The Franchise Memorandum

The United States District Court in the Northern District of Ohio recently ruled in favor of Buffalo Wild Wings (“BWW”) and against its former licensee, BW-3 of Akron, on cross motions for summary judgment. Buffalo Wild Wings, Inc. v. BW-3 of Akron, Inc., 2017 WL 5467156 (N.D. Ohio Nov. 14, 2017). The case began when BWW sent BW-3 – the only licensee in its system – a notice of termination after BW-3 did not cure its failure to comply with the remodel requirements imposed by the parties’ licensing agreement. However, the notice stated that the termination would be held in abeyance pending judicial resolution of BWW’s lawsuit for a declaration that it had the right to terminate. BWW also asserted Lanham Act claims for trademark infringement and unfair competition based on BW-3’s use of the BUFFALO WILD WINGS trademarks and system without complying with the brand’s image standards. In response, BW-3 debranded its BUFFALO WILD WINGS restaurant and opened the location under a new name. It also asserted counterclaims against BWW for, among other things, wrongful termination. Both parties moved for summary judgment on the other’s claims.

The court granted summary judgment in favor of BWW on BW-3’s counterclaims and denied BW-3’s summary judgment on BWW’s claims. Specifically, the court held that BW-3’s wrongful termination claim failed because BWW had not terminated the parties’ license agreement. Rather, BW-3 elected to abandon it. The court also rejected BW-3’s argument that BWW had repudiated the agreement by asserting Lanham Act claims. As the court explained, BWW was entitled to pursue Lanham Act claims while the license remained in effect, as long as it could demonstrate that BW-3’s use of the BUFFALO WILD WINGS marks was without consent, or that BW-3’s unauthorized use of the marks was likely to cause customer confusion. BWW had offered such evidence arising from BW-3’s use of the marks while failing to comply with BWW’s brand image standards.