Monthly Archives: January 2015
A post-term restrictive covenant in franchise agreement tripped-up a “Rogue Franchisee” in London In Oven Clean Domestic Limited v Read (January 2015). In this case, the High Court in London, in issuing an interim injunction shutting down the franchisee, held that a post termination non-compete obligation in a UK franchise agreement was reasonable and enforceable. Tim Harris, the CEO of OvenClean and Franchise Brands predictably stated “we do not have many disputes with our franchisees and we always try to resolve any issues with franchisees before they escalate. However, every now and then all franchisors have a rogue franchisee who threatens the very core of the franchisor's business.” The CEO of OvenClean tried to explain why he and OvenClean felt it necessary to put the franchisee out of business: "We do not have many disputes with our franchisees and we always try to resolve any issues with franchisees before they escalate. However, every now and then all franchisors have a rogue franchisee who threatens the very core of the franchisor's business. We had to act against [the franchisee] to protect our business and the businesses of all our franchisees.” Of course the CEO also warned other franchisees about acting in a similarly roguish manner stating the after the case, the franchisor has “a very useful set of precedent documents which will reduce our costs for future applications.” Franchisees that find themselves at the other end of a disputed termination are in almost every state subject to enforcement of the restrictive covenant […]
Although the Vann decision is indisputably a franchisor victory, it would be an expensive mistake for franchisors and their advocates to interpret the case as signaling any serious shift in the way that agencies, courts and legislatures around the country (or even other courts and agencies in California) view the issue of franchisor vicarious liability, conceptually or practically. As I wrote in a franchise column recently, "A recent case in California federal court, Vann v. Massage Envy Franchising LLC, 2015 WL 74139 (S.D.Cal. 2015), has given franchisors a win on a fact-specific application of the "employer control" issue in a vicarious liability setting. In this case, Mr. Vann, a massage therapist who worked at various Massage Envy franchisee spa locations, filed a class-action complaint against the franchisor MEF, and two franchisees, alleging violations of California's minimum-wage laws." Read More
No need to wait for the other shoe to drop on vicarious franchisor liability. Read More
Suit: 7-Eleven illegally terminated Philly franchisee’s contract — According to the complaint, during the changeover of the stores, 7-Eleven representatives discarded merchandise without properly crediting Patel for their purchase, and in one location removed $20,000 in cash the plaintiff had been holding in the safe for a relative’s wedding.
One franchise restaurant in Brockville has suddenly closed, while another that recently departed may be looking to re-establish its presence in the city. As these restaurant doors continuously “open and close”, based on decisions from the top, how many only-franchisee dollars have been thrown in the river of no return. When economic control is separated from ownership in a capitalistic system. Read More