Archive | Franchisee 101

Franchisee 101

Personal Guarantee of Franchisee Fees and Costs Upheld

What potential liabilities may owners of a terminated entity franchisee face as a result of personally guaranteeing the entity franchisee’s obligations in favor of the franchisor? As Violet Spear, the sole shareholder of Vianna, Inc., a terminated 7-Eleven franchisee in Evanston, Illinois, painfully learned, guarantors should expect to be liable for the franchisor’s attorneys’ fees […]

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Trademark Infringement: High Stakes Gamble

Something franchisees must know: Franchisees that continue to use their franchisors’ registered trademarks after their franchise agreements have been properly terminated by their franchisors could face crippling damage awards. Under the federal Lantham Act, courts may award an injured franchisor “treble damages” -three times the amount of damages actually suffered-for willful and knowing trademark infringement, and […]

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Improper Termination May Be Constructive Termination

According to a US district court judge in Budget Blinds Inc. v. LeClair, a franchisee with a franchise agreement governed by Wisconsin law may be entitled to damages from its franchisor under a claim for “constructive termination” of its franchise agreement if the franchisor does not comply with the notice and cure requirements of the Wisconsin Fair […]

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If At First You Don’t Succeed, Try, Try Again

Undeterred by last year’s disappointments, franchisees in the Golden State have regrouped this year and mounted a new offensive designed at passing franchisee favorable legislation in California. Last year, Assembly Bill 2305,The Level Playing Field for Small Businesses Act of 2012 (the “2012 Act”), was introduced in the California Assembly. The 2012 Act sought to revise California’s […]

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No Franchise If You Don’t Pay A Fee

Under California’s Franchise Investment Law (“CFIL”), a business relationship constitutes a franchise if: 1) the franchisor grants the franchisee the right to engage in a business offering, selling or distributing goods or services substantially associated with its trademark, service mark, trade name or logotype; 2) the franchisor provides significant assistance or exercises control by prescribing […]

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FTC Updates Definition of “Exclusive Territory”

The Federal Trade Commission (“FTC”) regulates the offer and sale of franchises at the Federal level by way of the FTC Rule, as amended in 2007 (the “FTC Rule”). Franchisors and their attorneys often submit questions to the FTC staff seeking clarification of provisions in the FTC Rule. Occasionally, the FTC staff publishes a frequently asked […]

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Reporting Sales and Paying Taxes: A Double-edged Sword

Typically, franchise agreements require franchisees to comply with all civil and criminal laws and provide that franchisees will be in default under their franchise agreements if any of their franchise owners commits a felony or other offense that is injurious to the “System” or the franchisor’s marks. In Dunkin’ Donuts Franchising, LLC v. Oza Bros., Inc., Dunkin received […]

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