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The Franchise Memorandum

Posts from May 2014 - Issue 180.
Posted in Arbitration

A federal district court in California recently denied a franchisee’s motion for a preliminary injunction to prevent a franchisor from proceeding with arbitration, finding that the arbitration provision was neither procedurally nor substantially unconscionable. The dispute in Moody v. Metal Supermarket Franchising America Inc., 2014 WL 988811 (N.D. Cal. Mar. 10, 2014), involved Metal Supermarket’s exercise of its option to purchase Moody’s assets upon termination and the proper purchase price for those assets. After Moody filed a state court action seeking a ...

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Posted in Class Actions

A federal court in California denied class certification to a customer who received an unwanted text message from a promotional campaign by a franchisee. Ryan v. Jersey Mike’s Franchise Sys., 2014 U.S. Dist. LEXIS 42677 (S.D. Cal. Mar. 28, 2014). The plaintiff, Ryan, was one of 7,659 of the franchisee’s customers who received a promotional text message relating to a loyalty card each obtained from the store. Ryan claimed that he had not given consent for such a text message, and he brought suit against both the franchisor and franchisee under the Telephone Consumer Protection Act ...

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In Anytime Fitness, LLC v. Edinburgh Fitness, LLC, 2014 U.S. Dist. LEXIS 50337 (D. Minn. Apr. 11, 2014), a federal court in Minnesota enjoined a former Anytime Fitness franchisee from violating a franchise agreements’ post-expiration covenant against competition and from using the franchisor’s proprietary customer data. After electing not to renew its franchise agreement, the franchisee had opened a new fitness club at the same location as its former Anytime franchise and used confidential customer data to solicit former Anytime clients. Anytime brought suit for breach of ...

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Posted in Trademarks

In Ledo Pizza System, Inc. v. Singh, 2014 U.S. Dist. LEXIS 46906 (D. Md. Apr. 3, 2014), a federal court in Maryland granted a franchisor’s motion for contempt against a former franchisee who failed to comply with a temporary restraining order prohibiting his continued operation of a pizza franchise following termination. The franchisor, Ledo Pizza, terminated Singh’s franchise agreement after he defaulted on several of his obligations under the contract. Ledo also filed suit for breach of contract and various violations of the Lanham Act. The court granted Ledo’s request ...

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Posted in Internet

A federal court recently denied the motion of Wyndham Hotels & Resorts to dismiss a complaint brought by the Federal Trade Commission for unfair or deceptive acts or practices based on breaches of the property management computer system used by Wyndham and its franchisees. FTC v. Wyndham Worldwide Corp., 2014 U.S. Dist. LEXIS 47622 (D.N.J. Apr. 7, 2014). The FTC alleged that franchisor Wyndham Hotels & Resorts, along with its affiliates, engaged in (1) deceptive practices by misrepresenting that it used “industry standard practices” and “commercially reasonable ...

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Posted in Procedure

A federal district court in California this month denied a restaurant foodservice supplier’s motion to intervene in a franchisor’s action to collect amounts owed by a former franchisee. Jack In The Box, Inc. v. Mehta, 2014 U.S. Dist. LEXIS 50575 (N.D. Cal. Apr. 9, 2014). Jack In The Box (“JIB”) sued Mehta, its former franchisee, for failure to pay amounts owed, and JIB took over Mehta’s restaurants pursuant to a court order in lieu of receivership that authorized JIB to operate the restaurants, collect all revenues, and pay reasonable and necessary bills for the protection ...

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Posted in Trademarks

A franchisor whose trademark was being infringed in a domain name recently obtained transfer of the domain to its control through a Uniform Domain-Name Dispute-Resolution Policy (“UDRP”) arbitration action. U.S. Structures, Inc. v. Ginger Storm, FA1401001540563 (NAF Mar. 5, 2014). Gray Plant Mooty represented the franchisor in the matter. In this case, U.S. Structures’ trademark ARCHADECK® was infringed by the domain name Chicagoland is a common reference to the Chicago metropolitan area, where U.S. Structures has an Archadeck ...

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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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