The Franchise Memorandum

In AAA Abachman Enterprises, Inc. v. Stanley Steemer Intern., Inc., 2008 WL 624040 (11th Cir. March 10, 2008), the plaintiff’s franchise agreement granted exclusive rights to use the Stanley Steemer trademarks in the carpet and upholstery cleaning business, within a specified territory. The franchisor later granted exclusive rights in the same territory to other companies to operate a “Stanley Steemer Duct Cleaning Business.” The plaintiff alleged that this grant of rights in connection with duct cleaning violated the exclusivity provision of plaintiff’s franchise agreement. A federal district court in Florida granted the franchisor’s motion for summary judgment, holding that the franchise agreement between the parties only provided exclusivity as to carpet and upholstery cleaning.

The plaintiff appealed, but the Eleventh Circuit affirmed. After a de novo review of the contract language, the court concluded that the contract language was unambiguous. The agreement gave the franchisee the exclusive right “to own and operate a Stanley Steemer carpet and upholstery business (hereinafter referred to as a ‘Stanley Steemer Business’). . . in the ‘Franchisee’s Area’ and to use the trademarks . . . solely in a Stanley Steemer Business in that area and in no other manner.” Although the royalty provision required that royalties be paid on all sales resulting from or “associated with the name Stanley Steemer,” the court held that the language “in no other manner” in the first provision clearly limited the exclusive grant of rights to only carpet and upholstery cleaning.