Monthly Archives: November 2019

Multi-Unit Franchisee’s Failure to Sign both Franchise Agreements Contemplated by its Development Agreement Leaves its Dispute with its Franchisor Dickey’s Outside the Scope of any Mandatory Arbitration Provision

Nov 16, 2019 - Judge’s Distribution and Franchise Rulings from the Front Lines by |

Multi-Unit Franchisee’s Failure to Sign both Franchise Agreements Contemplated by its Development Agreement Leaves its Dispute with its Franchisor Dickey’s Outside the Scope of any Mandatory Arbitration Provision By: Jeffrey M. Goldstein In a recent decision by the United States Circuit Court for the Tenth Circuit, a franchisee’s (Campbell’s) case against its franchisor (Dickey’s), for various business torts was permitted to remain and  proceed in federal court after the circuit court affirmed the district court’s decision that Dickey’s could not identify a valid written agreement that expressed a mutual intent to arbitrate the dispute. Campbell Invs., LLC v. Dickey’s Barbecue Rests., Inc., 2019 U.S. App. LEXIS 26980 *; __ Fed. Appx. __; 2019 WL 4235345 (10th Cir. 2019). The franchisee, Campbell Investments, a Utah-based company, purchased and briefly operated a Dickey’s Barbecue franchise in South Jordan, Utah. The business relationship quickly deteriorated, and Campbell sued Dickey’s. Although Dickey’s argued that a franchise operating agreement requires arbitration to resolve disputes between the parties. Campbell contended that it never signed an operating agreement when it purchased the restaurant from a former franchisee. The district court ruled in favor of Campbell, denying Dickey’s motion to force the case out of court and into arbitration. Even though it was clear, and both parties agreed, that they had been conducting the franchise business pursuant to some form of operative understanding, the district court held that Dickey’s could not identify a written agreement that contained an arbitration requirement. Making matters somewhat murky on this issue was that […]

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Allegedly Fraudulent Truck Independent Contractor Relationship Held to Fall Within Confines of Ohio Business Opportunity Act

Nov 10, 2019 - Judge’s Distribution and Franchise Rulings from the Front Lines by |

Allegedly Fraudulent Truck Independent Contractor Relationship Held to Fall Within Confines of Ohio Business Opportunity Act By: Jeffrey M. Goldstein In a recent federal court case in the Northern District of Ohio, the Court denied Defendants’ Motion to Dismiss the Plaintiffs’ Ohio Business Opportunity Act (“OBOA”) claim based on alleged fraud. Goodwin v. Am. Marine Express, Inc., No. 1:18-cv-01014, 2019 U.S. Dist. LEXIS 190965 (N.D. Ohio Nov. 4, 2019). The issue decided by the Court was whether the business relationship between the Plaintiffs and Defendants was legally a “business opportunity” covered by the OBOA. The process engaged in by the Court in determining whether the business relationship was a ‘business opportunity’ is very similar to that carried out by courts in determining whether certain distribution relationships fall within the confines of various state and federal franchise laws. As alleged in the Goodwin Complaint, AMX was a common carrier based in Cleveland that provided intermodal drayage, local/regional cartage, and over the road trucking services, whose customers shipped goods via tractor trailers operated by company-employed drivers or owner-operators, with dedicated leased units. Per Plaintiffs, as part of their “fraudulent scheme,” the individual Defendants directed AMX to transfer titles of semi-truck cabs that they intended to lease to owner-operators, like Plaintiffs, to Gurai Leasing through lease agreements called “Independent Contractor Agreements.” According to Plaintiffs, AMX and Gurai Leasing–as directed and controlled by the individual Defendants–concealed from them the terms of the lease and/or purchase, misrepresented and concealed from them the party from whom […]

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Indentured Servitude in the 21st Century: Employee and Franchisee Noncompete Covenants

Nov 8, 2019 - Reformist Thoughts by |

Indentured Servitude in the 21st Century: Employee and Franchisee Noncompete Covenants By:      Jeffrey M. Goldstein Founding Partner – Goldstein Law Firm, PLLC www.goldlawgroup.com Introduction In a recent decision regarding the right of a former franchisee to operate and work after the conclusion of its franchise agreement, the North Carolina Superior Court (the “Court”) held unenforceable a post-term covenant not to compete (“CNC”). Window Gang Ventures, Corp. v. Salinas, 2019 NCBC LEXIS 24, 2019 NCBC 23, 2019 U.S.P.Q.2D (BNA) 115878, 2019 WL 1471073. However, in so ruling, the Court also found that the Franchisor nevertheless had a legal interest protected by trade secret misappropriation and unfair trade practices laws. The franchisor in Window Gang Ventures, Window Gang Ventures, Corp. (“Window Gang” or “Franchisor” or “Plaintiff”) had franchise locations in 20 states, and “engaged in the business of operating or franchising ‘Window Gang’ locations for residential, commercial, industrial and high-rise cleaning services including window cleaning, blind cleaning, gutter cleaning, window tinting, chimney sweeping, dryer vent cleaning, roof washing, oil remediation, no slips floor, and low and high pressure spray applications.” The Defendant Gabriel Salinas (“Salinas”) was the President of Defendant The Gang Group, Inc. (“Gang Group”), and Defendant Window Ninjas, LLC (“Window Ninjas”).  Defendants Red Window, LLC (“Red Window”), Orange Window, LLC (“Orange Window”), and Blue Window, LLC (“Blue Window”) (together, the “Affiliated Defendants”) are limited liability companies organized by Salinas to operate Window Gang franchises in South Carolina, Tennessee, and Virginia, respectively. The factual background of the case, some of […]

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