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The Franchise Memorandum

The Franchise Memorandum

Posts in Choice of Law.
Posted in Choice of Law

The Sixth Circuit Court of Appeals affirmed a Michigan federal court’s finding that Michigan was a proper forum and Michigan law applied to dealer agreements between a Michigan manufacturer and a dealer in the Dominican Republic.

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Posted in Choice of Law

A federal court in Connecticut enforced the choice of law provision in a master franchise agreement entered into with the franchisor’s predecessor.

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Posted in Choice of Law

A federal court in New Jersey has dismissed certain state-law claims against the franchisors of Circle K gas stations based upon choice-of-law provisions in the parties’ franchise agreements, but ruled that related lease agreements had narrower choice-of-law language that did not apply to tort claims. Universal Prop. Servs. Inc. v. Lehigh Gas Wholesale Servs., Inc., 2021 WL 118940 (D.N.J. Jan. 13, 2021). Plaintiffs acquired the rights to operate 17 Florida-located gas stations from Defendants Circle K Stores, Inc. and TMC Franchise Corp. Plaintiffs alleged that during ...

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Posted in Choice of Law

A federal court in Texas granted in part and denied in part a franchisor’s motion to dismiss a franchisee’s counterclaims under California state law. Jack in the Box Inc. v. San-Tex Rests., Inc., 2021 WL 148058 (W.D. Tex. Jan. 14, 2021). Jack in the Box entered into franchise agreements for 49 Texas restaurant locations with Atour Eyvazian and Anil Yadav, who, on the same day, assigned the franchise agreements to San-Tex Restaurants. The franchise agreements contained a choice of law provision contemplating the application of California law to claims “regarding the making ...

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Posted in Choice of Law

A federal court in Washington held that a distributor failed to demonstrate that Wisconsin law, particularly the Wisconsin Fair Dealership Law (WFDL), should apply to a distribution agreement that specified that the agreement is to be governed by the laws of the State of Washington. ACD Distrib., LLC v. Wizards of the Coast, LLC, 2020 WL 3266196 (W.D. Wash. June 17, 2020). ACD, located in Wisconsin, and Wizards of the Coast (WOTC), located in Washington, entered into a distribution agreement that granted ACD the right to distribute WOTC’s gaming products in Wisconsin. At the end of ...

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An urgent care franchisor can pursue claims against a franchisee who refused to use new trademarks after a federal court in Alabama voided a one-year period of limitations in the parties’ agreement. AFC Franchising, LLC v. Fabbro, 2019 WL 6683781 (N.D. Ala. Dec. 06, 2019). Laura Fabbro entered into a Doctor’s Express franchise agreement in 2009 to operate an urgent care center under the franchisor’s marks, but the contract obligated Fabbro to comply with the franchisor’s directions to modify or discontinue the use of certain trademarks. When AFC Franchising later acquired ...

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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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Posted in Choice of Law

A manufacturer represented by Gray Plant Mooty recently obtained an important victory when a federal court in Iowa enforced a choice of law provision to preclude application of California’s unfair competition statute. Quality Office Furnishings, Inc. v. Allsteel, Inc., No. 3:17-CV-00041- JEG (S.D. Iowa Sept. 11, 2018). This dispute arose after Allsteel, a nationwide manufacturer of office furniture headquartered in Iowa, declined to renew its agreement with a California-based dealer. Although the dealer agreement designated Iowa’s courts as the exclusive forum and ...

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An Arizona federal court declined to enforce choice of law and forum selection provisions in a suit brought by four Ohio franchisees of Zounds Hearing Franchising for violations of Ohio’s Business Opportunity Purchasers Protection Act. Zounds Hearing Franchising, LLC v. Bower, 2017 WL 4399487 (D. Ariz. Sept. 19, 2017). The suit was initially filed in Ohio state court, and Arizona-based Zounds removed the case to federal court and moved to transfer it to Arizona pursuant to the forum selection clause in each franchise agreement, which included identical Arizona choice of law and ...

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Posted in Choice of Law

The United States District Court for the Northern District of New York recently rejected a franchisee’s counterclaims that her franchisor wrongfully refused to renew her franchise agreement and breached its implied covenant of good faith and fair dealing when (as previously reported in Issue 190 of The GPMemorandum) it thereafter obtained enforcement of the franchisee’s post-termination covenant against competition. H&R Block Tax Servs. LLC v. Strauss, 2017 WL 395119 (N.D.N.Y. Jan. 27, 2017). Gray Plant Mooty represents H&R Block in this case. 

