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The Franchise Memorandum

Posts from September 2015 - Issue 197.

A Massachusetts state appellate court has affirmed a trial court holding that Domino's Pizza LLC was not liable when a pizza delivery driver was robbed, kidnapped, and killed while making an early morning delivery. Lind v. Domino's Pizza LLC, 87 Mass. App. Ct. 650 (Mass. App. July 29, 2015). The plaintiffs—the parents and co-administrators of the victim's estate—brought a wrongful death action against Domino's on theories of vicarious liability, negligence, and negligent supervision and training.

Observing that courts have "consistently" determined that franchisors are ...

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A federal court has ruled that a plaintiff could not state a claim for negligence per se based on a defendant's alleged failure to comply with the disclosure requirements under the FTC's Franchise Rule. In G.P.P. Inc. v. Guardian Protection Products, 2015 U.S. Dist. LEXIS 85999 (E.D. Cal June 30, 2015), a distributor, Guardian Innovative Solutions ("GIS"), brought suit against its supplier, Guardian, regarding numerous distribution contracts covering multiple regions across the United States. GIS's central allegation was that the distribution agreements between the parties ...

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A federal court in New Jersey recently granted Steak n Shake's motion to dismiss a franchisee's fraud and misrepresentation claims in Cornerstone Inv. Partners, LLC v. Steak N Shake Enters., Inc., 2015 U.S. Dist. LEXIS 87533 (D.N.J. July 6, 2015). Steak 'n Shake has traditionally offered franchises for large "Classic" restaurants offering a full menu 24 hours a day. In January 2011, Steak 'n Shake began offering smaller "Signature" restaurants with a more limited menu and hours of operation. Plaintiff Cornerstone and Steak 'n Shake began negotiations for a Signature franchised ...

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The United States District Court for the Northern District of New York recently imposed contempt sanctions against a former franchisee after finding the franchisee had willfully violated an earlier injunction requiring her to comply with post-termination covenants against competition and solicitation contained in her franchise agreement. H&R Block Tax Servs. LLC v. Strauss, 2015 U.S. Dist. LEXIS 87668 (N.D.N.Y. July 7, 2015). Gray Plant Mooty represents the franchisor in this case. The franchisee had agreed that, upon termination, she would neither solicit clients to whom ...

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Posted in Arbitration

The United States Court of Appeals for the Fourth Circuit recently bifurcated a franchisor's common law claims from several franchisees' Maryland Franchise Law claims pursuant to the Federal Arbitration Act, and required the franchisor to pursue its claims in arbitration while the franchisees pursue their claims in Maryland district court. Chorley Enters. v. Dickey's Barbecue, 2015 U.S. App. LEXIS 13652 (4th Cir. 2015). Dickey's, a national franchisor of quick-service barbecue restaurants, claimed several of its Maryland franchisees breached their franchise agreements by ...

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In Espinosa v. Accor North America, Inc., 2015 La. App. LEXIS 2294 (La. App. July 8, 2015), the Louisiana Court of Appeal affirmed a lower court ruling that franchisor could not be held liable for injuries sustained by a guest who was shot at a Motel 6 location owned by a franchisee. Espinosa, who became a paraplegic as a result of the shooting, alleged that a broken gate enabled the armed robber to enter the parking lot. As against the franchisor, Accor, Espinosa asserted claims of direct negligence and vicarious liability, with the vicarious liability claim based on alleged actual and ...

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Posted in Discrimination

The United States District Court for the District of Indiana ruled on several motions in limine related to franchisee's claims under the Indiana Deceptive Franchise Practices Act ("IDFPA") in Andy Mohr Truck Center, Inc. v. Volvo Trucks, 2015 U.S. Dist. LEXIS 93817 (S.D. Ind. July 20, 2015), and declined to bar the plaintiff franchisee from presenting evidence showing concessions offered to franchisees in other states. The court was not persuaded by Volvo's argument that the IDFPA is properly construed as applying only to discrimination among Indiana franchisees. The plain ...

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Posted in Employment

The long anticipated Browning-Ferris decision was released on August 27, 2015. Browning Ferris Indus. of Cal., Inc., 362 N.L.R.B. No. 186. As expected, a three-member majority decided it was necessary to abandon the relatively "bright-line" definition of "joint-employer" to address the "current economic landscape" of the labor market. Citing to a 1982 Third Circuit opinion dealing with another Browning-Ferris affiliate, the Board majority said it needed to "revisit and to revise the Board's joint-employer standard . . . to put the Board's joint-employer standard on a clearer ...

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The Third Circuit court of appeals recently affirmed the denial of Wyndham Hotels' motion to dismiss a case brought by the FTC for unfair and deceptive trade practices. FTC v. Wyndham Worldwide Corp., 2015 WL 4998121 (3d Cir. Aug. 24, 2008). The FTC alleged that franchisor Wyndham Hotels & Resorts, along with its affiliates, engaged in deceptive practices by misrepresenting that it used standard and commercially reasonable practices to secure guest data, and engaged in unfair practices by failing to protect customer data. The claims arose after a criminal organization hacked into ...

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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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