Franchise Termination Damages – the Predictably Unpredictable Legal Morass By: Jeffrey M. Goldstein, Esq. (202) 293-3947 jgoldstein@goldlawgroup.com Goldstein Law Firm, PLLC   In franchise and antitrust distribution law there is no more exasperating, elusive and esoteric issue than damages. This analytical muddle threatens franchisors and franchisees alike. Further, the doctrinal failure regarding franchise damages is so robust that it has extensively infected damages theory, methodology, and calculation. Georgia Court of Appeals Overturns Franchisee’s Jury Damages Award A recent case from the Court of Appeals of Georgia, Legacy Academy, Inc., et al. v. Doles-Smith Enterprises, Inc., et al., Court of Appeals of Georgia, ¶15, 781, (Jun. 9, 2016),  draws attention to a few of the more ruffling damages issues in a distribution context. In Legacy, the franchisor was Legacy Academy, Inc., (“Legacy” or “the franchisor”) owned by Melissa and Franklin Turner (collectively, the “Legacy Parties”), and the franchisee was originally GMI Smith, LLC, and later Doles–Smith Enterprises, Inc., both of which were owned by Michele Doles–Smith and Gary Smith (collectively, the “DSE Parties” or “the franchisee”). In their complaint, the DSE Parties alleged that various representations in the franchisor’s Offering Circular about Legacy’s litigation history and the projected cash flow of its franchises were materially false and misleading and violated the Federal Trade Commission’s “Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures Rule.” The Legacy Parties answered, denying liability, and asserted counterclaims for lost royalties and advertising fees, which, absent the ‘early closing’ of the franchise associated with the termination, would […]

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