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The Franchise Memorandum

Posts from February 2018 - Issue 226.
Posted in Advertising

The United States District Court for the Northern District of Illinois granted franchisor KFC Corporation’s motion to dismiss, rejecting a franchisee’s claim that KFC had breached the parties’ franchise agreement by prohibiting him from telling customers that his KFC stores sold Halal chicken. Lokhandwala v. KFC Corp., 2018 WL 509959 (N.D. Ill. Jan. 23, 2018). Lokhandwala alleged that in 2002 KFC expressly permitted him to sell Halal chicken at his KFC stores. Relying on KFC’s alleged approval, the franchisee chose the locations for his five franchised businesses in ...

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Posted in Damages

The United States Court of Appeals for the Eleventh Circuit has affirmed a judgment, following a bench trial, against a franchisee who alleged that his inability to repay a promissory note was caused by the franchisor’s breach of the franchise agreement. DZ Bank AG Deutche Zentral-Genossenschaftsbank v. McCranie, 2018 WL 345045 (11th Cir. Jan. 10, 2018). McCranie, the former Brooke insurance agency franchisee, had originally financed the purchase of his franchise with a promissory note from the franchisor’s affiliate. The franchise agreement itself made the franchisor the ...

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Posted in Employment

A federal court in Georgia recently held that a franchisor and its licensee were not joint employers of a subfranchisee’s former employee. In Boon v. Clark Foods, Inc., 2017 WL 6622554 (M.D. Ga. Dec. 28, 2017), a server at an IHOP restaurant operated by Clark Foods sued IHOP (the franchisor), an IHOP master licensee named Sunshine Partners, and Clark Foods (an IHOP subfranchisee), claiming she was discriminated against on the basis of her age in violation of the Age Discrimination in Employment Act. IHOP and Sunshine Partners filed for summary judgment on the basis that they were not ...

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Relying substantially on admissions from the franchisee’s deposition, a federal court in Washington granted the defendant franchisor’s motion for summary judgment on the franchisee’s claims for misrepresentation. DiNardo v. Wow 1 Day Painting, LLC, 2018 WL 513584 (W.D. Wash. Jan. 23, 2018). Wow licenses a system for providing single-day interior and exterior painting services. DiNardo entered an agreement with Wow in May 2014 to open a franchise in Connecticut, but stopped operating it in late 2015. In May 2016, he brought suit against Wow in Connecticut state court ...

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We reported in The GPMemorandum, Issue No. 223, that the Virginia State Corporation Commission had issued an Order to Take Notice regarding the state’s franchise law. That Order stated that the Virginia Division of Securities and Retail Franchising had recommended certain revisions to Chapter 110 of Title 21 of the Virginia Administrative Code entitled “Retail Franchising Act Rules.” The proposed amendment would have provided an exemption from Virginia’s franchise registration law for franchisors that offer or sell a “single unit” franchise in which the ...

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Posted in Damages

In November 2017, the Seventh Circuit affirmed the confirmation of an approximately $9 million arbitration award for Hyatt against one of its former franchisees. In doing so, the Seventh Circuit instructed the parties to agree to the attorneys’ fees and costs owed to Hyatt under the attorneys’ fee provision in the parties’ franchise agreement. But the court also noted that it had the authority to award Hyatt fees and costs as a sanction for the franchisee’s refusal to comply with the arbitrator’s decision. After the franchisee did not agree to pay Hyatt’s attorneys’ ...

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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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