A recent case from Indiana demonstrates consequences to a franchisor that deviates from the contractually agreed audit method. In Noble Roman's Inc. v. Hattenhauer Distributing Co., an Indiana federal court granted a pizza...more
A Florida federal court held that the non-compete provision in a chocolate shop franchise agreement was enforceable against an ex-franchisee operating a competing chocolate store at the former franchised location....more
Structuring a franchise to reduce risk of joint employment and vicarious liability means limiting a franchisor's control over franchisees. This is a challenge in a professional services franchise, where the brand is...more
4/2/2018
/ Code of Conduct ,
Control Test ,
Employee Misconduct ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Fraud ,
Joint Employers ,
Professional Services Contract ,
Tax Preparers ,
Vicarious Liability
A franchisee looking to transfer assets of a franchised business may be subject to the franchisor's right of first refusal, the franchisor's option to purchase the business, or both, depending on the language of a franchise...more
Though an individual owner and operator of a formerly franchised Church's Chicken restaurant in Texas was not a signer of the franchise agreement, a district court ruled the individual was subject to the agreement's...more
3/1/2018
/ Assignments ,
Breach of Contract ,
Cease and Desist ,
Confusingly Similar ,
Equitable Estoppel ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Motion To Enjoin ,
Non-Compete Agreements ,
Non-Signatories ,
Post-Termination Acts ,
Restaurant Industry ,
Third-Party Relationships ,
Trademark Infringement ,
Trademarks
Franchise agreements give franchisors nearly absolute, unfettered discretion to control advertising of their brands. Franchisors need not regard prior course of dealings with franchisees. An Illinois federal court dismissed a...more
2/28/2018
/ Advertising ,
Attorney's Fees ,
Breach of Contract ,
Contract Terms ,
Corporate Branding ,
Dietary Guidelines ,
Dismissals ,
Fee-Shifting ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Franchisors ,
Islamic-Compliant ,
Kentucky Fried Chicken ,
Prior Express Consent ,
Promissory Estoppel ,
Revocation
A California federal judge held that breach of contract claims brought by franchisees of two ARCO-branded gas stations against their franchisor BP West Coast Products were untimely, and declined to adopt the franchisees'...more
A registered trademark is a valuable corporate asset and can be a significant part of a company's worth. A franchisor has an affirmative legal duty to police use of its mark by licensed franchisees and also third-party...more
2/2/2018
/ Cease and Desist ,
Duty to Monitor ,
Franchisee ,
Franchises ,
Franchisors ,
Injunctions ,
Likelihood of Confusion ,
Restaurant Industry ,
Trademark Infringement ,
Trademark Registration ,
Trademarks
As of January 1, 2018, the U.S. Small Business Administration (SBA) will begin implementing new rules that will affect franchisors, entrepreneurs wishing to join a franchise system, and lenders or CDCs (Certified Development...more
A Florida federal district court found that a doughnut franchisee's failure to pay royalties and other fees constituted a material breach of contract justifying termination, even though the franchisee expressed a willingness...more
On December 14, 2017, the National Labor Relations Board (Board) in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017) expressly overruled the divisive joint-employer standard adopted by Browning-Ferris...more
Some creativity can help in passing a former franchised business to the next generation, particularly if the franchisor has no part in the franchisee's succession plan.
A federal court in Nebraska preliminarily enjoined...more
A restaurant franchisor, World of Beer Franchising ("WOB"), recently lost an appeal to enforce a post-termination restriction against a franchisee launching a competing business. Both the trial and appellate court ruled...more
12/1/2017
/ Appeals ,
Dispute Resolution Clauses ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Injunctive Relief ,
Mandatory Arbitration Clauses ,
Mediation ,
Non-Compete Agreements ,
Remedies ,
Restaurant Industry ,
Restrictive Covenants
Baskin-Robbins charges a dairy supplier a so-called "commercial factor" fee for the right to make and sell Baskin-Robbins proprietary ice cream to franchisees. The supplier's pricing to franchisees includes an amount equal to...more
A federal court in New Jersey granted a franchisor's motion to compel arbitration of disputes involving seven frozen yogurt franchises, even though the claims were subject to different arbitration provisions in different...more
11/3/2017
/ American Arbitration Association ,
Arbitration ,
Breach of Contract ,
Conflicting Proposals ,
Contract Terms ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Insolvency ,
Liquidation ,
Motion to Compel ,
Unjust Enrichment
A federal court recently held that under California law, cleaning services franchisor Jan-Pro Franchising International (Jan-Pro) was not the employer of its unit franchisees. The franchisee plaintiffs failed to show that...more
A federal court in New York denied a franchisee's motion for preliminary injunction that would have prevented its franchisor Metal Supermarkets Franchising America (MSFA) from installing technology upgrades in its stores....more
Most dealership and franchise agreements require the franchisor's prior written consent to the transfer of a business from one franchisee to another. The new franchisee is often required to sign the franchisor's then-current...more
8/31/2017
/ Assignments ,
Attorney's Fees ,
Breach of Contract ,
Coercion ,
Consent to Assignment ,
Dealerships ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Oil & Gas ,
Purchasers ,
Sellers ,
Written Consent
A franchisor's investment in brand standards, protection and control often comes at a cost when a consumer believing or claiming to believe the franchisor and franchisee are the same, seeks to hold a franchisor liable for a...more
Beer distributors can be on common footing with their franchisee counterparts in bargaining with brewers or suppliers. Depending on the jurisdiction, distributors may have protection through beer distribution statutes...more
In Los Angeles Superior Court, McDonald's claimed victory when 6,600 workers seeking $41 million in back pay and penalties came away with less than 2% of the amount sought in a claim that the fast-food giant cheated them out...more
In every Franchise Agreement, the franchisor and franchisee promise to fulfill obligations to the other. For some promises, whether or not they were performed can be a clear "yes" or "no." For example: either a franchisee...more
For a relationship to meet the legal definition of a "franchise" in some jurisdictions, the franchisor must give significant assistance to, or have significant control over, the franchisee's business. A franchisor's...more
The consequences to an unwitting franchisor can be severe when it fails to provide disclosure documents required by franchise law. Most franchise laws provide for rescission of the franchise agreement, allowing the franchisee...more
A California federal judge dealt a major blow to employees of a Bay Area McDonald's in their effort to hold the franchisor responsible for its franchisee's alleged failure to pay wages and provide meal and rest breaks. The...more