Blog Banner Image

The Franchise Memorandum

Colorado Federal Court Denies Franchisor’s Motion to Set Aside a Jury Award for Breach of the Covenant of Good Faith and Fair Dealing
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). A jury found that KFC had breached the duty of good faith and fair dealing implied in the franchise agreement when it licensed a new franchise near Kazi’s franchised location, awarding Kazi $792,239 in lost future profits. KFC renewed the motion it had made during trial for judgment as a matter of law, adding an alternative request for a new trial.

KFC argued that under Kentucky law, Kazi had to prove that KFC had breached its duty of good faith and fair dealing by having acted dishonestly and deceitfully. Kazi responded that the consulting company KFC used for impact assessments always provided KFC with favorable reports. Further, KFC failed to consider any information that would be construed against its interests. KFC then argued that Kazi had not proved lost profits, although a forensic economist testified that there was evidence of up to a 26% impact on Kazi’s franchise. The court denied KFC’s motion for judgment as a matter of law because there was evidence from which a reasonable jury could rule in favor of Kazi as to both the alleged breach of the covenant of good faith and fair dealing and the amounts of lost profits. The court denied KFC’s motion for a new trial because Rule 59(e) is not a vehicle to revisit issues already decided by the court. The court stated that because there were no changes in the law, new evidence or need to correct an error, the motion could not be granted.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

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




















Blog Authors