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The Franchise Memorandum

Posts from October 2017 - Issue 222.
Posted in Contracts

Baskin-Robbins charges its designated supplier a fee for the right to manufacture and sell Baskin’s proprietary ice cream products to Baskin’s franchisees. The supplier includes an amount equal to the fee in the price that it charges Baskin’s franchisees for those products. In Association of Independent BR Franchise Owners v. Baskin-Robbins Franchising, LLC, 2017 WL 4314607 (D. Mass. Sept. 27, 2017), an association of Baskin-Robbins franchisees sought a declaration that the price component paid by its members that was attributable to the fee paid by the supplier to Baskin ...

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Posted in Choice of Law

An Arizona federal court declined to enforce choice of law and forum selection provisions in a suit brought by four Ohio franchisees of Zounds Hearing Franchising for violations of Ohio’s Business Opportunity Purchasers Protection Act. Zounds Hearing Franchising, LLC v. Bower, 2017 WL 4399487 (D. Ariz. Sept. 19, 2017). The suit was initially filed in Ohio state court, and Arizona-based Zounds removed the case to federal court and moved to transfer it to Arizona pursuant to the forum selection clause in each franchise agreement, which included identical Arizona choice of law and ...

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The United States District Court for the Northern District of Alabama has granted summary judgment in favor of franchisor Wintzell’s Franchise Company on vicarious liability claims lodged against it by Jose Ruiz, a customer of franchisee Wintzell’s Huntsville. Ruiz v. Wintzell’s Huntsville, LLC, 2017 WL 4305004 (N.D. Ala. Sept. 28, 2017). Ruiz developed a severe infection after eating raw oysters at Wintzell’s Oyster House, a restaurant owned and operated by Wintzell’s Huntsville under a franchise agreement with Wintzell’s Franchise. Ruiz claimed that ...

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Posted in Noncompetes

Meanwhile, a federal court in Ohio denied a franchisor’s motion for a preliminary injunction after finding that the franchisor did not show that it faced irreparable harm from a former franchisee who operated a competing business where the franchisor intended to open a new restaurant. D.P. Dough Franchising, LLC v. Southworth, 2017 WL 4315013 (S.D. Ohio Sept. 26, 2017). Franchisor D.P. Dough alleged a series of claims against Edward Southworth, a former franchisee, including breach of contract, misappropriation of trade secrets, copyright infringement, and trademark ...

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Posted in Antitrust

A franchisor of window replacement companies and its exclusive approved supplier of windows have successfully avoided claims that the windows sold to franchisees were sold at a discriminatory price under the Robinson-Patman Act and unlawfully tied to the franchisor’s services under the Sherman Act. Bendfeldt v. Window World, Inc., 2017 WL 4274191 (W.D.N.C. Sept. 26, 2017). The plaintiffs entered into a series of license agreements with Window World, Inc. (“WWI”) in the 2000s. Although the plaintiffs were at first required to purchase windows and related materials from a ...

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Posted in Noncompetes

In another case involving a post-term covenant against competition, the United States District Court for the District of Colorado declined to dismiss a franchisor’s complaint seeking to enforce a noncompete provision contained in the parties’ franchise agreement, despite the “strong public policy” against enforcement of such restrictions under Colorado law. Homewatch Int’l, Inc. v. Navin, 2017 WL 4163358 (D. Colo. Sept. 20, 2017). After expiration of the parties’ franchise agreement, the franchisee’s owner immediately commenced operating a competing ...

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Posted in Employment

The United States Court of Appeals for the First Circuit recently refused to allow a franchisee to pursue a claim that he was an employee of franchisor Jan-Pro on the grounds that the franchisee had already lost a similar case in a Georgia state court. Depianti v. Jan-Pro Franchising Int'l, Inc., 2017 WL 4324323 (1st Cir. Sept. 29, 2017). Depianti, a unit franchisee of a thirdparty who was a Jan-Pro master franchisee, brought suit in the federal court in Massachusetts, where his franchise was located, arguing that he was an employee of Jan-Pro. At the same time, Jan-Pro filed a case in ...

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Posted in Class Actions

A federal district court in California dismissed a class action suit initiated against Fitness Evolution Franchising LLC (“FEF”), the franchisor and successor to the Fitness 19 system, by members of the former Fitness 19 gyms in Abrantes v. Fitness 19 LLC, 2013 WL 4075576 (E.D. Cal. Sept. 14, 2017). The members’ accounts were transferred from franchised Fitness 19 gyms to various franchised Fitness Evolution gyms in 2015 and 2016. Automatic debits of monthly membership fees were subsequently made from the members’ bank accounts in accordance with the terms of the ...

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A federal court in Michigan recently dismissed fraud claims brought against a provider of cryotherapy chambers for failure to state a cause of action. Live Cryo, LLC v. CryoUSA Import & Sales, LLC, 2017 WL 4098853 (E.D. Mich. Sept. 15, 2017). Live Cryo alleged that it had been fraudulently induced to enter into the parties’ agreement, under which CryoUSA provided cryotherapy chambers to Live Cryo for use at its Michigan locations. Prior to signing the agreement, Live Cryo had received a booklet stating that some CryoUSA locations reached a 25-client-per-day mark fairly quickly ...

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Posted in Noncompetes

In another case litigated by Gray Plant Mooty, the Chief Judge for the United States District Court for the District of Nebraska granted a preliminary injunction prohibiting former The Maids franchisees and their two daughters from operating a competing residential cleaning business in violation of the noncompete and nonsolicitation provisions contained in the applicable franchise agreements. The Maids Int’l, Inc. v. Maids On Call, LLC, 2017 WL 4277146 (D. Neb. Sept. 25, 2017). The Maids International (“TMI”) terminated the franchise agreements because the ...

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Posted in Discrimination

In Andy Mohr Truck Center, Inc. v. Volvo Trucks North America, 2017 WL 3695355 (7th Cir. Aug. 28, 2017), the United States Court of Appeals for the Seventh Circuit reversed an Indiana district court’s denial of Volvo Trucks of North America’s motion for judgment as a matter law, finding that Volvo did not unfairly discriminate against its dealer, Mohr Truck Center, in violation of the Indiana Deceptive Franchise Practices Act (“IDFPA”) and overturning a jury’s finding of discrimination and a $6.5 million damages award. In support of its unfair discrimination claim, Mohr ...

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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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