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OVERVIEW

Franchise and Distribution Litigation WHEN IT COUNTS

Barnes & Thornburg attorneys have litigated franchise, licensing and distribution disputes under state and federal law in multiple state and federal jurisdictions and before numerous state agencies. The firm’s experience includes litigation and arbitration in virtually all aspects of franchisor/franchisee and distributor/dealer relationships, including expansion, renewal, and termination issues.

Our attorneys have experience in major litigation throughout the country, including matters involving shutting down -breakaway- franchisees; enforcing trademarks, service marks, trade secrets and operating procedures; upholding a franchisor's real estate and personal property rights through forcibles, replevin or UCC sales; pursuing franchisees through bankruptcy adversarial proceedings; and combating disgruntled and powerful area franchisees or franchise associations.

In addition to distributors, dealers and franchisees, our attorneys have represented franchisors doing business nationwide, such as Domino's Pizza, Burger King, Microsoft, AlphaGraphics, Boston Market, Brown's Chicken, Popeye's, Century 21, Blockbuster, Roto Rooter and Subway.

Barnes & Thornburg has represented clients in dealer/distributor franchise disputes in a number of industries, including: power sports, recreational vehicles, consumer products, restaurants and food service establishments, direct-to-home food delivery service, snack foods, electronics, medical products, sanitary care, automobile tires, furniture restoration, office supplies and educational services. The firm's franchise/distributor experience ranges from opposition proceedings in the United States Patent and Trademark Office to antitrust class actions to proceedings before the International Trade Commission and assisting in similar cases abroad. Such litigation involved patents, trademarks, and copyrights; real estate; antitrust and unfair competition; violation of non-compete agreements; regulatory compliance; and trade secrets.

EXPERIENCE
  • A Barnes & Thornburg attorney has served as lead arbitration counsel in defense of a $30 million dealer-distributor termination brought against an electronics company. The claimant alleged breach of contract and conspiracy to terminate its national distributorship of surge suppression products. Claimant was awarded nothing and ordered to pay on EFI's trademark infringement counterclaim.
  • A Barnes & Thornburg attorney is lead counsel to a Fortune 500 Manfacturer for its global distribution matters.
  • A Barnes & Thornburg attorney represented a distributor in a dispute against the plaintiff, a former dealer, who alleged a newly enacted statute applied to its prior relationship with the snowmobile manufacturer. The trial court dismissed the plaintiff’s original complaint on the grounds that the retroactive application of the new statute was an unconstitutional impairment of contract. 2011 U.S. Dist. LEXIS 80147.
  • A Barnes & Thornburg attorney represented a major agricultural chemical distributor in multiple class actions involving the herbicide atrazine, which was allegedly present in surface water of multiple municipal water districts. (This matter occurred prior to the attorney joining Barnes & Thornburg LLP.)
  • A Barnes & Thornburg attorney represented a national bottled water distributor in an insurance coverage case involving claims arising from water cooler fires.
  • A Barnes & Thornburg attorney represented consumer electric product designer and distributor of extension cords, surge protectors and power strips in product liability cases in several jurisdictions.
  • A Barnes & Thornburg attorney represented Juno Lighting, a leading manufacturer of lighting products in a dealer distributor dispute. Juno Lighting, LLC v. Lighting Solutions, Inc ., No. 1:11cv1528 (N.D. Ill., March 4, 2011).
  • A Barnes & Thornburg attorney represents clients in the medical device and electrical distribution industries in channel management counseling, including dealer, distributor and franchise litigation.
  • A Barnes & Thornburg attorney served as lead counsel in defense of an electrical product manufacturer in a multi-week arbitration brought by a former distributor alleging conspiracy in violation of the Sherman Act, price discrimination, violation of the Robinson¬Patman Act, wrongful termination of the distributorship, deceptive conduct in violation of Illinois and Tennessee Consumer Protection Statutes, and other common law tort claims. The claimant sought more than $10 million in damages, was awarded nothing, and was ordered to pay all costs of the arbitration.
  • Assisted a global construction equipment manufacturer and distributor in the syndicated refinancing of a multi-billion dollar credit facility.
  • Barnes & Thornburg attorneys represented a watersport boat manufacturer in a dealer distributor dispute involving the termination of dealer.
  • Barnes & Thornburg LLP represented J.D. Byrider, the leader in the used car sales and finance industry, in its sale to private equity firm Altamount Capital Partners.

    Altamount will provide strategic direction to J.D. Byrider as it continues to grow and further its franchisee expansion initiatives.

    For more than 20 years, J.D. Byrider has grown to be the key used car sales and finance enterprise in the country. In addition to its unique franchising model, the company also has developed the industry’s premier software, Discover System. The company has matched nearly 900,000 consumers to quality, affordable vehicles. It also has 127 franchised- and company-owned dealerships in 29 states.

