News & Analysis as of

Franchisors Contract Termination

Lewitt Hackman

Franchisor 101: All-Franchisor-Can-Eat

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A federal district court in New Jersey recently found that restaurant franchisor Golden Corral was entitled to nearly $1.2 million in consequential damages after terminating a franchised Golden Corral restaurant....more

Lathrop GPM

Michigan Court of Appeals Affirms Dismissal of Certain Franchisee Claims Against Franchisor Due to Release of Liability and...

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The Michigan Court of Appeals recently affirmed a trial court’s dismissal of certain claims by franchisees Red Fit, LLC and Cali Red, LLC against franchisor Red Effect International Franchise, LLC based on a release of...more

Lathrop GPM

Federal Circuit Reverses Preliminary Injunction on Franchisor’s Patent and Trade Dress Infringement Claim

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The Federal Circuit Court of Appeals reversed a preliminary injunction granted as to franchisor Urban Air’s patent and trade dress infringement claims against Kangaroo, LLC. UATP IP, LLC v. Kangaroo, LLC, 2024 WL 658205 (Fed....more

Lewitt Hackman

Franchisor 101: Getting Away With Tax (Franchisor) Evasion

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A Pennsylvania federal court refused to enforce non-competition and non-solicitation covenants in a franchise agreement of a nationwide tax preparation service franchisor. The court dismissed the franchisor’s request for...more

Lathrop GPM

Virginia Federal Court Denies Franchisor’s Motion for Preliminary Injunction

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A federal court in Virginia denied a franchisor’s motion for preliminary injunction against a former franchisee violating the franchise agreement’s post-termination noncompete. JTH Tax, LLC v. Younan, 2023 WL 6304865 (E.D....more

Lewitt Hackman

Franchisor 101: Liquidated Damages, 30 Minutes or Less

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A Michigan district court held a franchisee breached its obligations under its franchise agreements and upheld the liquidated damages clause in the agreements....more

Lathrop GPM

North Carolina Federal Court Rules That Franchise Agreement’s 1-Year Statute of Limitations Clause Barred Action Against...

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A federal court in North Carolina recently dismissed a complaint brought by Bigelow Corporation against its franchisor Hound Town USA because the claims were time barred. Bigelow Corporation v. Hounds Town USA, LLC, 2023 WL...more

Lathrop GPM

Michigan Federal Court Grants Summary Judgment Enforcing Franchise Agreement Termination and Awarding Liquidated Damages and...

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A federal court in Michigan granted Little Caesar Pizza Enterprises, Inc.’s motion for summary judgment seeking to enforce its termination of the franchise agreements between it and franchisee S&S Pizza Enterprises, Inc....more

Lathrop GPM

Minnesota Bankruptcy Court Enjoins Franchisee’s Breach of Post-Termination Noncompete

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A Minnesota bankruptcy court granted Fantastic Sams summary judgment and enjoined a former franchisee from violating the post-termination noncompete in its franchise agreements after the franchisee rejected the agreements in...more

Lewitt Hackman

Franchisee 101: Court Taxes Franchisor’s Restrictive Covenants

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The Second Circuit Court of Appeals affirmed a district court’s order denying a franchisor’s request for preliminary injunction against a terminated franchisee to enforce covenants not to compete or solicit former clients....more

Lewitt Hackman

Franchisor 101: Pizza Franchisor’s Release Overcooked

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A federal district court denied a pizza franchisor’s motion to dismiss a former franchisee’s complaint, finding the former franchisee sufficiently pleaded the franchisor coerced the franchisee into signing a general release....more

Lathrop GPM

Oklahoma Federal Court Grants Franchisor’s Post-Termination Motion for Preliminary Injunction Related to Trademark Infringement

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A federal court in Oklahoma granted franchisor Pizza Inn, Inc.’s motion for preliminary injunction preventing two former Pizza Inn franchisees – Odetallah and Allen’s Dynamic Food – from operating competing pizza restaurants...more

Lewitt Hackman

Franchisee 101: Default! Default!

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A federal district court in Michigan granted franchisor Little Caesar Enterprises, Inc. (LCEI) a default judgment against its former franchisee for violating the terms of the franchise agreement....more

Lewitt Hackman

Franchisor 101: Promises to Prospectives

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A federal district court in New Jersey denied Travelodge Hotels’ motion for partial summary judgment against a former franchisee, holding there are genuine issues of fact as to Travelodge’s breach of contract claims....more

Lathrop GPM

Connecticut Federal Court Denies Franchisee’s Motion for Temporary Restraining Order Following Termination

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A federal court in Connecticut denied a franchisee’s motion for a temporary restraining order permitting it to operate until the court could hear a preliminary injunction motion. A.B. Corp. v. Dunkin' Donuts Franchising, LLC,...more

Lewitt Hackman

Franchisor 101: No Repairing Delayed Filing

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A New Jersey federal court denied a franchisor’s motion for preliminary injunction against a franchisee due to franchisor’s 11 month delay in bringing the motion. Franchisee entered into two franchise agreements with H-1 Auto...more

Stark & Stark

The How, When, and Why of Franchise Termination in New Jersey

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Terminating a franchise can pose several potential pitfalls and expose a franchisor to significant liability. A franchisor may not simply cancel, terminate, or refuse to renew a franchisee for just any reason....more

Lewitt Hackman

Franchisor 101: Breaking Up Is Hard to Do

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A federal district court in Nevada partly denied a franchisor’s summary judgment motion on claims brought by a franchisee. IJL Midwest entered into several franchise agreements with a franchisor of a dating and...more

Dorsey & Whitney LLP

“Everything zen? Everything zen? I don’t think so...” - MAE Clauses in the Time of COVID

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On March 1, 2022, the Delaware Court of Chancery delivered a memorandum opinion ordering a yoga franchisor to complete the acquisition of its franchisee’s chain of yoga studios. The case arose out of the parties’ pre-COVID...more

Lewitt Hackman

Franchisor 101: No Tax on Renewals

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A federal court in Virginia denied tax franchisor, Liberty Tax’s, motion to dismiss complaints by two of its area developers (“ADs”). The ADs claimed Liberty Tax breached their contract for wrongfully terminating, failing to...more

Stark & Stark

What to do When Your Franchisee Files for Bankruptcy

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With the economic downturn caused by COVID-19, many expected a tidal wave of commercial bankruptcy filings. After an initial spike of retail bankruptcy cases at the outset of the pandemic, the onslaught of bankruptcy has not...more

Lewitt Hackman

Franchisee 101: Strong Releases Protect Fitness Franchisor

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A franchisee sued its franchisor, OsteoStrong Franchising, LLC, in Texas federal court after OsteoStrong terminated the franchise and development agreements. Termination occurred after the franchisee failed to timely develop...more

Lewitt Hackman

Franchisor 101: Pizza Termination in 30 Days or Less

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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

Lewitt Hackman

Franchisor 101: Competing With a Non-Compete Covenant?

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A federal court in Louisiana granted a preliminary injunction against a former franchisee of Liberty Tax Service for breaching post-termination covenants under a franchise agreement. Liberty Tax entered into franchise...more

Lathrop GPM

The Franchise Memorandum - Issue # 268 (Distribution Issue)

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Welcome to The Franchise Memorandum by Lathrop GPM. Periodically, The Franchise Memorandum focuses on topics primarily of interest to companies that use distributors and dealers rather than manage a business format franchise...more

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