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The Franchise Memorandum

Posts from November 2020 - Issue 259.

A federal court in California found that a restaurant does not violate the Americans with Disabilities Act or the California Unruh Civil Rights Act when it provides late-night service exclusively through its “drive-thru.” Szwanek v. Jack in the Box, Inc., 2020 WL 5816752 (N.D. Cal. Sept. 30, 2020). Plaintiffs Judy Szwanek and James Lopez II are California residents and patrons of Jack in the Box fast food restaurants within walking distance of their homes. Visual impairments prevent each from driving. They brought a putative class action against the franchisees who operate the ...

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A federal court in Colorado held that entities controlled by former franchisees were bound by the forum selection clauses in the franchisees’ terminated franchise agreements. Fitness Together Franchise, LLC v. EM Fitness, LLC, 2020 WL 6119470 (D. Colo. Oct. 16, 2020). EM Fitness and related franchiseedefendants operated several Fitness Together franchises in Ohio under franchise agreements that contained post-termination noncompetition and Colorado forum selection clauses. The franchiseedefendants negotiated the early termination of their franchise agreements ...

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Posted in Renewals

A federal court in Illinois has dismissed three of four counterclaims asserted against Liberty Tax by one of its former area developers and franchisees, David Rocci. JTH Tax LLC v. Grabowski, 2020 WL 6203355 (N.D. Ill. Oct. 22, 2020). Liberty first sued Rocci for allegedly continuing to operate competing businesses using Liberty’s trademarks and other property following the expiration of his area development agreement and the termination of his franchise. Rocci counterclaimed, arguing that Liberty breached the area development agreement because it failed to offer him a ...

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A federal court in Missouri granted, in part, a franchisor’s motion for a temporary restraining order against a former licensee. Imo’s Franchising, Inc. v. Kanzoua, Inc., 2020 WL 5534425 (E.D. Mo. Sept. 14, 2020). Imo’s Pizza entered into a licensing agreement with Kanzoua, which allowed Kanzoua to operate an Imo’s Pizza restaurant at its gas station/convenience store location. In July 2020, Imo’s Pizza terminated the agreement. Imo’s Pizza alleged that after termination, Kanzoua continued to sell pizza, hold itself out as an Imo’s-affiliated restaurant, and ...

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Posted in Contracts

Wyndham Hotel Group International’s claim for monetary damages against a guarantor of an $850,000 note related to a franchise agreement has survived a motion to dismiss. Wyndham Hotel Grp. Int’l v. Silver Entm’t LLC, 2020 WL 5517519 (S.D.N.Y. Sept. 14, 2020). Wyndham sued its franchisees Silver Entertainment and Veneto Hotel & Casino and was awarded monetary damages for their breach of the franchise agreement. Wyndham then sought to recover against Silverman, the personal guarantor of a note related to the franchise agreement. Silverman moved to dismiss the claims on the ...

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A federal court in Ohio denied an area representative’s request to enjoin the nonrenewal or termination of two of its area representative agreements. KAM Development, LLC v. Marco’s Franchising, LLC, 2020 WL 6146482 (N.D. Ohio Oct. 10, 2020). In 2010, Marco’s granted KAM two area representative agreements in which KAM agreed to solicit potential franchisees and service existing franchisees in Charlotte, North Carolina, and Columbia, South Carolina, for ten years. Each agreement provided up to four renewal periods of five years each, so long as KAM satisfied certain ...

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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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