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The Franchise Memorandum

Posts from January 2012 - Issue 151.
Posted in International

On February 1, 2012, amendments to China’s Commercial Franchise Registration Administrative Measures will become effective, clarifying the 2007 Measures. Among the clarifications in the 2011 Measures are:

  1. Foreign franchisors must register with the Chinese Ministry of Commerce (MOFCOM) in Beijing, not one of the provincial Commerce Ministries.
  2. Amendments to registrations must be filed when Chinese company registration information for the franchisor changes, when a change in the status of the franchisor’s intellectual property rights occurs, and when a change in the ...
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Posted in Trademarks

In Big O Tires, LLC v. Felix Bros. Inc., 2011 U.S. Dist. LEXIS 143087 (D. Colo. Dec. 13, 2011), a federal district court in Colorado denied a franchisor’s motion for summary judgment on its trademark and trade dress claims against the owners of three Big O Tires franchises in California. The defendants had elected not to renew their franchise agreement for one of the units, and requested early termination of the remaining two units. After Big O, the franchisor, declined that request, the defendants continued to operate their remaining two franchises and changed the name of their third ...

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The United States District Court for the District of New Jersey recently enforced a franchisor’s noncompete agreement in two consolidated cases. In the first case, Jackson Hewitt Inc. v. H.E.A.T. Enterprises, LLC, 2011 U.S. Dist. LEXIS 144759 (D.N.J. Dec. 15, 2011), the court had previously issued an injunction against the corporate defendant and its owner. Jackson Hewitt then asked the court to apply the injunction against two individuals, Elter and Fournier, who were associated with the business but were not signatories to the franchise agreement. Jackson Hewitt alleged ...

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The United States District Court for the Middle District of Florida recently dismissed a hotel franchisee group’s claim against several hotel franchisor entities for violation of the New Jersey Consumer Fraud Act (NJCFA). Amar Shakti Enters., et al. v. Wyndham Worldwide, Inc., et al. , 2011 U.S. Dist. LEXIS 146903 (M.D. Fla. Dec. 21, 2011). The franchisee group brought a variety of claims against the franchisors of multiple hotel brands in connection with the franchisors’ alleged practices of automatically enrolling hotel guests in brand loyalty programs and automatically ...

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Posted in Trademarks

A United States District Court in California last month dismissed Pinkberry’s case against parties who registered the trademark “Pinkberry” in Japan, concluding the Lanham Act did not extend to defendants’ activities outside the United States. Pinkberry, Inc., et al., v. JEC International Corp., et al., 2011 U.S. Dist. LEXIS 140669 (C.D. Cal. Dec. 7, 2011). The defendants registered the trademark at issue in Japan but never used it. After unsuccessfully attempting to purchase the right to the trademark from defendants, Pinkberry initiated a proceeding in Japan to ...

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Posted in Trademarks

In Century 21 Real Estate, LLC v. Destiny Real Estate Properties, et al., 2011 U.S. Dist. LEXIS 147075 (N.D. Ind. Dec. 19, 2011), the United States District Court for the Northern District of Indiana held that a holdover franchisee’s continued unauthorized use of a franchisor’s trademark constitutes use of a counterfeit mark, which allows the franchisor to seek additional damages and attorneys’ fees and costs under the Lanham Act. To establish counterfeiting, a plaintiff must prove that the mark is identical with or substantially indistinguishable from a registered mark ...

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Buffalo Wild Wings (BWW) recently prevailed on its motion for a preliminary injunction to enjoin three franchisees from continuing to use BWW’s trademarks after the termination of their franchise agreements. Buffalo Wild Wings Int’l, Inc. v. Grand Canyon Equity Partners LLC, 2011 U.S. Dist. LEXIS 141921 (D. Minn. Dec. 9, 2011). BWW terminated the franchisees for nonpayment, but allowed them to find a purchaser pursuant to a Limited Reinstatement Agreement. The Agreement would automatically expire and the franchisees would be required to immediately cease using the marks if ...

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The Consumer Financial Protection Bureau (CFPB) has announced that it will assume certain enforcement responsibilities for the FTC’s Franchising Trade Regulation Rule. Details of how enforcement responsibilities will be shared with the FTC have been awaiting confirmation of a chair of the CFPB. Richard Cordray was named chair last week by President Obama.

Under Section 1063 (i) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB was required to publish in the Federal Register by July 21, 2011, a list of the rules and orders for which it would assume ...

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Posted in Insurance

A federal court in California denied a commercial general liability insurance carrier’s motion for summary judgment seeking a declaration that it had no duty to defend a former franchisee sued for trademark violations by the franchisor. Tower Ins. Co. of New York v. Capurro Ent., Inc., 2011 U.S. Dist. LEXIS 144436 (N.D. Cal. Dec. 15, 2011). Certa Pro, a national franchisor of painting and decorating services franchises, had entered into a franchise agreement with defendant Capurro. After termination, Capurro began marketing a new business using Certa Pro’s marks, including ...

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Franchisors who wish to exhibit at the June 2012 International Franchise Expo (IFE), being held for the first time this year in New York, may have the opportunity to do so without registering their franchises in the state. In October, the New York Office of the Attorney General published a unique franchise registration exemption under its “general” exemption powers pursuant to N.Y. Gen. Bus. L. § 684(1). Although the exemption will not allow franchisors to “sell” franchises or distribute Franchise Disclosure Documents, for $150 per day franchisors can attend the 3-day IFE ...

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In Samica Enterprises, LLC v. Mail Boxes Etc., Inc., 2011 U.S. App. LEXIS 25530 (9th Cir. Dec. 1, 2011), the court affirmed a district court’s grant of summary judgment in favor of two franchisors who were sued by a large number of their franchisees under California law relating to their initial investment in the franchises and the franchisors’ administration of the franchise system. More than 200 franchisees of The UPS Store and Mail Boxes Etc. franchise systems brought various claims under the California Franchise Investment Act (CFIL) and common law against UPS and MBE. The ...

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Posted in Retrospective

This is the first of our year-long series of articles reviewing the progeny of what we identified in our ten-year anniversary edition in December 2007 as the most significant franchise case decisions summarized in Issues 1 through 100 of The GPMemorandum, covering the period from late 1997 through 2007. The first of those cases was the groundbreaking decision on appeal in Broussard v. Meineke Discount Muffler Shops, 155 F.3d 331 (4th Cir. 1998). The decision issued by the Fourth Circuit in that case reversed a large judgment that had been entered against the franchisor, primarily ...

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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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