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The Franchise Memorandum

Posts from June 2012 - Issue 156.
Posted in Contracts

In Window World of Chicagoland, LLC v. Window World, Inc., 2012 U.S. Dist. LEXIS 71615 (N.D. III. May 23, 2012), the franchisee entered into multiple licensing agreements with Window World that granted him exclusive trade areas in certain Illinois counties. The franchisee alleged that representatives of Window World assured him that his exclusive territories would be protected by the use of buffer areas around them and that if a territory adjacent to any of his exclusive territories was to be sold, he would have the "right of first refusal" to purchase the territory. When the ...

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A California federal court recently granted in part a franchisor's motion to dismiss the franchisee's single claim for breach of the implied covenant of good faith and fair dealing. In Dos Beaches, LLC v. Mail Boxes Etc., Inc., 2012 U.S. Dist. LEXIS 73248 (S.D. Cal. May 25, 2012), the franchisee claimed that Mail Boxes Etc. breached the implied covenant by (1) selecting a poor location for the franchise, (2) negotiating a lease that prevented the display of the UPS logo, (3) interfering with lease modifications, (4) refusing to provide marketing materials, (5) refusing to grant a ...

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A Pennsylvania district court judge held a former franchisee in contempt for "blatantly violating" the court's injunction order and continuing to operate a competing business after terminabon of a franchise agreement. In Marblelife, Inc. v. Stone Resources, Inc., 2012 U.S. Dist. LEXIS 68223 (E.D. Pa. May 16, 2012), Stone Resources was a Marblelife franchisee in the business of restoring and repairing granite surfaces until the agreement expired in April 2010. The franchisee and its principal agreed that, upon expiration, they would not operate a competing business for two ...

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Posted in Arbitration

In Senior Services of Palm Beach, LLC v. ABCSP Inc., 2012 U.S. Dist. LEXIS 79038 (S.D. Fla. June 7, 2012), a Florida federal court dismissed the case brought by Senior Services of Palm Beach against ABCSP Inc., a franchisor of home health care businesses, and granted ABCSP's motion to compel arbitration in California. Gray Plant Mooty represented franchisor ABCSP in this case.

Senior Services owned an ABCSP franchise in southern Florida. It brought suit against ABCSP over various disputes relating to its franchise agreement. ABCSP filed a motion to compel arbitration, arguing that ...

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Posted in Retrospective

Continuing our yearlong series of articles looking back at the ten cases we identified as the most significant franchise decisions summarized in the first 100 issues of The GPMemorandum, we now cPnsider the evolution of encroachment claims since the Eleventh Circuit's decision in Burger King v. Weaver (1999), in which the court found the Scheck decision to be "logically unsound." We reported in our ten-year anniversary issue in 2007 that "once-routine encroachment claims based on a duty of good faith and fair dealing have been few and far between" since the court's decision in the ...

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Posted in Arbitration

In NIACCF, Inc. v. Cold Stone Creamery, Inc., 2012 U.S. Dist. LEXIS 70256 (S.D. Fla. May 21, 2012), the U.S. District Court for the Southern District of Florida stayed an action brought by NIACFF, a national organization of Cold Stone franchisees, against Cold Stone pending the outcome of a motion to compel arbitration of the individual franchisees' claims. NIACCF sued Cold Stone in federal court regarding Cold Stone's alleged failure to provide accounting and disclosures related to its receipt of third-party payments, such as vendor rebates and gift cards. Cold Stone moved to ...

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Posted in Contracts

In DNB Fitness, LLC v. Anytime Fitness, LLC , 2012 U.S. Dist. LEXIS 74287 (N.D. III. May 30, 2012), a federal district court only partly granted a franchisor's motion to dismiss, as the court refused to enforce a clause that required mediation before the filing of a lawsuit. The case was a challenge to Anytime Fitness' practice of charging franchisees when they enrolled their health club members in a website called "Anytime Health." Several franchisees sued Anytime for breach of contract and alleged a failure of appropriate disclosure. The plaintiffs also alleged that Anytime used its ...

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Posted in Arbitration

The power to determine the appropriateness of a class arbitration was conferred on an arbitrator last month in a somewhat unusual context in Medicine Shoppe International, Inc, v. Edlucy, Inc., et al., 2012 U.S. Dist. LEXIS 67133 (E.D. Mo. May 14, 2012). This decision arose on franchisor Medicine Shoppe International's (MSI's) federal court motion to enjoin a collective arbitration, as the franchisor argued that separate arbitration agreements necessitated individual arbitration proceedings. In this case, it was MSI that was in the position of arguing that the court (rather ...

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On March 29, 2012, the State of Washington amended its Franchise Investment Protection Act to align it with the FTC Franchise Rule. These amendments became effective June 7, 2012, and made the following changes to the act:

  • Changed the term "offering circular" to "disclosure document" throughout the statute;
  • Brought the definition of "prospective franchisee" in line with the FTC Franchise Rule definition;
  • Changed the time period for which a prospective franchisee must have a disclosure document from 10 business days to 14 calendar days; and
  • Added a provision stating that a ...
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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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