Can Holdover Franchisees Be Held Liable For Trademark Counterfeiting?

One of the most common lawsuits in franchising involves the “holdover” franchisee. In these cases, the franchise agreement has either expired or it has been terminated. The holdover franchisee, however, continues to operate his or her business as though nothing has changed and continues to use the franchisor’s trademarks and trade dress. The recent case Century 21 Real Estate, LLC v. Destiny Real Estate Properties found that a holdover franchisee can be held liable for trademark counterfeiting, which means that potentially large punitive damage awards can be available against holdover franchisees.

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