Franchise Law – Fraud and Misrepresentation
Fraudulently Induced Into a Franchise
In Seymour v. Gloria Jean’s Gourmet Coffee (1992), an arbitrator awarded our franchisee client $70,000 in damages because the franchisee had fraudulently induced the franchisee to enter into the franchise relationship.
Franchisor Misrepresentation of Franchise
In Coady v. Sona Laser Centers, (2007), an arbitrator awarded nearly $400,000 for the franchisor’s negligent misrepresentations concerning the franchise.
Fraud for Merger and Integration
In Randall v. Lady of America Franchise Corp., 2005 WL 2709641 (D. Minn. 2005), the court held that a franchisor could not escape fraud for purposes of the Florida Franchise Misrepresentation Act by inserting boilerplate merger and integration clauses.
Franchisor Mislead Franchisee
In a later decision in Randall v. Lady of America Franchise Corp. (2007), the court held that our franchisee clients could proceed with their claims of fraud and violation of the Minnesota Franchise Act, even though the franchisor had required them to sign a document saying that the franchisor had made no representations about them. The court recognized that franchisors often mislead franchisees, and then try to cover their tracks by making franchisees sign such a document if they want to buy the franchise. The court held that this practice was unlawful.