A federal court in Nashville granted summary judgment on breach of contract claims in favor of a damage restoration franchisor’s lawsuit with a former California franchisee.
A Servpro franchisee had a territory in Los...more
The COVID-19 pandemic forced food service franchisors and franchisees to adapt their business models and operations procedures and work together to survive during these unprecedented times. People generally resist change...more
A federal court in Tennessee held a Gus’s World Famous Fried Chicken former franchisee in contempt for failure to deidentify its restaurant after entry of a temporary restraining order and consent to a permanent...more
11/2/2020
/ Contempt ,
Coronavirus/COVID-19 ,
Franchise Agreements ,
Franchise Termination ,
Franchisee ,
Franchises ,
Franchisors ,
Permanent Injunctions ,
Proprietary Information ,
Restaurant Industry ,
Sanctions ,
Trade Dress ,
Trademarks ,
TRO
A U.S. Court of Appeals upheld a federal district court decision partly granting a preliminary injunction sought by a companionship and domestic care services franchisor against a former franchisee, for violating the...more
10/30/2020
/ Appeals ,
Franchise Agreements ,
Franchise Termination ,
Franchisee ,
Franchisors ,
Judicial Discretion ,
Non-Compete Agreements ,
Preliminary Injunctions ,
Reaffirmation ,
Scope and Duration of Restrictive Covenant ,
Solicitation
Download PDF Assembly Bill 5 took effect in California on January 1, 2020 and governs when a business can treat a worker as an employee as opposed to an independent contractor. Under AB5 and its “ABC” test, a hiring entity...more
10/28/2020
/ ABC Test ,
Classification ,
Department of Labor (DOL) ,
Employer Liability Issues ,
Fair Labor Standards Act (FLSA) ,
Franchises ,
Franchisors ,
Independent Contractors ,
International Franchise Association (IFA) ,
Misclassification ,
State Labor Laws
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
In another twist to the joint employer saga, a United States District Court in New York voided the Department of Labor’s (“DOL”) new rule for joint employment. Eighteen (18) states and the District of Columbia brought a...more
A federal district court in Baltimore granted summary judgment against a former franchisee who claimed negligent misrepresentation against the franchisor and its officers. The court found there was no genuine issue of...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 guest sued the Hampton Inn and Suites franchisee in Nashville, Tennessee and the franchisor’s parent company, Hilton Domestic Operating Co., Inc. (“Hilton”), claiming race discrimination by a hotel employee. The plaintiff...more
7/31/2020
/ Agency Relationship ,
Consumer Complaint Management ,
Control Test ,
Dismissals ,
Franchisee ,
Franchisors ,
Hotels ,
Lack of Jurisdiction ,
Nexus ,
Personal Jurisdiction ,
Purposeful Availment Test ,
Race Discrimination
Item 19 of the Franchise Disclosure Document (FDD) can provide information on how a prospective franchisee may perform financially. Historical financial performance representations (FPRs) may be made if the franchisor has a...more
A federal court in Maryland entered default judgment and a permanent injunction in favor of an ice cream franchisor against a franchisee that continued operating its ice cream shop after termination....more
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
Last month, the National Labor Relations Board (NLRB) issued a final rule governing joint-employer status under the National Labor Relations Act (NLRA). The rule should resolve years of controversy over who is an employer...more
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
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
A federal court has granted, in part, restaurant franchisor Golden Corral’s motion to dismiss a complaint brought by a former franchisee. The court found a general release of claims, executed as part of an assignment of a...more
12/23/2019
/ Assignments ,
Dismissals ,
Franchise Acts ,
Franchisee ,
Franchisors ,
Golden Corral ,
Motion to Dismiss ,
Release of Claims ,
Release of Liability ,
Resorts & Restaurants ,
State Law Claims ,
Waivers
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 federal appellate court held that a franchisee must indemnify a franchisor for its litigation defense costs, vacating a district court’s order of summary judgment for the franchisee....more
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
California Governor Gavin Newsom signed into law Assembly Bill 5 (“AB-5”). AB-5 codifies into California’s Labor Code the “ABC test” for determining employee or independent contractor status, as adopted by the California...more
11/1/2019
/ ABC Test ,
CA Supreme Court ,
Dynamex ,
Employer Liability Issues ,
Franchisee ,
Franchises ,
Franchisors ,
Gig Economy ,
Governor Newsom ,
Independent Contractors ,
Misclassification ,
New Legislation ,
Retroactive Application ,
State Labor Laws