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The Franchise Memorandum

Posts from October 2016 - Issue 210.
Posted in Class Actions

The United States Court of Appeals for the Third Circuit recently held that a trial court did not abuse its discretion when it allowed an employmentclassification dispute between a group of franchisees and a franchisor to proceed on a class-wide basis. In Williams v. Jani-King of Philadelphia Inc., 2016 WL 5111920 (3d Cir. Sept. 21, 2016), two franchisees sued Jani-King, the world’s largest commercial cleaning franchisor, on behalf of a class of JaniKing franchisees in the Philadelphia area. The franchisees claimed that they were misclassified by Jani-King as independent ...

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A New Jersey federal district court granted a permanent injunction to Mister Softee against a former franchisee but declined to award lost future royalties based on the terminated franchise agreements. Mister Softee, Inc. v. Amanollahi, 2016 WL 5745105 (D.N.J. Sept. 30, 2016). Reza Amanollahi (“Amano”) entered into twenty-two franchise agreements pursuant to which he was permitted to operate Mister Softee ice cream trucks, provided that he park the trucks only at a specified location. Through an installment sale, Amano sold his franchises to four individuals (the ...

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After review by the French Constitutional Court, the French Parliament recently passed a controversial labor law commonly referred to as the “El Khomri” law (the “Law”). Article 64 of the Law contains provisions governing certain franchises. It is triggered if: (1) a franchise network contains at least 300 employees in France, inclusive of the employees of both franchisors and franchisees, and (2) the underlying franchise agreement contains terms that “have an effect on the organization of work and the conditions of work.” If those two requirements are satisfied ...

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Posted in Class Actions

A federal court in New York held that it lacked subject matter jurisdiction to hear claims that Dunkin’ Donuts franchises assessed an unlawful surcharge, under the guise of a sales tax, in Estler v. Dunkin’ Brands, Inc., 2016 WL 5720814 (S.D.N.Y. Oct. 3, 2016). Gray Plant Mooty represented the franchisor in this case. The plaintiffs alleged that various franchisees in New York City had improperly assessed sales tax on prepackaged coffee, which is exempt from sales tax under New York law. The plaintiffs brought claims against the franchisor, Dunkin’ Brands, and several ...

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Posted in Employment

A district court in the Southern District of New York recently denied a franchisor’s motion to dismiss federal and state law employment claims brought against it by employees of one of its franchisees. Ocampo v. 455 Hospitality LLC, 2016 WL 4926204 (Sept. 15, 2016). Several employees of a Doubletree hotel franchise sued the franchisee and the franchisor of the Doubletree system alleging violations of the Fair Labor Standards Act (“FLSA”) and the New York Labor Law. Doubletree moved to dismiss the claims against it on the grounds that the employees had failed to allege facts from ...

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Franchisors seeking to do business in Iran will continue to face challenges because Iranian sanctions will remain substantially in place for most industries. On October 7, 2016, the United States Department of Treasury’s Office of Foreign Assets Control (“OFAC”) updated the FAQs related to the Iranian Sanctions Program to provide further clarity regarding the scope of the sanctions lifting that occurred as part of the Joint Comprehensive Plan of Action (“JCPOA”) reached in 2015.

In July 2015, the U.S. and other countries entered into the JCPOA to ensure that Iran’s ...

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Posted in Terminations

The United States Court of Appeals for the Tenth Circuit has affirmed the district court’s grant of summary judgment in favor of a fast food franchisor in a case where the franchisee refused to sell and promote the franchisor’s mandatory menu plan. Steak N Shake Enter., Inc. v. Globex Co., LLC, 2016 WL 4743685 (10th Cir. Sept. 12, 2016). The dispute arose when Steak n Shake expanded its “$4 Menu” promotion, which offered a combination of items for a price of $4 – less than what customers would pay if each item was purchased separately. The franchisee refused to adopt the new $4 Menu ...

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About this Publication

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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