Mealey's Franchise

  • February 21, 2018

    Judge Enjoins Man From Operating Tax Business For Breaching Agreements

    KANSAS CITY, Mo. — A man accused of violating his franchise lease agreements (FLAs) with H&R Block Tax Services LLC was barred by a federal judge in Missouri Feb. 16 from soliciting or conducting any work within 25 miles of the franchise territories that is similar to H&R Block and ordered to cease operation of a tax preparation business in West Haven, Conn., until September 2019 (H&R Block Tax Services LLC v. Juan Frias, No. 18-00053-CV-RK, W.D. Mo., 2018 U.S. Dist. LEXIS 25667).

  • February 21, 2018

    Bankruptcy Judge: Cases ‘Not Filed In Good Faith’; Franchise Agreement Stands

    WILMINGTON, Del. — A federal bankruptcy judge in Delaware on Feb. 13 granted a motion to dismiss a Chapter 11 bankruptcy proceeding filed by a creditor, concluding that the bankruptcies of two management companies “were not filed in good faith” and the franchise agreement between the companies and a creditor could not be rejected (In re:  Rent-A-Wreck of America Inc., No. 11592, Ch. 11, Del Bkcy., 2018 Bankr. LEXIS 406).

  • February 16, 2018

    Montana High Court Finds No Good Cause For 2nd Chrysler-Jeep Franchise

    HELENA, Mont. — A trial court judge did not err in affirming a decision from the Montana Department of Justice, Motor Vehicle Division, that barred the Chrysler Group LLC (New Chrysler) from opening a second Chrysler-Jeep franchise in the town of Billings, a panel of the Montana Supreme Court ruled Feb. 13, holding that the franchisor failed to establish good cause under the Montana Dealer Act (Rimrock Chrysler Inc., et al. v. State of Montana Department of Justice, Motor Vehicle Division, et al., No. 17-0284, Mont. Sup., 2018 Mont. LEXIS 28).

  • February 16, 2018

    Bankruptcy Judge: Cases ‘Not Filed In Good Faith’; Franchise Agreement Stands

    WILMINGTON, Del. — A federal bankruptcy judge in Delaware on Feb. 13 granted a motion to dismiss a Chapter 11 bankruptcy proceeding filed by a creditor, concluding that the bankruptcies of two management companies “were not filed in good faith” and the franchise agreement between the companies and a creditor could not be rejected (In re:  Rent-A-Wreck of America Inc., No. 11592, Ch. 11, Del Bkcy., 2018 Bankr. LEXIS 406).

  • February 16, 2018

    Federal Magistrate Grants Transfer Of Franchise Action To California

    NEWARK, N.J. — Finding that a plaintiff franchisee of sensory-friendly kids’ gyms did not meet its burden to show that transfer to California was unwarranted, a federal magistrate judge in New Jersey granted transfer on Feb. 13 (Bella and Rosie Rock LLC v. We Rock the Spectrum LLC, No. 17-3628, D. N.J., 2018 U.S. Dist. LEXIS 23270).

  • February 14, 2018

    5th Circuit: Arbitration Must Proceed In Suit Seeking End Of Franchise Agreement

    NEW ORLEANS — In a two-page opinion, a Fifth Circuit U.S. Court of Appeals panel on Feb. 12 upheld a district court’s ruling that arbitration must proceed as a matter of law in a lawsuit where a franchisee alleges that a franchisor’s misrepresentations along with changes to the business model and focus are grounds for termination of the franchise agreement (Charging Bison, LLC v. Interstate Battery Franchising & Development, Inc., No. 17-10509, 5th Cir., 2018 U.S. App. LEXIS 3272).

  • February 14, 2018

    NLRB: Subway Can’t Be Liable For Recommending Biased Rules To Franchisees

    WASHINGTON, D.C. — A franchisor that recommended that its franchisees employ online and social media rules that have been determined to be discriminatory cannot be held liable for violating the National Labor Relations Act (NLRA) because it did not require that the franchisees adopt the rules, the National Labor Relations Board Office of the General Counsel stated in an advice memorandum released Feb. 12.

  • February 14, 2018

    Judge Refuses To Dismiss Franchisor’s Suit Seeking Past Due, ‘Future’ Royalties

    FORT LAUDERDALE, Fla. — A Florida federal judge on Feb. 12 denied a franchisee’s motion to dismiss a health care staffing franchisor breach of contract lawsuit seeking $399,803.63 in past due royalties and $1,436,400 in "future royalties” (Interim Healthcare Inc. v. Health Care@Home, LLC, et al., No. 17-61378, S.D. Fla., 2018 U.S. Dist. LEXIS 22109).

  • February 13, 2018

    Federal Judge Enjoins Former Franchisee From Violating Noncompete Agreement

    KALAMAZOO, Mich. — A Michigan federal judge on Feb. 9 granted a franchisor’s ex parte motion for a temporary restraining order enjoining a former franchisee from violating a noncompete agreement contained in the franchise agreement (Two Men and a Truck/International, Inc. v. Gerstner Management Systems, Inc, et al., No. 18-145, W.D. Mich., 2018 U.S. Dist. LEXIS 21469).

  • February 13, 2018

    Domino’s And Franchisee Will Pay $650,000 To Settle Delivery Drivers’ Wage Claims

    BOSTON — A Massachusetts federal judge on Jan. 23 granted final approval of a $650,000 settlement to be paid by a pizza shop franchisor and franchisee to end class claims by delivery drivers who claim that they were denied delivery fees that customers believed were tips, proper wages and reimbursement of business expenses (Alexander Mooney, et al. v. Domino’s Pizza, Inc., et al., No. 14-13723, D. Mass.).

