In Century 21 Real Estate LLC v. Perfect Gulf Properties, Inc., 2010 U.S. Dist. LEXIS 13438 (M.D. Fla. Feb. 17, 2010), a Florida federal court recently granted the franchisor’s motion for partial summary judgment on its breach of contract claims against the individual guarantors, and held that the franchisor was entitled to almost $1.4 million in damages. The franchisor sued the terminated franchisees and the individual guarantors to recoup unpaid royalties and advertising fees, as well as the remaining balance due on a promissory note that accelerated upon the termination of the franchise agreements. The guarantors asserted several unsuccessful defenses. For example, the court rejected their defense that the franchisor had failed to mitigate its damages by allegedly funding the promissory note knowing that the franchisees could not meet the franchise performance conditions. The court held that the doctrine of mitigation applies after a contract has been breached, but not before.
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