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Cases, news, issues and legal opinions impacting franchise law

Subway Franchisee Admits Bilking IRS of $1.5M

A multi-unit Subway franchisee in the Washington D.C. area pleaded guilty last week to conspiring to defraud the IRS of more than $1.5 million by under-reporting the money his sandwich stores were making.

California Court Orders Arbitration of Franchisee’s Employment Claims

A federal court in California granted last December a franchisor's motion to compel arbitration in a putative class action lawsuit filed by one of its franchisees. In Jacobson v. Snap-on Tools Co., Jacobson argued that his work was so closely regulated by Snap-on Tools, a franchisor of automotive and shop equipment, that he should be treated as an employee under California law, rather than as an independent franchisee.

In Minnesota It Takes the Wizard of Oz to Prove Franchisor Fraud

The United States District Court for the District of Minnesota on January 12, 2016, in Moxie Venture L.L.C., et al. v. The UPS Store, Inc., 2016 U.S. Dist. LEXIS 3603, hammered the final nail in the coffin of franchisee fraud claims under the Minnesota Franchise Act.

New York AG Settles with 96 Health Clubs over State Violations

NEW YORK – Attorney General Eric Schneiderman announced yesterday that his office has settled with almost 100 health clubs over various violations of state law as part of his ongoing investigation. The AG directed his comments not only to the fitness and health club owners but also to New York consumers.

Child Care Franchisee Wins Non-Compete Case by Confusing Everyone

In The Art of War, Sun Tzu states, inter alia, that "The whole secret lies in confusing the enemy, so that he cannot fathom our real intent." Sometimes, but not often, this strategy, if used by a franchisee, works in combatting the enforcement of a post term restrictive covenant following a franchise termination.

Franchisee’s Wrongful Termination Claim Is Rejected for Failure to Obtain Franchisor Consent to Its Franchise Purchase

In a recent case in the United States District Court for the Eastern District of Wisconsin, a federal court reversed its own initial decision in which it had upheld a franchisee's wrongful termination claim against its franchisor. Tex. Ujoints, LLC v. Dana Holding Corp., 2015 U.S. Dist. LEXIS 70468 (E.D. Wis., May 30, 2015).

‘Jared’ Accomplice Russell Taylor Sentenced to 27 Years for Child Pornography

INDIANAPOLIS – The former head of a charitable foundation started by former Subway pitchman Jared Fogle was sentenced to 27 years in federal prison for producing child pornography that resulted in a criminal case against Fogle.

Developer Heads to Jail for Stealing from Subway Founder Fred DeLuca

A prominent land developer in Delray Beach, Florida, will begin a six-month prison sentence on Monday for stealing more than $1 million from Subway co-founder Fred DeLuca, who died last September after a two-year battle with leukemia.

Subway’s Ex-Pitchman ‘Jared’ Sentenced to More than 15 Years on Child Sex Charges

INDIANAPOLIS – Following yesterday's four-hour hearing, Judge Tanya Walton Pratt issued her sentence for Jared Fogle, the disgraced pitchman for Subway sandwich chain, on charges of child pornography and traveling across state lines to have sex with minors. She announced that Fogle would remain behind bars in federal prison for 15 years and eight months and, upon his release, he would endure a lifetime of supervision.

UPS to Pay $4.2M to Settle Whistleblower Claims of Delivery Fraud

Department of Justice Attorney General Loretta Lynch in Briefing Room. Photo/Department of Justice
Department of Justice Attorney General Loretta Lynch in Briefing Room. Photo/DoJ

WASHINGTON, D.C. – United Parcel Services agreed last week to pay $4.2 million to settle a whistleblower's lawsuit claiming the shipping firm falsified records on state and city government packages to avoid paying out refunds to those agencies.