A franchisee sued real estate franchisor Century 21 for a declaration whether the franchisee could end its franchise agreement early despite a provision that deleted the franchisee’s early termination right. Noting the...more
On competing motions for a temporary restraining order (“TRO”) by ReBath – a nationwide bathroom remodeling franchisor, and its terminated franchisee, ReBath prevailed in restraining the ex-franchisee’s further operations. A...more
6/30/2021
/ Breach of Contract ,
Contract Termination ,
Counterclaims ,
Covenant of Good Faith and Fair Dealing ,
Failure To Pay ,
Franchise Agreements ,
Franchisee ,
Franchisors ,
Implied Covenants ,
Lowe's ,
Royalties ,
TRO
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
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
An insurance coverage case brought by McDonald’s and two of its franchisees (collectively, “McDonald’s”), raised a novel question in Illinois state court. The question was whether or not costs to comply with a mandatory...more
4/30/2021
/ Bodily Injury ,
Commercial General Liability Policies ,
Coronavirus/COVID-19 ,
Damages ,
Duty to Defend ,
Franchisee ,
Franchisors ,
Health and Safety ,
Injunctions ,
Insurance Claims ,
Insurance Industry ,
McDonalds ,
Negligence ,
Public Nuisance
A federal court in Connecticut ruled against an urgent care franchisor’s motion to dismiss, finding the plaintiff had standing to sue under Article III of the U.S. Constitution. The court still dismissed the plaintiff’s...more
4/29/2021
/ Article III ,
Choice-of-Law ,
Dismissals ,
Forum Selection ,
Franchise Acts ,
Franchise Agreements ,
Franchisors ,
Goods or Services ,
Sherman Act ,
Standing ,
Successor Interests
A federal court in Michigan granted 7-Eleven’s motion for summary judgment, enforcing the franchisor’s right to terminate a franchisee with repeated defaults, even though each default had been cured.
7-Eleven’s franchise...more
A federal court in California certified a class of Matco Tools franchisees who claimed to be misclassified by Matco as independent contractors rather than employees. They claimed Matco did this to avoid obligations owed to...more
The California Legislature just approved Senate Bill 95 which, once signed by Governor Gavin Newsom, will dramatically expand COVID-19 supplemental paid-sick leave....more
A federal court in New Jersey denied a 7-Eleven franchisee’s motion for a temporary restraining order. The franchisee sought an order enjoining 7-Eleven from enforcing various franchise agreement provisions, including charges...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
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
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