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Cases, news, issues and legal opinions impacting franchise law

Judge Rules Baskin-Robbins Add-On Charge on Products Is Not a Fee

Baskin-RobbinsA judge has ruled that Baskin-Robbins' "commercial factor" charge on ice cream and related products is not an unauthorized additional fee imposed on its franchisees as the Association of Independent BR Franchise Owners claimed.

Dealership Claims after Andy Mohr Truck Centers v. Volvo Trucks North America

The recent Seventh Circuit opinion reversing a $6.5 million-dollar verdict against Volvo Trucks North America appears, on its face, to be a blow against franchisees.  But the opinion is not fatal to dealer claims and provides an important silver lining.

BikeCaffe Settles with California Commissioner for Selling Unregistered Franchises

California's Commissioner of Business Oversight reached a settlement with Ralph Massetti and his franchise development firm, The Franchise Builders, for selling BikeCaffe franchises on the internet that were not registered or exempt according to state franchise regulations. Founder Will Shakesheff, chief franchise operations officer, was also named in the state's action against the franchisor.

Court Rules Franchise Laws Reflect Fundamental State Policies That Cannot Be Disclaimed by Contract

An Arizona court has ruled that franchise disclosure laws reflect fundamental state policies, which cannot be disclaimed by contract fine print in Zounds Hearing Franchising, LLC v. Bower.

Court Overturns Franchisee’s $6.5M Jury Verdict Finding 'No Unfair Discrimination'

Although the Indiana Deceptive Franchise Practices Act prohibits franchisors from "discriminating unfairly among its franchisees" in relation to the franchise agreement, an appeals court did not find that in a case where the franchisee claimed its franchisor gave other dealerships more favorable pricing.

Multi-Brand Franchisee Resentenced to 5 Years in Prison, $5.5M in Restitution for Bank Fraud

The Department of Justice, U.S. Attorney Office for the Western District of Missouri, announced last week that a former owner of multiple franchised restaurants was resentenced for a more than $5.5 million bank fraud scheme, increasing his initial one-year, one-day sentence to five years without parole.

Belize High Court Finds Ex-Franchisor Executive Guilty of Defamation, Questions His Integrity

Belize Sanctuary
Photo: Sanctuary Belize Development

In a non-franchise litigation brought by Belizean property owners of a tropical development, the Belize Supreme Court found former franchisor executive Thomas Kevin Herskowitz guilty of defamation with malice.

Jreck Subs Former Franchisor Owner Imprisoned for 12 1/2 Years in Investor Fraud Scheme

A New York district judge last week sentenced Christopher M. Swartz, former owner of franchising firm Jreck Subs, to prison for 12 ½ years for defrauding investors and lenders in his company out of at least $9.5 million. Swartz was also ordered to pay restitution to his victims and the U.S. Internal Revenue Service in the amount of $26,660,590.18.

Instant Tax Service Franchisor Convicted of Conspiracy, Fraud, Other Related Crimes

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Department of Justice Tax Division announced June 5, 2017 that a federal jury convicted the owner of Instant Tax Service franchise in Dayton, Ohio of conspiracy to commit wire fraud, bank fraud, evasion of employment taxes and failure to pay employment taxes.

Fast-Casual Cosi Emerges from Bankruptcy

Fast-casual franchisor Cosi, Inc., which once traded on the NASDAQ public exchange, announced yesterday that it has emerged from bankruptcy proceedings as a private company.