Franchise Litigation

Snell & Wilmer’s retail and franchise group is experienced in representing franchisors (and at times franchisees) in courtrooms throughout the country. Our franchise attorneys handle not only mediation and arbitration proceedings, but also have litigated cases through trial and appeal in state and federal courts across the country.

Our franchise attorneys have handled a variety of disputes for numerous franchising clients in a variety of industries, including restaurant, fast food, hospitality, hotels, real estate brokerage and automobile dealerships. Our cases range from disputes with individual franchisees or dealers to matters affecting the entire franchise or dealership system. We have substantial experience with the issues that frequently arise in franchise litigation.

Examples of franchising disputes that Snell & Wilmer has handled include disclosure and fraud issues, contract disputes / breach of the implied covenant of good faith and fair dealing, territorial disputes and encroachment, exclusivity provisions, dealer/franchisees termination, tortious interference claims, miscellaneous torts, trademark/copyright infringement, Lanham Act, antitrust, labor and employment, environmental and bankruptcy.

Disclosure and Fraud Issues

• Represented Arizona accounting firm in litigation over alleged negligent preparation of and misrepresentations in UFOC.
• Defended franchisor in third-party fraud claims in California arising out of franchisee’s allegedly fraudulent promotion of a commercial real estate investment.
• Defended franchisor in third-party action brought in Hawaii based on alleged fraudulent conduct of franchisee.
• Handled TRO/preliminary injunction hearing for franchisee involving franchise circular issues and failure of the franchisor to comply with the Uniform Act.
• Handling litigation for Arizona franchisor arising out of problems in its UFOC, including resolving disputes with five franchisees that had failed from the outset.
• Represented franchisor in Colorado fraudulent inducement claim arising from dealings with former franchisee.

Contract Disputes / Breach of the Implied Covenant of Good Faith and Fair Dealing

• Defense of automotive manufacturer in California on claims arising out of refusal to approve a dealership transfer.
• Prosecution and defense of actions in California and Pennsylvania to enforce franchisor’s right of first refusal to purchase shares in 28 Pittsburgh area franchisee locations.
• Prosecuting restaurant franchisor’s claims against franchisee who sold his restaurant and buyer who operated it as a generic restaurant. Sued franchisee for breach of contract and buyer for trademark violations and tortious interference. Settled for cash payment plus the attorneys’ fees franchisor incurred, together with buyer’s agreement to completely de-identify and post signs re: lack of affiliation with franchisor.
• Representation of several California franchisees in the hospitality industry against hotel franchisors on claims arising from breaches of the licensing agreement and UFOCs.
• Defense of automotive manufacturer in California action alleging wrongful encroachment by neighboring dealers and unfair sales and pricing practices.
• Represented various franchisors in temporary restraining order, preliminary injunction and forcible entry and detainer actions in Colorado state court.

Territorial Disputes and Encroachment

• Prosecution of action in New Jersey Chancery Court on behalf of franchisor in connection with encroachment dispute between franchisees.
• Representation of restaurant franchisor in termination litigation involving gaining possession of store and related personal property in Colorado state court.

Exclusivity Provisions

• Defended (including obtaining summary judgment and an award of attorneys’ fees) Seattle manufacturer of medical testing equipment in litigation brought by its Arizona dealer alleging that the manufacturer had violated the exclusivity provision in the dealer agreement by contracting directly with national chain retailers. Subsequently handled similar disputes with the manufacturer’s dealers in West Texas/New Mexico and Maryland, averting litigation by negotiating new non-exclusive agreements with those dealers.

Dealer/Franchisee Termination

• Prosecuted three separate pieces of litigation for ice cream franchisor to terminate franchisees while permitting franchisor to keep the stores and develop territory. Awarded attorney fees in each suit.
• Representation of several regional real estate franchisees (in Washington, Oregon, Montana, Idaho, Texas, New Mexico, Kansas and Michigan) in termination litigation with the national franchisor. Franchisor ultimately purchased our clients’ regional franchise agreements, with the parties arbitrating the issue of the fair market value for the regions.
• Continuing representation of national franchisor (provision of business services concept) in actions to enforce post-termination contractual covenants, including non-compete and intellectual property provisions.

Tortious Interference Claims

• Prosecution of action in federal court in Maryland on behalf of franchisor against competitor for wrongful interference with existing franchise relationship.
• Defense of tortious interference case against ice cream franchisor. Settlement paid by the area developer pursuant to indemnification provision.

Miscellaneous Torts

• Represented national hotel chain in multiple lawsuits against franchisees for failure to pay fees and for trademark infringement and defended counterclaims by franchisees.
• Representation of national fast food chain in Nevada in various tort cases ranging from adulterated food and slip and falls to claims of racial discrimination in a place of public accommodation.

Trademark / Copyright Infringement

• Prosecution of California action on behalf of franchisor to enjoin franchisee’s use of franchisor’s name and marks in a nationwide telemarketing scam.
• Filed claims for franchisor against franchisees and others for wrongful use of service marks in connection with fraudulent international sales of government backed letters of credit.
• Obtained judgment for fast food franchisor in two lawsuits against franchisees for trademark infringement and similar claims.
• Various actions for copyright infringement on behalf of franchisor in Colorado state and federal courts.

Lanham Act

• Prosecution of Lanham Act and related state law claims against California business that utilized famous name and marks of national franchisor.
• Prosecution of Lanham Act and related state law claims on behalf of franchisor against former Montana franchisee who continued to use a domain name incorporating franchisor’s name and marks.
• Representation of national restaurant licensor in successfully pursuing Lanham Act and unfair competition claims. Adverse party was using the licensor’s trademarks and other intellectual property in attempting to raise capital for new business venture.
• Prosecution of Lanham Act and related Colorado claims for restaurant franchisor against franchisee who refused to stop holding himself out as authorized post-termination.

Antitrust

• Defended ice cream franchisor against tortious interference/antitrust claim based on Tampa market. Settled for a walk-away.

Labor and Employment

• Defended largest franchisee of national pizza restaurant franchisor regarding all employment disputes.
• Obtained summary judgment for franchisor on allegations that one of its franchisees engaged in sexual harassment.
• Defended cookie industry franchisor in a number of employment litigation matters including wage and hour, harassment and discrimination claims.
• Prosecuted breach of contract claims on behalf of restaurant franchisors and defended franchisees’ discrimination and retaliation counterclaims under Title VII and 29 U.S.C. § 1981.
• Litigated unfair labor practices before the NLRB and the federal courts of appeals on the question of joint responsibility between franchisors and franchisees.
• Defended large fast food restaurant chain in several EEOC charges for sexual harassment and age discrimination.
• Defended fast food franchisee in ADA Public Access litigation regarding 30 restaurants.
• Defended franchisor-owned hotel in multi-million dollar food borne illness litigation involving over 30 plaintiffs. Resolved case for less than defense costs.

Environmental

• Participated in liability allocation mediations and represented one of the nation’s largest oil companies in connection with defense of property damage, stigma and pollution liability claims related to historic operations of gasoline service stations.

Bankruptcy

• Representation of western United States and Midwestern franchisees of national restaurant chain in Chapter 11 proceedings.
• Representation of bond trustees in Chapter 11 proceedings for a national restaurant chain, including issues involving Franchise Area Development Agreements.