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The Franchise Memorandum

Posts from January 2019 - Issue 237.
Posted in Employment

In three consolidated actions, the U.S. District Court for the Southern District of New York  granted summary judgment in favor of franchisor Domino’s Pizza, Inc. and certain related entities (the “Domino’s defendants”), holding that they were not joint employers of current and former employees of several Domino’s Pizza franchisees and therefore could not be held liable for alleged wage violations under the Fair Labor Standards Act and the New York Labor Law. In re Domino’s Pizza, Inc., 2018 WL 475944 (S.D.N.Y. Sept. 30, 2018). To make this determination, the court ...

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Posted in Antitrust

A federal district court in the Western District of Washington denied a motion to dismiss a putative class action lawsuit alleging that anti‐poaching clauses in Cinnabon franchise agreements violated the Sherman Act and Washington’s Unfair Business Practices Act. Yi v. SK Bakeries, LLC, No. 3:18‐cv‐05627 (W.D. Wash. Nov. 13, 2018). The lead plaintiff, Kyla Yi, was a former employee at a Cinnabon franchised bakery in Washington. Franchise agreements for Cinnabon bakeries prohibited franchisees from hiring or soliciting Cinnabon’s and other franchisees’ ...

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Posted in Employment

The long‐awaited decision of the D.C. Circuit Court of Appeals in an appeal challenging the controversial joint employer test adopted by the National Labor Relations Board in Browning‐Ferris Industries, 362 NLRB No. 186 (2015), was released on December 28, 2018. Browning‐Ferris Indus. of Cal., Inc. v. NLRB, 2018 WL 6816542 (D.C. Cir. Dec. 28, 2018). Although the D.C. Circuit’s decision was expected to either clarify or reject the NLRB’s August 2015 decision holding that a company could be a joint employer if it had an unexercised right to directly or indirectly control an ...

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On the other hand, a federal district court in Illinois granted in part and denied in part a franchisor’s motion for a preliminary injunction against a recently terminated franchisee who established a competing business. Auto Driveaway Franchise Sys., LLC v. Corbett, Bus. Franchise Guide (CCH) ¶ 16,300 (N.D. Ill Oct. 26, 2018). Auto Driveaway—a business offering vehicle transportation and shipping management services—sought a preliminary injunction and temporary restraining order against Corbett, the owner of the franchise at issue, seeking to enforce a noncompete ...

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Posted in Arbitration

The federal court in Maine also recently granted a motion to compel arbitration filed by daycare center franchisor Toddle Inn Franchising, holding that the arbitration provision included in its franchise agreement with franchisee KPJ Associates survived the expiration of the agreement. Toddle Inn Franchising, LLC v. KPJ Assocs., LLC, 2018 WL 6515129 (D. Me. Dec. 11, 2018). The dispute arose when, after operating for two years under an expired franchise agreement, KPJ notified Toddle Inn that it intended to open a competing daycare center at its Toddle Inn franchised business ...

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The U.S. District Court for the Western District of Wisconsin has denied a franchisor’s renewed motion for a preliminary injunction against its former franchisee, holding that the franchisor failed to show that its trade dress was entitled to protection or that the ex‐franchisee’s potential violation of the noncompete provision in its franchise agreement posed a threat of irreparable harm to the franchisor. E&G Fran. Sys., Inc. v. Janik, 2018 WL 5630589 (W.D. Wis. Oct. 31, 2018). E&G Franchise Systems operates and licenses others to operate Erbert and Gerbert’s Sandwich ...

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Posted in Arbitration

A Louisiana federal court dismissed a franchisee’s attempt to avoid arbitrating a dispute that was arbitrable by agreement between the parties in Kirksey v. Doctor’s Associates Inc., 2018 WL 66510121 (E.D. La. Dec. 19, 2018). Doctor’s Associates Inc., franchisor of the Subway brand, and Kirksey were parties to a franchise agreement containing an arbitration clause that required them to arbitrate their disputes in Connecticut. On the eve of an arbitration hearing between the parties in Connecticut, Kirksey filed suit against Subway in Louisiana state court seeking a ...

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A Michigan federal court denied a motion by the defendant franchisees to dismiss or, in the alternative, transfer venue in an action brought by Little Caesar to enforce the termination of the parties’ franchise agreements. Little Caesar Enters., Inc. v. Miramar Quick Service Rest. Corp., 2018 WL 6002511 (E.D. Mich. Nov. 15, 2018). Gray Plant Mooty represents Little Caesar in this matter. In their motion, the Massachusetts‐ and Connecticut‐based franchisees argued that a Michigan venue was either improper or overwhelmingly inconvenient because the events giving rise to ...

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Posted in Choice of Law

A federal court in Texas has upheld a franchise agreement’s choice of Tennessee law but declined to dismiss counterclaims based on other states’ franchise laws. Gigi’s Cupcakes, LLC v. 4 Box LLC, 2018 WL 6068817 (N.D. Tex. Nov. 19, 2018). Gigi’s Cupcakes filed suit against various franchisees for enforcement and declaratory relief related to their franchise agreements. In response, the franchisees counterclaimed for breach of contract, fraud, and other claims under the franchise laws of their respective states. In denying the franchisees’ original motion to ...

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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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