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
Twin City Lodging LLC bought a Best Western Hotel in Mankato, Minnesota, then entered into a “Membership Agreement” with Best Western International. Best Western granted Twin City a license to operate the hotel under Best...more
10/1/2019
/ Best Western ,
Breach of Contract ,
Community of Interest ,
Counterclaims ,
Franchise Fees ,
Franchise Termination ,
Franchisee ,
Franchises ,
Franchisors ,
Hotels ,
Licenses ,
Motion to Dismiss ,
Notice Requirements ,
Trademark Infringement
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
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
In a wrongful death suit by a Massachusetts wife of a man and their child who drowned in a Montreal hotel pool, a Massachusetts federal court held in Nandjou v. Marriott Internationalthat it had jurisdiction under the state...more
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
On May 20, 2019, the U.S. Supreme Court ruled that a bankrupt debtor’s “rejection” of a trademark licensing agreement does not terminate the licensee’s rights. This was under a part of the Bankruptcy Code that provides for...more
6/3/2019
/ Bankruptcy Code ,
Breach of Contract ,
Commercial Bankruptcy ,
Debtors ,
Executory Contracts ,
Franchisee ,
Franchisors ,
IP License ,
Mission Product Holdings Inc v Tempnology LLC ,
Rescission ,
Reversal ,
SCOTUS ,
Split of Authority ,
Trademark Licenses ,
Trademarks
The Ninth Circuit sent shockwaves through the franchise industry in ruling that last year’s California Supreme Court decision broadening who may bring wage misclassification claims (Dynamex v. Superior Court) applied...more
6/1/2019
/ ABC Test ,
Appeals ,
CA Supreme Court ,
Employer Liability Issues ,
Franchisee ,
Franchises ,
Franchisors ,
Indemnification ,
Independent Contractors ,
Joint Employers ,
Misclassification ,
Remand ,
Retroactive Application ,
Reversal ,
Statute of Limitations ,
Wage and Hour
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 federal district court upheld an arbitration panel’s decision to deny attorneys’ fees to Benihana, even though Benihana won a dispute with its licensee. The licensee started arbitration claiming Benihana breached the...more
3/29/2019
/ Appeals ,
Arbitration ,
Arbitration Awards ,
Attorney's Fees ,
Breach of Contract ,
Contract Termination ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Good Cause ,
License Agreements ,
Licensees ,
Prevailing Party ,
Reaffirmation ,
Restaurant Industry