On September 16, 2020, Rohit Chopra, one of the five commissioners on the Federal Trade Commission (FTC), declared on Twitter that “[franchise] regulators must stop unfair, deceptive, and discriminatory practices that target...more
In a misappropriation of trade secrets action, a franchisor sued a prospective franchisee, claiming breach of a non-disclosure agreement ("NDA") by operating a competing business. The prospective franchisee signed the NDA...more
Franchisors and franchisees in California have long conducted themselves based on precedent that voids post-termination covenants against competition in a franchise agreement in California. Recently, a franchisor’s ability to...more
8/31/2020
/ Anti-Competitive ,
Business & Professions Code ,
Exclusive Dealing Agreements ,
Franchise Agreements ,
Franchises ,
Franchisors ,
Non-Compete Agreements ,
Pharmaceutical Industry ,
Restrictive Covenants ,
Rule-of-Reason Analysis ,
Scope and Duration of Restrictive Covenant ,
Void and Unenforceable
A Florida federal court granted a preliminary injunction against a terminated franchisee. The court enjoined the ex-franchisee from using the franchisor’s trademarks and trade dress. The court enforced the franchisor’s...more
8/4/2020
/ Breach of Contract ,
Employee Relocations ,
Franchise Agreements ,
Franchise Termination ,
Franchisee ,
Franchisors ,
Non-Compete Agreements ,
Non-Parties ,
Preliminary Injunctions ,
Restrictive Covenants ,
Successor Interests ,
Successor Liability ,
Trade Dress ,
Trademark Infringement ,
Trademarks
A Massachusetts state court ruled that real estate franchisor, Re/Max of New England (Franchisor), breached its franchise agreements, the implied covenant of good faith and fair dealing and violated Massachusetts’ consumer...more
A federal court in Missouri ruled that a franchisee’s fraud claim cannot be based on the franchisor’s prediction at a franchise expo of future success in the franchised business....more
5/29/2020
/ Burden of Proof ,
Dismissals ,
Due Diligence ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Fraud ,
Misrepresentation ,
Negotiations ,
Puffery ,
Reasonable Reliance Claims ,
Trade Shows
A federal appeals court reversed dismissal of a claim against a barbeque restaurant franchisor. The court found that, despite having signed releases in favor of the franchisor, a former franchisee had valid claims for...more
5/5/2020
/ Actual Malice ,
Appeals ,
Breach of Contract ,
Business Partners ,
Buyouts ,
Covenant of Good Faith and Fair Dealing ,
Dismissals ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Franchisors ,
Fraud ,
Restaurant Industry ,
Reversal ,
Tortious Interference ,
Unfair or Deceptive Trade Practices ,
Waivers
A federal district court in Michigan granted a preliminary injunction in favor of tax preparation franchisor, Liberty Tax Service (JTH Tax, Inc. v. Magnotte, E.D. Mich., ¶16,575), finding it was likely to succeed on its...more
5/1/2020
/ Anti-Competitive ,
Breach of Contract ,
Contract Termination ,
Customer Lists ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Franchisors ,
Irreparable Harm ,
Loss of Goodwill ,
Lost Profits ,
Non-Compete Agreements ,
Preliminary Injunctions ,
Tax Preparers
A federal court in Cleveland rejected a California franchisee’s claim that an Ohio-based ice cream franchisor violated the California Franchise Investment Law (CFIL). The claim failed because the franchisee could not show it...more
4/3/2020
/ Actual Damages ,
Causation ,
Damages ,
Franchise Agreements ,
Franchise Disclosure Document ,
Franchise Investment Acts ,
Franchisee ,
Notice Requirements ,
Rescission ,
Statutory Violations ,
Willful Violations
A federal court in Alabama denied an urgent care franchisee’s motion to dismiss a suit brought by its franchisor. The franchisee argued the franchise agreement required suits to be brought within a one-year period. But the...more
2/28/2020
/ Acquisitions ,
Choice-of-Law ,
Conflicts of Laws ,
Express Contract Terms ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Limitation Periods ,
Motion to Dismiss ,
Rebranding ,
State Law Claims ,
Statute of Limitations ,
Unenforceable Contract Terms
Many will recall the 2018 national outbreak of E. coli bacteria linked to romaine lettuce. In April that year, an Ohio franchisor ordered its restaurants to stop serving romaine lettuce and dispose of any remaining romaine...more
2/27/2020
/ Appeals ,
Commercial Bankruptcy ,
E-Coli ,
Failure to Comply ,
Food Contamination ,
Food Poisoning ,
Food Safety ,
Franchise Agreements ,
Franchise Termination ,
Franchisee ,
Franchisors ,
Notice of Emergency Action ,
Public Health ,
Public Safety ,
Reaffirmation ,
Safety Violations
A Wisconsin pizza maker, Heggie’s Pizza (Heggie’s) argued that its relationship with a purported pizza distributor A & B Distribution (A&B), did not meet the Wisconsin Fair Dealership Law (WFDL) definition of a “dealership.”...more
2/5/2020
/ Breach of Contract ,
Community of Interest ,
Contract Termination ,
Dealerships ,
Distributors ,
Food Manufacturers ,
Food Safety ,
Franchise Acts ,
Franchise Agreements ,
Franchisee ,
Good Cause ,
Notice Requirements ,
Oral Contracts ,
Right To Cure ,
State Law Claims
