A California appellate court affirmed a trial court’s denial of more than $4 million in damages for “reverse royalties” arising from a franchisee’s purchase of a boba franchise with an exclusive 10-mile territory....more
A Virginia district court dismissed a lawsuit filed by 360 Painting, a franchisor of residential and commercial painting services, concluding an addendum to the parties’ franchise agreement precluded 360 Painting’s claims for...more
California Assembly Bill 257, the Fast Food Accountability and Standards Recovery Act (the “FAST Act” enacted in 2022), was to become effective January 1, 2023.
The FAST Act established a 10-member Fast Food Sector...more
4/13/2023
/ California ,
Employees ,
Employer Liability Issues ,
Franchises ,
Hiring & Firing ,
Labor Reform ,
New Legislation ,
Regulatory Requirements ,
Standards & Procedures ,
State Labor Laws ,
Workplace Safety
A federal court in Wisconsin ruled that Dairy Queen did not breach a 1952 franchise agreement with a franchisee by requiring a prospective buyer of the franchise to sign an updated franchise agreement.
Dairy Queen and a...more
Assembly Bill 257 and Senate Bill 1247 are now pending in the California legislature. Their passage could intrude on franchisors’ and franchisees’ abilities to conduct business in California....more
On April 7, 2022, the House of Representatives passed bill H.R. 3807, the Relief for Restaurant Franchisees and other Hard Hit Small Businesses Act of 2022, which, if passed by the U. S. Senate, will add $42 billion to the...more
Zubair Kazi operated a KFC franchise in Pueblo, Colorado since the 1980s. In 2019, KFC approved another individual to open a KFC restaurant in Pueblo. Kazi sued, claiming KFC breached its implied duty of good faith and fair...more
Patel v. 7-Eleven, a case in Massachusetts, has been closely watched since the ABC test took hold of franchise relationships in employee misclassification cases across the country.
A putative class of 7-Eleven franchisees...more
3/31/2022
/ 7-Eleven ,
ABC Test ,
Disclosure Requirements ,
Franchisee ,
Franchises ,
Franchisors ,
FTC Franchise Rule ,
Hiring & Firing ,
Independent Contractors ,
MA Supreme Judicial Court ,
Misclassification ,
Preemption ,
Putative Class Actions ,
Right to Control
On January 31, 2022, the California State Assembly passed AB 257, the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act, or the “Act”) by a vote of 41-19. The bill was originally introduced in January...more
According to the Los Angeles Times, fast-food workers at McDonald’s restaurants in Los Angeles, Oakland, Sacramento, San Diego and San Jose intend to walk off their jobs on November 9 in support of the passage of California...more
Past and present franchisees of commercial cleaning service franchisor, Jani-King, brought claims for violation of Connecticut minimum wage and anti-kickback laws, and unjust enrichment. They claimed Jani-King misclassified...more
11/1/2021
/ Appeals ,
Dismissals ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Independent Contractors ,
Minimum Wage ,
Misclassification ,
Service Agreements ,
Summary Judgment ,
Unjust Enrichment ,
Wage and Hour
An area developer entered into three agreements with a pizza franchisor and developed 50 franchises in Texas. The franchisor, Pizza Inn, Inc., tried to terminate all three contracts, though each had a twenty-year initial term...more
In the last year, we reviewed three attacks on franchising, questioned whether franchising was in the crosshairs of federal regulators and legislators, and concluded that the answer was yes....more
California Assembly Bill 257, the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act or AB 257) was defeated by the California Assembly on June 3, 2021. The bill was introduced by Assembly Member Lorena...more
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
California Assembly Bill 257, the Fast Food Accountability and Standards Recovery Act is currently pending in the California Legislature, introduced by Assembly Member Lorena Gonzalez....more
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
Earlier this year, we questioned whether franchising was in the crosshairs of federal regulators and legislators. It appears that the answer may be a resounding yes....more
The Small Business Administration (SBA) released key details on application requirements (RRF Application), eligibility and a program guide (RRF Program Guide) for the Restaurant Revitalization Fund (RRF) on April 19, 2021....more
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
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
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
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