A Texas court of appeals affirmed judgment in favor of a plaintiff who claimed a franchisor was vicariously liable for a franchisee’s employee’s wrongful conduct....more
The Eleventh Circuit Court of Appeals reversed a district court’s summary judgement order, granting a chocolate shop franchisor’s breach of contract and unfair competition claims. The appellate court concluded there were...more
A federal appellate court declined to enforce a choice-of-forum clause finding enforcement would conflict with Michigan’s Franchise Investment Law (“MFIL”).
Lakeside Surfaces, Inc., a maker of stone countertops, sued...more
A Texas appeals court affirmed a lower court judgment in favor of Pizza Hut and its franchisee for claims of an alleged sexual assault by a delivery driver. The appellate court held Pizza Hut was not liable for the...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
A San Francisco franchisee of the It’s Just Lunch matchmaking system received an offer to buy the franchised business for about $146,000 with the final price to be determined. Under the offer, the actual purchase price would...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
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 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 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
Many will recall the 2018 national outbreak of E. coli bacteria linked to romaine lettuce. In April that year, an Ohio franchisor ordered its restaurants to stop serving romaine lettuce and dispose of any remaining romaine...more
2/27/2020
/ Appeals ,
Commercial Bankruptcy ,
E-Coli ,
Failure to Comply ,
Food Contamination ,
Food Poisoning ,
Food Safety ,
Franchise Agreements ,
Franchise Termination ,
Franchisee ,
Franchisors ,
Notice of Emergency Action ,
Public Health ,
Public Safety ,
Reaffirmation ,
Safety Violations
The Ninth Circuit ruled that a California Matco Tool franchisee, John Fleming, could bring a class action wage and hour suit in California, even though a forum selection clause in the distribution agreement specified Ohio...more
2/3/2020
/ Anti-Waiver Provisions ,
Appeals ,
Arbitration Agreements ,
Class Action ,
Forum Selection ,
Franchise Agreements ,
Franchise Laws ,
Franchisee ,
Franchisors ,
Independent Contractors ,
Misclassification ,
Private Attorneys General Act (PAGA) ,
Sales & Distribution Agreements ,
Severability Doctrine ,
State Labor Laws ,
Wage and Hour
A federal appellate court held that a franchisee must indemnify a franchisor for its litigation defense costs, vacating a district court’s order of summary judgment for the franchisee....more
A California Court of Appeal held that courts should not enforce forum selection clauses in contracts that also contain a jury waiver. For franchisors that have California franchisees, this ruling could complicate the ability...more
11/26/2019
/ Appeals ,
Burden of Proof ,
Burden-Shifting ,
Choice-of-Law ,
Conflicts of Laws ,
Contract Terms ,
Forum Selection ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Jury Waivers ,
Unenforceable Contract Terms
A federal appeals court upheld a lower court’s refusal to order arbitration against a franchisee who bought an existing franchise. This was despite a provision in the franchise agreement to arbitrate “most disputes.”...more
Ten years after the franchisor of the EXIT real estate system entered into a franchise agreement for a franchisee to operate an EXIT franchise in Maitland, Florida, the parties entered into another franchise agreement for a...more
7/31/2019
/ Appeals ,
Breach of Contract ,
Damages ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Fraud ,
Oral Contracts ,
Promissory Estoppel ,
Real Estate Transactions ,
Reversal ,
Statute of Frauds ,
Unjust Enrichment ,
Void and Unenforceable ,
Written Agreements
Eskimo Hut, a franchisor of convenience stores that sell frozen daiquiris-to-go, convinced a Texas appellate court that it would probably win on claims that South Plains, a franchisee using a nonconforming drink mix, breached...more
The Ninth Circuit sent shockwaves through the franchise industry in ruling that last year’s California Supreme Court decision broadening who may bring wage misclassification claims (Dynamex v. Superior Court) applied...more
6/1/2019
/ ABC Test ,
Appeals ,
CA Supreme Court ,
Employer Liability Issues ,
Franchisee ,
Franchises ,
Franchisors ,
Indemnification ,
Independent Contractors ,
Joint Employers ,
Misclassification ,
Remand ,
Retroactive Application ,
Reversal ,
Statute of Limitations ,
Wage and Hour
A federal district court upheld an arbitration panel’s decision to deny attorneys’ fees to Benihana, even though Benihana won a dispute with its licensee. The licensee started arbitration claiming Benihana breached the...more
3/29/2019
/ Appeals ,
Arbitration ,
Arbitration Awards ,
Attorney's Fees ,
Breach of Contract ,
Contract Termination ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Good Cause ,
License Agreements ,
Licensees ,
Prevailing Party ,
Reaffirmation ,
Restaurant Industry
A state appellate court (“Court”) in New Mexico upheld a decision by the state’s Taxation and Revenue Department (“Department”) that royalties paid to out-of-state franchisors are subject to the state’s gross receipts tax...more
A federal Appeals Court has held that an offer to extend a franchisee’s buyback period lacked consideration required to form an enforceable contract and, instead, was an unenforceable gratuitous promise by the franchisor....more
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
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 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
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