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
Embedded within the 5,600-page Consolidated Appropriations Act, 2021 – more commonly known as the $2.3 trillion Coronavirus Relief Stimulus Bill enacted on December 27, 2020 – are significant changes to federal trademark and...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
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
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
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
8/31/2020
/ Anti-Competitive ,
Business & Professions Code ,
Exclusive Dealing Agreements ,
Franchise Agreements ,
Franchises ,
Franchisors ,
Non-Compete Agreements ,
Pharmaceutical Industry ,
Restrictive Covenants ,
Rule-of-Reason Analysis ,
Scope and Duration of Restrictive Covenant ,
Void and Unenforceable
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
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 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
Long ago the “government edicts doctrine” established that state and federal law is not entitled to copyright protection. Essentially, original works that have the force of law and created by officials in the course of their...more
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
A federal court in Cleveland rejected a California franchisee’s claim that an Ohio-based ice cream franchisor violated the California Franchise Investment Law (CFIL). The claim failed because the franchisee could not show it...more
4/3/2020
/ Actual Damages ,
Causation ,
Damages ,
Franchise Agreements ,
Franchise Disclosure Document ,
Franchise Investment Acts ,
Franchisee ,
Notice Requirements ,
Rescission ,
Statutory Violations ,
Willful Violations
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