COVID-19 HAS KILLED MY BUSINESS – MAY I LEGALLY TERMINATE MY CONTRACTS?

Mar 20, 2020 - Blog by |

The coronavirus (COVID-19) (“the Virus”) has made it impossible or impracticable for many businesses to comply with their contracts. The party who must ultimately bear the loss associated with the Virus largely depends on whether the explicit language in their contract contains a ‘force majeure’ clause. In the absence of such language, liability for the non-performance will turn upon the law of ‘impossibility’ in the applicable jurisdiction. Not only has the Virus physically disabled those responsible for meeting contractual obligations, but it also has caused many state and local authorities to issue orders banning or severely restricting association, gatherings and travel, for instance, which, in turn, create such impossibility or impracticability. The evolution of the Virus, as well as government and business responses thereto (quarantine and containment orders), has caused many businessmen, and lawyers in unrelated niches, to ask whether any legal excuses exist to discharge promisors from contractual obligations impacted by the Virus. As discussed below, and as will be discussed in more detail in subsequent articles in this series, businesses, including franchisees, distributors and dealers, who find themselves unable to meet certain obligations in their contracts, should seek legal assistance to determine whether force majeure or the common law of impossibility or impracticability excuses their contractual performance. While force majeure generally refers to unforeseeable “acts of God,” impossibility is a broad-sweeping doctrine that picks up events and occurrences that arguably substantially impede performance even though they are not nature related (e.g., blindness or death of famous artist in […]

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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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2017 Best Franchise Litigators

Apr 11, 2018 - Reformist Thoughts by |

2017 Best Franchise Litigators — USA By Jeffrey M. Goldstein   Over my 30 years of practice I’ve from time to time been asked by clients “if we hadn’t chosen you as our litigator, which lawyers would you have recommended that we had chosen to litigate our case?” Just again two weeks ago, during some dead-time during one of the prolific break-out sessions during Mediation for one of my clients, the issue was broached yet again. Interestingly, I had never provided a full and thoughtful answer to the question in the past. In addition, these clients wanted to know the best franchise lawyers ‘on both sides.’ For whatever reasons, prompted by that last Mediation discussion, I finally set about to list those litigators whose names I’d put on my personal informal list of ‘go to litigators’ for franchise and distribution. In preparing my information and non-scientific list I’ve used roughly the following criteria: (1) he or she has a minimum of 10-12 years in the franchise or distribution litigation ‘industry’; (2) franchise or distribution litigation (not franchise or distribution counseling or transactions) must predominate in his or her practice; (3) his or her ability and willingness to do battle in court are commensurate with their reputations; and (4) he or she participates in a full-time private practice. In essence, I have tried to informally distinguish between those who merely have prolific helpful professional ‘connections’ or ‘contacts’ in the franchise world (either within their law firms or in franchise corporations) and […]

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Seattle Hempfest and Las Vegas Hemp Festival End Franchise Agreement

Feb 27, 2017 - Reformist Thoughts by |

It appears that no post-termination restrictions on smoking pot will be imposed on terminated former licensee. It would have been interesting to see how a court might have applied the doctrine of unclean hands in any injunctive action. What is also notable in this dispute is that the business relationship between the parties, even though it was based on a non-traditional product, was hindered by a very traditional point of conflict between franchisors and franchisees selling more traditional products — “a differing vision of what a traditional “Hempfest” event should be, so we have amicably dissolved the licensing relationship to allow the Las Vegas event to follow its vision unhindered by the contractual agreements.” http://mjnewsnetwork.com/events/seattle-hempfest-and-las-vegas-hemp-festival-end-franchise-agreement/  

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Alternative Facts and Franchise Protection Legislation

Feb 15, 2017 - Reformist Thoughts by |

Alternative Fact: “Franchisees are happy with existing laws governing franchise ownership.” Passing state franchise relationship laws, which aim to protect many of the basic rights of franchisees and dealers that have been stripped from by the language of their individual franchise agreements, is a contentious, arduous and lengthy process. Indeed, even today, many states still do not have legislative protection for franchise owners in their states. See State Franchise Law Protects Franchisees Florida is the most recent state to begin the process toward enacting such franchise legislation. The Protect Florida Small Business Act (the “Legislation”), sponsored by Florida State Senator Jack Latvala (SB 750), claims that it will bring fairness to the relationship between corporations and the Floridians who own and work in franchise establishments. The Legislation was filed in the Florida Senate on February 7, 2017. View Bill Info The Legislation states that its intent “is to promote fair business relations between franchisees and franchisors and to protect franchisees against unfair treatment by franchisors.” The Legislation generally focuses on three areas including protection from unfair terminations of franchises, protection from unfair restrictions on transfers and sales of franchises, and protection from non-renewals of franchise agreements. As soon as the Legislation was announced, the usual adversaries in the franchise world dusted off their muskets, ran to the front lines, and began shooting. One franchisee advocacy group, the Protect Florida Small Business (“PFSB”), pointed out that industry-specific franchises in Florida were treated better than non-industry-specific franchises: “Florida laws already provide safeguards for […]

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