The Franchise Memorandum

A federal court in Ohio recently transferred to Georgia a class action alleging that a franchisor violated federal antitrust laws and breached license agreements by requiring its franchisees to use certain vendors and suppliers. Synergy Hotels, LLC v. Holiday Hosp. Franchising, LLC, 2021 WL 5979297 (S.D. Ohio Dec. 17, 2021).

A federal court in California enjoined the brother of a former franchisee from continuing to use marks similar to the franchisor’s—even though the franchisor’s application to register the mark was denied, and even though the restaurant was in Miami while the franchisor’s system otherwise consists of a single forthcoming restaurant in California. Shawarma Stackz LLC v. Jawad, 2021 WL 5827066 (S.D. Cal. Dec. 8, 2021).

A federal court in South Carolina granted franchisor Petland, Inc.’s motion to dismiss based on the court’s lack of personal jurisdiction. Madden v. Petland Summerville, 2021 WL 5770294 (D.S.C. Dec. 6, 2021).

A federal court in Colorado recently denied franchisor KFC’s motions to set aside a jury award for damages resulting from KFC’s breach of its duty of good faith and fair dealing. Kazi v. KFC US, LLC, 2021 WL 6081832 (D. Colo. Dec. 22, 2021).

A federal court in Georgia refused to dismiss a franchisee’s counterclaim alleging a breach of a franchise termination agreement between the parties. JTH Tax LLC v. Robertson, 2021 WL 5449215 (N.D. Ga. Nov. 22, 2021).

A federal district court in Maine recently relied on the express terms of the franchise agreement between the parties and awarded the franchisor the attorneys’ fees and costs it incurred enforcing and collecting on an arbitration award and defending the franchisee’s appeal of the judgment. Toddle Inn Franchising, LLC v. KPJ Assocs. LLC, 2021 WL 5828029 (D. Me. Dec. 8, 2021).

Without previous notice that it was even under consideration, on December 6, 2021, the NASAA Franchise Project Group requested comments by January 5, 2022, on a comprehensive proposal to eliminate the use of the acknowledgments and questionnaires (“A&Qs”) franchisors usually incorporate into their franchise sales closing processes.