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The Franchise Memorandum

The Franchise Memorandum

Posts in Limitation of Actions.

The United States Court of Appeals for the Seventh Circuit has affirmed a district court’s determination that a distributor’s claims were stale under the applicable statute of limitations. Heiman v. Bimbo Foods Bakeries Distrib. Co., 902 F.3d 715 (7th Cir. Aug. 30, 2018). Heiman’s company, JTE, distributed products for defendant Bimbo Foods under a distribution agreement that did not have a fixed duration and could be terminated in the event of a noncurable or untimely cured breach by one of the parties. The agreement also specified that New York law would govern all claims and ...

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Citing the applicable statutes of limitation and contractually agreed forum selection clauses, the United States District Court for the Eastern District of Missouri recently dismissed in part and transferred to Texas remaining claims brought by 111 franchisee plaintiffs against a franchisor. Armstrong v. Curves Int'l, 2014 WL 6085553 (E.D. Mo. Oct. 15, 2015). Gray Plant Mooty represents the franchisor in this case. The franchisees originally filed a 165- count complaint alleging that Curves made misrepresentations that induced them to buy their respective franchises, that ...

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A federal court in California recently denied a motion by former franchisees to dismiss a franchisor's claims for breach of contract and trademark infringement based on the contractual limitations period in the parties' franchise agreement. Fantastic Sam's Salons, Corp. v. Moassesfar, 2015 U.S. Dist. LEXIS 6934 (C.D. Cal. Jan. 21, 2015). Moassesfar had operated one Fantastic Sam's salon for three years and a second for over two years without paying franchise fees. In 2014, Fantastic Sam's sent Moassesfar a notice of default and provided an opportunity to cure the financial ...

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On interlocutory appeal, the Eleventh Circuit reversed in part a district court's grant of summary judgment for a franchisor on the basis that the appellant-franchisee's claims of illegal and undisclosed kickbacks were barred by the one-year contractual limitations period. Massey, Inc. v. Moe's Southwest Grill, LLC, 2014 U.S. App. LEXIS 8765 (11th Cir. May 9, 2014). The appeal stems from an action filed by 39 Moe's franchisees which sought to recover monies provided by approved suppliers to Moe's CEO and affiliates. In purchasing a franchise, each of the three appellant ...

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In a case litigated by Gray Plant Mooty, the United States Court of Appeals for the Sixth Circuit recently reversed a federal trial court’s judgment in favor of a franchisee in a dispute over a development contract on the grounds that its claims were barred by the agreement’s two-year limitations provision. The franchisee in Progressive Foods, LLC v. Dunkin’ Donuts, Inc., 2012 WL 3241696 (6th Cir., Aug. 9, 2012), had opened three stores under a six-store development contract before Dunkin’ terminated the deal for nonpayment of fees associated with the agreement. The ...

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The California Court of Appeals recently affirmed dismissal of a franchisee’s claims for violation of the California Franchise Investment Law (CFIL) and breach of contract, both of which were based on a franchisor’s alleged oral promise to grant an additional franchise territory in the future. In Celsi v. H&R Block Tax Services, LLC, 2012 Cal. App. Unpub. LEXIS 5275 (July 17, 2012), an H&R Block franchisee entered into a franchise agreement that gave it the right to operate a business in a specific franchise territory. At the same time, the franchisee also executed an addendum ...

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A U.S. District Court in Georgia granted a franchisor’s motion to dismiss certain claims because of a contractual limitations period, but allowed the plaintiffs’ RICO claims to move forward. In Massey, Inc., et., al., v. Moe’s Southwest Grill, LLC., et. al., 2012 U.S. Dist. LEXIS 53676 (N.D. Ga. April 17, 2012), Plaintiffs claimed that the franchisor failed to properly disclose to plaintiffs that its owner held an interest in a designated supplier. Although the owner held an interest in the supplier as early as 2001, the franchisor failed to disclose that interest until its ...

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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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