Employees of a Merry Maids home cleaning franchise brought a class action against the franchisee, the franchisor, its owner and affiliated entities claiming they were joint employers. A California federal district court...more
3/2/2019
/ Agency Relationship ,
Class Action ,
Employee Handbooks ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Franchisors ,
Genuine Issue of Material Fact ,
Joint Employers ,
Labor Law Violations ,
Minimum Wage ,
Reasonable Belief Test ,
Right to Control ,
State Labor Laws ,
Summary Judgment ,
Unpaid Overtime ,
Unpaid Wages ,
Wage and Hour
A Wisconsin federal judge granted summary judgment in favor of a food service and cleaning equipment maker (“Stoelting”), ruling that minimum purchase requirements under two dealer agreements were not a franchise fee under...more
1/31/2019
/ Contract Termination ,
Dealerships ,
Franchise Agreements ,
Franchise Fees ,
Franchise Termination ,
Franchises ,
Good Cause ,
Manufacturers ,
Minimum Purchase Requirements ,
Purchase Agreement ,
Summary Judgment ,
Wholesale ,
Written Notice
A bankruptcy court has found that Applebee’s failed to properly terminate its franchise agreements prior to the franchisee petitioning for bankruptcy. Therefore, the franchise agreements remained in effect and were property...more
12/28/2018
/ Applebee's ,
Commercial Bankruptcy ,
Contract Termination ,
Contract Terms ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Franchisors ,
Notice of Default ,
Right To Cure ,
Royalties
Most franchisors’ annual franchise registration renewal deadlines are a few months away. Nevertheless, franchisors should contact their accountants now regarding a new revenue recognition rule issued by the Financial...more
11/30/2018
/ Accountants ,
FASB ,
Financial Reporting ,
Franchise Agreements ,
Franchise Fees ,
Franchisee ,
Franchises ,
Franchisors ,
IP License ,
Registration Requirement ,
Training
Jimmy John’s will face antitrust claims, after an Illinois federal judge declined to dismiss allegations in a class action.
Plaintiffs claim the chain’s franchise agreement harmed competition by preventing franchisee...more
9/28/2018
/ Anti-Competitive ,
Antitrust Violations ,
Class Action ,
Enforcement Actions ,
Franchisee ,
Franchises ,
Franchisors ,
Motion to Dismiss ,
No-Hire/No-Solicitation Agreements ,
No-Poaching ,
Non-Compete Agreements ,
Restaurant Industry ,
State Attorneys General
The Ninth Circuit Court of Appeals upheld summary judgment in favor of Taco Bell on class claims that employees should be paid under California law for time spent on company premises eating employer-discounted meals during...more
8/24/2018
/ Appeals ,
Class Action ,
Employment Policies ,
Franchisee ,
Franchises ,
Reaffirmation ,
Rest and Meal Break ,
State Labor Laws ,
Summary Judgment ,
Taco Bell ,
Wage and Hour
Franchise agreements commonly prohibit the franchisee from soliciting or hiring workers employed by the franchisor or other franchisees. This may take the form of “no-hire” or “no-switching” clauses that prohibit hiring each...more
8/1/2018
/ Antitrust Violations ,
Enforcement Actions ,
Federal Trade Commission (FTC) ,
Franchisee ,
Franchises ,
Hiring & Firing ,
No-Hire/No-Solicitation Agreements ,
No-Poaching ,
Non-Solicitation Agreements ,
Restraint of Trade ,
State Attorneys General
On June 21 the U.S. Supreme Court reversed prior case law and let states tax online retailers that do not have physical presence in the state. The ruling also has significant implications for franchise systems that sell...more
6/28/2018
/ Appeals ,
Commerce Clause ,
Constitutional Challenges ,
Franchise Agreements ,
Franchises ,
Franchisors ,
Internet Retailers ,
Interstate Commerce ,
Out-of-State Companies ,
Physical Presence Test ,
Quill ,
Reversal ,
Royalties ,
Sales & Use Tax ,
SCOTUS ,
South Dakota v. Wayfair ,
Substantial Nexus
A Florida federal court refused to dismiss a franchisor's claim for past due royalties and lost future profits.
