The Franchise Memorandum

A federal court in Tennessee granted a manufacturer’s motion to transfer venue under a forum selection clause. C&S Outdoor Power Equip., Inc. v. ODES Indus. LLC, 2019 WL 4197608 (W.D. Tenn. Sept. 4, 2019). ODES manufactured vehicles and entered into an agreement with C&S Outdoor Power Equipment authorizing it as a dealer for ODES’s vehicles. The franchise agreement between ODES and C&S contained a forum selection clause which stated that any litigation relating to the agreement “shall exclusively be filed in a State or District court in (venue) Fort Worth, Texas, and each Party irrevocably and unconditionally submits to the exclusive jurisdiction of these courts.” C&S brought a lawsuit against ODES for violating the franchise agreement in Tennessee, and ODES sought to either dismiss the suit altogether or transfer venue to the Northern District of Texas.

The court granted the motion to transfer and denied ODES’ motion to dismiss. The court first determined that the plain language of the forum selection clause made clear that the parties agreed to litigate all claims stemming from the franchise agreement in Texas. Importantly, the clause was mandatory and required the litigation to occur in Texas as opposed to permissively authorizing Texas as a venue. The court then assessed that it was within its discretion to choose either to dismiss or transfer the case. The court had authority to transfer if the convenience of the parties and interest of justice weighed in favor of transfer. Because the forum selection clause elicited the clear intent of the parties to select Texas as the forum of choice, and no contravening factors weighed against transfer, the court enforced the forum selection clause by transferring the case to Texas and declined to dismiss the case.