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The Franchise Memorandum

Posts from March 2016 - Issue 203.
Posted in Class Actions

The United States District Court for the Eastern District of Wisconsin recently approved the settlement of a consolidated consumer class action brought against Doctor's Associates, Inc., the franchisor of Subway restaurants. In re: Subway Footlong Sandwich Mktg. Sr Sales Practices Litig., 2016 WL 755640 (E.D. Wisc. Feb. 25, 2016). The plaintiffs alleged that Doctor's Associates had engaged in deceptive marketing and sales practices by advertising Subway sandwiches as "Footlongs" and "6-inch" sandwiches when, the case alleged, some sandwiches were slightly shorter than ...

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Posted in Arbitration

Meanwhile, a Florida federal court has denied a franchisee's motion to stay proceedings and compel arbitration of the claims filed against it by its franchisor, Jewelry Repair Enterprises. Jewelry Repair Enters., Inc. v. Son Le Enters., Inc., 2016 WL 660904 (S.D. Fla. Feb. 18, 2016). Jewelry Repair's claims all arose from Son Le's alleged violations of the post-termination obligations and restrictive covenants contained in the parties' franchise agreement. One section of the franchise agreement provided for binding arbitration in the event of a dispute, while a subsequent ...

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The United States District Court for the District of Colorado recently denied a franchisor's motion for a preliminary injunction following the termination of one of its master franchisees. Intelligent Office System, LLC v. Virtualink Canada, Ltd., 2016 WL 687348 (D. Colo. Feb. 18, 2016). The parties had entered into an agreement that granted Virtualink the right to sublicense IOS's trademarks and office-sharing methods to subfranchisees throughout Canada. The dispute arose when Virtualink allegedly breached the master license agreement by, among other things, failing to ...

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Posted in Announcement

Ryan Palmer and Lavon Emerson-Henry joined Gray Plant Mooty's 38- member Franchise & Distribution Practice Group on March 2, 2016. Both will practice in the firm's Minneapolis office. Palmer and Emerson-Henry serve domestic and international franchisors across the restaurant, hospitality, retail, and service sectors. They counsel brand and concept owners in the development of franchise and distribution systems and help businesses resolve disputes with franchisees and licensees.

Palmer's experience includes extensive work in franchise finance and intellectual property ...

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Posted in Arbitration

A federal court in Maryland stayed two cases brought by restaurant franchisees against their franchisor pending arbitration in Trouard v. Dickey's Barbecue Restaurants, Inc., 2016 WL 687487 (D. Md. Feb. 19, 2016). The franchisees claimed that Dickey's violated the Maryland Franchise Registration and Disclosure Law in connection with their franchises and sought mediation. In response, Dickey's pursued arbitration and raised claims of fraud and breach of contract. The franchisees then filed lawsuits against Dickey's in federal district court, arguing that the arbitration ...

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A federal district court in New Jersey also recently denied a franchisor's motion to preliminarily enjoin the continued operation of five terminated franchises because the franchisor failed to demonstrate that it would suffer irreparable harm in the absence of injunctive relief. 7-Eleven, Inc. v. Sodhi, 2016 WL 541135 (D.N.J. Feb. 9, 2016). 7-Eleven had terminated the defendants' franchise agreements because they caused the net worth of their stores to fall below contractually mandated levels. While the court found 7-Eleven had demonstrated a likelihood of success on the ...

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The Ontario Court of Appeal has dismissed a class action suit brought by a group of former franchisees against Pet Valu Canada Inc., as the court drew a bright-line distinction between a franchise disclosure violation and a breach of the duty of good faith and fair dealing under the Arthur Wishart Act (AWA). 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2016 ONCA 24 (Can. Ont. Jan. 14, 2016). The franchisees principally alleged that Pet Valu—a wholesaler and retailer of pet food, supplies, and services—had not shared with them volume rebates it received from suppliers. The lower ...

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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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