close and ordered briefing on a schedule. Judges do not schedule briefing on questions they have already answered.
The need arguably arose when the expert did. The Jaegers' position is that this request serves their damages expert's report, due September 30 — a phase that is open. Documents whose necessity crystallizes when an expert engages are a recognized category, and Judge Locke himself, back in DE 262 (March 2024), acknowledged the Jaegers' "substantial claims for damages" and ordered damages-document exchanges. The court has treated damages discovery as a living category in this case before.
Sea Tow's own opposition guts its burden and prejudice arguments. DE 322 admits the valuation data exists, in organized form, in a spreadsheet already produced; that the multiples "have not changed"; and that twenty-eight transactions underlie them. Producing the transaction file behind a spreadsheet you already produced is not a burden. There is no trial date. Expert discovery is open. Where, exactly, is the prejudice?
And then there is the ruler problem. Sea Tow's position, stated plainly, is that the only valuation evidence the Jaegers need is the H2FRO transaction — the sale in which the CEO's own company bought the territory from the company the CEO runs. Every arm's-length comparable, Sea Tow argues, should stay sealed away. You may only measure your damages with the ruler we built, and we built it in-house. Courts are not generally fond of a party engineering exclusive control over the evidence by which its own liability will be measured. If Sea Tow's conduct caused the Jaegers' losses — a question for trial — then the fairness of the damages yardstick is not a technicality. It is the whole ballgame.
Finally, the confidentiality objection answers itself. Confidentiality is never a lawful basis to withhold relevant discovery — it is a basis to designate it. The protective order in this case exists for precisely this purpose; sensitive valuation data can go out attorneys'-eyes-only, and any genuine leak concern (FeNAC anxieties included) is addressed by a designation, not a denial. Sea Tow's final section is atmosphere, not law.
We will not place bets on how this motion will go, for the simplest of reasons: we can only read half of it. The Jaegers' moving papers sit under seal, and commenting on the odds of a fight when one side's brief is invisible would be guesswork dressed as analysis. What we can say is this: whatever Judge Locke decides, every admission catalogued above was made in a public filing, and no ruling on a discovery motion can un-say a word of it.
Hornswaggled is a work of journalism, commentary, and satire concerning matters of public record and public concern. "Frochise"™ is our satirical coinage. Satirical characterizations and editorial framing are opinion protected under the First Amendment and are not assertions of fact.
This dispatch is drawn from publicly filed documents and docket entries in Sea Tow Services International, Inc. v. Tampa Bay Marine Recovery, Inc., et al., No. 2:20-cv-02877-WFK-SIL (E.D.N.Y.) — specifically Document 322 (filed 08/25/26, PageID #: 12472–12475); the docket entry for Document 321 ("SEALED DOCUMENTS, Letter MOTION to Compel Damages Documents," filed 08/25/26; contents under seal and not reviewed); Document 320 (filed 07/27/26, PageID #: 12466); the Minute Orders at Documents 262 (03/19/24) and 314 (02/25/26); and the Court's Docket Orders of December 29, 2025, together with prior orders in the same action. SBA Franchise Directory status is based on our review of the Directory as published at sba.gov following the June 30, 2026 recertification deadline; readers should verify current status directly. All court filings are available through PACER at pacer.uscourts.gov.
Statements attributed to parties or counsel are characterizations of positions taken in court filings, not findings of fact by any tribunal. The FeNAC-related assertions in DE 322 are unsworn attorney statements. The identity of DE 321 as the Jaegers' motion to compel damages documents is taken from the docket text itself; our reading of why it was filed under seal, and of the reasons for Sea Tow's absence from the SBA Franchise Directory, are informed speculation clearly labeled as such. Questions posed in this dispatch are posed as questions. We accuse no one of a crime. All parties are presumed to be acting lawfully and retain every right and defense available to them.
Nothing here is legal advice. Franchisees, prospective franchisees, and non-parties with questions about their own rights should consult a licensed attorney experienced in franchise law who is not affiliated with any party to this litigation.
This dispatch was prepared with AI assistance from primary source documents. Readers should independently verify all citations, dates, and docket references against the original filings before relying on them.
Hornswaggled corrects errors promptly and in the open. Send documentation to the address below.