The Franchise Memorandum

A Michigan federal court denied a motion by the defendant franchisees to dismiss or, in the alternative, transfer venue in an action brought by Little Caesar to enforce the termination of the parties’ franchise agreements. Little Caesar Enters., Inc. v. Miramar Quick Service Rest. Corp., 2018 WL 6002511 (E.D. Mich. Nov. 15, 2018). Gray Plant Mooty represents Little Caesar in this matter. In their motion, the Massachusetts‐ and Connecticut‐based franchisees argued that a Michigan venue was either improper or overwhelmingly inconvenient because the events giving rise to Little Caesar’s complaint occurred where the franchisees were located. Accordingly, they sought a Massachusetts venue.

In denying the franchisees’ motion, the court first held that the franchisees had waived any objection to venue through the franchise agreements’ Michigan forum selection provision. The court further observed that even in the absence of such a clause, Michigan was a proper venue for the dispute because a substantial part of the events underlying Little Caesar’s claims occurred in Michigan since Little Caesar is headquartered there. Among Little Caesar’s reasons for terminating the parties’ franchise agreements was the franchisees’ failure to provide required financial records to Little Caesar and to make timely payments to their Michigan‐based supplier. The court noted that federal law did not require venue in the district with the “most substantial contacts to the dispute.” Lastly, the court denied the franchisees’ motion to transfer the case because under the Supreme Court’s ruling in Atlantic Marine, the franchise agreements’ mandatory forum selection clause was to be given controlling weight in “all but the most exceptional of cases.” The franchisees’ arguments did not make the case exceptional.