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The Franchise Memorandum

Posts from May 2017 - Issue 217.
Posted in Terminations

A United States District Court in Miami, Florida rejected a franchisee’s bid to invalidate a notice of default sent by email for failure to comply with the franchise agreement’s notice provisions. Tim Hortons USA, Inc. v. Singh, 2017 WL1326285 (S.D. Fla. Apr. 4, 2017). Tim Hortons had sent a notice of default by both email and overnight mail. The notice gave the franchisee, Singh, five days to cure certain financial defaults. Tim Hortons terminated the franchise after Singh allegedly failed to cure its default within five days of receiving a copy of the emailed notice. Having ...

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Posted in Terminations

The United States District Court for the District of Arizona recently granted a hotel membership association’s motion to dismiss, holding that its termination of a hotel’s membership agreement did not constitute a breach of contract. Regency Midwest Ventures Ltd P’ship v. Best Western Int’l, Inc., 2017 WL 992357 (D. Ariz. Mar. 15, 2017). The membership association arrangement is akin to a franchisor-franchisee relationship. The membership association involved in this case, Best Western, initially determined that it had grounds to terminate the parties’ agreement ...

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Posted in Employment

The Second Circuit Court of Appeals recently affirmed a decision that franchised black-car drivers using a franchisor dispatching service were independent contractors, not employees, of the franchisor. In Saleem v. Corporate Transportation Group, 2017 WL 1337227 (2d Cir. Apr. 12, 2017), the plaintiffs-appellants were black-car drivers in the tri-state area who owned black-car franchises. The defendants-appellees were a group of related transportation companies known as Corporate Transportation Group (“CTG”) that owned “base licenses” that allowed them to ...

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Posted in Arbitration

A federal district court in Illinois granted a franchisor’s motion to confirm an arbitration award in Hyatt Franchising, LLC v. Shen Zhen New World I, LLC, 2017 WL 1397553 (N.D. Ill. Apr. 19, 2017). The hotel franchisor had been awarded over $10 million in damages and fees in an arbitration to enforce the termination of a California franchisee’s franchise agreement for repeated failure to meet its payment obligations and for failure to timely complete required renovations. The franchisee moved to vacate the arbitrator’s award on three grounds: (1) the arbitrator engaged in ...

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Posted in Terminations

A federal court in Illinois has granted summary judgment in favor of a franchisor on both its claims and the franchisee’s counterclaims in Fantastic Sams Franchise Corp. v. PSTEVO, LLC, 2017 WL 1075195 (N.D. Ill. Mar. 22, 2017). Fantastic Sams brought suit after the franchisee, PSTEVO, stopped paying weekly licensing fees and national advertising fees and then abandoned its franchised salons altogether. Initially, PSTEVO actively defended the litigation, asserting counterclaims which alleged that Fantastic Sams should have let PSTEVO spend its national advertising fees on ...

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Posted in Arbitration

The Texas Court of Appeals recently confirmed an arbitration award in favor of a franchisee, Adams, and against franchisor Prescription Health Network, LLC (“PHN”). Prescription Health Network, LLC v. Adams, 2017 WL 1416875 (Tex. App. Apr. 20, 2017). PHN had raised four principal arguments on appeal: (1) that the award should be vacated because the arbitration panel “exceeded their powers”; (2) that the award should be vacated because the arbitration panel acted with “manifest disregard”; (3) that alternatively, the award should be modified because the ...

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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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