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Cases, news, issues and legal opinions impacting franchise law

Steak ‘n Shake Granted Summary Judgment in Colorado

DENVER – Last month a Colorado district court granted Steak 'n Shake's motion for summary judgment on claims of breach of contract, trademark infringement, unfair competition, and injunctive relief against two terminated franchisees' counterclaims for breach of contract and fraud.

FDA Extends Deadline for Menu Labeling

The Food and Drug Administration has announced that it is delaying the compliance date of the menu labeling rule by one year. Covered establishments will now have until December 1, 2016 to comply with the rule.

Franchisor Regis Held Liable for Predecessor’s Debts

The Third Circuit Court of Appeals has affirmed that hair styling salon conglomerate Regis Corporation is liable for damages awarded against its predecessor, Trade Secret, Inc., in an arbitration action brought by a franchisee of the former owner.

NRA Says IRS Proposal Would Force Exorbitant Costs on Restaurants

(Washington D.C.) The National Restaurant Association released the following statement last week Thursday regarding the House’s introduction of the Commonsense Reporting and Verification Act of 2015, which affects Obamacare (Affordable Care Act) reporting requirements:

FTC Smacks The Entrepreneur’s Source over Buyer Deception

Terry Powell, founder of The Entrepreneur's Source talks about smart investing
Founder Terry Powell talks about franchise buying on YouTube

WASHINGTON, D.C. – While franchise brokerage/consultant firm The Entrepreneur's Source (TES) promotes its image as "helping people improve their lives," the Federal Trade Commission (FTC) found otherwise after launching an investigation into the firm's business practices regarding privacy and security.

UPS Charged $25M on Whistleblower Suit for Overcharging Feds

UPS truck and the UPS Store in NYCWASHINGTON, D.C. – The Department of Justice declared this week that United Parcel Services (UPS), the world's largest package shipping company, agreed to pay $25 million to resolve allegations of overcharging. UPS was accused of submitting false claims to the federal government in connection with its delivery of Next Day Air overnight packages.

NLRB Declares Franchisor Freshii Not a Joint Employer

On April 28, 2015 the National Labor Relations Board (“NLRB”), Office of the General Counsel, issued an Advice Memorandum to the NLRB’s Chicago area regional office finding that a restaurant franchisor and its Chicago area development agent are not joint employers with a Chicago franchisee.

NLRB Rules Freshii Not Employer of Franchisees

As franchisors and their attorneys brace themselves for rulings from the National Labor Relations Board on whether franchisors can be found to be a joint employer with their franchisees, they received a favorable decision this week. The answer from the NLRB's Division of Advice opined Freshii, a health food restaurant chain, was not a joint employer.

Marks & Klein’s Fatal Error in Representing ERA Real Estate Franchisees

Franchisees of ERA Franchise Systems have amended their malpractice lawsuit against franchisee law firm Marks & Klein for failing to limit the franchise owners' exposure to $383,000 in attorney fees. The award in favor of ERA was part of the underlying franchise agreement litigation that was brought by the real estate franchisor against the franchisees for breach of contract.

Franchisees Reassert Fraud Claims against Papa Murphy’s

VANCOUVER, Wash. – A court ruled last October that franchisees could move forward with their fraud and negligent misrepresentation claims against Papa Murphy's International, in order to give more detail to their allegations. Having denied the franchisor's motion to dismiss, the judge declared, "I'm not dismissing those claims at this point. I'm going to allow further discovery to be done by franchisees."