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The Franchise Memorandum

Posts from April 2017 - Issue 216.

Meanwhile, the United States District Court for the Southern District of New York held that a license agreement between Safe Step Walk In Tub and CKH Industries created an accidental franchise, and therefore partially denied Safe Step's motion to dismiss CKH's claims. Safe Step Walk In Tub Co. v. CKH Indus., Inc., 2017 WL 1050126 (S.D.N.Y. Mar. 17, 2017). Under both the FTC's "Franchise Rule" and applicable state laws, the court found that the following three indicia of a franchise were readily met: (1) the franchisee obtained the right to operate a business or sell or offer goods or ...

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A federal court in California has allowed various claims by a distributor against its supplier to go to trial, including a California Unfair Competition Law ("UCL") claim alleging the supplier should have provided a Franchise Disclosure Document. G.P.P., Inc. v. Guardian Protection Prods., Inc., 2017 WL 220305 (E.D. Cal. Jan. 18, 2017). The Pennsylvania-based plaintiff was the exclusive distributor of defendant Guardian's products in several different territories, which did not include California. But the distributor had originally entered into distribution agreements ...

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Posted in Antitrust

The Ninth Circuit Court of Appeals has reversed a district court's standing-based dismissal of a class-action complaint against Apple Inc. In re Apple iPhone Antitrust Litig., 846 F.3d 313 (9th Cir. Jan. 12, 2017). The plaintiffs alleged that Apple violated federal antitrust law by requiring iPhone "apps" to be sold only through Apple's "App Store," prohibiting third-party app developers from selling the software outside of Apple, and charging app developers 30 percent of their App Store sales. The district court had held that the plaintiffs lacked standing because of the ...

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Posted in Arbitration

A Michigan federal court recently found that it lacked the authority to determine the arbitrability of a dispute between an American manufacturer and a foreign dealer in Arabian Motors Group, W.L.L. v. Ford Motor Co., 2017 WL 218081 (E.D. Mich. Jan 19, 2017). A Kuwaiti dealer alleged that it could not be compelled to arbitrate its dispute with an American manufacturer as required by the parties' resale agreement. The dealer claimed that the agreement's delegation clause was unenforceable under the federal Motor Vehicle Franchise Contract Arbitration Fairness Act. The court found ...

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Posted in Antitrust

In Suture Express, Inc. v. Owens Sr Minor Distribution, 2017 WL 971782 (10th Cir. Mar. 14, 2017), a distributor of sutures and endomechanical (together known as "suture-endo") supplies sued two competitors in the medical and surgical supply market, alleging that their bundling packages constituted illegal tying arrangements in violation of state and federal antitrust laws. Unlike the defendants, who distributed a large selection of medical supplies from a network of regional distribution centers, Suture Express's narrow focus on two types of easy-to-ship medical supplies ...

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Posted in Contracts

A Wisconsin federal court recently denied a distributor's motion to dismiss a breach of contract action brought by one of its dealers. Traffic and Parking Control Co. v. Global Traffic Techs., LLC, 2017 WL 1067774 (E.D. Wis. Mar. 21, 2017). TAPCO claimed, among other things, that GTT breached the dealership agreement between the parties by sending its termination notice in the form of an email. While the notice clause of the agreement did not explicitly identify email as a permissible form of written notice, both parties' email addresses were listed in the contact information section ...

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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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