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Franchisee's Wrongful Termination Claim Rejected for Failure to Obtain Franchisor Consent to its Franchise Purchase
In a recent case in the United States District Court for the Eastern District of Wisconsin, a federal court reversed its own initial decision in which it had upheld a franchisee's wrongful termination claim against its franchisor. Tex. Ujoints, LLC v. Dana Holding Corp., 2015 U.S. Dist. LEXIS 70468 (E.D. Wis., May 30, 2015). Granting a motion for reconsideration, the District Court held that the plaintiff was not a 'franchisee' under the relevant franchise law because, although the plaintiff had purchased the 'franchise rights to distribute' from a former franchisee, it had done so without first obtaining the consent of the franchisor for the purchase...
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Federal Court in Michigan Becomes One Stop Shop for Constructing Coffin for Terminated Franchisee
Many times a terminated franchisee fails or refuses to attend court proceedings initiated by its franchisor or distributor. The main reasons invoked by franchisees for failing to attend such proceedings vary, including (1) having no money; (2) believing that the franchisor is limited by law regarding how much or the type of relief that can be awarded against it where the franchisee fails or refuses to defend; or (3) imagining that the franchisee or dealer has no real defenses to the claims. A case decided in federal court on New Year's Eve, 2015, Domino's Pizza Franchising, LLC, Plaintiff, v. VTM Pizza, Inc., and Terrence M. Williams, Defendants, shows just how far an aggressive franchisor and a motivated court can go 'in just one court hearing' in deciding against an absent franchisee...
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Child Care Franchisee Thwarts the Impact of its Franchise Termination by Confusing Everyone
In
The Art of War, Sun Tzu states, inter alia, that "The whole secret lies in confusing the enemy, so that he cannot fathom our real intent." Sometimes, but not often, this strategy, if used by a franchisee, works in combatting the enforcement of a post term restrictive covenant following a franchise termination.
As an attorney representing only franchisees and dealers, I've historically been repeatedly accosted by potential franchisee and dealer clients demanding that I provide them with a certifiable blueprint for how to 'get around' the post term restrictive covenants in their franchise and dealership agreements...
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Perpetual Termination Jockeying in the Hotel Franchise World Jan. 2016
Seemingly, more than in other franchise niches, hotel franchises seem to be signed-up and then discarded by schisophrenic hotel franchisors. On any given day any particular hotel can be a 'perfect fit' for the brand, and, then, 6 months later, after initial fees have been paid to the franchisor, and after another newer or larger potential replacement property coincidentally becomes available in that market, the initial hotel is deemed a 'terrible fit.' Usually observers justifiably focus on the negative financial impact of questionable terminations on the hotel owners (franchisees) themselves, without too much consideration regarding the impact on the hotel brands. Below, however, it is difficult, after reading the article, to come away with a good view of the franchisor, Ramada...
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Franchise Myths and Franchisor Malpractice
Three Common Franchise Myths
A myth is an invented story, idea or concept. Sometimes myths are used to support and justify particular ideas, institutions, and traditions. In two recent columns I've identified and discussed three pervasive franchise myths, including:
"If you buy this franchise, you'll be our partner."
"If you buy this franchise, you'll be rich."
"If you buy this franchise, you'll benefit from our experience and expertise in successfully operating franchises."
As I previously noted, the first two myths are existentially mysterious in that, one would have thought that, over the course of history, as these myths were passed from one generation to the next, they would have been exposed and debunked. They have not been...
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