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Court Watch

By Cynthia M. Klaus and Susan E. Tegt
August 30, 2012

Criminal Conviction Does Not Equal Franchise Termination

A recent case from the Federal District Court in New Jersey highlights the risk involved in terminating a franchisee based on a criminal conviction. International House of Pancakes, LLC v. Parsippany Pancake House, Inc., Bus. Franchise Guide (CCH) ' 14,856 (D. N.J. Jun. 27, 2012). The background of the case is that IHOP, the franchisor, had entered into a franchise agreement with Parsippany Pancake House, Inc. (“Pancake House”) in 2005. The franchise agreement gave Pancake House the right to operate an IHOP restaurant and use IHOP's trademarks during the term of the franchise agreement.

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