Franchise Litigation & Dispute Resolution

We represent only franchisors.

Lathrop GPM understands franchising and only represents franchisors and their interests. Our litigators have developed a national reputation as zealous advocates for their franchisor clients and will not take a position in court that is adverse to franchisors.

Our experience and areas of focus include:

• Antitrust and Trade Regulation
• Appellate Practice
• Arbitration and Alternative Dispute Resolution
• Defense of System-wide Franchise Claims and Class Actions
• Enforcing System Standards
• Franchise & Dealership Terminations
• Franchise Reorganization & Bankruptcy
• Noncompete Agreements
• Underreporting & Franchise Audits
• Vicarious Liability/Risk Management

We know what we are doing.

Our franchise lawyers have been recognized nationally and internationally, including:

• Recognized as one of the top franchise firms internationally by Chambers Global (2024) and nationally by Chambers USA (2024)
• Named 2021 and 2024 Best Franchise Law Firm in the World and Category Finalist in 2022 and 2023 by Global Franchise Magazine
• Ranked for legal services in the “Top Franchise Suppliers” by Entrepreneur Magazine (2024)
• 11 members listed in International Who’s Who in Franchising (2023)
• 13 members listed among “Best Lawyers in America” and “Ones to Watch” (2024), including one Lawyer of the Year
• 6 members listed as “Super Lawyers” and “Rising Stars” (2024)
• 10 members listed as “Legal Eagles” by Franchise Times (2024)

We litigate throughout the U.S., cost-effectively.

We have handled franchise cases in virtually every state and have made important case law on behalf of franchisors on numerous legal issues, including antitrust, vicarious liability, trademark infringement, noncompete enforcement, standards enforcement, underreporting of sales, encroachment, termination rights, and liquidated damages. We have also successfully defended franchisors in class actions brought in many states.

Lathrop GPM is able to maintain a national franchise litigation practice because we have developed an extensive network of local counsel lawyers throughout the United States to ensure maximum efficiency at very favorable rates. These lawyers act as procedural local counsel and provide assistance in conforming with local custom and practice, without adding material expense.

We represent many of the leading brands in franchising.

Lathrop GPM represents many of the most well-known and respected franchisors in the world, as well as regional and startup franchisors. We have handled virtually every issue a franchisor may face in a courtroom or in arbitration, including:

• Alternative dispute resolution
  • Arbitration
  • Mediation
  • Mini-trials
• Antitrust claims
  • Product sourcing claims
  • Tying claims
• Class actions
• Employment
  • ADA claims
  • Discrimination and harassment claims
  • Workers compensation
• Franchisee relationship
  • Bankruptcy
  • Breach of contract
  • Covenants not to compete
  • Franchisee councils and associations
  • Good faith and fair dealing
  • Renewals
  • Relocations
  • Standards violations
  • Supply and distribution
  • Terminations
  • Tortious interference
  • Transfers
  • Underreporting of sales
• Trademark protection and enforcement
  • Domain name disputes
  • Enforcing system standards and specifications
  • Franchisor inspections and associated liability risks
  • Trademark dilution
  • Trademark infringement
• Vicarious liability
  • ADA liability
  • Agency and control issues
  • Indemnification issues
  • Insurance issues

Enforcing System Standards

One of the most serious problems facing franchisors today is the failure of franchisees to comply with system standards. Whether it is the quick service restaurant industry or automotive repair business, noncompliance with system standards diminishes brand equity, can lead to negative publicity, and lessens the ability to succeed in today’s ultra-competitive environment.

We have assisted our franchisor clients in successfully enforcing system standards for decades. Whether it is counseling clients in developing enforcement programs, drafting critical documents, or going to court to obtain compliance with standards, we have more experience in this area than any law firm in the U.S. In addition to bringing numerous actions to terminate the franchise relationship based on non-compliance with standards, we have also developed an approach to enforcing standards that is fast and cost-effective — filing legal actions seeking injunctive relief and payment of the franchisor’s attorneys’ fees and costs. In our representation of major restaurant franchisors, we have successfully brought close to 1,000 cases for injunctive relief and recovered virtually every penny of the franchisor’s legal fees and costs. Even more importantly, our clients have seen a marked improvement in overall standards compliance.

Our Experience

• Develop enforcement programs tailored to individual client needs
• Prepare, review and/or  revise franchise agreements, notices, and operations manuals necessary for the enforcement program
• Develop necessary health, safety, and sanitation standards as required by client’s situation
• File actions to prevent franchisee use of unapproved products
• Mandate use of new products and participation in new programs
• Mandate required remodels and refurbishments

Franchise & Dealership Terminations

Terminating a franchisee or dealer is a difficult decision that often involves challenging business and legal concerns. Questions such as should we terminate; can we terminate; and how do we terminate must be properly analyzed in order to limit achieve the objective while limiting legal exposure to the franchisor/manufacturer. Our team of experienced franchisor lawyers can help. We work closely with our clients to navigate the complex issues involved in franchisee or dealer terminations. Early involvement by our lawyers in the default/termination process can help keep a relatively small problem from turning into a large lawsuit. We provide business and legal guidance as to all available  options — and help tailor an appropriate course of action to achieve  our clients’ objectives.

