An Ohio federal court granted a franchisor’s motion to dismiss a putative class of franchisees alleging antitrust violations and related claims, including interference to deflate franchisees’ reimbursement rates. Other class claims, based on franchisor’s alleged increased restrictions and control over franchisee’s eyewear selections, and breach of contract and negligence due to the franchisor’s alleged failure to secure franchisees’ customer privacy data, were also dismissed.
In 2014, eyewear franchisor, Pearle Vision, changed its franchise agreement to introduce a new program to “automate the supply chain system.” Under the program, franchisees would receive supplies and frames that were most likely to sell based on the products the franchisees were selling. Franchisees argued this program reduced profit margins because it limited eyewear frames only to brands owned or licensed by the franchisor. The franchisees also argued the frames were not marketable or tailored to each franchisee’s purchase history. They contended that the franchisor’s increasing control extended to third party vendors when franchisor contracted with a vision care provider and agreed that the provider would pay franchisees at reimbursement rates lower than franchisees would have received in the open market.
The franchisor moved to dismiss on the basis that the antitrust and tort claims were time barred, and the breach of contract and privacy claims were unfounded and not supported by contract terms. The franchisees argued the claims were timely because each below market payment received was an independent wrongful act that restarted the statute of limitations period.
The federal court agreed with the franchisor that the antitrust claims were time barred, because the alleged violations occurred on or before 2014, far beyond the limitations period, and franchisees did not experience “continuous violations,” which would renew the statute of limitations period. If the violations occurred, the federal court concluded the violations began and ended when the new franchise agreement and related documents were executed. Any subsequent payments were mere manifestations of the previous agreement.
The court also dismissed the breach of contract claims because the franchisees failed to point contractual terms that prohibited the franchisor from controlling the relationship between franchisees and third-party vendors. First, the franchise agreement stated that no provision covered this issue. Second, the provisions franchisees specifically cited in the franchise agreement gave franchisor the power to exert such control over franchisees’ inventories. The court also dismissed misrepresentation claims as time barred, because the alleged misrepresentations were discovered no later than 2018, when franchisees formed an independent association over this very concern.
Franchisees in established franchise systems can be expected to resist and sometimes challenge new standards of operation. The perception that such changes benefit the franchisor to the detriment of its franchisees is sometimes the reality. As a result, franchisors planning to implement systemwide changes should consult their franchise counsel to anticipate potential franchisee challenges and analyze potential defenses to such claims as part of the effort to evolve the system.
Brave Optical, Inc. v. Luxottica of Am. Inc., 2025 WL 962827 (S.D. Ohio Mar. 31, 2025)
