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The Franchise Memorandum

Posts from November 2015 - Issue 199.

Citing the applicable statutes of limitation and contractually agreed forum selection clauses, the United States District Court for the Eastern District of Missouri recently dismissed in part and transferred to Texas remaining claims brought by 111 franchisee plaintiffs against a franchisor. Armstrong v. Curves Int'l, 2014 WL 6085553 (E.D. Mo. Oct. 15, 2015). Gray Plant Mooty represents the franchisor in this case. The franchisees originally filed a 165- count complaint alleging that Curves made misrepresentations that induced them to buy their respective franchises, that ...

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Do you transfer customer data from the European Union to the United States? Employee data? If so, you better make sure that you are taking the right steps to comply with the EU data privacy and protection laws. On October 6, 2015, the European Court of Justice ruled that the 15-year-old EU-U.S. Safe Harbor Framework used by over 4,000 American businesses to transfer personal data from the 28 member countries of the European Union to the United States was immediately invalid. Maximillian Schrems v. Data Protection Commissioner, Case C-362/14 (Oct. 6, 2015). Even if a company did not ...

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The United States District Court for the Eastern District of Arkansas recently held that a forum selection clause in a series of franchise agreements was enforceable and did not violate Arkansas public policy. Ajax Holdings, LLC v. Comet Cleaners Franchise Grp., LLC, 2015 WL 5898310 (E.D. Ark. Oct. 9, 2015). Ajax and Comet Cleaners entered into a series of franchise agreements for Ajax to operate Comet Cleaners dry cleaning and laundry businesses. Under the franchise agreements, the parties agreed to bring all lawsuits arising from or relating to the agreements in the state or ...

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Posted in Noncompetes

A federal court in Georgia granted a plaintiff franchisor's motion for a preliminary injunction enforcing a franchise agreement's restrictive covenants in Cellairis Franchise, Inc. v. Duarte, 2015 WL 6517487 (N.D. Ga. Oct. 21, 2015). The defendant, Duarte, was a former employee, independent contractor, and officer of the franchisor who had been involved in finding and negotiating mall leases for the franchisor to open franchised cell phone kiosks. He was also a part-owner of four franchises, although he claimed he was not involved in their day-to-day operations or management ...

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Posted in Class Actions

A United States District Court in the Eastern District of Missouri recently granted class certification to certain former general managers of company-owned Panera restaurants in connection their employment dispute with the company. Boswell v. Panera Bread Co., 2015 WL 6445396 (E.D. Mo. Oct. 23, 2015). The class of former general managers alleged that Panera breached a buy-out provision in their employment agreements and also committed fraud because it never intended to comply with the provision. Panera contested the allegations, contending, among other things, that the ...

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On October 1, 2015, the North American Securities Administrators Association ("NASAA")—the franchise examiners—issued a "Proposed Franchise Commentary on Financial Performance Representations." NASAA is seeking to create new interpretations and guidelines for financial performance representations ("FPRs"), including (a) when franchisors can and cannot use data from company-owned or affiliate-owned outlets; (b) when franchisors can and cannot use a subset of the entire pool of franchised or company-owned outlets; and (c) the types of disclaimers, notes and ...

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Posted in Contracts

The New Jersey Superior Court recently affirmed summary judgment in favor of a retail lessor, holding that an exclusivity provision in a lease agreement with Starbucks did not prohibit the shopping center from also leasing space to a McDonald's franchisee. Delco LLC v. Starbucks Corp., 2015 WL 6159534 (N.J. Super. Ct. App. Div. Oct. 21, 2015). The lease agreement contained an exclusivity provision that prohibited the lessor from leasing space within the shopping center to any tenant (other than Starbucks) for the operation of a business selling coffee, espresso, and tea drinks. The ...

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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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