The Franchise Memorandum

The Louisiana Court of Appeals affirmed a trial court’s finding that there was a signed franchise agreement between the parties even though the franchisor could not produce the signed original. Miss Bee’s Snoworld, LLC v. Guidry, 2021 WL 2493348 (La. Ct. App. June 18, 2021). Brooke and Michael Hyde owned and operated a snowball business in Louisiana since 2008, and in 2014 they decided to franchise the business. While their franchise documents were in the works, Brooke Hyde reconnected with a friend, Kaci Guidry, and explained the franchise opportunity. Guidry was interested in the business and over the next few months she and her sister invested many hours to learn about the business. Guidry even found and purchased a location for the prospective franchise business. In May 2015, Guidry was provided a copy of the completed FDD. While Hyde and an employee testified that they received a signed copy of the franchise agreement and stored it at the snowball business, Guidry testified that she never signed the agreement. On June 7, 2015, Guidry’s sister allegedly took the file with the signed copy of the franchise agreement after getting into an argument with Hyde and the staff. By June 15, 2015, Guidry and her sister opened a competing snowball business at the location Guidry purchased for the proposed franchised business.

The franchisor, Miss Bee’s Snoworld, brought suit against Guidry for unlawful use and disclosure of confidential information and breach of contract. After a bench trial, the court ruled in favor of Miss Bee’s when it found that even though Hyde could not produce the signed copy of the franchise agreement, other evidence, including testimony, could prove the existence of a contract if the original was lost, stolen, or destroyed. The trial court found Hyde’s and her employee’s testimony satisfactory to determine Guidry did execute the franchise agreement, that her sister took the agreement, and that Guidry’s subsequent actions of operating a competing business was a breach of contract and the unlawful use and disclosure of confidential information. The Louisiana Court of Appeals affirmed the trial court’s decision and held the trial court did not act manifestly erroneously when it found the franchise agreement was executed and subsequently lost, stolen, or destroyed.