Terminations & Non-Renewals

Carmen is an authority on dealership and franchise terminations. He has repeatedly been called upon by the American Bar Association, in the Forum on Franchising and the Antitrust Section, and by the International Franchise Association, to present Continuing Legal Education for other lawyers on franchise termination and related topics.

He has extensive successful experience protecting franchisees, dealers, agents, and other distributors from terminations by the franchisor, manufacturer, or supplier. Some have been litigated to the hilt while others settled quickly, usually because Carmen framed the debate favorably for his clients and let the opponent know that they would be in for a fight.

Some of those matters include:

  • Successful defense of a substantial international franchisor (prevailing at the summary judgment stage in federal court in Brooklyn) from claims of wrongful termination and alleged fraud and RICO violations arising from the termination by the franchisor of a six-store franchisee in Brooklyn and Queens.
  • Also on the franchisor side, Carmen prevailed in a federal court evidentiary hearing in Ohio to defeat a franchisee’s claim that it was wrongfully terminated with the franchisee counterclaiming for fraud.
  • For franchisees, Carmen won a precedent-setting case in the United States Court of Appeals for the Seventh Circuit. He persuaded the court to hold that even where a franchisor might establish good cause for termination due to the franchisee’s failure to pay royalties, the franchisee’s claims against the franchisor for conduct that caused the franchise to fail survive the termination. Thus, the franchisee might recover damages even though the termination was lawful.
  • During the middle of a federal court evidentiary hearing in Chicago, Carmen successfully resolved claims to terminate a local multi-unit Merlin’s Muffler franchisee.
  • In a case involving the threatened termination of valuable insurance agency agreements, Carmen successfully obtained preliminary injunctive relief against termination in the Cook County Circuit Court, which led to a favorable resolution of the case.

Carmen has successfully negotiated other matters involving terminations such as:

  • Exit agreements for dozens and dozens of franchisees and dealers facing notices of default or termination.
  • “Second chance” agreements for franchisees facing termination who wished to stay in the system.
  • Substantial reductions including 100% forgiveness of franchisor claims for liquidated damages arising upon franchise terminations.
  • Settlements as well as “second chance” agreements for non-franchised dealers and agents facing contract termination.