Mealey's Franchise

  • August 07, 2020

    Panel Upholds Denied Portion Of Injunction To Health Care Franchisor

    CINCINNATI — In a breach of contract case, the Sixth Circuit U.S. Court of Appeals affirmed on Aug. 5 the denial of a preliminary injunction in part to ComForCare Franchise Systems (CFS) because enjoining former in-home health care services franchisees from serving their existing 79 patients would harm these patients (ComForCare Franchise Systems, LLC v. ComForCare Hillsboro McMinnville Corp., et al., No. 19-2467, 6th Cir., 2020 U.S. App. LEXIS 24723).

  • August 05, 2020

    Insurer Disputes Coverage For Injunctive Suit Against Franchise Arising From COVID-19

    CHICAGO — An insurer on July 30 filed a declaratory judgment lawsuit disputing coverage for an underlying declaratory and injunctive relief action seeking to order the former owner of a McDonald's franchise to provide a safe working environment in response to the novel coronavirus, arguing that the underlying lawsuit does not seek "damages" to trigger coverage under the policy (Employers Preferred Insurance Company v. Lexi Management LLC, et al., No. 2020CH05203, Ill. Cir., Cook Co.).

  • August 04, 2020

    Hawaii Federal Judge Stays Franchise Dispute To Allow Arbitration

    HONOLULU — A Hawaii federal judge on July 31 denied a defendant franchisor's motion to compel arbitration and instead stayed the suit to allow the parties to arbitrate the whether the arbitration clause in a franchise agreement is enforceable (Vierican LLC v. Midas International LLC f/k/a Midas International Corp., No. 19-620, D. Hawaii, 2020 U.S. Dist. LEXIS 135974).

  • August 04, 2020

    Judge Dismisses In Part Sex Trafficking Profit Suit Against Hotel Franchisors

    SAN JOSE, Calif. — A federal judge in California on July 30 dismissed in part a sex trafficking survivor's lawsuit under the Trafficking Victims Protection Reauthorization Act (TVPRA) against the franchisors of three hotel chains because she could not establish a direct liability theory but only an agency liability theory regarding their alleged profiting (B.M. v. Wyndham Hotels & Resorts, Inc., et al., No. 20-656, N.D. Calif., 2020 U.S. Dist. LEXIS 135494).

  • August 03, 2020

    NLRB Vacates 2015 Joint-Employer Decision In Browning-Ferris

    WASHINGTON, D.C. — The National Labor Relations Board on July 29, following remand from the District of Columbia Circuit U.S. Court of Appeals, vacated its 2015 decision that had expanded the standard for assessing joint-employer status under the National Labor Relations Act (NLRA), dismissed the complaint and reopened and amended the underlying representation case with one of the two alleged joint employers removed (Browning-Ferris Industries of California, Inc., et al. and Sanitary Truck Drivers and Helpers Local 350, Nos. 32-CA-160759 and 32-RC-109684, NLRB).

  • July 30, 2020

    Insurer:  Policies 'Were Not Designed To Cover Economic Fallout From Global Pandemic'

    CHICAGO — A commercial property insurer filed suit in a federal court in Illinois on July 29 against 31 of its restaurant insureds, seeking a declaration that it has no duty to provide business interruption coverage for their alleged losses arising from public health orders that restricted public gatherings in an effort to slow the spread of the novel coronavirus (State Auto Property And Casualty Insurance Co.  v. Classic Dining Group LLC, et al., No. 20-04434, N.D. Ill.).

  • July 30, 2020

    Federal Judge Says Former Franchisee Failed To Show Compliance With Injunction

    DETROIT — A Michigan federal judge on July 27 denied a motion to dismiss filed by the owners of a former franchisee and extended noncompete and nonsolicitation covenants in the franchise agreements because the franchisee failed to show that they complied with any of the terms of a preliminary injunction previously entered by the court (JTH Tax, Inc. v. Claudia Magnotte, et al., No. 19-11607, E.D. Mich., 2020 U.S. Dist. LEXIS 131921).

  • July 30, 2020

    Negligent Misrepresentation Claim Fails Against Child Care Franchisor, Judge Says

    BALTIMORE — Promotional statements by a franchisor of a national educational child care system cannot support a negligent misrepresentation counterclaim by a former franchisee and its principals, a Maryland federal judge ruled July 27, granting summary judgment to the franchisor and two of its officers (Kiddie Academy Domestic Franchising LLC v. Wonder World Learning LLC, et al., No. 17-3420, D. Md., 2020 U.S. Dist. LEXIS 132931).

  • July 29, 2020

    Judge Dismisses 30-Minute Fitness Franchisees' RICO, Breach Of Contract Suit

    WACO, Texas — A Texas federal judge on July 27 dismissed a suit filed by 32 franchisees alleging that the franchisor of 30-minute fitness and weight loss centers and its related entities knew that they had an unsustainable system but hid that information from franchisees (Bonita Arruda, et al. v. Curves International, Inc., et al., No. 20-92, W.D. Texas, 2020 U.S. Dist. LEXIS 132273).

  • July 28, 2020

    Wage Theft Not Covered Under Business Owners Policy, Illinois Panel Affirms

    ELGIN, Ill. — An Illinois appeals panel on July 27 affirmed a lower court's ruling that a Dunkin' Donuts franchise owner insured cannot recover under its business owners insurance policy for an employee's alleged wage theft, agreeing "with the overwhelming majority of courts that have addressed this issue" (3BC Properties LLC, et al. v. State Farm Fire and Casualty Company, No. 2-19-0501, Ill. App., 2nd Dist., 2020 Ill. App. LEXIS 501).

