The Franchise Memorandum

On October 1, 2009, amendments to Illinois’ Franchise Disclosure Act, signed by Governor Quinn in late August, went into effect. These amendments change several provisions of Illinois franchise law, and bring the Disclosure Act in greater harmony with the amended FTC Franchise Rule. The most notable changes are as follows: 

• Franchise registrations in Illinois will now automatically expire 120 days after the franchisor’s fiscal year end. This new expiration date will supersede dates previously given to franchisors. As a result, if a franchisor’s current expiration date ...

In De Giovanni v. Jani-King Int’l., Inc., 2009 WL 2993798 (D. Mass. Sept. 21, 2009), the court considered plaintiffs’ motion to certify a class composed of Jani-King franchisees operating in Massachusetts. Plaintiffs brought two claims against Jani-King.  First, the plaintiffs claimed that Jani-King had engaged in various unfair business practices, including breach of contract, misrepresentation, unjust enrichment, and violation of Massachusetts’ unfair and deceptive trade practices law. Second, the plaintiffs claimed that Jani-King had violated ...

In Casual Dining Dev., Inc v. QFA Royalties, LLC, 2009 WL 2869335 (D. Colo. Sept. 3, 2009), an aggrieved Quizno’s development agent brought suit against QFA Royalties (the successor in interest to the Quizno’s corporation) for failure to renew its area director marketing agreement in alleged violation of the Wisconsin Fair Dealership Law (“WFDL”).  The development agent alleged that QFA sent a notice of nonrenewal without good cause, as required by the WFDL. The development agent also alleged that it had “performed all conditions precedent to renewal that had not been ...

A Florida federal court recently enjoined franchisor Panda Express from opening a restaurant adjoining a Chick-Fil-A restaurant location in Mount Dora, Florida. Chick-Fil-A, Inc. v. CFT Development, LLC, 2009 WL 2870617 (M.D. Fla. Sept. 3, 2009). When Panda Express acquired its property in 2007, it was aware that Chick-Fil-A enjoyed the benefit of a restrictive covenant prohibiting the property from being used as the site of “a quick service restaurant deriving twenty-five percent (25%) or more of its gross sales from the sale of chicken.” Panda Express resisted the ...

In Domino’s Pizza, LLC v. Robert J. Deak, 2009 WL 2867744 (W.D. Pa. Sept. 4, 2009), a Pennsylvania federal court granted Domino’s motion for judgment on the pleadings. Domino’s filed a declaratory action asking that the court declare as expired an area development agreement entered into with franchisee, Deak. 

Domino’s and Deak were parties to a development agreement that was set to expire on July 31, 2005. In early 2005, Domino’s advised Deak that the development agreement would not be renewed under the same terms. In response, Deak claimed that Domino’s had made ...

An Ohio federal court recently denied Wendy’s International Inc.’s motion to dismiss a franchisee’s claim that Wendy’s violated Sherman Act § 1 by requiring it to purchase food supplies from approved sellers in which Wendy’s had a financial interest. Burda v. Wendy’s Int’l, Inc., 2009 U.S. Dist. LEXIS 86044 (E.D. Ohio Sept. 21, 2009). The court held that the franchisee sufficiently pled a tying claim under a “Kodak lock-in” theory.   

When Plaintiff Robert Burda acquired a Wendy’s franchise in 1996, there were multiple Wendy’s-approved food suppliers. In ...

In Valpak Direct Marketing System, Inc. v. Maschino, 2009 WL 2942716 (11th Cir. Sep. 15, 2009), the Eleventh Circuit affirmed a trial court’s decision granting summary judgment to franchisor Valpak Direct Marketing Systems, finding that its former franchisees had failed to pay fees and were properly terminated. The franchisees, Mr. and Mrs. Maschino, had been issued a notice of default for nonpayment and were subsequently terminated when they failed to pay within the cure period set forth in the notice – even though they had made the payment prior to the date Valpak issued the ...

In Super 8 Motels, Inc. v. Rahmatullah, 2007 WL 2905463 (S.D. Ind. Sept. 9, 2009), an Indiana federal court granted the franchisor’s motion for summary judgment on the issue of liquidated damages against a former franchise owner of a Super 8 guest lodging facility. The franchisor sued the terminated franchisee to recoup its damages, including liquidated damages and interest in the amount of $407,811.20. The court enforced the liquidated damages provision contained in the Franchise Agreement, which went into effect if the Agreement was terminated for cause more that than two ...