Franchise Cases Plentiful, Even Though Not Supreme
Franchise litigation didn’t rise to the level of the U.S. Supreme Court—which ended this year’s session this week in dramatic form, prompting this blog post. But attorneys are watching plenty of cases.
“There’s been no downturn in litigation over the past year,” said Bobbi Howell with Foley & Lardner, who presented a paper summarizing 300 franchise-related decisions in the last 12 months. “The law is nothing if not interesting.”
Howell and Gregg Rubenstein, of Nixon Peabody, presented their picks for most important cases at the International Franchise Association’s Legal Symposium earlier this spring. They grouped them into themes.
Arbitration is one major theme. “If there is a way for a court to compel arbitration, it will. Courts love arbitration,” Rubenstein said, adding a prediction. “As we get further away in time from those older contracts, we’ll get more and more contracts with express prohibitions on collective arbitration.”
Vicarious liability is another hot topic, they said, with at least 27 cases seeking to impose responsibility on franchisors for bad things that happen at franchisees’ locations. “All systems should be concerned by this trend,” Howell said.
Restrictive covenants make up a third theme, with 29 cases. Howell advised paying close attention to the wording of same. “When you draft, please please, please, when you write the word ‘termination,’ put in ‘expiration and termination,’ ” Howell said.