Menu
Blog Banner Image

The Franchise Memorandum

The Franchise Memorandum

Posts in Encroachment.
Posted in Encroachment

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).

Email LinkedIn Twitter Facebook
Posted in Encroachment

A federal court in Colorado has denied a motion to dismiss a franchisee’s claim that the franchisor breached the implied duty of good faith and fair dealing. Kazi v. KFC US, LLC, 2020 WL 6680361 (D. Colo. Nov. 12, 2020). The franchise agreement in question stated that KFC would not operate, or permit a third party to operate, another KFC within a one-and-a-half mile radius of Kazi’s restaurant. In March 2019, after execution of the franchise agreement, KFC issued a policy allowing franchisees to request an impact study if KFC intended to permit the development of a new location within ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

On the other hand, a federal court in Colorado has concluded that amendments to an encroachment protection in the Colorado Dealer Act do apply to dealer agreements in existence before the amendments were enacted. DC Auto., Inc. v. Kia Motors Am., Inc., 2019 WL 4192112 (D. Colo. Sept. 4, 2019). The parties’ dealer agreements, which were entered into in 2003 and 2008, stated that Kia had the right to add new dealers, relocate dealers, or remove dealers from the geographic area, to the extent permitted by applicable law. At the time the parties executed the agreements, the Colorado Dealer ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

The Commonwealth Court of Pennsylvania recently reversed a decision by the State Board of Vehicle Manufacturers, Dealers and Salespersons that prohibited Arctic Cat from appointing a new dealer to sell ATVs within an existing dealer's market. Arctic Cat Sales, Inc. v. State Bd. of Vehicle Mfrs., Dealers, and Salespersons, 2015 Pa. Commw. LEXIS 78 (Pa. Commw. Ct. Feb. 23, 2015). The existing dealer, Nieman, filed a protest before the board alleging that the addition of a new ATV dealership in its market would result in a price war that would cause one or both dealers to withdraw from the ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

In Aston Martin Lagonda of North America, Inc. v. Lotus Motorsports, Inc., 2014 U.S. Dist. LEXIS 35909 (D. Mass. Mar. 18, 2014), a Massachusetts federal court partially granted Aston Martin's motion to dismiss the defendant-dealer's counterclaims. Aston Martin had sought a declaratory judgment that the parties' dealer agreement did not prohibit it from locating a new dealer within 8.7 miles of Lotus's existing dealership, but outside of its territory. Lotus, which had served as the sole Aston Martin dealership in New England (except for one dealership) since 1996, claimed the ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

In CCF, LLC v. Pimental, 2013 R.I. Super. LEXIS 98 (R.I. Super. Ct. May 24, 2013), a Wendy’s franchisee in East Greenwich, Rhode Island, sued McDonald’s Corporation and a town official challenging the approval of various permits and approvals issued by the local planning board and zoning board that allowed for a McDonald’s drive-through restaurant across from the Wendy’s franchisee’s restaurant. On the parties’ cross-motions for summary judgment, the court found for McDonald’s. It weighed whether the Wendy’s franchisee had standing to appeal the decisions of ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

In Kia Motors America, Inc. v. Glassman Oldsmobile Saab Hyundai, Inc., 2012 U.S. Dist. LEXIS 7346 (E.D. Mich. Jan. 23, 2012), a federal district court held that Kia’s decision to add a new dealership to the defendant’s assigned geographic area did not implicate the “anti-encroachment” provision of the Michigan Motor Vehicle Dealers Act. Under the statute, a distributor that seeks to place a new dealer within the “relevant market area” of an existing dealer must satisfy certain procedures. In 1998, at the time the parties executed their agreement, the statute defined ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

In Black Angus Holdings, LLC v. Back Yard Burgers, Inc. (In re Black Angus Holdings, LLC), 2010 Bankr. LEXIS 995 (Bankr. D. Kan. Mar. 24, 2010), a Kansas federal bankruptcy court declined to dismiss a franchisee’s breach of contract claim arising out of the opening of a restaurant in an area that overlapped with the franchisee’s protected area.  The franchise agreement between the parties prevented the franchisor from establishing another restaurant within an “exclusive radius” of two miles from the franchisee’s restaurant. After the franchisor established a new ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

The United States Court of Appeals for the Sixth Circuit has affirmed a Michigan federal court’s grant of summary judgment to defendant ExxonMobil Oil Company, turning aside the appellant-dealer’s encroachment claims because the parol evidence rule barred oral evidence regarding Exxon’s alleged promise to provide the dealer with an exclusive territory. Partner & Partner, Inc. v. ExxonMobil Oil Corp., 2009 WL 1184796 (6th Cir. May 4, 2009). 

In upholding the district court’s decision, the Sixth Circuit noted that neither the original sales agreement between Exxon and ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

In Transport Truck & Trailer, Inc. v. Freightliner LLC, 2008 WL 4239002 (D. Idaho, Sept. 20, 2008), the court granted Freightliner, LLC’s motion for summary judgment dismissing all claims, including a claim for breach of the implied covenant of good faith and fair dealing based on Freightliner’s grant of a competing dealership in the territory of Transport Truck & Trailer, Inc. (“TTT”). 

Although it had a non-exclusive territory, TTT claimed that by granting another dealership in its territory, Freightliner violated its implied covenant of good faith and fair dealing ...

Email LinkedIn Twitter Facebook
Posted in Encroachment

In General Motors Corp. v. Tennessee Motor Vehicle Commission, 2007 WL 4756809 (Tenn. Ct. App. Oct. 30, 2008), the Tennessee Court of Appeals late last month upheld the Tennessee Motor Vehicle Commission’s administrative decision prohibiting GM from allowing a current franchisee to relocate its dealership into another franchisee’s market area. GM claimed that a Tennessee dealership statute—which allows the Commission to deny the proposed granting of an “additional franchise” in a dealer’s market area—applies only where new franchises are granted and not ...

Email LinkedIn Twitter Facebook

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. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors