Guarantor’s Departure from Borrower’s Employment Creates Factual Disputes Precluding Summary Judgment on Good Faith and Impossibility Defenses
Jul 1, 2026 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |Abstract In Rise Line Business Credit, LLC v. Rodriguez, the United States District Court for the Southern District of Florida addressed whether a guarantor who was no longer employed by the borrower at the time the lender exercised its remedies had satisfied his contractual obligation to “fully cooperate and assist” the lender. The court granted partial summary judgment in favor of the lender on four affirmative defenses—estoppel, justification, failure to mitigate, and ratification—while denying summary judgment on waiver, consent/acquiescence, good faith, impossibility, and indefinite contract terms defenses. The decision turns on whether Rodriguez acted in good faith given his limited capacity after leaving the borrower’s employment, a question the court found presents genuine disputes of material fact requiring jury determination. Court and Parties The United States District Court for the Southern District of Florida issued its Report and Recommendation on June 24, 2026, in Rise Line Business Credit, LLC v. Rodriguez, Case No. Civ-BECERRA/TORRES, 2026 U.S. Dist. LEXIS 141299. Rise Line Business Credit, LLC, a Delaware limited liability company with its principal place of business in New York, is the plaintiff and lender. Robert Rodriguez, the defendant, served as chief executive officer of NPN Holdings LLC at the time he entered the conditional guarantee at issue. NPN Holdings LLC was the borrower under the loan agreement, and Rodriguez guaranteed certain obligations to Rise Line under a Conditional Guarantee executed contemporaneously with the loan. Factual Background In June 2018, Rise Line entered into a Loan and Security Agreement with NPN Holdings […]
Franchisor’s Failure To Disclose Violates FDUTPA, But Franchisee’s Summary Judgment Bid Fails On Causation And Damages
Jul 1, 2026 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |ABSTRACT The United States District Court for the District of New Hampshire denied a franchisee’s motion for partial summary judgment in a franchise disclosure dispute, finding that although the franchisor sold a franchise without providing the required Federal Trade Commission Franchise Disclosure Document in violation of both federal regulations and Florida’s Deceptive and Unfair Trade Practices Act, the franchisee failed to establish the remaining essential elements of causation and damages necessary for judgment as a matter of law. The court held that Florida substantive law governed the franchise formation dispute despite a contractual choice-of-law provision selecting New Hampshire law, reasoning that Florida’s consumer protection statutes applied to contract formation questions and that enforcing the choice-of-law clause to circumvent those protections would violate public policy. The decision clarifies that proving a per se statutory violation under FDUTPA does not eliminate the plaintiff’s burden to demonstrate detrimental reliance and quantifiable harm, and it reinforces that franchisors cannot use choiceof-law provisions to prospectively waive franchisees’ statutory disclosure rights. CASE IDENTIFICATION AND PARTIES This case, MI-BOX of North Florida, LLC v. MI-BOX Florida, LLC, was decided on March 25, 2026, by the United States District Court for the District of New Hampshire. MI-BOX of North Florida, LLC, the plaintiff and franchisee, sued MI-BOX Florida, LLC, the defendant and franchisor, alleging violations of Florida’s Deceptive and Unfair Trade Practices Act, fraudulent inducement, and seeking rescission of the parties’ Dealership Agreement. The case was originally filed in Florida state court, removed to the United States District […]
Franchisor Wins Injunction Enforcing Noncompetes Against Franchisees Who Rebranded After Termination
Jun 23, 2026 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |ABSTRACT The Minnesota Court of Appeals affirmed a district court’s grant of a temporary injunction in favor of Ellie Fam LLC, a Minnesota-based mental health clinic franchisor, against franchisees operating in Arizona and Nevada. The franchisees had attempted to terminate their franchise agreements citing Ellie’s alleged breaches and began operating independently under new names. Ellie sought enforcement of noncompete clauses in the franchise agreements. The appellate court applied the five-factor Dahlberg test and found that despite the district court determining the balance-of-harms factor favored the franchisees, the remaining four factors supported granting the temporary injunction. The court rejected franchisees’ arguments that substantial harm to them should bar the injunction, that their affirmative defenses precluded Ellie’s likelihood of success, and that arbitration clauses prevented injunctive relief. The decision emphasizes the importance of preserving contractual relationships pending full adjudication and demonstrates judicial willingness to enforce noncompete provisions in franchise agreements even when operational disputes exist. CASE IDENTIFICATION AND PARTIES This case, Ellie Fam LLC v. Coelho, 2026 Minn. App. Unpub. LEXIS 374, was decided by the Minnesota Court of Appeals on April 13, 2026. The case consolidated two appeals, A251515 and A25-1517, arising from Ramsey County District Court. Ellie Fam LLC served as respondent and franchisor, a Minnesota limited liability company that franchises mental-health clinics providing outpatient counseling and therapy services. The appellants and franchisees included Felipe Coelho and his company FKL Enterprises LLC, Allyson and Justin Fernstrom and their company AJ Southwest Ventures Inc., who operated Ellie clinics in Arizona, and […]
Court Grants Preliminary Approval Of $10.5 Million Securities Settlement Against Fitness Franchisor
Jun 23, 2026 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |ABSTRACT This article examines the United States District Court for the Western District of Texas’s April 16, 2026 preliminary approval of a $10.5 million class action settlement in In re F45 Training Holdings, Inc. Securities Litigation. The case involved allegations that F45 Training Holdings, Inc., a fitness franchisor, made materially false and misleading statements in its initial public offering materials and subsequent disclosures regarding franchise growth metrics, revenue recognition practices, and the sustainability of its business model. The court granted preliminary certification of the settlement class, approved the settlement as fair, reasonable, and adequate, established a notice program, and set a schedule for final approval proceedings. This decision has significant implications for securities litigation involving franchisors and demonstrates judicial willingness to approve settlements that provide meaningful recovery while avoiding the risks and costs of continued litigation. CASE CAPTION AND COURT In re F45 Training Holdings, Inc. Securities Litigation, No. 1:22-CV-1291-DAE, was decided by Senior United States District Judge David A. Ezra in the United States District Court for the Western District of Texas, Austin Division, on April 16, 2026. Lead Plaintiff Pledge Capital LLC and named Plaintiff Police and Fire Retirement System of the City of Detroit (collectively, Plaintiffs) brought claims against F45 Training Holdings, Inc. (Defendant and franchisor), along with individual defendants Adam Gilchrist, Michael Raymond, Darren Richman, Mark Wahlberg, Christopher E. Payne, controlling entity defendants MWIG LLC and Kennedy Lewis Management LLC, and underwriter defendants Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Robert W. Baird & […]
Sunrise Marine, LLC v. Aqua Traction Marine, LLC: A Limited Resurrection of the Covenant of Good Faith and Fair Dealing in Territorial Dispute Cases
Jan 23, 2026 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |The Wisconsin federal court’s decision in Sunrise Marine, LLC v. Aqua Traction Marine, LLC, No. 25-CV-722, 2026 U.S. Dist. LEXIS 1409 (E.D. Wis. Jan. 6, 2026) is best understood as reflecting the WFDL’s long‑recognized pro‑dealer (pro-franchisee) character. By broadly construing contractual protections, recognizing inaction as a basis for statutory liability, interpreting accrual in a manner that preserved the dealer’s claim, and sustaining all of Sunrise’s causes of action at the pleading stage, the court strengthened the dealer’s ability to hold the supplier accountable for conduct that undermined the competitive viability of its exclusive territory. For these reasons, the case should be viewed as a strongly pro‑franchisee, pro‑dealer decision within the broader landscape of Wisconsin dealership and franchise jurisprudence. Decision The court’s decision in Sunrise Marine, LLC v. Aqua Traction Marine, LLC was strongly pro‑dealer, holding that Sunrise Marine plausibly alleged violations of the Wisconsin Fair Dealership Law and that Aqua Traction’s failure to enforce territorial protections could constitute both a statutory violation and a breach of contract. The judge denied Aqua Traction’s motion to dismiss in full, applying the WFDL liberally in favor of protecting the dealer. Aqua Traction Marine, LLC manufactured custom flooring for recreational boats and had operated a dealership network. Sunrise Marine, LLC had served as one of its dealers since 2019 under an agreement granting Sunrise an exclusive territory covering roughly the eastern third of Wisconsin and a portion of Michigan’s Upper Peninsula. The dealership agreement stated that Aqua Traction would protect each dealer’s territory and […]
