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The Franchise Memorandum

Posts from September 2016 - Issue 209.

The Kentucky Court of Appeals recently affirmed the dismissal of a complaint against six Domino’s Pizza entities on a motion for summary judgment. Johnson v. Seagle Pizza, Inc., 2016 WL 4410705 (Ky. Ct. App. Aug. 16, 2016). The case arose from a robbery at a Domino’s franchise in Kentucky. At the time of the armed robbery, Crystal Roberts, an employee of the franchise, was on break behind the store, talking on the phone with her boyfriend, who lived a block away. The robber forced Roberts back into the store and demanded money. As the assailant was fleeing, he shot and killed Roberts’ ...

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The United States District Court for the Eastern District of Pennsylvania partially denied a motion to dismiss a complaint alleging that a transmission repair franchisor had failed to maintain its brand. Jade Grp., Inc. v. Cottman Transmission Ctrs., LLC, 2016 WL 3763024 (E.D. Pa. July 13, 2016). The plaintiff-franchisees entered into license agreements that allegedly required the franchisor, Cottman Transmission Centers, to “continue to develop, promote and protect the good will and reputation associated with the Cottman names and marks.” In 2006, Cottman purchased the ...

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Posted in Arbitration

In PCPA, LLC v. The Flying Butcher, LLC, 2016 WL 3920170 (D.N.H. July 18, 2016), a federal court granted the plaintiffs’ motion to dismiss their complaint without prejudice. The Flying Butcher, former franchisees of Meat House Franchising, executed a franchise agreement with Meat House that included an arbitration clause that covered disputes “arising out of or relating to operation of the Franchised Business or this Agreement.” In 2014, Meat House’s secured creditors entered into an Asset Purchase Agreement with one of the plaintiffs – PCPA, LLC – pursuant to which ...

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Posted in Arbitration

A federal court in New York denied the petition of franchisor Benihana, Inc. to vacate an arbitration award, finding that the arbitration panel acted within its broad authority in concluding that even though Benihana had the right to terminate its license agreement with franchisee Benihana of Tokyo, LLC (“BOT”), Benihana’s decision to terminate was unreasonable. Benihana, Inc. v. Benihana of Tokyo, LLC, No. 15-cv-7428 (S.D.N.Y. July 15, 2016). In challenging the arbitration panel’s decision, Benihana conceded that the license agreement language required the panel to ...

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Posted in Noncompetes

An Arizona federal court enjoined a former ReBath franchisee from violating a covenant not to compete in ReBath LLC v. New England Bath Inc., Bus. Franchise Guide (CCH) ¶ 15,801 (D. Ariz. July 15, 2016). ReBath, a bathroom remodeling franchisor, discovered that franchisee New England Bath, Inc. (“NEBI”) conducted business outside of its exclusive territory in breach of its franchise agreement, and demanded payment of liquidated damages. NEBI refused to pay the damages and, after the agreements expired, also failed to comply with its post-expiration obligations, including a ...

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Posted in Terminations

The United States District Court for the Northern District of Illinois denied a motion to dismiss and permitted franchisor Tilted Kilt Franchise Operating, LLC to proceed with its request for a declaratory judgment that it had good cause to terminate its agreement with a franchise developer. Tilted Kilt Franchise Operating v. 1220, 2016 WL 4063172 (N.D. Ill. July 29, 2016). Tilted Kilt sought to terminate the agreement after discovering that the developer had made financial performance representations to prospective franchisees that were inconsistent with its Franchise ...

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Posted in Insurance

A federal court in Michigan dismissed all of a franchisee’s counterclaims and defenses that were based on the franchisee’s claim that the franchise agreements between the parties were unenforceable due to indemnification provisions that lacked mutuality. L.A. Ins. Agency Franchising, LLC. v. Montes, 2016 WL 4415238 (E.D. Mich. Aug. 19, 2016). Claudia Montes entered into several franchise agreements with L.A. Insurance Agency Franchising, LLC. LA Insurance subsequently sued Montes for breach of the franchise agreements. In turn, Montes asserted several counterclaims ...

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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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