System-Wide Disputes

Carmen D. Caruso Law Firm has strong experience in cases with system-wide impact that can threaten the continued viability of a brand. Most often, these cases involve contract or fraud issues on steroids – i.e. the same claim or controversy may affect the entire system or to substantial numbers of franchisees or dealers in particular markets. These cases may arise in numerous ways, usually stemming from change that may be sought or unsought, and which can create opportunity, anxiety, risk, and increased costs – all at once.

Some of our case highlights:

  • In a major business victory, Carmen D. Caruso represented the national independent association (and numerous state franchisee associations) of an iconic national brand in litigation seeking declaratory and injunctive relief against “coerced concept changes” whereby the franchisor sought to require its franchisees to convert their units into a new brand with consequently higher costs and unproven business results. As the result of our lawsuit the franchisor substantially retreated from its declared mandates.
  • Carmen represented five franchisees against the franchisor or a patented building construction franchise for breaching the implied covenant of good faith and fair dealing by failing to keep current with evolving building code standards and unfair pricing of mandatory supply product purchases. Because of our claims in arbitration, the franchisor remedied the building code deficiencies and gave the franchisees new franchise agreements containing an express duty of good faith and fair dealing coupled with express protections against unfair pricing.
  • In another major legal/business victory, we represented most all franchisees of a popular pizza chain in negotiating favorable settlements of franchisor royalty claims, and obtaining new franchise agreements for all franchisees giving them substantial protection against unfair supply product pricing and misuse of advertising funds.
  • Successfully represented several members of an independent franchisee association (which we created for our clients) in test case challenges to a lawn-care franchisors attempt to drastically change the terms of the franchise agreement as the franchisees came up for renewal.
  • Carmen and his former partners successfully defended a national pizza franchisor from allegations by its largest franchisee that it committed commercial negligence in the failed roll-out of a new deep dish pizza product. On the other side of this issue, Carmen and his former partners successfully represented the franchisee that owned the entire Chicago market of a national steakhouse concept in alleging that the franchisor committed commercial negligence in the failed roll-out of a new salad and pasta bar concept.
  • Successfully defended a putative class action on behalf of all persons that purchased a franchise from a national retailing franchisor over the past fifteen years seeking damages and rescission for alleged fraud.

Some other system-wide disputes in which we have advised our clients include brand decline and damage, attempts by franchisees to “collectively bargain” the franchise agreement, national and regional advertising issues, market withdrawals, mergers between competitors, sales of the franchise system, system-wide challenges to the enforceability of non-competes, and threats to the business model from consumer or public interest organizations or governmental regulators.

System-wide issues require the very best franchise lawyers. If you are facing a system-wide issue either urgently or on the horizon we invite you to contact us.

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