A franchisee sued real estate franchisor Century 21 for a declaration whether the franchisee could end its franchise agreement early despite a provision that deleted the franchisee’s early termination right. Noting the...more
On competing motions for a temporary restraining order (“TRO”) by ReBath – a nationwide bathroom remodeling franchisor, and its terminated franchisee, ReBath prevailed in restraining the ex-franchisee’s further operations. A...more
6/30/2021
/ Breach of Contract ,
Contract Termination ,
Counterclaims ,
Covenant of Good Faith and Fair Dealing ,
Failure To Pay ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Implied Covenants ,
Lowe's ,
Royalties ,
TRO
A group of franchisees sued OsteoStrong, a franchisor of bone density improvement centers. They claimed omissions in the FDD about bankruptcies and lawsuits, and misrepresentations of patent rights to equipment and...more
6/1/2021
/ Breach of Contract ,
Civil Liability ,
Criminal Liability ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Franchisors ,
Injunctive Relief ,
Irreparable Harm ,
Medical Devices ,
Preliminary Injunctions
A Minnesota federal court ruled in favor of a franchise broker on summary judgment. The court dismissed misrepresentation claims brought by a military veteran who alleged unlawful inducement to invest in a failed kickboxing...more
An insurance coverage case brought by McDonald’s and two of its franchisees (collectively, “McDonald’s”), raised a novel question in Illinois state court. The question was whether or not costs to comply with a mandatory...more
4/30/2021
/ Bodily Injury ,
Commercial General Liability Policies ,
Coronavirus/COVID-19 ,
Damages ,
Duty to Defend ,
Franchisee ,
Franchisors ,
Health and Safety ,
Injunctions ,
Insurance Claims ,
Insurance Industry ,
McDonalds ,
Negligence ,
Public Nuisance
A federal court in Michigan granted 7-Eleven’s motion for summary judgment, enforcing the franchisor’s right to terminate a franchisee with repeated defaults, even though each default had been cured.
7-Eleven’s franchise...more
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
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
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
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
2/1/2021
/ Appeals ,
Breach of Contract ,
Contract Renewal ,
Contract Terms ,
Declaratory Judgments ,
Development Agreements ,
Failure to Notify ,
Franchisee ,
Franchises ,
Franchisors ,
Jury Verdicts ,
Late Notices ,
Notice of Intent ,
Reversal
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
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
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
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
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
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
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
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
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
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 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