Franchisor Resolves Litigation After Asserting Counterclaim

Europe - Georgia | United States - Colorado

A franchisor defended litigation arising out of a potential franchisee’s dissatisfaction that the franchisor elected to exercise its unambiguous right to refuse to consent to the potential franchisee’s proposed purchase of 28 franchised stores from another franchisee. The potential franchisee filed suit asserting claims for fraud, negligent misrepresentation, defamation, tortious interference with contract, promissory estoppel and equitable estoppel based on the franchisor’s refusal to consent to the transfer.

The franchisor asserted a counterclaim fraud, alleging that the potential franchisee misrepresented and concealed material facts on which the franchisor relied in assessing whether to consent to the transaction, and in so doing incurred considerable expense that it would not have incurred but for the fraud and concealment by the potential franchisee. The case resolved confidentially in the fall of 2017.

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