Monthly Archives: January 2016
Franchisor advocates who are constantly yelling ‘the sky is falling’ in the face of new franchise legislation should take great solace in recent Minnesota federal court decisions that have blasted gaping holes in the Minnesota Franchise Act. Ironically, the MFA, which was enacted to provide heightened legal protection to franchisees and dealers, is itself serving as the fulcrum for the erosion of some legal rights that franchisees had before the MFA was passed. See Minnesota Franchise Lawyer’s Franchise Review Dooms Fraud Claims of Franchisees and Franchise Fraud and the Wizard of Oz, in Pulse, both by Jeffrey Goldstein.
Insurance Entrepreneurs Wanted for Franchise Industry in Face of Joint Employer Risk January 20, 2016 http://www.insurancejournal.com/magazines/coverstory/2016/01/11/394052.htm Okay; maybe I’m missing something. The underlying purpose of insurance is to assess and manage risk. And, altho insurance companies many times prefer to establish insurance programs for situations in which there is there is little to no risk, creative, aggressive and successful underwriters are capable of building profitable programs in the face of tangible heightened risk. That’s how they made and make money, and that’s how the insurance industry historically evolved and competes. But, according to Mr. Betterley, this rule doesn’t apply to the franchise industry? As he states: “The reality is that insurers are becoming cautious because the exposure [due to joint employer franchisor liability] has changed,” Betterley said. “In the past if there was a request to add the franchise the underwriting assessment would be presumably that the risk is minimal and yes probably they would. Now they have to look at it and say, ‘No, wait a minute there’s real exposure here.' Well, can’t somebody re-assess the risks, cost it out, and build a program to reflect these new franchise industry realities and risks? Not according to Mr. Taffae who, in the article, stated “There’s just no way to underwrite it …” Hard to believe. http://www.insurancejournal.com/magazines/coverstory/2016/01/11/394052.htm
Franchise Fraud and the Wizard of Oz — Minnesota Franchise Lawyers Watch Out 1/20/16 The United States District Court for the District of Minnesota on January 12, 2016, in In Moxie Venture L.L.C., et al. v. The UPS Store, Inc., 2016 U.S. Dist. LEXIS 3603, hammered the final nail in the coffin of franchisee fraud claims under the Minnesota Franchise Act by ruling that as a matter of law a franchisee could not argue that it was misled by a franchisor’s fraudulent representations since the franchise agreement contained a franchise fraud disclaimer. Minnesota franchise lawyers should take notice; Minnesota franchise law is under attack. https://www.linkedin.com/pulse/article/franchise-fraud-wizard-oz-jeffrey-m-goldstein/edit
Franchisee’s Wrongful Termination Claim Rejected for Failure to Obtain Franchisor Consent to its Franchise PurchaseJan 5, 2016 - Franchise Articles by Jeffrey M. Goldstein |
Franchisee’s Wrongful Termination Claim Rejected for Failure to Obtain Franchisor Consent to its Franchise Purchase By: Jeffrey M. Goldstein Goldstein Law Firm, PLLC (202) 293 3947 In a recent case in the United States District Court for the Eastern District of Wisconsin, a federal court reversed its own initial decision in which it had upheld a franchisee’s wrongful termination claim against its franchisor. Tex. Ujoints, LLC v. Dana Holding Corp., 2015 U.S. Dist. LEXIS 70468 (E.D. Wis., May 30, 2015). Granting a motion for reconsideration, the District Court held that the plaintiff was not a “franchisee’ under the relevant franchise law because, although the plaintiff had purchased the ‘franchise rights to distribute’ from a former franchisee, it had done so without first obtaining the consent of the franchisor for the purchase. The Court's reconsideration decision focused on an asset purchase agreement (APA) under which an entity created by Daniel Zahn and Martin Brown, called DanMar Holdings LLC, acquired substantially all of the assets of a Texas company, called Automotive Industrial Supply Co., Inc. (AISCO). The purpose of the transaction was for Zahn and Brown's entity to acquire AISCO's purported right, based on an alleged oral agreement, to distribute Dana's "GWB" product line, which consisted of heavy duty industrial drive lines and universal joints used in the fracking industry. After the APA transaction, the distribution assets acquired were then transferred from DanMar Holdings to Texas Ujoints LLC in a second separate deal. There was no dispute in the case that Dana […]
Federal Court in Michigan Becomes One Stop Shop for Constructing Coffin for Terminated Franchisee 1/5/2016 By: Jeffrey M. Goldstein (202) 293-3947 Many times a terminated franchisee fails or refuses to attend court proceedings initiated by its franchisor or distributor. The main reasons invoked by franchisees for failing to attend such proceedings vary, including (1) having no money; (2) believing that the franchisor is limited by law regarding how much or the type of relief that can be awarded against it where the franchisee fails or refuses to defend; or (3) imagining that the franchisee or dealer has no real defenses to the claims. A case decided in federal court on New Year’s Eve, 2015, Domino's Pizza Franchising, LLC, Plaintiff, v. VTM Pizza, Inc., and Terrence M. Williams, Defendants, shows just how far an aggressive franchisor and a motivated court can go ‘in just one court hearing’ in deciding against an absent franchisee. Generally, when a dealer or franchisee defendant fails to answer or reply to a Complaint, the Court will enter a default, meaning that the franchisee has a judgment entered against it for all of the substantive claims asserted by the franchisor in its Complaint. The next, and related step, is where the franchisor requests that the Court award it money damages for the franchisee’s alleged misconduct underlying the Complaint; claims for such monetary damages are asserted via a motion for default judgment. These two steps usually are separated by a period of weeks, with the latter award […]