BOULDER, Colo. (BRAIN) — The former Colorado Multisport and Full Cycle owners are engaged in a legal dispute over the sale of the combined businesses to Mike's Bikes last summer.
Colorado Multisport owner Michael Stone filed a breach of contract lawsuit Feb. 16 in Boulder District Court alleging Full Cycle owner Russ Chandler stopped making payments as part of their transaction before selling it to Mike's Bikes. Through his MC2 LLC, Stone owned and operated Colorado Multisport inside Full Cycle. Stone is asking for a jury trial.
In an email, Chandler told BRAIN on Tuesday, "We are disappointed that Michael has chosen to pursue this path rather than resolve our differences through the constructive dialogue that defined our working relationship for many years. We have always valued our time together and wish him nothing but success. That said, the allegations in the complaint are without merit, and we look forward to addressing them fully in court."
BRAIN emailed the two attorneys representing Stone for comment, but as of Tuesday afternoon they have not responded.
According to the lawsuit, Chandler obtained control of CMS and managed the brand as part of Boulder Bicycle Holdings Inc. (BBH), operating as Full Cycle. Beginning in 2021, through a negotiated letter of intent, the businesses were combined. The lawsuit says Chandler "later represented to third parties that he owned and had the right to sell the CMS brand, despite acknowledging that he did not possess such authority."
The lawsuit states that the letter of intent required Full Cycle to pay CMS $3,000 per month for 36 months, 15% of EBITDA above $50,000 annually, and make full disclosure of Chandler's compensation, distributions, and Full Cycle financials.
According to the lawsuit the letter of intent specifies that Stone and MC2 would retain ownership of the Colorado Multisport trademark, with licensing to BBH expressly conditioned upon performance by Full Cycle. The CMS trademark would transfer only if all terms were met and the agreement was not terminated, and if it was, Stone would retain ownership. In addition, if BBH transferred ownership before Dec. 31, 2023, Stone would receive 15% of the sale's net proceeds.
Stone alleges in the lawsuit that Chandler made only sporadic and reduced payments and failed to pay any EBITDA-based compensation among other defaults. According to the lawsuit, Chandler admitted to Stone in writing that Full Cycle owed at least $47,000, that it had no cash or cash assets, and that payment was contingent on speculative future events.
Stone claims damages of:
- Unpaid contractual compensation exceeding $50,000.
- Theft and misappropriation of the CMS brand and goodwill.
- Reputational harm and business damages.
"Stone values the stolen Colorado Multisport name and goodwill at not less than $250,000, based on its long-standing market presence, years of branding in the Boulder and Front Range market, media recognition, high performing athlete recognition, and the value recognized by the purchaser when Chandler sold it," the lawsuit states.
Mike's Bikes, owned by Pon.Bike, re-opened Full Cycle last June under the new name. Mike's does not appear to be using the Colorado Multisport name. It's the fifth Mike's Bikes location in Colorado and 19th in the country.
Full Cycle dates to 1982, making it the oldest operating bike store in Boulder. For many years it was a mainstay in Boulder's University Hill area, then added a Pearl Street location and later moved to its current store on East Pearl Street. Chandler, an active member of the local cycling community, acquired the store with two partners in 2016.
