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The Franchise Memorandum

Posts from May 2012 - Issue 155.

In a recent decision, a federal district court in the Eastern District of Pennsylvania granted summary judgment to a franchisor on a terminated franchisee’s counterclaim. In Vino 100, LLC v. Smoke on the Water, LLC, 2012 U.S. Dist. LEXIS 46465 (E.D. Penn. Mar. 30, 2012), a wine/tobacco store franchisee had been terminated for failure to pay royalties and for breaching its lease agreement for the franchised business premises due to nonpayment. As a defense and counterclaim to the franchisor’s action for damages, the franchisee asserted that the franchisor had made an unlawful ...

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In Dickey’s Barbecue Restaurants, Inc. v. GEM Investment Group, LLC, 2012 U.S. Dist. LEXIS 54448 (N.D. Tex. Apr. 18, 2012), a federal court in Texas denied a franchisor’s motion for a preliminary injunction to enforce noncompetition covenants. The defendants had signed an agreement with Dickey’s Barbecue to develop three franchised restaurants in the state of Washington. During the construction of their first restaurant, the defendants dropped out of training and established an independent restaurant at their formerly franchised location.

Despite a contractual ...

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Posted in Settlement

A Michigan federal court found a former franchisee in contempt of a court order after she failed to take affirmative steps to transfer the telephone number of her terminated franchise to the franchisor. In Allegra Network LLC v. Bagnall, 2012 U.S. Dist. LEXIS 48918 (E.D. Mich. Apr. 6, 2012), the franchisor filed a motion for preliminary injunction after learning that the franchisee was operating a competing printing business at the location at which it had previously operated its franchise. To settle that matter, the parties entered into a stipulated injunction in which the former ...

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Posted in Terminations

In Husain, et al. v. McDonald’s Corp., et al., 2012 Cal. App. LEXIS 515 (Cal. Ct. App. Apr. 30, 2012), a California appellate court upheld the trial court’s grant of a preliminary injunction allowing McDonald’s franchisees to continue operating their franchises during the pendency of a lawsuit against the franchisor. The plaintiffs owned and operated multiple McDonald’s franchises in Northern California. They brought suit and asked the trial court to force McDonald’s to allow them to continue operating their franchises during the pendency of the litigation, which the ...

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In a case litigated by Gray Plant Mooty, the United States District Court for the Western District of North Carolina recently granted a franchisor’s motion for a preliminary injunction to prevent a former franchisee from operating a competing business. In Outdoor Lighting Perspectives Franchising, Inc. v. OLP-Pittsburgh, Inc., 2012 U.S. Dist. LEXIS 53583 (W.D.N.C. Apr. 17, 2012), Outdoor Lighting Perspectives Franchising (“OLP”) sought a preliminary injunction to enforce the covenant against competition in the franchise agreement. The clause prevented the ...

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In Anago Franchising, Inc. v. IMTN, Inc., 2012 U.S. App. LEXIS 8120 (7th Cir. Mar. 29, 2012), Anago Franchising terminated one of its subfranchisors, IMTN. After termination, Anago discovered that IMTN had sent a letter to many of its customers advising them that it would no longer be operating under the franchisor’s name, but instead would operate under a competing trademark and software system. Anago commenced an action, claiming that IMTN’s use of its trademarks in the letter would cause confusion regarding IMTN’s continued affiliation with Anago. Specifically, Anago ...

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A U.S. District Court in Georgia granted a franchisor’s motion to dismiss certain claims because of a contractual limitations period, but allowed the plaintiffs’ RICO claims to move forward. In Massey, Inc., et., al., v. Moe’s Southwest Grill, LLC., et. al., 2012 U.S. Dist. LEXIS 53676 (N.D. Ga. April 17, 2012), Plaintiffs claimed that the franchisor failed to properly disclose to plaintiffs that its owner held an interest in a designated supplier. Although the owner held an interest in the supplier as early as 2001, the franchisor failed to disclose that interest until its ...

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Posted in Trademarks

Last month, the United States Court of Appeals for the Fourth Circuit issued a highly anticipated ruling on the legality of the use of others’ trademarks in Google’s keyword ad/sponsored links program, AdWords. The case is Rosetta Stone Ltd. v. Google, Inc., 2012 U.S. App. LEXIS 7082 (4th Cir. Apr. 9, 2012). The appellate court reversed most of a 2010 ruling by a federal district court in Virginia, which had granted summary judgment in Google’s favor on all claims. The lawsuit claimed that the search giant committed direct and contributory trademark infringement and trademark ...

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In Ohio Learning Centers, LLC et al. v. Sylvan Learning, Inc. et al., No. RDB-10-1932, 2012 U.S. Dist. LEXIS 57151 (D. Md. Apr. 24, 2012), the United States District Court for the District of Maryland granted an Ohio-based franchisee’s motion to dismiss for lack of personal jurisdiction in a case brought against it and the franchisor by another Ohio-based franchisee, holding that the defendant franchisee did not have sufficient minimum contacts with the state of Maryland. The plaintiff franchisee had sued both the franchisor and defendant franchisee in Maryland alleging ...

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Posted in Retrospective

This is the fourth in our year-long series of articles reviewing the recent progeny of what we identified in our December 2007 ten-year anniversary edition as the most significant franchise case decisions summarized in Issues 1 through 100 of The GPMemorandum, which covered the period from late 1997 through 2007. The fourth of those key cases was actually a series of decisions in a class action named Collins v. International Dairy Queen et al., which was venued in federal court in Macon, Georgia, from 1994 through 2000. Our firm represented IDQ and its subsidiary, franchisor American ...

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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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