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Mealey's Franchise

  • February 21, 2019

    Choice-Of-Venue Provision Voided, But Franchise Dispute Stayed In Ohio

    CLEVELAND — An Ohio federal judge in a Feb. 11 order agreed with a franchisor that a franchisee’s allegations of fraud and negligent misrepresentation must first proceed to arbitration (Party Princess Toledo LLC, et al. v. Party Princess USA LLC, No. 17-2490, N.D. Ohio, 2019 U.S. Dist. LEXIS 21801).

  • February 20, 2019

    Judge Denies Dismissal Of Transmission-Repair Company From Discrimination Case

    CAMDEN, N.J. — In an employee’s discrimination lawsuit against his employer, a New Jersey federal judge on Feb. 14 refused to dismiss a transmission-repair franchise company because a license agreement plausibly shows that it is a joint employer (Zevin Curtis Ward v. Cottman Transmission Systems LLC, et al., No. 18-2155, D. N.J., 2019 U.S. Dist. LEXIS 24685).

  • February 20, 2019

    Judge Denies Certification Of Junk Fax Class Over Proof Of Consent

    NEW HAVEN, Conn. — A federal judge in Connecticut on Feb. 14 refused to certify a class for hotel franchisees who claim that AT&T Mobility LLC and AT&T Mobility National Accounts violated the Telephone Consumer Protection Act of 1991 (TCPA), as amended by the Junk Fax Prevention Act of 2005, when sending an allegedly unsolicited facsimile in January 2014, finding that the plaintiff was unable to show that each potential class member consented to receiving the email without conducting individual mini-trials (Gorss Motels Inc. v. AT&T Mobility LLC, et al., No. 17cv403, D. Conn., 2019 U.S. Dist. LEXIS 24726).

  • February 15, 2019

    Parties Clearly Intended To Exclude Grantor Of Franchise From Coverage, Judge Rules

    MIAMI — A Florida federal judge on Feb. 12 held that a “grantors of a franchise" exclusion in a  general liability insurance policy bars additional insured coverage for  an underlying lawsuit brought against the national franchisor of Subway brand restaurants, granting the insurer’s motion for summary judgment in a subrogation lawsuit brought by the franchisor’s umbrella insurer (Allied World National Assurance Company v. Maryland Casualty Company, No. 13-62502, S.D. Fla., 2019 U.S. Dist. LEXIS 23586).

  • February 15, 2019

    Wendy’s Agrees To $50M Class Settlement After Franchisees Were Hacked

    PITTSBURGH — A fast food chain has agreed to pay $50 million to settle financial institutions’ class claims against its franchisees in connection with a data breach first reported in 2016, according to a motion for preliminary settlement approval filed Feb. 13 in a Pennsylvania federal court (First Choice Federal Credit Union, et al. v. The Wendy’s Company, et al., No. 16-506, W.D. Pa.).

  • February 13, 2019

    Judge Finds Fraudulent Transfer Claims Against Franchisor Are Not Untimely

    WILKESBORO, N.C. — A North Carolina judge on Feb. 11 rejected the majority of a franchisor’s arguments that claims asserted by franchisees were untimely under state law and denied its motion for judgment on the pleadings, holding that a tolling agreement reached in 2013 could apply to certain plaintiffs and that others could not have discovered an alleged fraudulent transfer through public records (Window World of Baton Rouge LLC, et al. v. Window World Inc., et al., Nos. 15 CVS 1, 15 CVS 2, N.C. Super., Wilkes Co., 2019 NCBC LEXIS 11).

  • February 12, 2019

    Judge: Fact Issues Exist As To Whether Area Developer Had Right To Renew Agreements

    DALLAS — A Texas federal judge on Feb. 8 granted a franchisor’s motion for summary judgment as to a defendant’s counterclaim for violation of the Arkansas Franchise Practices Act but denied its motion as to breach of contract and declaratory judgment claims, finding that fact issues exist regarding whether the defendant had the right to renew area developer agreements for a second five-year period (Pizza Inn, Inc. v. Bob Clairday, No. 18-0221, N.D. Texas, 2019 U.S. Dist. LEXIS 20401).

