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The Franchise Memorandum

The Franchise Memorandum

Posts in Transfers.
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A federal court in Georgia denied a manufacturer’s motion for summary judgment related to its withholding of consent to a proposed transfer of a car dealer location. Savannah Motorcars, LLC v. Volkswagen Grp. Of Am., Inc., 2022 WL 866342 (S.D. Ga. Mar. 22, 2022).

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A federal court in Ohio recently transferred to Georgia a class action alleging that a franchisor violated federal antitrust laws and breached license agreements by requiring its franchisees to use certain vendors and suppliers. Synergy Hotels, LLC v. Holiday Hosp. Franchising, LLC, 2021 WL 5979297 (S.D. Ohio Dec. 17, 2021).

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A federal district court granted the motion of franchisor H&R Block Tax Services LLC (“Block”) for summary judgment, finding that the plaintiff had no right to become an H&R BLOCK franchisee under either contract or detrimental reliance theories. CG & JS Enters., LLC v. H&R Block, Inc., 2017 WL 5483763 (E.D. La. Nov. 15, 2017). CG & JS Enterprises, LLC is owned by Christopher Gibbens and Johnny Shaw, two former employees of Block. Gibbens left Block in January 2013 under amicable circumstances. In April 2013, an existing H&R BLOCK franchisee expressed interest in transferring his ...

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A federal court in Florida granted in part and denied in part a motion to dismiss a lawsuit brought by plaintiffs seeking to sell their Tim Hortons franchises to a third party. Picktown Foods, LLC v. Tim Hortons USA, Inc., 2017 U.S. Dist. LEXIS 186107 (S.D. Fla. Nov. 8, 2017). The plaintiffs, who are five different Tim Hortons franchisees, had entered into a purchase agreement with a third party to sell each restaurant for $880,000, but Tim Hortons did not consent to the sale, which was required under the franchise agreements before a sale could close. Tim Hortons indicated that it would ...

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Meanwhile, a federal court in Kentucky held that a franchisee sufficiently pled a claim against a franchisor for intentional interference with a prospective economic advantage. Raheel Foods, LLC v. Yum! Brands, Inc., 2017 WL 217751 (W.D. Ky. Jan. 18, 2017). Raheel was party to several franchise agreements with Yum! Brands and eventually decided to sell its franchised stores. Under the franchise agreements, prior to selling the stores, Raheel was required to obtain Yum! Brands’ approval of the proposed purchaser. Raheel alleged that it presented proposed purchasers to Yum ...

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Although they still lost on other grounds, parties who attempted to purchase a Mercedes Benz dealership may have made important law last month in their tortious interference lawsuit against the car company. Fresno Motors, LLC v. Mercedes Benz USA, LLC, 2014 U.S. App. LEXIS 21127 (9th Cir. Nov. 5, 2014). The plaintiffs maintained that Mercedes Benz did not provide timely notice it was exercising its right of first refusal to buy the dealership, and that the company's exercise of that right constituted interference with the plaintiff's contract to purchase the business from the ...

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A federal court in Kentucky has upheld a franchisor’s rejection of three separate Asset Purchase Agreements (APAs) that would have transferred the franchisees’ restaurants to a third party. As part of a settlement agreement resolving various franchise agreement violations, the franchisee defendants in KFC Corp. v. Kazi, 2012 U.S. Dist. LEXIS 180424 (W.D. Ky. Dec. 20, 2012), were obligated to close any sale of their restaurants by November 30, 2012. KFC rejected the first proposed APA because it involved 100% financing, which did not meet KFC’s financial requirements. The ...

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A federal court in Maryland recently denied a truck manufacturer’s motion to dismiss its dealer’s counterclaims in an action regarding the unauthorized transfer of a dealership. In Paccar Inc. d/b/a Peterbilt Motors Company v. Elliot Wilson Capitol Trucks LLC, 2012 U.S. Dist. LEXIS 166962 (D. Md. Nov. 21, 2012), Peterbilt filed suit alleging that Elliot Wilson had materially breached its dealer agreement by selling rights to the dealership without prior approval. Elliot Wilson responded by filing counterclaims alleging that Peterbilt was aware of the potential sale and ...

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In Pasqualetti v. Kia Motors Am., 2009 WL 3245439 (N.D. Ohio Sept. 30, 2009), the court rejected Pasqualetti’s claim that Kia Motors’ refusal to approve the transfer of a dealership to him constituted tortious interference. The court stated that a tortious interference claim will not lie “where the defendant was the source of the business opportunity allegedly interfered with” and that “[a]s a matter of public policy . . . franchisors should not fear potential tort liability for simply deciding not to contract with a prospective franchisee.” Citing decisions from ...

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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. 

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