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Enforcing Arbitration Clauses in 'Hidden' or Unlawful Franchise Agreements
Licensors, manufacturers, and other businesses that find themselves as unwitting franchisors face interesting issues when they attempt to enforce an arbitration clause. Most registration states will usually have statutory provisions that declare that the sale of an unregistered franchise or the sale of a franchise without the required disclosure is unlawful. See, e.g., Cal. Corp. Code ” 31110, 31119; 815 Ill.Comp.Stat. ' 705/5; N.Y. Gen. Bus. Law ' 683.1; Wash. Rev. Code ' 19.100.020.(1). However, in the usual case, the sale is not declared to be void, but is voidable through an action for rescission. See, e.g. Cal. Corp. Code ” 31300; Wash. Rev. Code ' 19.100.190(2); N.Y. Gen. Bus. Law ' 691; 815 Ill.Comp.Stat. ' 705/26.
When the putative franchisee sues in court, it can be expected that it will attempt to maximize the remedies allowed by the registration laws, such as rescission and/or statutory penalties. If the challenged agreement has an arbitration clause, it is likely that the unwitting franchisor will petition a state or federal court to compel arbitration. It can be expected that the putative franchisee will resist such an attempt by claiming that the contract is an illegal franchise agreement and thus the arbitration clause cannot be enforced.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.
Protecting Innovation in the Cyber World from Patent Trolls
With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.