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The Franchise Memorandum

Posts from March 2017 - Issue 215.
Posted in Arbitration

Meanwhile, the same court held that a franchise agreement delegated to the court the power to determine arbitrability. Han v. Synergy Homecare Franchising, LLC, 2017 WL 446881 (N.D. Cal. Feb. 2, 2017). The issue arose when Synergy moved to dismiss the complaint of its franchisee, Han, and to compel arbitration pursuant to an arbitration clause in the franchise agreement. In furtherance of its motion, Synergy argued that an arbitrator must decide the threshold question of whether the claims asserted by Han were subject to arbitration. Han argued that the question of arbitrability ...

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Posted in Arbitration

The United States District Court for the Northern District of California denied a former franchisee’s motion for vacatur of an arbitration award and affirmed the arbitration award in favor of franchisor Jiffy Lube International, Inc. on the grounds that the franchisee failed to show the arbitrator’s manifest disregard for the law. Stevens v. Jiffy Lube Int’l, Inc., 2017 WL 512888 (N.D. Cal. Feb. 8, 2017). After Randy and Elissa Stevens failed to successfully negotiate a new lease with their existing landlord, Jiffy Lube terminated their franchise agreement for loss of right ...

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A federal court in Virginia recently denied a franchisor’s claim that a franchisee of its tax preparation system breached its post-termination obligations and awarded the franchisee $2,736,896.17 on its counterclaims. JTH Tax, Inc. v. Aime, 2017 WL 640092 (E.D. Va. Feb. 15, 2017). The matter arose out of the IRS’s revocation of Aime’s Electronic Filing Identification Number (“EFIN”), which the franchise agreements required Aime to maintain. Rather than simply terminate the franchise agreements for Aime’s nine offices, JTH entered into a purchase and sale ...

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The Eighth Circuit Court of Appeals recently affirmed a district court’s dismissal of a contractor’s claims against FedEx Corporation. Neubauer v. FedEx Corp., 2017 WL 655434 (8th Cir. Feb. 17, 2017). From 2004 to 2011, Neubauer and his corporate entity were parties to a series of Standard Operating Agreements with FedEx under which Neubauer would pick up and deliver FedEx packages within specific geographic areas in return for weekly payments based on stops made. Neubauer was described as an independent contractor of FedEx. In early 2011, FedEx transitioned to a new business ...

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A federal court in Indiana has dismissed a franchisor’s Lanham Act claim on the grounds that the franchisor unreasonably delayed bringing the claim. Noble Roman’s, Inc. v. Hattenhauer Distrib. Co., 2017 WL 640092 (S.D. Ind. Feb. 27, 2017). Under the parties’ franchise agreements, Hattenhauer was required to use only Noble Roman’s approved ingredients at its pizza franchises. However, after Noble Roman’s changed its approved distributor in 2010, Hattenhauer began purchasing and using unapproved cheese at one of its franchised locations. In 2014, Noble Roman’s ...

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A trial court’s dismissal of defamation claims against a franchisor and related parties, including the franchisor’s legal counsel, was reversed last week by a court of appeals in Florida. Rolle v. Cold Stone Creamery, Inc., et al., 2017 WL 815365 (Fla. App. March 1, 2017). This case arose when Rolle, a former franchisee, participated in a 2010 CNBC documentary regarding franchising. In response to the documentary, the franchisor retained attorney Robert Zarco, who wrote a letter to CNBC (with a copy to Janet Sparks, a freelance writer for the Blue Mau Mau website), asking that ...

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Last month, the United States Court of Appeals for the Fourth Circuit affirmed the District of Maryland’s holding that a hotel franchisor was not responsible for a guest’s death at one of its franchised hotels. DiFederico v. Marriott Int’l, Inc., 2017 WL 444690 (4th Cir. Feb. 2, 2017). The guest was killed in the September 20, 2008 terrorist attack on the Marriott Islamabad, a hotel owned and operated by one of Marriott International’s franchisees. The guest’s family brought a wrongful death suit against Marriott but did not name the franchisee as a defendant. The Fourth ...

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Posted in Arbitration

In Frye v. Wild Bird Centers of America, Inc., 2017 WL 605285 (D. Md. Feb. 14, 2017), the district court upheld an arbitration award that equitably tolled the start of a posttermination noncompetition period until the date of actual compliance. Gray Plant Mooty represented the franchisor in the case. The franchisees, Frye, had allowed their franchise agreement to expire, but they nevertheless continued to use the Wild Bird Centers of America’s (“WBCA’s”) marks and to operate a WBCA store at their Colorado location without paying any fees to WBCA, without WBCA’s ...

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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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