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The Franchise Memorandum

Posts from January 2017 - Issue 213.
Posted in Arbitration

A federal court in California has denied franchisees’ motion for an order to consolidate their claims into a single arbitration. Meadows v. Dickey’s Barbecue Rests., Inc., 2016 WL 7386138 (N.D. Cal. Dec. 21, 2016). This case arose from a dispute regarding whether franchisor Dickey’s Barbecue Restaurants made false and misleading representations to the plaintiffs, all of whom are owners and former owners of Dickey’s franchises in California. The court had previously determined that the franchisees’ claims in this matter must be submitted to arbitration. Subsequent ...

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Posted in Arbitration

A federal court in Florida recently ordered a franchisor and franchisee to proceed to arbitration following an earlier entry of a preliminary injunction against the franchisee. Pirtek USA, LLC v. Twillman, 2016 WL 7116205 (M.D. Fla. Dec. 7, 2016). The case involved claims of unfair competition, fraud, and breach of the noncompete and confidentiality provisions of a franchise agreement between the parties. Following entry of the preliminary injunction order, Twillman, a Pirtek franchisee, filed several motions seeking, among other things, relief from and/or modification of ...

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Posted in Arbitration

The United States Court of Appeals for the Eleventh Circuit denied a franchisee’s appeal of a district court’s confirmation of an arbitration award in Careminders Home Care, Inc. v. Kianka, 2016 WL 7228808 (11th Cir. Dec. 14, 2016). In arbitration, Compassionate Care, a former franchisee of CareMinders Home Care, claimed that the franchisor had breached the franchise agreement and committed fraud as to the parties’ business relationship. After the arbitrator found in favor of CareMinders, the franchisor petitioned the district court to confirm the arbitration award ...

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Posted in Employment

In December, an Oregon federal court found that a franchisor was not a joint employer of its franchisee’s employees and granted portions of the franchisor’s motion for summary judgment. Gessele v. Jack in the Box, Inc., 2016 WL 7223324 (D. Or. Dec. 13, 2016). The plaintiffs had brought a putative class action alleging violations of the minimum wage and overtime provisions of the Fair Labor Standards Act (“FLSA”) and various state wage-and-hour laws. The plaintiffs had been employed in several of the company-owned restaurants run by franchisor Jack in the Box at the time the ...

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Posted in Arbitration

Similarly, the Appellate Court of Illinois affirmed an order dismissing a franchisee’s complaint and ordering the parties to submit to arbitration, despite the fact that the defendants were not signatories to the franchise agreement. In Kim v. Kim, 2016 IL App. (1st) 153296-U (Ill. App. Ct. Nov. 30, 2016), a franchisee sued employees of the franchisor claiming that the employees had fraudulently induced him to enter into a franchise agreement with the franchisor. The franchisor itself was not a defendant. Citing to the franchise agreement’s arbitration clause, the employees ...

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Posted in Noncompetes

A United States District Court for the Southern District of Texas recently granted a motion by Fantastic Sams to enforce a post-termination noncompetition obligation against a nonrenewing franchisee. Fantastic Sams Franchise Corp. v. Mosley, 2016 WL 7426403 (Dec. 23, 2016). The franchise agreement contained a noncompetition provision prohibiting the franchisee, Mosley, from operating a hair salon business within five miles of the location of his former Fantastic Sams salon for two years after the expiration of the agreement. Soon after the expiration of the franchise ...

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Posted in Arbitration

A Connecticut federal court granted a petition to compel arbitration filed by Subway sandwich restaurant franchisor Doctor’s Associates, Inc. (“Subway”) enforcing an arbitration clause contained in Subway’s application to become a franchisee. Doctor’s Assocs. Inc. v. Burr, 2016 WL 7451620 (D. Conn. Dec. 28, 2016). Prospective franchisees, the Burrs, submitted a Subway franchise application that included the arbitration clause, but Subway declined to grant the Burrs a franchise. In response, the Burrs initiated an action against Subway’s third-party ...

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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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