Franchise Agreements

REPRESENTATIVE CASES

  • Disputes surrounding encroachment claims in which franchisees brought claims that a franchisor had allowed saturation of the market by authorizing additional businesses to operate within the areas where the franchisee expected to have exclusivity.
    Disputes surrounding franchisees who claimed that the earnings expected and/or represented to them did not satisfy the promises relied upon by the investor.

  • Disputes arising from alleged differences between the provisions of the franchise agreement and representations made by salespeople on the earnings potential of the investment.

  • Disputes involving the earnings potential which required review of the “type and nature” of representations, and required determination of the relevancy of the California Franchise Investors Law and the related regulations.

  • Disputes involving claimed misrepresentations and fraud regarding the earnings potential, encroaching exclusivity, and the interaction between the franchise agreement, the parole evidence rule, integration clauses, and the “no promises made” clause.

  • Disputes alleging that the franchisee failed to comply with provisions of the franchise agreement on the exclusive use of the franchisor’s trademark.

  • Disputes involving “covenant not to compete” issues and territorial encroachment.

  • Claims that a franchisee was estopped from making claims based on underperforming earnings when the franchise agreement specified that no representations concerning earnings were in the franchise agreement.

  • Disputes involving alleged misrepresentations of franchisee anticipated earnings made by persons who the franchisor alleged did not have authority to make such claims.

  • Disputes regarding whether the franchisee reasonably relied on representations in the offering circular, and whether the franchisor duly limited the authority of its agent to make representations.

  • Disputes claiming “promissory fraud” requiring the Court to make legal determinations.

  • Disputes based on the California Franchise Investment Law and its effect on other civil remedies, such as rescission, and based on provisions allowing the franchisor to negate “exclusive territory” provisions by placing new outlets near a franchisee’s business.

  • Disputes involving the application of the implied covenant of good faith and fair dealing when the franchisee claims that the franchisor cannot take actions having a substantial negative effect on the franchisee’s business.

  • Disputes in which the franchisee claimed that placing a new franchise within 3 miles of its business was a violation of the implied covenant of good faith and fair dealing when the franchise agreement was silent on exclusivity.

  • Disputed territorial rights relating to establishing distribution channels favoring new franchisees.

  • Claim by franchisee that a new marketing system violated the covenant of good faith and fair dealing by favoring new franchisees, even though the franchise agreement was silent regarding the issue.

  • Dispute in which a franchisee claimed it was within its rights under the franchise agreement to seek internet sales, and franchisor claimed that the agreement limited sales to certain enumerated locations.

  • Dispute involving the post-term non-compete clause and determination of the nature of the post-term business in relation to the in-term business and the franchise agreement.

  • Dispute requiring determination of the nature of the non-compete in-term clause when only the delivery service of the business was the subject of the franchisor’s objection.

  • Franchisor objected to a franchisee’s pricing practices, and the franchisee’s cross-complaint alleged that the franchisee’s advertising contribution resulted in a positive impact on a competing outlet, and thus was a violation of the covenant of good faith and fair dealing.

  • Matter in which a franchisor and franchisee were named as co-defendants in an action for vicarious liability, and were alleged to be joint employers.

  • Matter in which a franchisor sought to terminate a franchise agreement, alleging that the franchisee violated the “obey all laws” provision when the franchisee was alleged to have failed to comply with wage and hour laws.

  • Franchisor alleged that a franchisee failed to comply with operational standards, after the franchisee received notice of its failure to comply with practice goals, and after the franchisee agreed in an additional post-agreement contract to educate its employees on the operational standards.

  • Franchisor alleged non-payment of ongoing franchise fees and royalties. Franchisee claimed that rising advertising fees imposed by the franchisor were not clearly articulated in the franchise agreement, and claimed there was mismanagement of the advertising funds.

  • Complaint alleged that a franchisee did not promptly de-identify its business upon the conclusion of the franchise agreement, and improperly used the franchisor’s trademark as a holdover franchisee. The complaint sought a court order to rectify the situation.

  • Franchisee alleged fraud in an action for wrongful termination when the franchisee expected its franchise agreement to be renewed, and expected to be able to continue operating its business. The franchisee disputed the franchisor’s claim that it had “good cause” for termination of the agreement, claimed that the renewal was unreasonably denied, and claimed that it was unreasonably denied its right of first refusal. Franchisee claimed it did not get the training and support to which it was entitled, and thus, its business did not do well.

  • Dispute regarding the ability to transfer and assign a franchise agreement.

  • Dispute regarding franchisee’s claim that computation of future royalties was not reasonable, and was speculative, conjectural, and fraudulent.