The case concerned an Interim Healthcare staffing franchise in Arizona. The franchisor issued a default notice...more
4/30/2018
/ Breach of Contract ,
Contract Termination ,
Contract Terms ,
Failure To Pay ,
Franchises ,
Franchisors ,
Future Royalties ,
Lost Profits ,
Motion to Dismiss ,
Notice of Default ,
Pleadings ,
Royalties
A Florida federal court held that the non-compete provision in a chocolate shop franchise agreement was enforceable against an ex-franchisee operating a competing chocolate store at the former franchised location....more
Franchise agreements give franchisors nearly absolute, unfettered discretion to control advertising of their brands. Franchisors need not regard prior course of dealings with franchisees. An Illinois federal court dismissed a...more
2/28/2018
/ Advertising ,
Attorney's Fees ,
Breach of Contract ,
Contract Terms ,
Corporate Branding ,
Dietary Guidelines ,
Dismissals ,
Fee-Shifting ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Franchisors ,
Islamic-Compliant ,
Kentucky Fried Chicken ,
Prior Express Consent ,
Promissory Estoppel ,
Revocation
A registered trademark is a valuable corporate asset and can be a significant part of a company's worth. A franchisor has an affirmative legal duty to police use of its mark by licensed franchisees and also third-party...more
2/2/2018
/ Cease and Desist ,
Duty to Monitor ,
Franchisee ,
Franchises ,
Franchisors ,
Injunctions ,
Likelihood of Confusion ,
Restaurant Industry ,
Trademark Infringement ,
Trademark Registration ,
Trademarks
A Florida federal district court found that a doughnut franchisee's failure to pay royalties and other fees constituted a material breach of contract justifying termination, even though the franchisee expressed a willingness...more
On December 14, 2017, the National Labor Relations Board (Board) in Hy-Brand Industrial Contractors, Ltd., 365 NLRB No. 156 (2017) expressly overruled the divisive joint-employer standard adopted by Browning-Ferris...more
Some creativity can help in passing a former franchised business to the next generation, particularly if the franchisor has no part in the franchisee's succession plan.
A federal court in Nebraska preliminarily enjoined...more
A restaurant franchisor, World of Beer Franchising ("WOB"), recently lost an appeal to enforce a post-termination restriction against a franchisee launching a competing business. Both the trial and appellate court ruled...more
12/1/2017
/ Appeals ,
Dispute Resolution Clauses ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Injunctive Relief ,
Mandatory Arbitration Clauses ,
Mediation ,
Non-Compete Agreements ,
Remedies ,
Restaurant Industry ,
Restrictive Covenants
Baskin-Robbins charges a dairy supplier a so-called "commercial factor" fee for the right to make and sell Baskin-Robbins proprietary ice cream to franchisees. The supplier's pricing to franchisees includes an amount equal to...more
In Los Angeles Superior Court, McDonald's claimed victory when 6,600 workers seeking $41 million in back pay and penalties came away with less than 2% of the amount sought in a claim that the fast-food giant cheated them out...more
The parent of Dunkin' Donuts was named along with Starbucks and about 80 other coffee sellers, distributors and retailers in a 2010 lawsuit alleging violations of California's Proposition 65 and Safe Drinking Water and Toxic...more
For a relationship to meet the legal definition of a "franchise" in some jurisdictions, the franchisor must give significant assistance to, or have significant control over, the franchisee's business. A franchisor's...more
Among the many differences between Tesla and traditional automakers, Tesla does not sell or service its electric cars through franchised dealers; it sells direct to consumers. Recent legal challenges to Tesla's...more
An important part of the franchise system is the confidential operating manual. Many franchisors claim protection of operating manuals under the law of trade secrets and copyright.
Keeping the contents confidential is...more
11/2/2016
/ Breach of Contract ,
Confidential Business Information (CBI) ,
Copyright ,
Copyright Infringement ,
Copyright Registration ,
Franchises ,
Franchisors ,
Intellectual Property Protection ,
Operating Agreements ,
Policy Manuals ,
Popular ,
Trade Secrets
For more than 55 years, the International Franchise Association has been committed to improving methods and business practices for all participants in franchising - whether working with the Federal Trade Commission, lobbying...more
With franchisors deeply concerned about joint liability for franchisee employees, more states are passing laws trying to prevent that from happening. Here are some states and measures that have passed:
Texas enacted...more
Franchisees aren't always excited when their franchisor introduces a new policy. But if a new policy overreaches and might doom a franchisee's business, can it be stopped before it starts?...more
5/26/2016
/ Breach of Contract ,
Cell Phones ,
Franchise Agreements ,
Franchisee ,
Franchises ,
Franchisors ,
Irreparable Harm ,
Performance Incentives ,
Preliminary Injunctions ,
Royalties ,
Sales Commissions ,
Unfair or Deceptive Trade Practices ,
Unjust Enrichment