California Federal Court Gives Another Bullet to Franchisors in Franchise Termination Cases
Dec 18, 2025 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |In Fiesta Ventures Bevercreek, Ltd. Liab. Co. v. Qdoba Rest. Corp., No. 24-CV-2218 JLS (BLM), 2025 U.S. Dist. LEXIS 162943 (S.D. Cal. Aug. 21, 2025), the dispute arose from a series of franchise agreements and subsequent defaults between Fiesta Ventures entities (FVD and FVB) and Qdoba, the franchisor. The relationship began in 2012, with Fiesta Ventures operating Qdoba restaurants under franchise agreements. By 2019, only one location remained under operation. In July 2019, the parties entered into a development agreement for a new restaurant in Bevercreek, Ohio, which led to a new franchise agreement in April 2023. However, the Bevercreek location failed to open on time due to leasing issues, prompting Qdoba to issue a notice of default in February 2024. Rather than immediately terminating the franchise agreement, the parties entered into a Workout Agreement, which required the Bevercreek restaurant to open by May 31, 2024, and included a provision making affiliates of FVB (including FVD and the individual owners) liable for any future default. Qdoba extended the opening deadline three more times, but after the landlord terminated the lease, Qdoba terminated FVB’s franchise agreement. FVB attempted to cure the default, but Qdoba did not reconsider its decision. Subsequently, Qdoba also terminated FVD’s franchise agreement, relying on the Workout Agreement’s affiliate liability provision. Fiesta Ventures sued Qdoba, alleging breach of contract and unfair business practices under California law. Qdoba counterclaimed, seeking declaratory judgments regarding the terminations, lost future royalties for both agreements, attorneys’ fees, and enforcement of personal guarantees. Fiesta Ventures […]
Prospective Waivers and Worker Misclassification: The Franchise Implications of Munoz v. Earthgrains Distribution, LLC
Nov 7, 2025 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |Abstract: Munoz v. Earthgrains Distribution, LLC is significant in establishing that franchisors and distribution systems cannot use contract provisions to sidestep labor protections or employee misclassification claims. The court held that mandatory general releases –required as a condition of selling distribution rights but imposed at the start of the relationship – constitute unlawful prospective waivers of wage-and-hour rights under California law and are also unconscionable. The decision underscores that California’s labor rights cannot be waived by private agreement, even in franchise-style independent contractor arrangements, and that standardized, one-sided contracts between franchisors and individual operators invite close judicial scrutiny. As a result, Munoz limits the enforceability of pre-drafted releases and highlights the risks of using franchise or distribution models that functionally resemble employment relationships, emphasizing that such agreements must be fair, negotiated, and supported by genuine consideration to withstand challenge. Factual Background The plaintiffs—Tlaloc Munoz, Miguel Ruiz, and Edgar Corona—brought a wage-and-hour action under the Private Attorneys General Act (PAGA) and as a putative class action, alleging that defendants Earthgrains Distribution, LLC and Bimbo Bakeries USA, Inc. misclassified them as independent contractors instead of employees, in violation of California law and various provisions of the Industrial Welfare Commission Wage Order 1-2001 and California Labor Code. The claims included failure to reimburse expenses, unlawful wage deductions, inaccurate wage statements, failure to pay overtime, and denial of meal/rest breaks, among others. They also asserted unfair business practices under California’s Business & Professional Code and a PAGA claim. Each plaintiff had executed a Distribution Agreement […]
Court Sides with Franchisee in Ruling that the Covenant of Good Faith and Fair Dealing Can be Violated by a Franchisor Who Acts in His Sole Discretion
