The Franchise Memorandum

A federal court in Tennessee granted franchisor Frost Shades’ motion to compel arbitration of franchisee Lunt’s fraudulent inducement of contract claims, but the court also granted in part franchisee Lunt’s request for a preliminary injunction preventing Frost Shades’ enforcement of noncompete restrictions under the franchise agreement while that arbitration was pending. Lunt v. Frost Shades Franchising, LLC, 2023 WL 3484202 (M.D. Tenn. May 16, 2023).

A federal court in Michigan recently denied a franchisor’s motion to dismiss claims alleging that it was liable as a joint employer for claims under Title VII of the Elliott-Larsen Civil Rights Act, Michigan’s state counterpart to Title VII. Acuff v. Dy N Fly, LLC, 2023 WL 3293278 (E.D. Mich. May 5, 2023).

A Minnesota bankruptcy court granted Fantastic Sams summary judgment and enjoined a former franchisee from violating the post-termination noncompete in its franchise agreements after the franchisee rejected the agreements in bankruptcy. EllDan Corp. v. Fantastic Sams Franchise Corp., 2023 WL 3394917 (Bankr. Minn. May 11, 2023).

A federal court in Florida recently dismissed a franchisee’s lawsuit sua sponte pursuant to the forum-selection clause in the parties’ franchise agreements, finding the clause valid, mandatory, and enforceable. Kava Culture Franchise Grp. Corp. v. Dar-Jkta Enters. LLC, 2023 WL 3568598 (M.D. Fla. May 18, 2023).

A federal court in Michigan granted a motion to dismiss claims that franchisor Bateel International, LLC had violated the Michigan Franchise Investment Law and the Texas Business Opportunity Act. Luxury Concepts, Inc. v. Bateel Int’l LLC, 2023 WL 3606649 (E.D. Mich. May 23, 2023).

A federal court in Ohio recently denied in part a franchisor’s motion for summary judgment related to a dispute over the renewal of two area representative agreements. KAM Dev., LLC v. Marco’s Franchising, LLC, 2023 WL 3251216 (N.D. Ohio May 4, 2023).

Reflecting a shifting national landscape on restrictive covenants, the Minnesota Legislature recently adopted legislation that prohibits franchisors from placing certain nonsolicitation and no-poach restrictions in franchise agreements.

Lathrop GPM’s Increasing Diversity in Franchising initiative was launched in October 2021 to help increase ownership and participation in franchising within underrepresented racial and ethnic groups.

Join Lathrop GPM attorneys Rachel L. O’Connor and Carlos L. White at 11:30 CT on Wednesday, June 21, for a discussion on the benefits, challenges, and strategies for developing and implementing ESG Standards into a franchise system.