In a dispute over alleged misappropriation of systemwide advertising funds, a North Carolina superior court permitted franchisees to proceed with claims against their franchisor but dismissed claims against the franchisor’s guarantors as premature. PJC Management Group, LLC v. MAACO Franchisor SPV LLC, 2026 WL 1096903 (N.C. Super. Apr. 22, 2026).
MAACO is the franchisor of a chain of vehicle painting and auto body repair businesses. Under their franchise agreements, MAACO’s franchisees pay weekly marketing fees for nationwide advertising and marketing. After MAACO stopped using its in-house ad agency and transitioned to using independent agencies, some franchisees requested an accounting of MAACO’s advertising receipts and disbursements, which they were entitled to under their franchise agreements. Some franchisees alleged that MAACO’s accounting was deficient and “raised more questions than it answered.” Accordingly, those franchisees sued MAACO alleging contract-based claims, an unfair or deceptive practices claim, and an accounting claim. The franchisees also sued MAACO’s parent companies Driven Systems LLC and Driven Brands, Inc. MAACO and its parent companies moved to dismiss.
MAACO argued that the plaintiff franchisees failed to state a claim for breach of contract because they only alleged that MAACO made an unpopular decision that increased administrative costs and decreased overall advertising spend, which MAACO was permitted to do under the terms of the franchise agreements. The court rejected this argument and held that under North Carolina’s notice pleading regime, the franchisees sufficiently alleged misappropriation which, if proven, could constitute breach of contract. Specifically, the franchisees alleged that MAACO reduced its ad expenditures, failed to provide required statements and advertising receipts and disbursements, engaged in unexplained, irregular transactions, and faulty accounting. The court thus denied MAACO’s motion to dismiss the franchisees’ breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory judgment claims. The court did, however, dismiss the franchisees’ claims against the parent companies as guarantors of MAACO’s obligations under the franchise agreements, finding the claims unripe because there was no judgment yet against MAACO. The court also dismissed the franchisees’ statutory unfair or deceptive practices claim under N.C.G.S. § 75-1.1 because the dispute at issue was an ordinary breach of contract violation and as such was not sufficiently unfair or deceptive to sustain the claim. Finally, the court dismissed the accounting claim because accounting is a remedy and not an independent cause of action.