Aug 21, 2025 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |Zest Anchors, LLC v. Biomet 3i, LLC United States District Court for the Southern District of New York June 5, 2025, Decided; June 5, 2025, Filed Case No. 1:23-cv-07232 (JLR) Reporter 2025 U.S. Dist. LEXIS 106986 *; 2025 LX 140064; 2025 WL 1591707 In Zest Anchors, LLC v. Biomet 3i, LLC, the Court addressed a dispute arising from a terminated distribution agreement between dental implant companies Zest and Biomet. After the termination, Section 13.4 of the agreement provided Zest with “the option, but not the obligation, to repurchase” Biomet’s remaining inventory of Zest products “in its sole discretion.” Biomet claimed that Zest initially exercised this option through its invoking of its contractual rights and proposal of an altered distribution agreement on September 3, 2021, thereby triggering reasonable reliance and operational decisions by Biomet based on the belief that repurchase would occur. However, Zest allegedly reversed its decision without explanation, refused to accept the products or pay for them, and leveraged the situation to pressure Biomet into renegotiating distribution terms—actions that, Biomet argued, went beyond mere discretion and constituted bad faith. “Biomet claims that Zest reneged on its decision to repurchase its product from Biomet in order to gain the upper hand in ongoing contract negotiations and to cause harm to Biomet in the marketplace. Id. ¶¶ 19, 38. Biomet also alleges that Zest’s subsequent refusal to repurchase any of the product caused Biomet to suffer financial harm and loss of reputation, and interfered with Biomet’s contracted-for benefit under the Distribution Agreement, […]
Court Finds that Franchisor Had “Unclean Hands” Preventing it from Obtaining Requested Preliminary Injunction Terminating Franchisees Pending Arbitration
Aug 21, 2025 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |Fetch_ Pet Care_ Inc. v. Atomic Pawz Inc._2025 U.S. Dist. LEXIS 132647 (July 2025) Result: In Fetch! Pet Care, Inc. v. Atomic Pawz Inc., the United States District Court for the Eastern District of Michigan considered a motion for a preliminary injunction by the plaintiff, Fetch! Pet Care, Inc., against multiple franchisee defendants accused of breach of contract, trademark infringement, misappropriation of trade secrets, and conspiracy to commit tortious interference with business relationships. The court’s reasoning centered on the application of established legal standards for granting a preliminary injunction, detailed factual findings as to each of the four governing factors, and the substantial influence of ongoing arbitration proceedings on the court’s analysis and ultimate disposition. The court began by articulating the legal framework for preliminary injunctions, explicitly following precedent from the United States Court of Appeals for the Sixth Circuit. The four factors that courts must weigh in such cases are: whether the movant has a strong likelihood of success on the merits; whether the movant would suffer irreparable injury absent a stay; whether granting the stay would cause substantial harm to others; and whether the public interest would be served by granting the stay. The court emphasized that these are not prerequisites that must each be met independently, but are interrelated concerns to be balanced together. It also underscored that preliminary relief is “an extraordinary remedy” to be granted only if the movant clearly establishes entitlement. Further, the court noted that where a dispute is subject to arbitration, as in this […]
Gas Station Dealer Runs Afoul of the Sharp Pleading Requirements of the Petroleum Marketing Practices Act
May 15, 2025 - Judge’s Distribution and Franchise Rulings from the Front Lines by Jeffrey M. Goldstein |The United States District Court for the Northern District of California recently ruled that a franchisee gas station dealer had failed to plead in its complaint certain necessary allegations to support a Petroleum Marketing Practices Act violation against its franchisor. In essence, the PMPA aims to protect gas station dealers from arbitrary actions by larger oil companies, ensuring a degree of fairness and stability in the franchise relationship. As discussed below, although the court’s reasoning for the dismissal appears straightforward and correct, it also demonstrates how some pro-franchisee statutes, either on their face or as interpreted and applied, lead to loopholes for franchisors. Edwards & anderson, Inc. v. Peninsula Petro., LLC, No. 25-cv-00882-MMC, 2025 U.S. Dist. LEXIS 87586 (N.D. Cal. May 7, 2025) The Petroleum Marketing Practices Act (PMPA), a federal statute, provides significant protections for gas station dealers (franchisees) against unfair termination or non-renewal of their franchise agreements by oil company franchisors. The key safeguards include the following: Limitations on Termination and Non-Renewal: Just Cause Requirement: A franchisor can only terminate or not renew a franchise for specific reasons outlined in the PMPA. Examples of Permitted Reasons: These reasons include franchisee’s failure to comply with reasonable and material provisions of the franchise agreement, failure to act in good faith, withdrawal from the market, or certain events like fraud or bankruptcy. Notice Requirements: The PMPA mandates that franchisors provide franchisees with a specific period of written notice (typically 90 days) before terminating or non-renewing a franchise. Right of First Refusal: Sale of Leased Premises: If a […]
