FAQs - Answers
4. What can I expect
in a franchise lawsuit?
Franchise lawsuits, like any other lawsuit, can be time
consuming and expensive to prosecute. However, there are certain aspects of
franchise lawsuits that render them vulnerable to more attorney time and costs
than in ordinary cases. Franchise lawsuits can involve a number of different
areas of the law and require the assertion of different alternative theories of
liability in order to “cover your bases.” Depending upon the nature of the
dispute involved, different common law and statutory claims can be utilized.
Most franchise disputes involve a breach of contract or a breach of good faith
and fair dealing implied in all contracts. However, franchise lawsuits can also
implicate anti-trust claims which may be predicated on state and/or federal
anti-trust laws. Franchise lawsuits can involve violations of franchise
disclosure laws or franchise relationship laws. Disclosure laws generally cover
the manner in which the franchise was sold to the franchisee and the information
that was presented to the franchisee. Franchise relationship laws generally
cover the termination and/or nonrenewal of franchises and the reasons therefore.
Many states in addition have consumer protection laws and/or unfair trade
practice laws that would extend protections to franchisees. These statutes
typically prohibit a broad range of what are determined unlawful, unfair, or
fraudulent business practices.
Once you have determined the parameters of your
dispute with an experienced franchise attorney, the decision needs to be made
about where to file a lawsuit. Often times, a franchisor will require in its
contract that suit be brought in its home state. Such provisions may or may not
be enforceable. Further, the enforceability of such provisions may depend very
well on what court is deciding the enforceability of those provisions. Thus, for
example, if a franchise agreement contains a provision that any and all claims
arising out of or relating to the franchise agreement will be brought in the
home state of the franchisor, it is more likely that a court in that home state
would enforce such a provision. But, if for example, you are a franchisee
located in California, then by filing your suit first in a California court, you
may have increased the likelihood of keeping the lawsuit in California.
California courts may be more favorably disposed to setting aside a foreign
forum and choice of law based upon California statutory and/or public policy
provisions. An experienced franchise attorney can assist you in making strategic
decisions that will benefit your case in the long run and help determine the
most favorable court in which to litigate your dispute.
Once your lawsuit has been started, the parties enter a phase called “discovery”.
Discovery is a process whereby the parties are entitled to demand the production
of documents, things, admissions, and testimony from the opposing parties.
Testimony may be taken under oath in the form of a “deposition” or
interrogatories. Depositions are used for two general purposes. One is to
discover information that the other side possesses including the identity and
location of witnesses, the existence of documents, and to generally pin down the
other side in terms of the facts to which they will testify in trial.
Depositions are also used to secure testimony for trial of witnesses that are
beyond the subpoena power of the courts at issue. For example, a case brought in
California means that witnesses who do not reside in California are beyond the
power of the court to order them to appear at the trial in the matter. However,
California courts through a process of cooperation with other states courts can
compel the attendance of the witness at a deposition in their home state and
that deposition can be used in lieu of trial testimony at the trial in the
matter in California. Other discovery procedures call for the exchange of
documents and the written testimony under oath of answering questions.
As a
franchisee in a franchise law suit, you can expect to give a deposition. When
giving a deposition, it is important to always tell the truth in response to
question asked. This does not mean you must volunteer information or respond to
question that were note asked. But you can expect that the franchisor lawyers
will be skilled attorneys and subject you to a vigorous cross examination about
the merits of your case. Generally speaking, depositions will last a day or more
depending upon whether you are in federal or state court. You can expect your
lawyer to also take depositions of parties and key witnesses on the other side.
Once depositions have been completed, one side or another may bring what is
known as a summary judgment. Summary judgment is a procedure whereby the parties
can use the materials gathered in discovery in order to request that the court
enter a judgment in favor of one party or another based upon the evidence that
has been deduced thus far. Depending upon whether the court finds that there are
factual issues involved in the case that would need to be decided by a jury, it
may or may not enter a summary judgment. If a summary judgment is entered, the
case is over and the losing party will have the right of an appeal. Otherwise,
the case will be decided by a jury. Of course this assumes there is no
arbitration clause at issue in the case. Arbitration clauses are discussed
below.
Another aspect of franchise cases is the necessity of hiring experts to
testify as to liability and damage issues. While experts are not absolutely
necessary, they are sometimes desirable and particularly so if the franchisor
has hired experts to represent its case. Experts can be a very key but also
expensive part of preparing a case for trial. You will need to confer with your
experienced franchise attorney on the pros and cons of hiring an expert to
represent your case.
At the trial of a franchise lawsuit, you will be required
to provide testimony as to both liability and damages. As the plaintiff in a
franchise lawsuit, you will generally bear the burden of proving liability and
damages. The burden of proof is generally speaking in civil cases by a
preponderance of the evidence. That means that you must show that it was more
likely than not that the franchisor’s conduct, whether a breach of contract or
violation of an applicable law, caused your damages. You will also be required
to prove by a preponderance of the evidence, that you in fact suffered damages.
The damages that you request must not be speculative, but they do not have to be
established with exact certainty. Assuming that you are entitled to a jury trial
in your franchise lawsuit, it will be the jury that decides whether you have
proven that the franchisor is legally responsible to you for damages and the
amount of such damages. At the end of the case, the jury will render its
decision and a final judgment either in favor of you as the franchisee or the
franchisor will be entered. Even if you win your franchise lawsuit, it does not
you will get paid right away. Franchisors or franchisees, should they be the
losing party, will have the opportunity to appeal. In addition, subsequent to
the jury decision, it may also be possible to request the court award attorney’s
fees depending upon whether the contract provides for attorneys fees to the
prevailing party and/or a statute upon which the franchisee has prevailed as a
provision for awarding attorneys fees to the franchisee.
In sum, once you move
forward with your franchise case, you should be ready for a significant fight.
Franchisors will often fight even the most meritorious cases tooth and nail
because to admit defeat might expose them to the same types of claims by all of
its franchisees. Franchisors may pull out all of the stops in using tactics and
strategies designed to insulate them from having to pay you for the damages that
they caused. An experienced franchise attorney can help you get the compensation
that you are owed.