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Court Watch

By Bryan Huntington and R. Henry Pfutzenreuter
January 31, 2016

Court Dismisses Franchise Act Claims

Businesses alleging their status as franchisees are often quick to assume the applicability of protective franchise acts and rely upon them as leverage against the alleged franchisor. In those instances where the alleged franchisee operates in multiple territories, there may be a significant number of franchise acts claimed to apply. The first thing experienced franchisor litigation counsel will do once a dispute arises is determine whether there are grounds to challenge the initial applicability of those franchise acts. The recent decision in Rogovsky Enterprises, Inc. v. MasterBrand Cabinets, Inc., No. 3:15-cv-00022, 2015 WL 7721223 (S.D. Ind. Nov. 30, 2015), demonstrates that if the alleged franchisor can successfully challenge that the necessary elements of a franchise exist under one state's statute, that likely spells the end for some or all of the alleged franchisee's other franchise act claims as well.

In this case, MasterBrand Cabinets, Inc. (MasterBrand) moved to dismiss the complaint of Rogovsky Enterprises, Inc. (Rogovsky). MasterBrand is an Indiana manufacturer of cabinets. Rogovsky is a franchisor of kitchen and bath design/home remodeling franchises known as Kitchen & Home Interiors (KHI). MasterBrand and Rogovsky entered into an exclusive distribution agreement in December 2011 (the Agreement), which granted KHI franchisees the right to sell MasterBrand cabinets, under a term of seven years.

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