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The Franchise Memorandum

Posts from September 2009 - Issue 123.

A Vermont federal court recently granted, in part, a Ben & Jerry’s motion to dismiss the plaintiffs’ complaint regarding allegations of fraudulent inducement, fraudulent nondisclosure, fraud, estoppel, and negligent misrepresentation pertaining to the information set forth in Item 19 of the Ben & Jerry’s Uniform Franchise Offering Circular.  Sherman v. Ben & Jerry’s Franchising, Inc., 2009 WL 2462539 (D. Vt. Aug. 10, 2009). The plaintiffs are former Ben & Jerry’s franchisees who owned and operated a shop in Blacksburg, Virginia. The plaintiffs brought suit ...

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Posted in Discrimination

The United States District Court for the Southern District of New York issued an opinion late last month in DiPilato v. 7-Eleven, Inc., 2009 WL 2633130 (S.D.N.Y. Aug. 25, 2009), that serves as an important reminder that franchisors should maintain independent contractor relationships with franchisees. The plaintiff was a 43-year-old unmarried female applicant who was denied a 7-Eleven franchise after allegedly being told by a franchise sales employee that a single female over the age of 40 would not be a suitable franchisee. DiPilato sued 7-Eleven and several of its employees for ...

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Posted in Damages

The opinion recently handed down in Meineke Car Care Centers, Inc. v. RLB Holdings, LLC, 2009 WL 2461953 (W.D.N.C. Aug. 10, 2009), limited a franchisor’s rights to seek future royalties and lost profits where a franchise agreement does not specifically provide for such damages. Meineke was seeking to recover past-due royalty and advertising fees, along with lost prospective fees and future profits, from franchisees who operated four locations that closed before the expiration of the franchise agreements. The parties filed cross motions for summary judgment on Meineke’s ...

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In Victory Lane Quick Change, Inc. v. Hoss, WL 2461260 (E.D. Mich. Aug. 10, 2009), a court denied a franchisor’s attempt to enforce the covenant against competition contained in the franchise agreement. The court denied the franchisor’s motion for a preliminary injunction because the franchisor had granted another franchise within three miles of the franchisee’s business and because of the nonproprietary nature of the business. 

The franchise agreement in this case granted the franchisee a license to operate a Victory Lane Quick Oil Change Center in Howell, Michigan. The ...

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In Dunkin’ Donuts Franchised Restaurants, LLC, et al. v. Fatima & Ali, Inc., et al., Case No. 09-60793-WPD (S.D. Fla. Aug. 14, 2009), a Florida federal court last month entered a preliminary injunction prohibiting the franchisees from infringing on Dunkin’ Donuts’ trademarks after termination for failure to pay franchise and advertising fees.

The court found that Dunkin’ Donuts demonstrated a likelihood of success on the merits of its claims. The franchisees had argued that because Dunkin’ Donuts sought a preliminary injunction to cease use of its trademarks, the ...

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Posted in Contracts

In Cottman Transmission Systems, LLC v. FVLR Enterprises, LLC, 2009 WL 2488505 (Tex. Ct. App. Aug. 17, 2009), a Texas appellate court affirmed a jury’s finding that Cottman was liable for the lease obligations of its terminated franchisee even though Cottman was not a signatory to the lease. The franchisee and landlord had entered into a 10-year lease that included a lease rider giving Cottman the option to assume the lease upon its termination or expiration. Cottman did not sign either the lease or the rider.  

After Cottman terminated the franchisee for abandonment, the landlord ...

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A Texas federal court recently issued a preliminary injunction preventing the defendants/franchisees from continuing to use plaintiff TGI Friday’s Inc.’s trademarks following the termination of the parties’ franchise agreements. TGI Friday’s Inc. v. Great Northwest Restaurants, Inc. et al., 2009 WL 2568269 (N.D. Tex. Aug. 20, 2009). 

The court held that TGI Friday’s had demonstrated a substantial likelihood that it would prevail on the merits of its termination case because there was no dispute that the franchisees had ceased paying franchise fees and continued to ...

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Posted in Trademarks

In Doctor’s Associates Inc. v. Agnello, 2009 WL 2526171 (S.D.N.Y. July 28, 2009), a federal magistrate judge considered a request by a franchisor for damages against a former franchisee who had used the franchisor’s trademarks in connection with the operation of a strip club. The franchisee had formerly operated a Subway restaurant. After the franchisor terminated his franchise agreement, the franchisee continued to use the Subway trademarks to operate a deli at a different location during the day, and also began operating a strip club at that deli at night, advertised as ...

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A Virginia federal court late last month granted an injunction to franchisor Little Caesar against both its former franchisee and a nonsignatory to the franchise agreement, including requiring the third party to stop operating a competing business at the location of the former franchise. The case is Little Caesar Enter., Inc. v. Little Caesar’s, Va., Inc., No. 2:09-cv-00112-JBF-JEB (E.D. Va. Aug. 28, 2009). The defendant was granted a franchise and told, before opening the restaurant, that Little Caesar would not entertain any changes in ownership of the franchise until six ...

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About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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