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Petroleum Franchisor Required to Litigate Franchisee Dealer’s Wrongful Termination Claim

The United States District Court for the District of New Jersey rejected the petroleum franchisor’s request to dismiss on summary judgment the gasoline dealer franchisee’s case for wrongful termination because, according to the Court, the defendant bears the burden of proof in actions under the PMPA, and the bulk of defendant’s evidence was testimonial and thus subject to credibility determinations; material disputes existed regarding the following facts, going to the franchisor’s good faith in demanding changes to the renewal agreement: (1) the existence of a formula for calculating increases in rent at Defendant’s franchises — although Defendant contended such a policy exists, it cited oral deposition, in-court testimony, or affidavits, uncorroborated by any written policy; (2) whether the petroleum franchisor’s employees, Deakin and McGee, in fact warned plaintiff that rental values would increase when they initially met; (3) whether the franchisor’s employees, Deakin and McGee, suggested, during that initial meeting, that plaintiff franchisee could operate a truck stop at the property; (4) whether defendant failed to provide the franchisee dealer with training; whether the franchisee’s need for training was apparent; and whether the franchisor had a training program that was available; (5) whether the franchisor placed franchisee dealer’s account on COD status in retaliation for her request to operate the station as a commission; (6) whether the franchisor defendant had a motive not to renew the agreement, as shown by the strained relationship between Sathu, Deakin, and McGee; (7) defendant franchisor received an offer from Tim Horton’s to open a franchise at the location; and (8) the substantial increase in rent, which […]

Franchisor Cannot Require Arbitration of Dispute With New Franchisee Where New Franchisee Failed to Sign a New Franchise Agreement as Part of Franchise Purchase From Prior Franchisee

The United States Circuit Court for the Tenth Circuit ruled that a restaurant franchisor, Dickey’s Barbecue, was not entitled to require arbitration of disputes between it and a new franchisee, who had purchased the restaurant from a prior franchisee, because the new franchisee had never executed a franchise agreement, and because Utah law required that an arbitration agreement be contained in a written document setting forth the scope of the dispute to be arbitrated; without a signed franchise agreement between the new franchisee after its purchase of the franchise from a prior franchisee, the franchisor could not demonstrate—through recourse either to the text of the asset purchase agreement or evidence presented to bolster its “course of dealing” theory—that the new franchisee ever assumed the written obligations of the prior franchisee, including specifically the agreement to arbitrate disputes. Campbell Invs., LLC v. Dickey’s Barbecue Rests., Inc., No. 18-4055, 2019 U.S. App. LEXIS 26980 (10th Cir. Sep. 6, 2019) Click on Link Below to Read Full Decision Campbell Invs._ LLC v. Dickey_s Barbecue Rests._ Inc._

Auto Manufacturer Franchisor Falls Prey to Amended Colorado Car Dealer Act’s New Expanded Relevant Market Definition

  In a Colorado federal court case interpreting the Amended Colorado Car Dealer Act in which the car dealer agreement “expressly reserved” for the defendant car manufacturer “the unrestricted right to grant others the right to sell Kia products,” and noted also that plaintiffs are “not being granted an exclusive right to sell Kia products in any specified geographic area,” and stated that defendant “may add new dealers to, relocate dealers into or remove dealers from” the geographic area “as permitted by applicable law”, and where the plaintiff franchisee dealers alleged that defendant’s plan to establish the proposed dealership violated Colo. Rev. Stat. § 44-20-125 (“CDA”), a statute which creates a private right of action for “an existing motor vehicle dealer adversely affected by” a distributor’s plan to reopen, relocate, or establish a “same line-make motor vehicle dealer,” and where the CDA requires any manufacturer seeking to “establish an additional motor vehicle dealer, reopen a previously existing motor vehicle dealer, or authorize an existing motor vehicle dealer to relocate” to provide at least sixty days notice to all of its existing dealers “within whose relevant market area the new, reopened, or relocated dealer would be located”, and where the CDA was amended to define the “relevant market area” as the greater of “the geographic area of responsibility defined in the franchise agreement of an existing dealer” and “the geographic area within a radius of ten miles of any existing dealer of the same line-make of vehicle as the proposed additional […]

5 Common Examples of Franchisor Antitrust Violations

Antitrust is among the most-confusing areas of the law, even for attorneys. But, as a franchisee, understanding the antitrust principles that apply to the franchise relationship is important, as franchisor antitrust violations are common, and they can have severe negative ramifications for individual franchisees. So, as a franchisee, when is it time to speak with an antitrust attorney? Here are five of the most-common antitrust violations in franchising: Common Antitrust Violation #1: Unlawful Customer Restrictions Protected and “exclusive” territories are common in franchising; and, while dividing geographic territories amongst franchisees is generally permissible, there are other types of customer restrictions that can violate federal and state antitrust laws. When examining customer restrictions for potential antitrust issues, the franchisor’s intent and the practical effect of a restriction are both important factors. With regard to franchisor intent, if the purpose of a restriction is to limit customers’ options (i.e. by prohibiting franchisees from serving customers outside of their respective territories), then this is more likely to tend toward an antitrust violation. For example, if a franchisor wants to prevent franchisees from competing with one another on price (in order to drive up royalties and marketing fund contributions), this could be an unlawful practice. On the other hand, if a franchisor simply restricts franchisees from actively marketing outside of their respective territories (but does not restrict the customers they can serve), this is an industry-standard practice that generally does not raise antitrust implications. This is a complicated and nuanced area, and franchisees who […]

Jeffrey M. Goldstein chosen by peers as a “2019 Power Lawyer” by Lawyers of Distinction as announced in New York Times recognizing Excellence in Civil Litigation

7 Considerations for Choosing a Lawyer to Perform Your Franchise Business Review

Not only does buying a franchise involve a making sizable financial investment, but it also involves entering into a long-term legal relationship that provides very limited opportunities to protect your investment if something goes wrong. As a result, in addition to working with your financial advisor, it is also important to work with an attorney who can help you assess the legal risks involved and, potentially, negotiate more-favorable terms into your franchise agreement. These legal services are commonly referred to as a franchise business review. As with all aspects of buying a franchise, when choosing a lawyer to perform your franchise business review, you need to make an informed decision. A lawyer who doesn’t focus his or her practice on franchise law won’t be able to provide you with the insights you need, although he or she may be able to provide general legal advice about the risks entailed by your franchise agreement. Likewise, a lawyer who primarily represents franchisors will lack the perspective needed to view the issues from your point of view and might even have interests that are in conflict with yours. So, what is the best option? When you need a franchise business review, you need a franchise lawyer who focuses exclusively on representing prospective and current franchisees. What Factors Should You Consider When Choosing a Lawyer for Your Franchise Business Review? While there aren’t many franchise lawyers in this category, there are more than one. So, what factors should you consider when choosing a lawyer […]