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Court Watch

By Cynthia Klaus, Jon S. Swierzewski, and Sejal Desai Winkelman
January 31, 2007

Improper Registration Trips Up Franchisor in California

Franchisors that fail to properly register in California must concern themselves with more than just the risk of litigation with their franchisees. After a recent decision by the U.S. District Court for the Central District of California, they must also prepare for potential litigation with competitors alleging unfair competition. Edible Arrangements International, Inc. v. Notaris, (CCH) ' 13,487 (C.D. Cal. Oct. 19, 2006).

Edible Arrangements is a franchise business selling fresh, edible fruit arranged to resemble traditional floral bouquets. James and Amanda Notaris registered and began selling a similar franchise business in California called Fresh Fruit Bouquet Company. Edible Arrangements filed suit against the Notarises alleging unfair competition in offering an improperly registered franchise circular. Edible Arrangements claimed that the violation caused it irreparable harm by giving the defendants an unfair advantage in the franchise market and sought injunctive relief pursuant to the California Unfair Competition Law (the 'UCL'). The UCL's broad terms create a cause of action for unfair competition for 'any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or
misleading advertising.'

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