Franchisees’ Weapons Turned on Them in Court – May 26, 2014 Allstate Franchisees
May 6, 2015 - Franchise Articles by Jeffrey M. Goldstein |Franchisees’ Weapons Turned on Them in Court – Allstate Agent Franchisees New Jersey is normally considered a ‘good state’ for franchise lawyers who represent only franchisees and dealers. This case, however, shows that on any given day, and despite the sophistication of legal representation, franchisees are subject to being blown out of the water on almost any ground. In this case, we see the Court use two relatively potent pro-franchisee legal weapons – the New Jersey Franchise Protection Act and the common law covenant of good faith and fair dealing – to bludgeon the franchisees to a legal death.
Not All Franchisor Silence is Golden – Failures to Speak and Fraud in the Franchise Context (June 2014)
May 6, 2015 - Franchise Articles by Jeffrey M. Goldstein |David Abbo, Colorado Toyz, Inc., and Wireless Phones, L.L.C.v. Wireless Toyz Franchise, L.L.C., Joe Barbat, Richard Simtob, Jsb Enterprizes, Inc., and Jack Barbat, 2014 Wl 1978185, Court Of Appeals Of Michigan (May 13, 2014) Wireless Toyz Franchise, L.L.C. (WTF), a franchisor, and David Abbo, its franchisee, initially entered into a franchise agreement for a retail store in Colorado and subsequently signed a development agent agreement under which Abbo was required to open additional Wireless Toyz franchise stores. Wireless Toyz franchises are retail stores that sell electronic communication devices and initiate cellular telephone services with various providers. Franchisees earn commissions by selling third-party service contracts and additionally profit by marketing cell phones and related merchandise. Abbo paid a $20,000 franchise fee, in addition to $180,600 for the exclusive right to market and sell Wireless Toyz franchises throughout Colorado.
Franchisees’ Legal Scorecard for June 2014 — Franchise Purchase and other Dangerous Transactions
May 6, 2015 - Franchise Articles by Jeffrey M. Goldstein |More Franchisee Dis-Information To Grease the Efficient Franchise Purchase Information Market The most serious mistake that potential franchisees make is to rely exclusively upon their franchisors to provide them with information regarding potential franchise investments. The Franchise Disclosure Document (FDD) for sure provides some information, although far too little. Indeed, the FDD is deceptively useless if prospective franchisees limit their due diligence solely to the FDD and any other information given to them by franchisors. In this regard, Item 20 of the FDD was supposed to serve the altruistic and efficiency-promoting purpose of providing the potential franchisee with a gateway to obtaining other valuable sources of information about the franchise system, most notably contact information for current and former franchisees of the system.
RE/MAX FRANCHISEE OUT-MANEUVERS LEGAL CLUTCHES OF DEFECTIVE RESTRICTIVE COVENANTS NOT TO COMPETE
May 6, 2015 - Franchise Articles by Jeffrey M. Goldstein |RE/MAX of New England, Inc., and RE/MAX, LLC, Plaintiffs v. Prestige Real Estate, Inc., d/b/a LAER Realty Partners, Stacey Alcorn, and Andrew F. Armata, Defendants, U.S. District Court, D. Massachusetts, July 7, 2014. A real estate brokerage franchisor RE/MAX of New England, Inc. was denied a temporary restraining order or preliminary injunction after one of its franchisees terminated its relationship with RE/MAX and started to do business under a different name. According to the Court, in denying RE/MAX's motion for temporary restraining order and preliminary injunction, the real estate franchisor failed to demonstrate a likelihood of success on the merits of any of its claims. The franchisee, Prestige Real Estate, Inc. entered into 13 franchise agreements with RE/MAX, each for a different real estate office. Three of the agreements had expired prior to the dispute and had been continued on a month-to-month basis. The other ten agreements were active when, in April 2014, Prestige sent RE/MAX a demand letter terminating their relationship. The franchisee, Prestige, subsequently started doing business as LAER Realty Partners.
Baloney, Big Macs, the NLRB, and Franchise Advocacy
May 6, 2015 - Franchise Articles by Jeffrey M. Goldstein |A column last week in the Los Angeles Times, entitled “The NLRB-McDonald’s Ruling Could Be the Beginning of a Franchise War” is another example of how top franchise industry ‘experts’ and ‘talking heads’ too frequently lack sufficient knowledge about the facts and theories they are discussing. Most notably, for example, contrary to the ‘fact’ set forth in the column, the NLRB matter was not a ‘ruling’ nor was it ‘issued’ by the NLRB. It was, instead, a policy decision made by a rank political appointee in the NLRB. This was nothing more than a personal choice made by the NLRB’s ‘in house’ counsel to include McDonald’s as a named defendant in certain pending internal NLRB labor cases. This choice was not litigated before the ALJ, the NLRB or the courts.
Consult a Franchise Attorney for Franchisor Misrepresentation
May 6, 2015 - Franchise Articles by Jeffrey M. Goldstein |Do you suspect that your franchisor misrepresented important details about its product, or the company itself? Misrepresentations to franchisees violate the Franchise Disclosure Rule. To get a clearer idea of how this has violated your rights, consult a franchise attorney.
For Unlawful Termination of a Franchise Agreement, Franchise Lawyers Can Help
May 6, 2015 - Franchise Articles by Jeffrey M. Goldstein |Did your franchisor suddenly terminate your franchise agreement without giving you the required 30-day minimum written notice? Under the Franchise Rule, the franchisor is required to give a minimum of at least 30 days, in written form, before terminating a franchise agreement. Franchise lawyers can help you determine if the termination was unlawful. Protect yourself against an unlawful termination.
October 2014 Court Wrap-Up: Featuring Dunkin’ and Popeye’s
May 6, 2015 - Franchise Articles by Jeffrey M. Goldstein |Federal Court Drives Final Nail in Dunkin’ Franchisee’s Coffin Dunkin Donuts Franchising, LLCv. Claudia I, LLC, and Claudia I, LLC v. Spring Hill Realty Inc., 2014 WL 5353724 (E.D. Pa., Oct. 20, 2014). After a long and litigious period, the United States District Court for the Eastern District of Pennsylvania granted Dunkin’ a permanent injunction against franchisee Claudia on October 20, 2014. This case is a prototypical example of what can happen when a franchisor loses trust, faith and patience with an underperforming franchisee. In this regard, it is important to note that the franchisee in this case also tightened the legal noose around its neck by unhelpfully focusing its attention and resources on relatively minor infractions of the franchisor and landlord rather than the most detrimental and objectionable franchisor conduct. This left Dunkin’ in the driver’s seat from the time of the execution of the franchise agreement through the final decision of the Court.
Pizza Delivery, Pot Smoking, Seatbelts, and a $2.28 Million Judgment Against the Pizza Franchisor
May 5, 2015 - Franchise Articles by Jeffrey M. Goldstein |This case shows that, as predicted last week, a mid-western jury answers to nobody, finding, in contrast to recent California courts, that franchisors can be subjected to serious vicarious liability for the conduct of their franchisees’ employees. In Bruntjen v. Bethalto Pizza, LLC, 2014 IL App (5th) 120245, 18 N.E.3d 215, 385 Ill.Dec. 215(2014) (decision follows below under comments), a passenger in a van that was struck by the car being driven by a pizza delivery driver brought an action against the driver, the driver’s employer (the franchisee), the franchisor of driver’s employer, and others for negligence. The Circuit Court of Illinois, Madison County, entered judgment in favor of the injured passenger for approximately $2.28 million. The appeal was rejected and the judgment affirmed.
