Protecting Client in Fee Dispute

On the advice of his company’s general counsel, a prominent CEO retained Carmen Caruso to resolve his fee dispute with his lawyers at a successful matrimonial law firm, and an equally prominent firm representing his wife in their divorce case, after two firms collectively billed more then $3 million in fees while being unable to bring the case to a successful negotiated conclusion. Caruso was able to navigate the client through a four-way mediation involving both spouses and their respective former lawyers, and conclude the divorce while negotiating reasonable concessions from their prior attorneys.

Protection of Renewing Franchisees and Franchisee Assets

In a successful regional lawn care system, the franchise agreements had historically provided that the franchisees themselves owned their customer lists, which is the most important asset of their business. In recent years the franchisor changed the franchise agreement to provide that the franchisor owned the franchisee’s customer lists. Long term franchisees coming up for renewal faced these new agreements, as they would be required to sign the “then current” franchise agreement as a condition of renewal.

Upon being retained, we created an independent franchisee association seeking a negotiated solution to protect the franchisee’s ownership of their customer lists. When the franchisor initially refused to negotiate, Carmen Caruso and Sarah Isaacson filed suit on behalf of two “test case” franchisees alleging that the franchisor had breached its duty of good faith and fair dealing in purporting to require a renewing franchisee to sign a new franchise agreement that would result in the transfer of assets to the franchisor without consideration. After the briefing of cross-motions for summary judgment, the franchisor relented and agreed to new contract language for its renewing franchisees that would protect their equity in the value of their customer lists.

Win-Win Settlement for a National Brand Independent Franchisee Association

Following an evidentiary hearing and closing argument in arbitration as lead trial counsel, we negotiated a win-win settlement that preserves the independent association’s ability to attend and monitor all meetings of the franchisee advisory council, which the franchisor sponsors, including the FAC’s private dinner meetings and or other executive sessions from which the franchisor had sought to exclude the association’s representative. This settlement achieves the association’s key goal of transparency, i.e. that all FAC activities must be transparent for the benefit of all system franchisees, thus creating “checks and balances” to prevent the franchisor from exercising undue influence over FAC members and to keep the FAC from becoming a rubber stamp.

Protecting Franchisees When the Franchisor Files Bankruptcy

When a popular Chicago pizza restaurant brand filed for bankruptcy protection due to financial problems being experienced by its shareholders, Carmen Caruso was engaged to defend the franchisees from the Trustee’s complaint that the franchisees had engaged in an improper “royalty strike” and to allege counterclaims that the franchisor had breached its duty of good faith and fair dealing by requiring the franchisees to pay above-market prices to a franchisor-owned commissary for basic ingredients such as cheese, sauces and dough. In negotiating with the Trustee, a comprehensive settlement was reached whereby the franchisees will receive significant benefits that might not have been available “but for” the bankruptcy.

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