Legal Alerts

Jack in the Box Inc. v. San-Tex Restaurants, Inc.: A Lesson in how Doing Everything Right is Sometimes Not Enough to Prevent a Facially Frivolous Lawsuit

Jan 14, 2021Legal AlertsCFIL, CFRA, CUPA, Federal Court, Jurisdiction, Texas

Executive Summary: In an unpublished decision, Judge Rodriguez of the United States District Court for the Western District of Texas denied Jack-in-the-Box’s motion to dismiss counterclaims brought against it by a franchisee that had been in default for more than two years, was terminated, and continued to operate the franchise after termination. Citation: Jack in the Box Inc. v. San-Tex […]

Ronald Cohn, Inc. v. Sprouts Farmers Market, Inc.: Court Allows Old Unfair Competition Claim to Proceed

Jan 13, 2021Legal AlertsStatute of Limitations, Unfair Competition

Executive Summary: In an unpublished decision, Judge Houston of the United States District Court for the Southern District of California denied Sprouts Farmers Market, Inc.’s motion to dismiss California Unfair Competition Law Claims based exclusively on alleged violations of the California Franchise Investment Law from, at the latest, 2011. Citation: Ronald Cohn, Inc. v Sprouts Farmers Market, Inc., 2021 WL […]

Patel v. 7-Eleven, Inc.: Federal Court Finds that FTC Franchise Rule Preempts State ABC Independent Contractor Test

Sep 10, 2020Legal AlertsABC Test, Employment Law, Federal Court, Independent Contractor

Executive Summary: In a published decision, Judge Gorton of United States District Court for the District of Massachusetts issued a decision finding that 7-Eleven franchisees claims that they were employees of 7-Eleven corporate pursuant to Massachusetts ABC Test was preempted by the Federal Trade Commission’s Franchise Rule and, therefore, the ABC Test was inapplicable to the franchise industry. Citation: Patel v. 7-Eleven, […]

A.B. v. Hilton Worldwide Holdings Inc.: A Must Read for Hotel Franchisors and Franchisees

Sep 8, 2020Legal Alerts9th Circuit, Employment Law, Independent Contractor, Joint Employer

Executive Summary: In a published decision, Judge Immergut of United States District Court for the District of Oregon granted several hotel franchisors’ motions to dismiss claims that they should be held liable for sex trafficking of a plaintiff that had stayed at their hotels in Oregon and Washington, but the decision’s analysis leaves open several critical questions. Citation: A.B. v. Hilton Worldwide Holdings Inc., […]

T.A.W. Performance, LLC v. Brembo, S.p.A.: Court of Appeal Provides Alternative Approach to Analyzing Jurisdictional Disputes by a Purported California Franchisee

Aug 17, 2020Legal AlertsCFIL, Federal Court

Executive Summary: In a partially published decision, the California Court of Appeal, First District, Division 3, found that it lacked specific jurisdiction over a purported California franchisee without addressing if the CFIL governed their relationship or if the CFIL voided its forum selection clause. Citation: T.A.W. Performance, LLC v. Brembo, S.p.A., 53 Cal.App.5th 632 (2020). Relevant Background: Defendant Brembo, S.p.A. (“Defendant”) […]

Esguerra-Aguilar, Inc. v. Shapes Franchising, LLC: Court Finds Incorporation of Arbitration Rules Allows Arbitrator to Determine Arbitrability of Dispute

Jul 9, 2020Legal AlertsCFIL, Federal Court

Executive Summary: In an unreported decision, Judge Freeman of the United States District Court for the Northern District of California granted a franchisor’s motion to stay proceedings pending arbitration finding that the parties delegated the question of arbitrability to the arbitrator to decide by incorporating, by reference, the AAA and NAF arbitration rules. Citation: Esguerra-Aguilar, Inc. v. Shapes Franchising, LLC, 2020 […]

BP Products North America Inc. v. Petroleum: Yet Another Lesson in the Need for Clarity for Potential Costs for Franchisees

Apr 27, 2020Legal AlertsCFIL

Executive Summary: In an unreported decision, Judge Rogers of the United States District Court for the Northern District of California denied a franchisor’s motion for a preliminary injunction against a franchisee who was previously terminated for failing to implement a new marketing program based on the franchisee’s argument that the franchise agreement did not “require” it to take on these additional […]

National Labor Relations Board Follows Department of Labor’s Lead and Publishes Franchisor Friendly Joint Employer Rule

Feb 25, 2020Legal AlertsEmployment Law, Joint Employer, Labor Law, NLRB

Executive Summary The National Labor Relations Board adopts a joint employer rule that negates indirect control and explicitly limits the terms and conditions of employment which may be analyzed when determining if two or more entities are joint employers. Analysis On February 26, 2020, the National Labor Relations Board (“NLRB”) released its final rule regarding the determination of joint employer […]

Department of Labor Publishes Franchise Friendly Joint-Employer Rule

Jan 13, 2020Legal AlertsDepartment of Labor, Employment Law, Joint Employer

Executive Summary The U.S. Department of Labor released a final rule regarding the determination of joint employer status under the FLSA. The standard largely mirrors the Bonnette standard that was well-settled law for decades, but the Department of Labor’s interpretative opinion is likely to be challenged, and there is some doubt of whether it will be followed by the courts. Analysis On […]

Handel’s Enterprises, Inc. v. Schulenburg: In Spite of a “Willful” Violation of the CFIL, a Federal Court Finds a Franchisee is not Entitled to Rescission

Jan 6, 2020Legal AlertsCalifornia, CFIL

Executive Summary: In a reported decision, Judge Barker of the United States District Court for the Northern District of Ohio found that in order to successfully rescind a franchise agreement under the California Franchise Investment Law a franchisee must prove that the violation was willful and the plaintiff relied on the violation in entering into the contract and that the violation caused damages. Citation: Handel’s […]