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The Franchise Memorandum

Posts from February 2020 - Issue 250.
Posted in Employment

In another joint employer claim against a franchisor, a federal court in California has dismissed without prejudice a discrimination complaint filed by a franchisee’s former employee proceeding pro se against the franchisee, its owners, and the franchisor. Stewart v. Chick-fil-A, 2020 WL 264578 (S.D. Cal. Jan. 17, 2020). Plaintiff Lindsey Stewart is a 62 year-old woman who worked at a Chick-fil-A franchise in California owned by Defendants 3 Little Cows, Inc., Danny Putnam, and Becky Putnam. Stewart’s complaint alleged one count of “corporate failure to supervise their ...

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Posted in Employment

A federal court in New Jersey partially denied franchisor Jackson Hewitt Tax Service’s motion to dismiss, allowing claims to proceed that allege Jackson Hewitt was an employer of certain of its franchisees’ employees. Mardis v. Jackson Hewitt Tax Service, Inc., 2019 WL 7207551 (D.N.J. Dec. 26, 2019). In so holding, the court disagreed with Jackson Hewitt’s arguments that Oklahoma statute § 59-6005(B) and (C) — which expressly states that “[a] franchisor shall not be considered the employer of a franchisee or a franchisee’s employees” — should be applied ...

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A federal court in Michigan granted a franchisor, Liberty Tax, a preliminary injunction against the owners of its former franchisee in JTH Tax, Inc. v. Magnotte, 2020 WL 127949 (E.D. Mich. Jan. 10, 2020). On January 16, 2018, after significant defaults, Liberty Tax terminated multiple franchise agreements with franchisee Reliable Income Tax. Liberty’s notice of termination reminded Reliable and its owners, the Magnottes, of their post-termination restrictive covenants regarding noncompetition, nonsolicitation, and return of customer information. Despite this, in ...

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Posted in Terminations

A federal court in Florida has held that Tim Hortons had properly terminated a franchise agreement with its former franchisee and was entitled to summary judgment and a permanent injunction against the former franchisee. Tim Hortons USA, Inc. v. Tims Milner LLC, No. 18-cv-24152-DPG (S.D. Fla. Jan. 7, 2020). As previously reported in Issue 243 of The GPMemorandum, Tims Milner entered into franchise and lease agreements with Tim Hortons and its affiliates in 2016 to own and operate seven locations in Michigan. The franchise agreements provided that, if Milner defaulted under a lease ...

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Posted in Settlement

A federal court in Missouri has granted in part a franchisee’s motion to enforce a settlement agreement and awarded the franchisee its attorneys’ fees as the “prevailing party.” Biologix Franchise Marketing Corp. v. Kay Logic, 2020 WL 33108 (E.D. Mo. Jan. 2, 2020). Biologix and its former franchisee, Kay Logic, entered into a settlement agreement whereby Kay Logic would make monthly installment payments to Biologix. A portion of each installment payment would serve as a credit toward the purchase of Biologix’s products, which Kay Logic was permitted to sell without ...

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Posted in Damages

A federal court in Ohio has granted a franchisor’s unopposed motion for summary judgment against a former franchisee, awarding damages for the franchisee’s attempt to continue to use Matco’s marks and trade secrets after termination. Matco Tools Corp. v. Urquhart, 2020 WL 364242 (N.D. Ohio Jan. 22, 2020). In July 2014, Urquhart entered into a distributorship agreement with Matco. In March 2019, Urquhart effectively stopped buying tools from Matco, even though his truck still bore the trademarked Matco logos, and he was still servicing the “List of Calls and Potential ...

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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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