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Franchisor 101: Is Matco the Next Jan-Pro?

A federal court in California certified a class of Matco Tools franchisees who claimed to be misclassified by Matco as independent contractors rather than employees. They claimed Matco did this to avoid obligations owed to...more

Franchisee 101: Convenience Store Pays for Inconvenient Ordinance

A federal court in New Jersey denied a 7-Eleven franchisee’s motion for a temporary restraining order. The franchisee sought an order enjoining 7-Eleven from enforcing various franchise agreement provisions, including charges...more

New Revenue Rule Affects Franchisors

An updated rule issued by the Financial Accounting Standards Board (“FASB”) will again change when most franchisors can recognize revenue in their financial statements from the sale of their franchises and their collection of...more

Franchisor 101: Court Delivers Pizza Franchisor Liquidated Damages

The Sixth Circuit Court of Appeals recently affirmed a $2.6 million award of liquidated damages in favor of a pizza franchisor and a summary judgment order enforcing termination of franchise agreements due to nonpayment and...more

Franchisee 101: No Excuse for Late Notice

The U.S. Court of Appeals for the Fifth Circuit reversed a trial court judgment against a Texas franchisor, finding the lower court erred in excusing an untimely renewal notice of area development agreements. The Court held a...more

Franchisor 101: California’s Dynamex/ABC Test is Retroactive

In 2019, the U.S. Court of Appeals for the Ninth Circuit held that the ABC Test announced in a California Supreme Court decision, Dynamex Operations West, Inc. v. Superior Court, 4 Cal.5th 903 (2018) could apply to franchise...more

Franchisee 101: Shelf the Self-Help

Lola Salamah and Amro Elsayed signed a franchise agreement with M.M. Fowler, Inc., the franchisor of Family Fare gas stations, to operate a gas station franchise in North Carolina. A few years into the franchise...more

Franchisor 101: AB 5’s Preemptive Strike

Franchisors faced unprecedented challenges in 2020. Enactment of California’s Assembly Bill 5 on January 1, 2020 was just the tip of an iceberg. As the COVID-19 pandemic upended franchise systems across all industries,...more

Franchisee 101: Fitness Franchisee Exercises Poor Judgment

A federal court in Denver granted Fitness Together Franchise, LLC a preliminary injunction against the owner of three former franchisees, three former franchisee entities and three additional entities formed to operate a...more

Franchisor 101: Court Remediates Damage to Restoration Franchisor

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

Changes: Cooperation Rather Than Conflict

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

Franchisee 101: COVID Defense Leads to Contempt

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

Franchisor 101: (Non)Competing for Care

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

Competing Tests: Employee or Independent Contractor? Saving the Franchise Model

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

New Franchise Regulations on the Horizon?

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

Franchisee 101: Trashing the Competition

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

Franchisor 101: New Joint Employer Rule Nixed for Now

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

Franchisee 101: They Were Just Kidding

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

Franchisor 101: Taking the Red Pill on Non-Competes

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

Franchisee 101: Successor Slips Out of Non-Compete

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

Franchisor 101: Nothing Personal in Claims Against Hotel Franchisor

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

FRANCHISEE 101: Recruitment Reprimand

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

FRANCHISOR 101: COVID-19 vs. Item 19

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

Los Angeles County and City Issue Dine-In Orders

As Los Angeles reopens in the midst of the COVID-19 pandemic, Los Angeles County and the City of Los Angeles have issued substantially similar Revised Orders that restaurants must comply with to provide dine-in service....more

Franchisee 101: Expo is No Excuse

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

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