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The Franchise Memorandum

Posts from June 2013 - Issue 168.
Posted in Encroachment

In CCF, LLC v. Pimental, 2013 R.I. Super. LEXIS 98 (R.I. Super. Ct. May 24, 2013), a Wendy’s franchisee in East Greenwich, Rhode Island, sued McDonald’s Corporation and a town official challenging the approval of various permits and approvals issued by the local planning board and zoning board that allowed for a McDonald’s drive-through restaurant across from the Wendy’s franchisee’s restaurant. On the parties’ cross-motions for summary judgment, the court found for McDonald’s. It weighed whether the Wendy’s franchisee had standing to appeal the decisions of ...

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Posted in Arbitration

A federal court in Illinois found that an arbitration agreement in a franchisor’s online employment application is valid and enforceable, and held that the arbitrator should decide whether the arbitration agreement allows class arbitration. Chatman v. Pizza Hut, Inc., 2013 U.S. Dist. LEXIS 73426 (N.D. Ill. May 23, 2013). The case was brought as a class action in state court by a delivery driver on behalf of himself and all other similarly situated employees. The plaintiff asserted claims against Pizza Hut and the franchisee under the Illinois Wage Payment and Collection Act and ...

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When two franchise agreements contained contradictory choice-of-law and forum selection clauses, the United States District Court for the Northern District of Ohio decided that Pennsylvania law should control, but that it had personal jurisdiction over the franchisee and Ohio was the appropriate forum. Mgmt. Recruiters Int’l, Inc. v. Corbin, 2013 U.S. Dist. LEXIS 69736 (N.D. Ohio May 16, 2013). In this case, franchisor Management Recruiters International, Inc. brought suit against franchisees Van Corbin and Management Consulting Group, Inc. alleging they owed fees under ...

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In Ayu’s Global Tire, LLC v. Big O Tires, LLC, 2013 Cal. App. Unpub. LEXIS 3721 (Cal. Ct. App. May 24, 2013), the California Court of Appeals, applying Colorado law, found that clear and specific language in a Uniform Franchise Offering Circular and franchise agreement undermined a franchisee’s assertion that he reasonably relied on purported precontract misrepresentations and omissions by the franchisor. In this case, a tire store franchisee claimed that he was fraudulently induced to enter into a franchise agreement with Big O Tires. He alleged that he had been assured by Big O ...

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The Minnesota federal district court recently transferred to the Northern District of Texas a putative collective action against franchisor Jani-King International and two wholly-owned subsidiaries. Von Brugger v. Jani-King of Minn., Inc., 2013 U.S. Dist. LEXIS 74548 (D. Minn. May 28, 2013). The defendants are Texas corporations headquartered in Texas. Von Brugger, the plaintiff, who worked primarily as an assistant operations manager for Jani-King of Minnesota, claims that the defendants intentionally misclassified him (and other employees) as exempt from the Fair Labor ...

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Posted in Contracts

In Damabeh v. 7-Eleven, Inc., 2013 U.S. Dist. LEXIS 66565 (N.D. Cal. May 8, 2013), a federal court in California dismissed a franchisee’s claims that 7-Eleven breached the express terms of the franchise agreement, breached the implied covenant of good faith and fair dealing, and tortiously interfered with the franchisee’s prospective business advantage when 7-Eleven terminated the franchise agreement instead of repairing damage to the franchisee’s store. The parties’ claims and defenses relied on a franchise agreement provision providing that the agreement could be ...

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Posted in Damages

A franchisor that successfully enforced its franchisees’ covenants against competition was recently prevented by the Texas Court of Appeals from recovering its legal costs of enforcement. Franlink, Inc. v GJSM Unlimited, Inc., 2013 Tex. App. LEXIS 5118 (Tex. Ct. App. Apr. 25, 2013). Franlink, the franchisor, had sued its former franchisees for injunctive relief to prevent the breach of a noncompete provision in their franchise agreements. The trial court granted the injunction, but denied its request for attorneys’ fees. The dispute on appeal centered on whether Franlink ...

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In C&M Hardware v. True Value Co., 2013 Wisc. App. LEXIS 404 (Wisc. Ct. App. May 9, 2013), the appellate court declined to enforce two exculpatory clauses in the parties’ Retail Member Agreement. C&M sued True Value for misrepresentations that were allegedly made to induce C&M to become a franchisee. The trial court granted True Value’s motion for summary judgment based on the language in two different exculpatory provisions in the parties’ contract. The court of appeals reversed the ruling on these misrepresentation claims after determining that the exculpatory language ...

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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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