  • July 24, 2020

    Hampton Inn, Suites Brand Franchisor Dismissed From Discrimination Lawsuit

    NASHVILLE, Tenn. — A federal judge in Tennessee on July 22 dismissed the franchisor of the Hampton Inn and Suites brand from an African American man's discrimination case for lack of jurisdiction and dismissed in part certain claims against the franchisee (Richard Willock v. Hilton Domestic Operating Co., Inc., et al., No. 20-42, M.D. Tenn., 2020 U.S. Dist. LEXIS 129394).

  • July 23, 2020

    Checkers Settles Data Breach Class Action For Reimbursements, Food Vouchers

    TAMPA, Fla. — A Florida federal judge on June 30 preliminarily approved the settlement of class claims against the operator of the Checkers and Rally's fast-food chains by two customers over a data breach, with the agreement providing relief in the form of cash reimbursements for expenses, food vouchers to the restaurants and chainwide data security measures (Breandan Cotter, et al. v. Checkers Drive-In Restaurants Inc., No. 8:19-cv-01386, M.D. Fla., 2020 U.S. Dist. LEXIS 121223).

  • July 20, 2020

    California Court Affirms Ruling Vacating Parents’ Award For Distress Over Son’s Fall

    LOS ANGELES — A California appeals court on July 10 affirmed a lower court ruling that because the parents of a 4-year-old child who was injured when he fell out of an open hotel room window did not see him fall, they were not entitled to an award for negligent infliction of emotional distress in a suit against a hotel franchise’s housekeeping company (Linping Wang, et al. v. Sun Hospitality Inc., No. B300241, Calif. App., 2nd Dist., Div. 5, 2020 Cal. App. Unpub. LEXIS 4354).

  • July 20, 2020

    Franchisor Is Vicariously Liable For Franchisee’s Negligence, Panel Says

    TRENTON, N.J. — The New Jersey Superior Court Appellate Division on July 15 affirmed a trial court’s ruling that a franchisor’s insurer owes coverage for an auto accident in which a franchisee was involved because the plaintiff who was injured met his burden of proving that the franchisor was vicariously liable for the franchisee’s negligence (Peter Fontana, et al. v. Executive Cars, et al., No. A-4520-18T2, N.J. Super., App. Div., 2020 N.J. Super. Unpub. LEXIS 1406).

  • July 20, 2020

    New Trial On Damages Granted In Former CFO’s Suit Against Planet Fitness

    SALEM, Mass. — A Massachusetts judge on June 26 partially granted a motion by the owner and operator of Planet Fitness health clubs, its franchisor subsidiary and executives for a new trial following a more than $5 million jury verdict for the former chief financial officer (CFO) in her fraud lawsuit, finding the damages should be reduced by more than $1 million (Jayne Conway v. Planet Fitness Holdings, LLC, et al. , No. 1377CV00756-D, Mass. Super., Essex Co.).

  • July 17, 2020

    Gym Franchisors Denied Injunction As To Arizona Governor’s COVID-19 Order

    PHOENIX — Despite “deeply sympathizing” with franchisors of boutique fitness studios, an Arizona federal judge on July 14 denied them a temporary restraining order and preliminary injunction over the state governor’s executive order temporarily closing gyms due to the COVID-19 health crisis because they are not likely to succeed on the merits of their claims (Xponential Fitness, et al. v. Arizona, et al., No. 20-01310, D. Ariz., 2020 U.S. Dist. LEXIS 123379).

  • July 16, 2020

    Tech Company, Subsidiary: VW Dealerships’ RICO Claim Over Emissions Fraud Fails

    SAN FRANCISCO — A German multinational engineering and technology company and its subsidiary argue in a July 13 brief to the Ninth Circuit U.S. Court of Appeals that franchise dealerships are attempting “to vindicate their unfounded right to have their supplier, Volkswagen, make and supply them with hypothetical diesel vehicles instead of the electric-powered and other vehicles that Volkswagen in its discretion chose to manufacture and offer for sale” ([In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation] J. Bertolet, Inc., et al. v. Robert Bosch, LLC, et al., No. 20-15034, 9th Cir.).

  • July 14, 2020

    Noncompete Provision Enforced; Preliminary Injunction Issued In Franchise Dispute

    MEMPHIS, Tenn. — A Tennessee federal judge on July 10 granted a plaintiff’s motion for a preliminary injunction to enforce a noncompete provision in a franchise agreement after determining that the franchisor met its burden of showing that the noncompete provision is  reasonable and that it will be irreparably harmed without a preliminary injunction (AmeriSpec LLC v. Sutko Real Estate Services Inc., et al., No. 20-2365, W.D. Tenn., 2020 U.S. Dist. LEXIS 121040).

  • July 13, 2020

    Arbitration Clauses In Franchise Agreements Are Enforceable, Judge Says

    SAN JOSE, Calif. — A California federal judge on July 9 granted a franchisor’s motion to stay a suit filed by franchisees because the franchise agreements include arbitration clauses requiring that any disputes arising under the franchise agreements be submitted to arbitration (Esguerra-Aguilar Inc., et al. v. Shapes Franchising LLC, et al., No. 20-574, N.D. Calif., 2020 U.S. Dist. LEXIS 120848).

  • July 10, 2020

    Judge:  Franchisee Fails To Show Violation Of Franchise Investment Protection Act

    SEATTLE — A franchisee did not present any new evidence that a franchisor of direct marketing services violated the Franchise Investment Protection Act (FIPA) by selling products and services to its franchisees “for more than a fair and reasonable price,” a Washington federal judge held July 6, denying partial summary judgment to the franchisee on his counterclaim (Money Mailer, LLC v. Wade G. Brewer, No. 15-1215, W.D. Wash., 2020 U.S. Dist. LEXIS 118110).

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