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Cases, news, issues and legal opinions impacting franchise law

Subway Settles, Will Ensure ‘Footlongs’ Are Foot Long

Subway sandwich photo by powerplantop
Photo by James

Does a class of sandwiches, the footlong, have to be a foot long or more? The answer, at least for Subway sandwiches, is that they soon will be, thanks to a settlement of a class action lawsuit that began with an Australian teenager in 2013.

Courts, Not Arbitrators, to Decide How Class Arbitration Is Governed

The U.S. Court of Appeals for the Third Circuit issued its "precedential opinion" last month stating district courts can make the decision as to whether arbitration clauses permit class action arbitration.

A Franchise Consultant’s Legal Nightmare

Chris Conner
Franchise Marketing Systems' president Chris Conner speaks on YouTube

GAINSVILLE, Georgia – Christopher Conner, founder and president of Franchise Marketing Systems, made a curious statement in 2012. He said, "Franchisees will sometimes sue; this is part of doing business." But he adds, "Or is it?" Conner sells himself as a veteran franchise consultant "who has been involved in several thousand business transactions without any lawsuits or litigation involved."

Franchisee's Fraudulent Misrepresentation Claims Dismissed because of Franchise Contract Disclaimer

CHICAGO - A district court in Illinois granted a franchisor's motion to permanently dismiss a franchisee's counterclaim that he was given bogus financials related to how much he could expect to make in purchasing a franchise.

Subway Franchisee Admits Bilking IRS of $1.5M

A multi-unit Subway franchisee in the Washington D.C. area pleaded guilty last week to conspiring to defraud the IRS of more than $1.5 million by under-reporting the money his sandwich stores were making.

California Court Orders Arbitration of Franchisee’s Employment Claims

A federal court in California granted last December a franchisor's motion to compel arbitration in a putative class action lawsuit filed by one of its franchisees. In Jacobson v. Snap-on Tools Co., Jacobson argued that his work was so closely regulated by Snap-on Tools, a franchisor of automotive and shop equipment, that he should be treated as an employee under California law, rather than as an independent franchisee.

In Minnesota It Takes the Wizard of Oz to Prove Franchisor Fraud

The United States District Court for the District of Minnesota on January 12, 2016, in Moxie Venture L.L.C., et al. v. The UPS Store, Inc., 2016 U.S. Dist. LEXIS 3603, hammered the final nail in the coffin of franchisee fraud claims under the Minnesota Franchise Act.

New York AG Settles with 96 Health Clubs over State Violations

NEW YORK – Attorney General Eric Schneiderman announced yesterday that his office has settled with almost 100 health clubs over various violations of state law as part of his ongoing investigation. The AG directed his comments not only to the fitness and health club owners but also to New York consumers.

Child Care Franchisee Wins Non-Compete Case 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.

Franchisee’s Wrongful Termination Claim Is 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).