  • February 7, 2019

    North Carolina Panel Upholds Dismissal Of Franchisee’s Suit Over Transfer Fee

    RALEIGH, N.C.— A franchisee’s lawsuit accusing a franchisor of violating the North Carolina Unfair and Deceptive Trade Practices Act (UDTPA) by failing to disclose a change in the transfer fee from 10 percent to 50 percent was properly dismissed as untimely, a North Carolina Court of Appeals panel ruled Feb. 5, holding that a one-year statute of limitations was included in the franchise agreement (Purnima Sanghrajka, et al. v. Family Fare LLC, et al., No. COA18-164, N.C. App., 2019 N.C. App. LEXIS 60).

  • February 7, 2019

    Chapter 11 Filing Was Not Frivolous; No Sanctions Warranted, Federal Judge Says

    WILMINGTON, Del. — A Delaware federal judge on Feb. 5 held that a bankruptcy court did not abuse its discretion in denying sanctions against debtors because their filings seeking to reject a franchise agreement were not patently unmeritorious or frivolous (In Re: Rent-A-Wreck Of America, Inc., et al., No. 18-801, D. Del., 2019 U.S. Dist. LEXIS 17857).

  • February 7, 2019

    Claims Against GM Are Dismissed In Dispute Over Auto Dealership Sale

    PITTSBURGH — A Pennsylvania federal judge on Feb. 5 dismissed claims against General Motors LLC (GM) for violations of the Pennsylvania Board of Vehicles Act (BVA), tortious interference with contract and breach of duty of good faith and fair dealing in a case over GM’s delay in approving sale of an automobile dealership (Brooks Automotive Group Inc., et al. v. General Motors LLC, No. 18-00798, W.D. Pa., 2019 U.S. Dist. LEXIS 18334).

  • February 6, 2019

    Judge Dismisses Franchisees’ RICO Claim Against Individuals Accused Of Inducement

    WILMINGTON, N.C. — Area and independent franchisees of a restaurant chain cannot pursue claims that three individuals who formed a franchise for the business violated the Racketeer Influenced and Corrupt Organizations (RICO) Act, a federal judge in North Carolina ruled Feb. 4, holding that the plaintiffs did not sufficiently allege that the men engaged in a pattern of racketeering activity over a substantial period of time (Trident Atlanta LLC, et al. v. Charlie Graingers Franchising LLC, et al., No. 18-cv-10-BO, E.D. N.C., 2019 U.S. Dist. LEXIS 17295).

  • February 1, 2019

    N.J. High Court Remands Ruling That Invalidated Franchise’s Arbitration Clause

    TRENTON, N.J. — A New Jersey Supreme Court on Jan. 22 remanded an appeals panel’s ruling that refused to depart from its 2016 decision invalidating an arbitration clause in an agreement to participate at a trampoline park franchise, finding that reconsideration is warranted in light of a recent New Jersey high court ruling (Alexander Defina v. Go Ahead and Jump 1, LLC, et al., No. 081457, N.J. Sup., 2019 N.J. LEXIS 154).

  • February 1, 2019

    Franchisor’s TRO Bid Rejected In Trade Secrets Misappropriation Dispute

    BALTIMORE — A franchisor has failed to show that it is likely to succeed on the merits of its claims against a former franchisee or that, absent a temporary restraining order (TRO) and preliminary injunction, the continued existence and operation of the defendant’s new business will cause irreparable harm to the franchisor, a federal judge in Maryland ruled Jan. 29 in denying the franchisor’s motion for temporary restraining order and preliminary injunction in a trade secrets misappropriation and breach of contract lawsuit (SH Franchising LLC v. Newlands Homecare LLC, et al., No. 18-2104, D. Md., 2019 U.S. Dist. LEXIS 14378).

