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Federal Court Finds Washington’s Franchisee Bill of Rights Provides Franchisees Recourse Only Under the Consumer Protection Act

The United States District Court for the Western District of Washington held that a franchisee does not have a direct cause of action against a franchisor for violations of the Washington Franchise Investment Protection Act (FIPA), unless the claim is in connection with the offering or sale of a franchise. Money Mailer, LLC. v. Brewer, 2018 WL 3156901 (W.D. Wash. June 28, 2018). Brewer, a franchisee of Money Mailer, brought an action alleging that the franchisor was charging unreasonable fees in violation of FIPA and the Washington Consumer Protection Act (CPA). During discovery, Brewer learned that Money Mailer had been charging its franchisees for printing services at more than twice what the services had cost Money Mailer.

The court determined that Money Mailer’s practice of doubling the fees to its franchisees was a clear violation of a provision under FIPA’s “bill of rights” that prohibits a franchisor from selling products or services to franchisees at more than a “fair and reasonable price.” However, because FIPA explicitly provides for damages only in connection with misconduct that arises in the course of offering or selling a franchise, Brewer did not have a remedy under FIPA. The court explained that Brewer’s recourse would arise under the CPA instead, because FIPA provides that a violation of the bill of rights constitutes an unfair or deceptive act for purposes of the CPA.

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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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