|FROM:||The Legal Taxi|
|RE:||Whether Franchisor can obtain damages and injunctive relief after an involuntary termination of a franchise agreement?|
Termination of franchise.
Whether franchisor can obtain damages and injunctive relief for an involuntary termination of franchise agreement?
Adam terminated the franchise relationship of its moving service business because Robert defaulted in its payment of royalties and advertising fees, and it failed to submit required monthly sales reports. After termination, Robert continued to use Adam’s names, trade names, and trademarks. Under the Lanham Act standard for trademark infringement, the likelihood of confusion standard, Robert's continued operation of the moving business created a risk of consumer confusion. Plaintiff (Adam) brought an action for unfair competition and trademark infringement, for breach of several agreements that the defendants executed in connection with the franchises. Plaintiff seeks damages and injunctive relief.
Give grounds for termination of franchise agreement & don’t include the IP law in your research Memo.
- Relevant Statute & Case
- Summaries of Key Cases
Article 2 Business Corporations -- Securities
Chapter 2.7 Deceptive Franchise Practices
It is unlawful for any franchise agreement entered into between any franchisor and a franchisee who is either a resident of Indiana or a nonresident who will be operating a franchise in Indiana to contain any of the following provisions:
(1) Requiring goods, supplies, inventories, or services to be purchased exclusively from the franchisor or sources designated by the franchisor where such goods, supplies, inventories, or services of comparable quality are available from sources other than those designated by the franchisor. However, the publication by the franchisor of a list of approved suppliers of goods, supplies, inventories, or service or the requirement that such goods, supplies, inventories, or services comply with specifications and standards prescribed by the franchisor does not constitute designation of a source nor does a reasonable right of the franchisor to disapprove a supplier constitute a designation. This subdivision does not apply to the principal goods, supplies, inventories, or services manufactured or trademarked by the franchisor.
(2) Allowing the franchisor to establish a franchisor-owned outlet engaged in a substantially identical business to that of the franchisee within the exclusive territory granted the franchisee by the franchise agreement; or, if no exclusive territory is designated, permitting the franchisor to compete unfairly with the franchisee within a reasonable area.
(3) Allowing substantial modification of the franchise agreement by the franchisor without the consent in writing of the franchisee.
(4) Allowing the franchisor to obtain money, goods, services, or any other benefit from any other person with whom the franchisee does business, on account of, or in relation to, the transaction between the franchisee and the other person, other than for compensation for services rendered by the franchisor, unless the benefit is promptly accounted for, and transmitted to the franchisee.
(5) Requiring the franchisee to prospectively assent to a release, assignment, novation, waiver, or estoppel which purports to relieve any person from liability to be imposed by this chapter or requiring any controversy between the franchisee and the franchisor to be referred to any person, if referral would be binding on the franchisee. This subdivision does not apply to arbitration before an independent arbitrator.
(7) Permitting unilateral termination of the franchise if such termination is without good cause or in bad faith. Good cause within the meaning of this subdivision includes any material violation of the franchise agreement.
(8) Permitting the franchisor to fail to renew a franchise without good cause or in bad faith. This chapter shall not prohibit a franchise agreement from providing that the agreement is not renewable upon expiration or that the agreement is renewable if the franchisee meets certain conditions specified in the agreement.
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Please find the attached document for summary of key case:
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NEITHER MIND MERCHANTS, THE LEGAL TAXI, ANY OTHER SUBSIDIARY OF MIND MERCHANTS, OR ANY AGENTS OR VENDORS OF MIND MERCHANTS (TOGETHER, "MIND MERCHANTS"), NOR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, OR REPRESENTATIVES (TOGETHER, "PERSONNEL"), PROVIDES LEGAL SERVICES OR LEGAL ADVICE IN THE UNITED STATES, UNITED KINGDOM, OR INDIA. MIND MERCHANTS IS NOT A LAW FIRM, AND IT DOES NOT AND CANNOT RENDER LEGAL SERVICES OR LEGAL ADVICE TO THE GENERAL PUBLIC. MIND MERCHANTS IS NOT ENGAGED IN THE PRACTICE OF LAW, NOTWITHSTANDING ANY PERFORMANCE OR DELIVERY OF SERVICES BY LAWYERS WHO ARE OR MAY BE AUTHORIZED TO PRACTICE LAW IN THE UNITED STATES, UNITED KINGDOM, OR INDIA. THE SERVICES AND RELATED WORK PRODUCT PROVIDED BY MIND MERCHANTS AND ITS PERSONNEL ARE PERFORMED AND PROVIDED SOLELY AT THE REQUEST OF LAWYERS AND ARE BEING PROVIDED DIRECTLY TO THOSE LAWYERS, OR THEIR DESIGNEE(S), IN SUPPORT OF THE LEGAL SERVICES THAT THOSE LAWYERS ARE PERFORMING FOR THEIR CLIENTS.