When termination is inevitable, our lawyers navigate the complex web of applicable state and federal laws — and assist our franchisor clients in documenting the default and termination process in order to maximize the likelihood of a good business and legal outcome. When termination disputes arise, our franchise litigators have extensive experience in handling challenges to termination, allegations of wrongful termination, injunctions seeking to prevent termination and enforcing post-termination obligations. Lathrop GPM franchise litigators handle dozens of termination-related disputes each year, in jurisdictions across the nation.

Franchise & Distribution Noncompete Agreements

Virtually all modern franchise agreements include a provision that restricts the franchisee’s ability to compete with the franchise system during the term of the agreement and for a specific period thereafter. Our lawyers have drafted and enforced these noncompete agreements for our franchisor clients in order to:  (1) protect the goodwill associated with the franchisor’s trademarks; (2) protect confidential business information and training; (3) protect existing franchisees from unfair competition; (4) protect the integrity of the franchise system, and (5) provide the franchisor with an opportunity to “re-franchise” the territory free from interference by a former franchisee.

The lawyers in our Franchise & Distribution Practice Group have been instrumental in developing a vast body of case law enforcing noncompete agreements on behalf of our franchisor clients throughout the United States. In fact, our lawyers “wrote the book” on franchise noncompete law by editing the Second and Third Editions of Covenants Against Competition in Franchise Agreements, published by the ABA Forum on Franchising. With deep knowledge of the unique nature of the franchise relationship and mastery of the important nuances in franchise noncompete law, our lawyers have been very successful enforcing noncompete agreements and protecting franchise systems from the competitive activities of former franchisees. 

Our Experience

• Editing the Second, Third and Fourth Editions of “Covenants Against Competition in Franchise Agreements,” ABA Forum on Franchising, (4th ed. 2022)
• Publishing “Covenants Not to Compete and Nonsignatories:  Enjoining Unfair Conspiracies,” Franchise Law Journal, Winter 2006
• Enforcing in-term covenants preventing franchisees from operating competing businesses during the term of the franchise agreement
• Enforcing post-termination noncompete agreements throughout the U.S.
• Enforcing post-termination noncompete agreements against nonsignatories
• Enforcing noncompete provisions against bankrupt franchisees who attempt to use the bankruptcy courts to evade their noncompete obligations

Vicarious Liability/Risk Management

Our franchise lawyers have extensive experience defending vicarious liability lawsuits against franchisors directly, as well as overseeing insurance-retained defense counsel in defense of franchisors. With respect to the former, we have defended franchisors in matters throughout the United States. Because we have been involved in some of the most prominent franchise vicarious liability cases, we are on top of new developments as they occur. With respect to insured cases, we have developed a unique and proprietary Vicarious Liability/Insurance Defense Program (Vicarious Liability Program) that allows franchisors to “outsource” the administration of all vicarious liability litigation to us on a flat-fee basis. Participation in this program frees franchisor personnel from the time-consuming tasks of administering, monitoring, and tracking developments for a significant number of vicarious liability lawsuits. We have successfully handled hundreds of cases for several franchisors at a flat-fee cost that is reasonable and predictable — a benefit that our clients find very attractive.

As part of the Vicarious Liability Program, we work closely with our franchisor clients and their insurance carrier/third-party administrator to ensure that: (1) plaintiffs’ counsel are educated as to the unique franchisor/franchisee relationship (many cases are dismissed at this stage); (2) cases are promptly tendered by the franchisee to the appropriate insurance carrier so it can defend and indemnify the franchisor as an “additional insured”; and (3) cases are properly defended by competent insurance defense counsel through careful monitoring and oversight by Lathrop GPM.

Underreporting & Franchise Audits

Because royalties are the lifeblood of most franchise systems, maintaining the integrity of the franchise sales reporting system is critical. Yet many franchisors are concerned not only that their franchisees may be underreporting their sales, but that they are powerless to do anything about it.

For three decades, our lawyers have had great success helping franchisors of all sizes address the underreporting of sales. A strong enforcement program has a demonstrable deterrent effect, and our clients have reported to us that as a direct result of increased enforcement efforts, they have seen reported sales rise in their systems.

Our efforts are focused in two areas. First, we have had extraordinary success in bringing lawsuits to terminate franchisees who have underreported their sales and engaged in other forms of financial fraud, including tax fraud. Second, we have designed and implemented audit programs for our clients, which involve identifying the best indicators of underreporting, collecting and analyzing critical financial and operational data, and resolving those cases where underreporting has been found. We often resolve these issues without litigation.

Our expertise has helped to ensure the honest reporting of sales by franchisees and to address cases of intentional underreporting. We have an entertaining, informative and revealing program that we provide free of charge to franchisors who would like to learn more about our capabilities in this area.