The Ninth Circuit ruled that a California Matco Tool franchisee, John Fleming, could bring a class action wage and hour suit in California, even though a forum selection clause in the distribution agreement specified Ohio...more
2/3/2020
/ Anti-Waiver Provisions ,
Appeals ,
Arbitration Agreements ,
Class Action ,
Forum Selection ,
Franchise Agreements ,
Franchise Laws ,
Franchisee ,
Franchisors ,
Independent Contractors ,
Misclassification ,
Private Attorneys General Act (PAGA) ,
Sales & Distribution Agreements ,
Severability Doctrine ,
State Labor Laws ,
Wage and Hour
Washington State’s Attorney General settled a case against sandwich franchisor, Jersey Mike’s, over antipoaching provisions in its franchise agreements. Since 2018, Washington State has made agreements with more than 60...more
12/20/2019
/ Antitrust Violations ,
CID ,
Civil Investigation Demand ,
Contract Terms ,
Employment Contract ,
Franchise Agreements ,
Franchisors ,
Hiring & Firing ,
No-Poaching ,
Restrictive Covenants ,
Settlement ,
State Attorneys General
A California Court of Appeal held that courts should not enforce forum selection clauses in contracts that also contain a jury waiver. For franchisors that have California franchisees, this ruling could complicate the ability...more
11/26/2019
/ Appeals ,
Burden of Proof ,
Burden-Shifting ,
Choice-of-Law ,
Conflicts of Laws ,
Contract Terms ,
Forum Selection ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Jury Waivers ,
Unenforceable Contract Terms
Under California law, a business relationship is a “franchise” if: (1) the business will be substantially associated with the franchisor’s trademark; (2) the franchisee will directly or indirectly pay a fee to the franchisor...more
A federal appeals court upheld a lower court’s refusal to order arbitration against a franchisee who bought an existing franchise. This was despite a provision in the franchise agreement to arbitrate “most disputes.”...more
A gasoline franchisee defeated a motion to dismiss brought by its franchisor, seeking to avoid a claim under the federal Petroleum Marketing Practices Act (PMPA). In 2018, Global Companies (Global) sent the franchisee a...more
9/1/2019
/ Franchise Agreements ,
Franchisee ,
Franchisors ,
Motion to Dismiss ,
Notice of Non-Renewal ,
Oil & Gas ,
Petroleum Marketing Practices Act (PMPA) ,
Purchase Agreement ,
Right of First Refusal ,
Sales & Distribution Agreements ,
Sales Contracts ,
Third Party Purchaser (TPP) ,
Unfair Contract Terms ,
Written Notice
The Mississippi Supreme Court ruled that a beer manufacturer’s “match and redirect” provision in an agreement with a wholesaler violated the state’s Beer Industry Fair Dealing Act (BIFDA). Anheuser-Busch’s contract said if...more
8/29/2019
/ Anheuser-Busch ,
Beer ,
Beverage Manufacturers ,
Civil Conspiracy ,
Contract Terms ,
Distributors ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
MS Supreme Court ,
Redirect ,
State Law Claims ,
Tortious Interference ,
Unenforceable Contract Terms ,
Unfair Dealing ,
Wholesale ,
Wine & Alcohol
Morgan Rothschild (“Rothschild”), sole owner of the Party Princess franchise system, sold a party planning franchise for the territory of Washington and promised the franchisee would achieve certain sales. Prior to the sale,...more
8/1/2019
/ Administrative Agencies ,
Agency Deference ,
Contract Terms ,
Dispute Resolution ,
Forum ,
Franchise Agreements ,
Franchisee ,
Interpretive Opinions ,
Litigation Strategies ,
Mandatory Arbitration Clauses ,
Misrepresentation ,
Motion to Compel
Ten years after the franchisor of the EXIT real estate system entered into a franchise agreement for a franchisee to operate an EXIT franchise in Maitland, Florida, the parties entered into another franchise agreement for a...more
7/31/2019
/ Appeals ,
Breach of Contract ,
Damages ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Fraud ,
Oral Contracts ,
Promissory Estoppel ,
Real Estate Transactions ,
Reversal ,
Statute of Frauds ,
Unjust Enrichment ,
Void and Unenforceable ,
Written Agreements
Eskimo Hut, a franchisor of convenience stores that sell frozen daiquiris-to-go, convinced a Texas appellate court that it would probably win on claims that South Plains, a franchisee using a nonconforming drink mix, breached...more
A 7-Eleven franchisee of more than 40 years brought claims that the convenience store franchisor engaged in a region-wide scheme, dubbed “Operation Philadelphia,” to force older franchisees to terminate their franchise...more
5/2/2019
/ 7-Eleven ,
Breach of Contract ,
Bullying ,
Debit and Credit Card Transactions ,
Failure to Notify ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Independent Contractors ,
Investment Schemes ,
Transaction Fees
The U.S. Sixth Circuit Court of Appeals upheld summary judgment for franchisor Buffalo Wild Wings (“BWW”) rejecting a restaurant operator’s counterclaims for wrongful termination, malicious prosecution, and breach of...more
5/1/2019
/ Abeyance ,
Breach of Contract ,
Counterclaims ,
Declaratory Rulings ,
Franchise Agreements ,
Franchisors ,
License Agreements ,
Licensees ,
Malicious Prosecution ,
Notice of Default ,
Restaurant Industry ,
Summary Judgment ,
Trademark Licenses ,
Wrongful Termination
A commercial real estate relocation and consulting business franchisor (Relo) succeeded in getting a preliminary injunction to enforce a non-compete covenant against a former franchisee....more