The franchise agreement ...

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Posted in Choice of Law

A federal court in the Southern District of Illinois recently struck a franchise agreement’s choice of law provision after concluding that the state in which the franchise was located had a materially greater interest in the dispute than the state whose law was chosen by contract. Show-Me’s Franchises, Inc. v. Sullivan, 2014 U.S. Dist. LEXIS 171507 (S.D. Ill. Dec. 11, 2014). In a case started by Show-Me, Sullivan brought counterclaims alleging violations of the Indiana Deceptive Franchise Practice Act, the Illinois Franchise Disclosure Act, and Indiana common law. He argued ...

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The United States District Court for the District of Minnesota recently held that the selection of Minnesota law in a sales representative agreement did not have the effect of incorporating the Minnesota Termination of Sales Representative Act (MTSRA), where the facts of the case did not otherwise result in its application. North Coast Tech. Sales, Inc. v. Pentair Tech. Prods., Inc., 2013 U.S. Dist. LEXIS 28368 (D. Minn. Mar. 13, 2013). Gray Plant Mooty represented the defendant manufacturer in this case. The dispute arose when Pentair sent a notice advising the sales ...

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A federal court recently granted summary judgment to a franchisor despite rejecting the franchisor’s choice of law argument. In Red Roof Franchising, LLC v. AA Hospitality Northshore, LLC, 2012 U.S. Dist. LEXIS 90564 (D.N.J. June 28, 2012), the United States District Court for the District of New Jersey upheld the termination of a franchisee who ceased making payments under its franchise agreement before completely abandoning the business. The franchisee had operated a Red Roof Inn in Minnesota under an agreement that contained a Texas choice of law provision. Prior to the end of ...

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In Hockey Enter., Inc., v. Total Hockey Worldwide, LLC, 2011 U.S. Dist. LEXIS 2201 (D. Minn. Jan. 10, 2011), a Minnesota federal court dismissed a Florida franchisee’s claim against franchisor Total Hockey Worldwide, LLC, its parent, and a number of its officers for breach of the Minnesota Franchise Act. A Florida-based franchisee of two hockey-training businesses had filed suit against the Total Hockey defendants alleging, among other things, that they violated the Minnesota Franchise Act by failing to register the franchisor in Minnesota and making several false ...

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Posted in Choice of Law

In 1-800-GOT JUNK? LLC v. Superior Court, 2010 Cal. App. LEXIS 1805 (Cal. App. 2d Dist. Oct. 21, 2010), a California court of appeals decided that a franchisee could enforce a Washington choice of law clause in a California case notwithstanding the anti-waiver provision in the California Franchise Relations Act (CFRA), which voids a contractual stipulation that purports to waive any provision of the CFRA. A California-based franchisee had sued 1-800-Got-Junk, a Delaware company headquartered in Vancouver, Canada, for wrongful termination and argued that the franchise ...

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Posted in Choice of Law

The Ninth Circuit recently confirmed that a state franchise law does not apply to claims involving out-of-state franchisees even if the franchise agreement has a choice of law provision applying that state’s law. The franchisees in Taylor v. 1-800-GOT-JUNK?, LLC, 2010 U.S. App. LEXIS 14433 (9th Cir. July 14, 2010), operated a junk removal franchise in Oregon pursuant to a franchise agreement that contained a Washington choice of law provision. Neither the franchisees nor the franchisor were Washington residents. A previous dispute between the parties, in which the franchisees ...

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Posted in Choice of Law

In Red Lion Hotels Franchising, Inc. v. MAK LLC, 2010 U.S. Dist. LEXIS 23633 (E.D. Wash. Mar. 15, 2010), the court held that the Washington Franchise Investment Protection Act (“FIPA”) did not apply to a Washington-based franchisor in its dispute with a California franchisee, even though the franchise agreement contained a Washington choice of law provision. Franchisor Red Lion sued the franchisee for breaching the franchise agreement by failing to comply with a mandatory property improvement plan. The franchisee argued that the termination was improper and ...

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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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