  • February 12, 2018

    Federal Judge Grants Summary Judgment To IHOP In Wrongful Discharge Suit

    TOLEDO, Ohio — An Ohio federal judge on Feb. 8 granted a motion for summary judgment filed by International House of Pancakes LLC in a wrongful discharge lawsuit filed by a former employee who was fired for refusing to cooperate with a federal investigation, finding that IHOP made a reasonable decision to deny indemnification after determining that the former employee engaged in fraud and willful misconduct (Autumn Lee Tangas v. International House of Pancakes, LLC, et al., No. 15-1566, N.D. Ohio, 2018 U.S. Dist. LEXIS 21077).

  • February 9, 2018

    Judge Grants Conditional Certification In FLSA Suit Against Franchise Owners

    ASHEVILLE, N.C. — A North Carolina federal judge on Feb. 2 granted a plaintiff’s motion for conditional collective action certification in her lawsuit alleging that owners and/or operators of multiple national franchise restaurants misclassified employees as exempt from the Fair Labor Standards Act (Helen Holland v. Fulenwider Enterprises, Inc., et al., No. 17-48, W.D. N.C., 2018 U.S. Dist. LEXIS 17483).

  • February 9, 2018

    Federal Judge Enjoins Franchisee From Using IHOP Marks At 3 Restaurants

    MOBILE, Ala. — An Alabama federal judge on Feb. 7 granted a motion by IHOP Restaurants LLC and IHOP Franchisor LLC for a preliminary injunction enjoining a franchisee from using its mark or any trademark that is confusingly similar to the IHOP mark at restaurants (IHOP Restaurants LLC, et al. v. Moeini Corp., No. 17-00570, S.D. Ala., 2018 U.S. Dist. LEXIS 19707).

  • February 7, 2018

    Hotel Franchise Sufficiently Alleged That Faxes Were Unsolicited, Judge Finds

    BRIDGEPORT, Conn. — A federal judge in Connecticut on Feb. 2 held that a franchisee of Wyndham Worldwide sufficiently alleged that a company violated the Telephone Consumer Protection Act (TCPA), as amended by the Junk Fax Prevention Act (JFPA), and state law by sending unsolicited faxes, holding that a ruling finding that there is “an established business relationship” between the companies is more appropriate at a later stage in the suit (Gorss Motels Inc. v. AVM Enterprises Inc., No. 17-cv-1078, D. Conn., 2018 U.S. Dist. LEXIS 17748).

  • February 7, 2018

    Franchisee Ordered To Pay Franchisor Attorney Fees Of More Than $240,000

    CHICAGO — The Seventh Circuit U.S. Court of Appeals on Feb. 2 ordered a former franchisee to pay a franchisor more than $240,000 in attorney fees and costs in a dispute over a $7.7 million arbitration award entered in favor of the franchisor (Hyatt Franchising, L.L.C. v. Shen Zhen New World I, LLC, et al., No. 17-2071, 7th Cir.).

  • February 7, 2018

    Men’s Salon Franchisor Sues Franchisee For Trademark Infringement

    SANTA ANA, Calif. — A men’s salon franchisor filed a complaint on Jan. 18 in a California federal court accusing one of its franchisees of improperly terminating its franchise agreement and continuing to use its trademarked items and confidential information while operating a salon under a different name (Ultimate Franchises, Inc., et al. v. Amyn Sachedina, et al., No. 18-97, C.D. Calif.).

  • February 2, 2018

    Magistrate Denies Franchisee’s Motion To Transfer, Dismiss Dispute With Franchisor

    NEWARK, N.J. — A New Jersey federal magistrate on Jan. 31 refused to dismiss or transfer a franchisor’s lawsuit alleging that franchisee improperly and unilaterally terminated their franchise agreement, finding that the franchisee has failed to carry its burden of demonstrating that the convenience of the parties and the interests of justice support a transfer (Weichert Real Estate Affiliates, Inc. v. CKM16, Inc., et al., No. 17-4824, D. N.J., 2018 U.S. Dist. LEXIS 15388).

  • February 2, 2018

    Kentucky Fried Chicken Franchise Settles Disability Bias Suit For $30,000

    DUBLIN, Ga. — A Kentucky Fried Chicken franchisor, Hester Foods Inc., agreed to pay $30,000 to settle a disability discrimination lawsuit, the Equal Employment Opportunity Commission announced Feb. 1 (Equal Employment Opportunity Commission v. Hester Foods, Inc., No. 17-34, S.D. Ga.).

  • January 31, 2018

    New York Federal Judge: Class Suit Over Applebee’s Forced Tips May Proceed

    NEW YORK — A New York federal judge on Jan. 26 denied a motion for judgment on the pleadings brought by the franchisors of two New York City locations of Applebee’s in a class suit alleging that customers are forced to pay a minimum percentage for tips, holding that the plaintiffs alleged possible harm and tipping as a social norm does not negate the claims (Kendall Ghee, et al. v. Apple-Metro, Inc., et al., No. 17-5723, S.D. N.Y., 2018 U.S. Dist. LEXIS 13112).

  • January 31, 2018

    Judge Enjoins Franchisee From Violating H&R Block Noncompete Clauses

    KANSAS CITY, Mo. — A Missouri federal judge on Jan. 26 granted H&R Block Tax Services LLC’s motion for a temporary restraining order, enjoining a franchisee from continuing to violate noncompetition and nonsolicitation clauses in franchise agreements for the operation of tax services offices (H&R Block Tax Services LLC v. Juan Frias, No. 4:18-00053, W.D. Mo., 2018 U.S. Dist. LEXIS 12914).