Are there any cases in recent years in which you have created important legal precedent for your franchise clients?
Washington D.C. litigator Eric Yaffe reflects on important cases he has worked on.
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We often are in situations where there are cutting-edge legal issues that we face, and fortunately we’ve been in a position over the years where we’ve been able to make law that has been beneficial to our franchisor clients. For example, in the area of vicarious liability, when a franchisee or someone is bringing a case against a franchisee, sometimes they will try to bring the franchisor in as well, and we’ve been able to help develop law that says that the franchisor should not be liable for what its franchisees do unless there’s been real control by the franchisor over the franchisee’s operations.
We’ve also been able to establish law that says essentially that if there are multiple franchisees to a franchise agreement and one franchisee does something wrong, then all franchisees are responsible. In other words, all franchisees can be terminated, and that ensures that all franchisees will look out for each other as partners and will ensure that there’s no wrongdoing or breach of the franchise agreement.
We’ve also made law in the area of the perpetuity of contracts. Sometimes in old franchise agreements the franchise relationship seems to be able to go on in perpetuity, and we have developed some case law in various jurisdictions which says that that’s not proper and, in fact, an at-will relationship may be created where the franchisor can, in fact, terminate the franchise relationship. So we’ve been able to make law in a number of areas over the years, including in the damages realm concerning lost profits and a number of different areas that we fortunately have found to be very favorable to our franchisor clients.