A popular contractual tool for franchise systems is a mandatory arbitration provision. A pair of recent decisions suggest that, where a franchisor’s franchise agreement does not directly address the issue of class- or group-wide arbitration, franchisees may be able to consolidate their claims and proceed against the franchisor as a group. The cases illustrate the importance for a franchisor of ensuring that its franchise agreement’s arbitration clause is drafted carefully.
Tag: franchise agreement
Clumsy Drafting In Franchise Agreements Can Haunt You: Hamden v. Total Car Franchising Corp.
A recent decision from the United States District Court from the Western District of Virginia highlights the importance of careful drafting of franchise agreements and, in particular, dispute resolution provisions.
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.
Lawsuit Regarding Strip Club Ad Highlights Importance Of Franchise Brand Management
A recent lawsuit filed by sandwich franchisor Capriotti’s underlines the importance of brand management for franchise companies. The franchisor sued its Las Vegas-based franchisee, seeking to terminate the franchise agreement in reaction to the franchisee’s co-advertising campaign with a strip club, featuring the tagline “a match made in Vegas heaven: boobs and Bobbies.”
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