  • January 30, 2019

    Ohio Federal Judge Awards Preliminary Injunction To Relocation Services Franchisor

    CINCINNATI — An Ohio federal judge on Jan. 25 granted a preliminary injunction to a relocation services franchisor to prevent former franchisees from directing customers to stop contacting it, to stop the use or disclosure of trade secrets, to stop the breaching of noncompete and nonsolicitation agreements and to prevent wrongful competition (Relo Franchise Services Inc. v. Connor Gilman, et al., No. 18-578, S.D. Ohio, 2019 U.S. Dist. LEXIS 12335).

  • January 29, 2019

    Judge Refuses To Reconsider Denial Of Discovery Request Related To Financials

    WILKESBORO, N.C. — A North Carolina judge on Jan. 25 refused to reconsider the denial of a franchisor’s motion to compel requests related to the financial impact of its alleged overpricing on franchisees’ businesses, finding that the decision contained no clear error or misapplied applicable law (Window World of Baton Rouge LLC, et al. v. Window World Inc., et al., Nos. 15 CVS 1, 15 CVS 2, N.C. Super., Wilkes Co., 2019 NCBC LEXIS 7).

  • January 28, 2019

    Judge Approves $1.1M Class Action Settlement In Pizza Delivery Drivers’ Wage Dispute

    CINCINNATI — An Ohio federal judge on Jan. 18 held that a $1.1 million settlement between a class of pizza delivery drivers and Domino’s Pizza and its franchisee in a wage-and-hour violations dispute is “fair, reasonable and adequate” and “provides participating class members with a substantial recovery for the claims raised in this lawsuit” (Paul Mullins v. Southern Ohio Pizza, Inc., et al., No. 17-426, S.D. Ohio, 2019 U.S. Dist. LEXIS 11019).

  • January 28, 2019

    Documents Ordered To Be Produced In Distribution Agreement Dispute

    LAS VEGAS — A nonparty beverage company was ordered by a Nevada federal magistrate judge on Jan. 23 to produce certain documents in a dispute over the sale of a distribution business between an alcoholic beverage wholesale distributor and its supplier (Bonanza Beverage Co. v. MillerCoors LLC, No. 18-01445, D. Nev., 2019 U.S. Dist. LEXIS 11532).

  • January 28, 2019

    Split NLRB Finds Franchisees Running Shared-Ride Vans Are Independent Contractors

    WASHINGTON, D.C. — A divided National Labor Relations Board on Jan. 25 overruled FedEx Home Delivery, 361 NLRB 610 (2014), stating that it improperly “limited the importance of entrepreneurial opportunity” when deciding the status of workers and held that franchisees who operate shared-ride vans for SuperShuttle DFW Inc. are independent contractors, not employees, under the National Labor Relations Act (NLRA) (SuperShuttle DFW, Inc. and Amalgamated Transit Union Local 1338, No. 16-RC-010963, NLRB).

  • January 25, 2019

    Summary Judgment Granted In Trade Secret Suit Over GPS Tracking System

    SAN FRANCISCO — A federal judge in California on Dec. 28 ruled that a communication options and custom software provider failed to present sufficient evidence creating a triable issue of fact in arguing that Domino’s Pizza Inc. misappropriated its trade secrets when it developed an in-house custom GPS driver tracking system (the solution) for its franchisees using trade secrets the plaintiff had allegedly provided to Domino’s while working to develop a similar system for the pizza maker (Prostar Wireless Group LLC v. Domino’s Pizza Inc., No. 16-5399, N.D. Calif., 2018 U.S. Dist. LEXIS 217615).

  • January 25, 2019

    6th Circuit Asked To Overturn Injunction Ruling In Trade Secrets Dispute

    CINCINNATI — A federal district court erred in preliminarily enjoining franchisees from operating or taking part in any business that competes with or is similar to an ice cream parlor franchise with which the franchisees had franchise agreements based on the franchisor’s claim for trade secret misappropriation because the court erred in finding that the franchisor had shown a sufficient likelihood of success on the merits of its misappropriation claim, the franchisees argue in a Sept. 28 appellant brief filed in the Sixth Circuit U.S. Court of Appeals (Handel’s Enterprises Inc. v. Kenneth S. Schulenburg, et al., No. 18-3596, 6th Cir.).