Mealey's (June 27, 2016, 8:56 AM EDT) -- CHARLOTTE, N.C. — A North Carolina federal judge on June 22 granted Meineke Care Car Centers LLC’s motion for summary judgment against a franchisee who failed to pay all required fees to the franchisor and gave up control of his franchise without authorization (Meineke Car Care Centers LLC v. Earl Williams, No. 3:15-cv-00343, W.D. N.C.; 2016 U.S. Dist. LEXIS 81282).
(Order available. Document #98-160712-030R.)
Meineke sued Earl Williams for breach of a March 2010 franchise and trademark agreement under which Williams was granted the right to operate a Meineke automotive repair shop for 15 years in Sheridan, Wyo.
Williams was authorized and licensed to operate an auto repair shop under the Meineke trade name, display the Meineke logo, receive training and access to Meineke’s methods, procedures and techniques and participate in Meineke’s established network of similar repair shops. In return, Williams agreed to pay Meineke a weekly franchise fee equal to a varying percentage of the franchisee’s gross revenue and “advertising contributions” equal to 8 percent of gross revenue.
Transfer Prohibited
The franchise agreement prohibited transfer of the franchise or any of its assets, revenues or income without Meineke’s authorization.
In December 2013, Williams began failing to pay some of the franchise fees and advertising contributions. On April 7, 2015, Meineke terminated the franchise agreement after learning that Williams transferred control of his Meineke shop and its assets without Meineke’s authorization.
The termination notice instructed Williams to perform various post-termination obligations required by the franchise agreement, including payment of all sums he owed to Meineke. At the time the franchise agreement was terminated, Williams owed Meineke $23,875.42 for missed payments. Meineke also expected receipt of royalties and advertisement contributions to continue until, at least, March 2025, which it calculated would amount to $373,308.02.
Meineke, which has its principal place of business in North Carolina, sued to recover these amounts in the U.S. District Court for the Western District of North Carolina, and Williams answered its complaint. Meineke filed a motion for summary judgment on May 18, which Williams failed to respond to by the June 6 deadline. On June 14, U.S. Judge Frank D. Whitney ordered Williams to show cause for his failure to respond. Rather than comply with the show cause order, Williams simply filed an “untimely response,” the judge said.
No Evidence
“Defendant’s response neither complies with the Court’s Show Cause Order nor moves the Court to deem his response as timely filed,” Judge Whitney wrote. “Finally, the court notes that Defendant’s untimely and noncompliant response fails to set forth any affirmative evidence whatsoever to counter Plaintiff’s declarations and other exhibits proffered in support of its claims.”
Judge Whitney granted Meineke’s motion for summary judgment and ordered Williams to pay it $397,183.43.
Meineke is represented by Lawrence J. Hilton of One LLP in Newport Beach, Calif., and Brian Anthony Romanzo of Driven Brands Inc. in Charlotte. Williams is represented by John F. Hanzel of John F. Hanzel P.A. in Cornelius, N.C.
(Additional documents available: Complaint. Document #98-160712-031C. Answer to complaint. Document #98-160712-032W. Meineke summary judgment motion. Document #98-160712-033M. Reply to summary judgment motion. Document #98-160712-034W.)...