Court Dismisses Franchisor’s CEO from Lawsuit Based on Plaintiffs’ Failure to State a Claim
A federal court dismissed the sole claim against the CEO for alleged violations of the DTPA because the franchisees failed to allege that the CEO engaged in any false, misleading, or deceptive acts or practices. Momentum Marketing Sales & Services, Inc. v. Curves Int’l, Inc.,
Business Franchise Guide (CCH), ¶14,215 (W.D. Tex. Jul. 28, 2009)
Franchisor Prevails on Motion to Dismiss Out of State Law Claims
A federal court ruled that Texas law trumped out-of-state statutory claims asserted by franchisees, even in states whose franchise statutes contained anti-waiver provisions, dismissing the out-of-state claims based on the Texas choice of law provision in the franchise agreements and on the “most significant relationship” test contained in the Restatement (Second) of Conflicts of Law. Momentum Marketing Sales & Services, Inc. v. Curves Int’l, Inc.,
Business Franchise Guide (CCH), ¶14,047 (W.D. Tex. Dec. 17, 2008).
Forum Selection Clause Enforced in Spite of the New York Franchise Sales Act's Anti-Waiver Provision
Several fitness center franchisees filed suit against Curves, a Texas franchisor. The case was transferred to the federal court for the Western District of Texas by a federal district court in New York City. With respect to the convenience of the parties and the witnesses, the franchisees failed to articulate any compelling reasons for overriding the forum selection clause, which specified a Texas forum. Although the franchisees asserted that their witnesses would be inconvenienced by a transfer, the franchisor pointed out that its witnesses would also be inconvenienced if the case was tried in the instant court. Moreover, New York’s familiarity with the governing law (the franchisees asserted claims under the New York Franchise Sales Act) weighed slightly against transfer. Finally, in light of the franchisor’s uncontested assertion that related cases were already pending in the Western District of Texas, the interests of trial efficiency and justice favored transferring the action.
The federal court also rejected the franchisees' contention that the anti-waiver provision of the New York Franchise Sales Act rendered the forum selection clauses unenforceable. The franchisees’ reading of the anti-waiver provision, that it meant that they could not be required to contractually consent to litigating a dispute in a forum other than New York, was overly broad. Luv2BFit, Inc. v. Curves Int'l, Inc.,
DC N.Y., Bus. Franchise Guide ¶13,996 (S.D. N.Y. Sept. 29, 2008).
Preparation of Revised Disclosure Documents - Casual Dining Chain
Represented a major casual dining chain in connection with the preparation of revised disclosure documents and other post-merger/post-royalty securitization changes.
Acquisition of Minority Interest in Korean Restaurants
Represented public international full service restaurant chain in acquisition of minority interest in Korean restaurants.
California Remediation Program
Represented one of the largest service-based franchisors in the country in connection with a California remediation program.
Represented a well-known bar/entertainment-facility licensor in connection with its co-branding license with major entertainment concern.
Corporate and Financial Workout - Multi-Unit Franchisee with Restaurants in Hong Kong and Taiwan
Represented a major casual dining brand in connection with a corporate and financial workout with a multi-unit franchisee with restaurants in Hong Kong and Taiwan.
Developed Franchise Disclosure Protocol
Developed an industry-leading state franchise disclosure protocol which enables our clients to obtain state franchise registrations faster, with less expense, and with fewer state requests for additional information than before.
Developing Franchise and Refranchising Programs - Multi-Concept Restaurant Operator
Represented a multi-concept restaurant operator with developing franchise and refranchising programs for its mature restaurant brands. Established a product test arrangement between a quick-service pizza concept and a holder of food-concession rights at an international airport.
Development and Implementation of a Multi-State Plan
Represented a fast casual dining chain in connection with the development and implementation of a multi-state plan to remedy over 100 franchise sales violations. The plan resulted in state administrative charges of less than $20,000, no state- or franchisee-initiated legal actions, and enabled the client to register its franchise offering in all desired states.
Due Diligence and Risk Assessment Review
Represented a major pizza brand in connection with a comprehensive due diligence and risk assessment review of its international franchise program and resulting action plan.
Establishment of a Manufacturing Joint Venture
Represented a proprietor of frozen pizza products to establish a manufacturing joint venture with the owner of a manufacturing facility.
Formation of Independent Association of Master Franchisees
Represented a group of master franchisees in connection with the formation and continuing representation of an independent association of master franchisees.
Franchising and Refranchising - Initial Foray
Represented a midsize casual dining brand in connection with its initial foray into franchising and refranchising.
Franchisor Filing in China
Represented a major casual dining steakhouse brand in connection with one of the first existing franchisor filings in China under the new Chinese franchising regulations.
FTC Advisory Opinion
Represented a franchisor in connection with obtaining an FTC Advisory Opinion regarding the ability to count parents and affiliates when analyzing the fractional franchise exemption.
International Transaction - Casual Dining Brand
Represented a major U.S. casual dining brand in its entry into Canada and Mexico as its first international transaction in more than ten years.
Offer and Sale of Marks and System - Casual Dining Restaurant
Represented a casual dining seafood restaurant in connection with the offer and sale of its marks and system to a Saudi Arabian party that will develop and operate restaurants in 10 Mid East and surrounding countries.
Restructuring of Domestic Franchise Program
Represented a major international video and entertainment chain in connection with the restructuring of its domestic franchise program.
Remediation Plan to Remedy Franchise Sales
Represented a Fortune 500 company in preparing a remediation plan to remedy over 1,500 franchise sales violations in virtually all 50 states.
Negotiation of Development and Franchise Rights
Represented a private equity company in connection with its negotiation of development and franchise rights for a major restaurant brand.
Preparation of International-Specific Disclosure Documents
Represented dozens of franchisors in connection with the preparation of international-specific disclosure documents and regulatory filings.
Major Casual Dining: Entry Into Russian and Middle Eastern Markets
Represented a major casual dining steakhouse brand in connection with its entry into the Russian and Middle Eastern markets.
Negotiation of a Revised Franchise Agreement
Represented an international franchised retail chain in the negotiation of a revised franchise agreement and operational policies with the franchisor’s franchisee association.
Registration of Franchise Offerings
Represented numerous start-up franchisors and mature companies in the registration of franchise offerings.
Refranchising - Taiwan Market
Represented a major video franchisor in connection with the refranchising of the Taiwan market.
Jiffy Lube Franchisee Heartland Automotive
Represented Jiffy Lube International, Inc. in the Chapter 11 proceedings of its largest franchisee, Heartland Automotive Holdings, Inc., in Fort Worth, Texas. The debtor operates over 400 franchised Jiffy Lube service centers across the nation, raising complex issues regarding franchise agreements, non-residential real property leases, and franchisee relations.
Preparation of Revised Offering Circular
Represented a major casual dining brand to prepare a revised offering circular and refranchising forms (including purchase documentation) in connection with plans to refranchise over 500 restaurants. We also assisted with the sale and purchase documents for the first sale of almost 50 restaurants to an existing franchisee.
Secured Creditors through Loan Covenant Default and Reorganization
Represented multi-chain franchise holding company in dealings with master franchisees, regulators and secured creditors through loan covenant default and reorganization.
Retrieval of Pirated Internet Domain Names
Represented franchisors in the retrieval of pirated Internet domain names through ICANN proceedings.
Proposed Private Placement
Represented a leading environmentally friendly vehicle rental company in connection with a proposed private placement.