    Attorneys in Barnes & Thornburg’s Corporate Department advised J.D. Byrider on the sale.
  • Barnes & Thornburg LLP represented the largest independent distributor of automotive paints, coatings and accessories in the U.S. to a Canadian public company. The cash merger transaction was based on an aggregate purchase price of over U.S. $200 million and resulted in shareholders receiving U.S. $21.00 per share, which represented a premium of approximately 32% to the 30-day trailing average share price of the client’s OTC Market Pink Sheets before the announcement of the transaction.
  • Barnes & Thornburg represented XM Satellite Radio in a class action relating to whether the plaintiff and purported class members were misled with respect to the equipment that would have to be purchased for a new car to allow the use of satellite radio. The contract between the plaintiff and the car dealer had a mandatory arbitration clause that barred class arbitration. In an attempt to avoid the arbitration clause, the plaintiff voluntarily dismissed the dealer. XM Satellite Radio, along with the Honda manufacturer and distributor, obtained an order compelling arbitration based on the doctrine of equitable estoppel. This ruling defeated the class allegations. The parties then settled the plaintiff’s individual claim. Agnew v. Honda Motor Co, Ltd., 2009 U.S. Dist. LEXIS 53914 (S.D. Ind. 2009).
  • Barnes & Thornburg was lead counsel, representing a distributor of parts and products, as well as its intellectual property holding company subsidiary, in the power sports industry acquire substantially all of the inventory and intellectual property assets of a manufacturer of motorcycle touring luggage. The transaction involved entities controlled by a parent private equity firm.
  • Barnes & Thornburg, LLP represented a national distributor of high technology audio and video equipment and services in connection with a statutory merger with a NASDAQ-listed company through a Section 368 tax-free reorganization.
  • Barnes & Thornburg, LLP represented a nationwide distributor of high-end automotive paint products in connection with a multi-million dollar equity infusion, and a multi-million dollar debt infusion by a Dutch corporation.
  • Claim against client was dismissed for forum non conveniens in suit for fraud and wrongful termination of distributor.
  • Obtained judgment in favor of franchisor in connection with dispute over terms of a lease with the landlord for a franchise’s location.
  • On behalf of global manufacturer of electrical products, prosecute civil actions under the Lanham Act against known manufacturers and distributors of counterfeit circuit breakers. Related work included investigations, inspections and collaborating with federal authorities. In addition to putting a dent in the growing industry of counterfeiting of electrical products, these civil efforts helped lead to the first criminal conviction of a distributor of counterfeit circuit breakers.
  • Representation of largest trade creditor in Chapter 11 case of fast food franchisor.
  • Represented a major alcoholic beverage distributor in the Southeast in connection with its acquisition by a well-known national private equity owned logistics company.
  • Represented a midwest-based, privately-held operator of over 100 restaurants in connection with its purchase of 18 casual-dining format restaurants from the concept franchisor.
  • Represented a regional producer and distributor of agricultural chemical products in the sale of a substantial portion of its assets.
  • Represented bank on refinancing existing credit facilities and providing funding for a series of acquisitions by a regional beer and wine distributor.
  • Represented cosmetic manufacturer in commercial contract dispute with distributor.
  • Represented distributor against the plaintiff, a former dealer, alleging a newly enacted statute applied to its prior relationship with the snowmobile manufacturer. The trial court dismissed the plaintiff’s original complaint on the grounds that the retroactive application of the new statute was an unconstitutional impairment of contract.
  • Represented International House of Pancakes, Inc. against a restaurant for trademark and trade dress infringement in IHOP v. Langley, in the United States District Court for the Eastern District of North Carolina. Assisted client in obtaining a Temporary Restraining Order and then a Permanent Injunction and Judgment against the restaurant causing it to be renamed and repainted and from any further infringement of IHOP’s rights. IHOP Corp. v. Langley, No. 5:08cv168 (E.D.N.C., filed Apr. 3, 2008).
  • Defended manufacturer of blood glucose meters and test strips against claims of patent infringement in a multi-billion dollar market. The case settled after the plaintiffs potential recovery was reduced by partial summary judgments of laches and invalidity and a motion in limine barring a substantial portion of the plaintiffs remaining damages claim.
  • Represented taxpayer’s appeal of imposition of gross income tax on the franchise fees it received. The Tax Court granted summary judgment for taxpayer. Norrell Services Co. v. Indiana Dep’t of State Revenue, 816 N.E.2d 517 (Ind. Tax Ct. 2004).
  • Trace Schmeltz recently earned a victory for the officers and directors of Green Recycling Enterprises, a franchisee sued for alleged trademark infringement, unfair competition, breach of franchise agreement and specific performance of a franchise agreement. In the complaint, Free Green Can attempted to hold the officers and directors of Green Recycling liable for actions taken in furtherance of Green Recycling's business. Judge Sharon Coleman of the U.S. District Court for the Northern District of Illinois granted our clients' motion to dismiss plaintiffs' second amended complaint against each of the individual defendant officers and directors for failure to state a claim upon which relief may be granted. The lawsuit continues against the corporate defendants. Free Green Can, LLC et ano v. Green Recycling Enterprises, LLC et al. (Case No. 10-cv-5764).
  • Whether shutting down “breakaway” franchisees, enforcing trade and service marks or trade secrets or operating procedures or enforcing a franchisor’s real estate and personal property rights through forcibles, replevin or UCC sales, pursuing franchisees through bankruptcy adversarial proceedings, or doing battle with disgruntled and powerful area franchisees or franchise associations, Mr. McErlean has handled as lead counsel every type of conceivable litigation that occurs between franchisors and franchisees in federal and state courts and before arbitrators throughout the country. Through the years, Mr. McErlean has represented as lead counsel Domino’s Pizza, Burger King, Microsoft, Alphagraphics, Boston Market, Brown’s Chicken, Popeye’s, Century 21, Blockbuster, Roto Rooter and Subway in major litigated matters throughout the country.
PROFESSIONALS

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