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The Franchise Memorandum

The Franchise Memorandum

Posts in Tortious Interference.

A federal court in New Hampshire recently denied franchisor Planet Fitness’s motion for judgment on the pleadings that it did not tortiously interfere with the prospective contracts of one of its franchisees. 

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In another case from the Third Circuit, the appellate court affirmed a lower court’s decision to grant a franchisor’s motion for summary judgment. Audi of Am. v. Bronsberg & Hughes Pontiac, Inc., 2020 WL 2988888 (3d Cir. June 4, 2020). Audi of America and Wyoming Valley Motors (WVM) were parties to a 1997 franchise agreement that permitted WVM to operate a location-specific Audi dealership. In 2011, Audi unveiled a plan to convert all franchised locations to exclusive dealerships, with a six-year transition period. To comply with these new requirements, WVM purchased real ...

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The Fourth Circuit Court of Appeals has vacated a judgment dismissing claims that Mid-Atlantic Restaurant Corporation (owner of the Smithfield’s Chicken ‘N Bar-B-Q franchise system) interfered with the business relationship between owners of certain of its franchisees. Musselwhite. v. Mid-Atlantic Restaurant Corp., 2020 WL 1873330 (4th Cir. Apr. 15, 2020). In the underlying action, Musselwhite, a part-owner of several Smithfield’s Chicken ‘N Bar-B-Q franchisees, alleged that Mid-Atlantic wrongfully interfered with the business relationship between ...

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A federal court in New York recently dismissed claims brought by a former U.S. distributor of ORI legwear—an Italian hosiery brand—against ORI’s subsequent U.S. distributor. LuxSoma LLC v. Leg Res., Inc., 2018 WL 583119 (S.D.N.Y. Jan. 25, 2018). LuxSoma purportedly entered into a nonexclusive distribution agreement with ORI for distribution of ORI products in the U.S. in June 2011. LuxSoma struggled to sell ORI’s products, so ORI entered into an exclusive U.S. distribution agreement with Leg Resource in July 2012. LuxSoma sued Leg Resource for, among others things ...

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A federal district court in Wisconsin recently granted summary judgment in favor of the franchisor of Dairy Queen® restaurants against a counterclaim alleging that it had improperly interfered with negotiations between a franchisee and its subfranchisee, to which the franchisee was attempting to sell its territory rights. Am. Dairy Queen Corp. v. Universal Inv. Corp., 2017 WL 3701865 (W.D. Wis. Aug. 25, 2017). The subfranchisee, Universal Investment Corp., had operated a Dairy Queen unit in Wisconsin for more than 40 years. Universal’s franchise rights were originally ...

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The United States Court of Appeals for the Ninth Circuit has affirmed the dismissal of a franchisee’s complaint alleging that franchisor Charter Practices International (“CPI”) improperly refused to renew his franchise. Robinson v. Charter Practices Int’l, LLC, 2017 WL 2684122 (9th Cir. June 21, 2017). The franchisee had purchased a veterinary hospital from CPI and at the same time also owned and operated independent veterinary clinics that were not part of his CPI franchise. Initially, CPI had not enforced a noncompetition covenant contained in the parties’ ...

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Following a two-week jury trial in federal court in Philadelphia on a real estate developer's tortious interference claim, a jury recently returned a complete defense verdict in favor of Dunkin' Donuts. Selzer v. Dunkin' Donuts Inc., No. 2:09-cv-05484-GP (E.D. Pa.). Gray Plant Mooty represented the franchisor in this case, which involved a Pennsylvania real estate developer who had entered into an agreement with a Dunkin' Donuts franchisee to develop his stores in York, Pennsylvania. The franchisee had entered into a store development agreement with Dunkin', giving him the ...

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In Getty Petroleum Marketing, Inc. v. 2211 Realty, LLC, 2012 U.S. Dist. LEXIS 19346 (D. Mass. Feb. 16, 2012), a Massachusetts federal court considered a dispute arising out of the termination of a dealership agreement. Pursuant to the agreement, which Getty assigned to Green Valley Oil, defendant 2211 Realty operated a Lukoil station in Rhode Island. The plaintiffs terminated the agreement based on 2211 Realty’s alleged failure to pay for fuel deliveries, and initiated a lawsuit to enforce termination. 2211 Realty brought counterclaims alleging, among other things, breach of ...

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In Utility Trailer Sales of Kansas City, Inc. v. MAC Trailer Manufacturing, Inc., et al., 2001 U.S. App. LEXIS (10th Cir. Oct. 5, 2011), MAC and Utility entered into a dealer agreement, which granted Utility the right to “be the only dealer authorized or licensed by MAC in the [Kansas City] area” to sell MAC trailers. The dealer agreement also provided that neither MAC nor any other MAC dealer was prohibited from selling MAC trailers in the Kansas City area. 

Several years after executing the dealer agreement, Utility filed a complaint in federal district court alleging that MAC ...

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In Utility Trailer Sales of Kansas City, Inc. v. MAC Trailer Mfg., Inc., et al., 2010 LEXIS 83142 (D. Ka. Aug. 16, 2010), a Kansas federal court held that the “wrongful means” element needed to defeat the competitor privilege on a tortious interference claim is a higher standard than “malice.” The case arose out of a 2000 dealer agreement that granted Utility Trailer (UT) a nonexclusive license to sell trailers manufactured by MAC Trailer Manufacturing. Within a specified territory, however, UT was to be the sole authorized dealer. Importantly, the dealer agreement did not ...

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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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