Franchise Terminations & Dealership Terminations

Carmen D. Caruso is an authority on dealership and franchise terminations as 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.

Carmen D. Caruso Law Firm has extensive successful experience protecting franchisees, dealers, agents and other distributors from terminations by the franchisor, manufacturer or supplier (and we have also prevailed for franchisors in these cases).   Some have been litigated to the hilt while others settled quickly, usually because we framed the debate favorably for our clients and let the opponent know that they would be in a for a fight.

Some highlights include:

  • Earlier in his career, Carmen successfully defended 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 it was wrongfully terminated where the franchisee was counterclaiming for fraud.
  • Turning to the franchisee side, Carmen won a precedent-setting case in the United States Court of Appeals for the Seventh Circuit, persuading the Court of Appeals to hold that even where a franchisor might establish good cause for termination due (for example) 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, meaning that 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, where the other side was threatening a “knife fight” in its attempt to usurp our client’s book of business, we successfully obtained preliminary injunctive relief against termination in the Cook County Circuit Court, leading to a favorable resolution of the case.
  • Successfully negotiated exit agreements for dozens and dozens of franchisees and dealers facing notices of default or termination.
  • Successfully negotiated “second chance” agreements for franchisees facing termination who wished to stay in the system.
  • Successfully negotiated substantial reductions including 100% forgiveness of franchisor claims for liquidated damages arising upon franchise terminations.
  • Successfully negotiated settlements as well as “second chance” agreements for non-franchised dealers and agents facing contract termination.
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