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The Franchise Memorandum

The Franchise Memorandum

Posts in Renewals.
Posted in Renewals

The Fifth Circuit Court of Appeals has reversed a Texas court’s ruling excusing an area representative’s untimely renewal notice and rendered judgment for the franchisor. Pizza Inn, Inc. v. Clairday, 979 F.3d 1064 (5th Cir. 2020). Clairday and Pizza Inn were parties to two area development agreements under which Clairday held two five-year options to renew. Clairday failed to timely notify Pizza Inn of his intent to exercise the second renewal option. Pizza Inn did not honor the tardy notice of renewal and did not renew. A jury awarded damages after finding that Pizza Inn had ...

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A federal court in Illinois has dismissed three of four counterclaims asserted against Liberty Tax by one of its former area developers and franchisees, David Rocci. JTH Tax LLC v. Grabowski, 2020 WL 6203355 (N.D. Ill. Oct. 22, 2020). Liberty first sued Rocci for allegedly continuing to operate competing businesses using Liberty’s trademarks and other property following the expiration of his area development agreement and the termination of his franchise. Rocci counterclaimed, arguing that Liberty breached the area development agreement because it failed to offer him a ...

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A federal court in Maryland denied both parties’ cross motions for summary judgment on the issue of whether the renewal of a franchise agreement must retain unaltered the initial agreement’s renewal term, thus permitting indefinite renewals. Jos. A. Bank Clothiers, Inc. v. J.A.B.-Columbia, Inc., 2017 WL 6406805 (D. Md. Dec. 15, 2017). Bank, a clothing store with more than 500 locations, had fourteen franchises. After Bank was acquired by Men’s Wearhouse in 2014, it decided to abandon its franchising efforts. Accordingly, it sought to remove or explicitly limit the ...

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In a case in which Gray Plant Mooty represented H&R Block, the United States Court of Appeals for the Eighth Circuit reversed a district court holding that Block was required to continue performing its obligations under certain franchise agreements in perpetuity. H&R Block Tax Services LLC v. Franklin, 2012 WL 3870574 (8th Cir. Sept. 7, 2012). The franchise agreements at issue provided that they would “automatically renew” for successive five-year terms, but that the franchisee could elect not to renew if it gave 120 days’ notice. After the agreements had remained in force for ...

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A federal court in South Dakota was asked to interpret the renewal language of three franchise agreements as amended after a class action lawsuit involving Little Caesar and its franchisee. Sioux Falls Pizza Co., Inc. v. Little Caesar Enterp., Inc., 2012 U.S. Dist. LEXIS 34687 (D.S.D. Mar. 14, 2012). At issue last month was whether Little Caesar could refuse to renew the franchises based on the franchisee’s prior litigation against the franchisor over the Hot-N-Ready concept. The franchisee claimed in the first litigation that it created the Hot-N-Ready concept and sued Little ...

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The California Court of Appeals, Second Appellate District, affirmed a trial court’s ruling that a franchisor did not breach the franchise agreements with its former franchisees by refusing to renew their franchises on the same terms found in their original franchise agreements. G.I. McDougal, Inc. v. Mail Boxes Etc., Inc., 2012 Cal. App. Unpub. LEXIS 243 (Cal. Jan. 12, 2012). As described earlier in this memorandum, MBE was the franchisor of packaging and shipping businesses that was acquired by United Parcel Service, which changed the franchise name to “The UPS Store.” ...

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A California federal court has granted a franchisor’s motion to dismiss an amended complaint brought by many of its Union 76 brand gas station franchisees in connection with the franchisor’s renewal of their franchise agreements. The case is In re ConocoPhillips Co. Service Station Rent Contract Litig., 2010 U.S. Dist. LEXIS 61300 (N.D. Cal. Jun. 2, 2010). The plaintiff-franchisees sued, claiming that Conoco violated Section 31101 of California’s Franchise Investment Law (CFIL). Section 31101 exempts the offer and sale of a franchise from the registration requirements ...

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In Casual Dining Dev., Inc v. QFA Royalties, LLC, 2009 WL 2869335 (D. Colo. Sept. 3, 2009), an aggrieved Quizno’s development agent brought suit against QFA Royalties (the successor in interest to the Quizno’s corporation) for failure to renew its area director marketing agreement in alleged violation of the Wisconsin Fair Dealership Law (“WFDL”).  The development agent alleged that QFA sent a notice of nonrenewal without good cause, as required by the WFDL. The development agent also alleged that it had “performed all conditions precedent to renewal that had not been ...

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In Domino’s Pizza, LLC v. Robert J. Deak, 2009 WL 2867744 (W.D. Pa. Sept. 4, 2009), a Pennsylvania federal court granted Domino’s motion for judgment on the pleadings. Domino’s filed a declaratory action asking that the court declare as expired an area development agreement entered into with franchisee, Deak. 

Domino’s and Deak were parties to a development agreement that was set to expire on July 31, 2005. In early 2005, Domino’s advised Deak that the development agreement would not be renewed under the same terms. In response, Deak claimed that Domino’s had made ...

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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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