Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—E.D. Mich.: Dispute over Home Instead franchise terms stayed pending similar cases, (Aug 12, 2026)

By Donielle Tigay Stutland, J.D.

The plaintiff franchisees’ Michigan case is the last-filed of similar actions filed in other federal courts.

The federal district court for the Eastern District of Michigan stayed an action brought by franchisees of Home Instead alleging that the franchisor breached a settlement agreement provision regarding the renewal of their franchise agreements. Parallel suits had earlier been filed by other franchisees raising identical questions in Nebraska and California. The court stayed the action pending resolution of the earlier actions, after finding that the Michigan suit was the last to be filed and the parties and issues were substantially similar. The court denied the franchisor’s alternative motion to transfer or dismiss on res judicata grounds (Rem Senior Services Corp. v. Home Instead, Inc., No. 4:25-cv-13746-FKB-APP (E.D. Mich. Aug. 10, 2026)).

Background. Home Instead is a Nebraska organized franchisor of home health care services, offering non-medical companionship and in-home care support for individuals throughout its local community. REM Senior Services “REM” and Bethesda Home Care “BHC” are Michigan based home care agencies that entered into respective franchise agreements with Home Instead franchise.

Around August 2021, an entity known as Honor Technology (“Honor”) acquired a controlling interest in Home Instead and began utilizing a different business model for delivering care, known as the “Care Platform.” Under the Care Platform model, Honor handles many of the duties and responsibilities previously assigned to franchisees. The franchisees argue that the Care Platform model effectively converts each franchisee into a sales manager for Honor’s own business, rather than an independent franchised business, and franchisees make substantially less money under this model.

In April 2023, Home Instead circulated a new franchise agreement, which the franchisees argue contained less favorable terms for them, such as higher performance standards, a shorter term, increased royalties, and less favorable renewal conditions. Additionally, Home Instead proactively sought to force all franchisees to execute the new franchise agreement, irrespective of the current expiration date of their franchise agreement.

No franchisee was amenable to renewing early because of the many changes and a representative group of franchisees, known as the Zarco Group, participated in mediation with the franchisor in March of 2024. The mediation led to a Settlement Agreement, which was executed on May 2, 2024 and expires sometime after March 17, 2027, and the franchisor sent out communication that the settlement terms would be extended to all franchisees.

The settlement terms provided that franchise agreements executed within three years of the Effective Date would not grant Home Instead discretion over renewals, and franchisees in good standing would receive a five-year auto-renewal if they met material conditions. The settlement also gave a three-year grace period during which Home Instead would not require non-Care Platform franchisees to convert to that platform.

REM and BHC’s existing franchise agreements are set to expire after March 17, 2027. REM and BHC seek to exercise an early renewal under the Settlement Agreement so they can remain on the traditional model. Home Instead has refused early renewals for agreements expiring after March 17, 2027, which REM and BHC argue would force them onto the Care Platform. The parties dispute whether Paragraph 5 confers a right to early renewal before March 17, 2027, for franchisees whose current agreements expire later.

REM and BHC brought suit claiming that disallowing early renewals is a breach of the Settlement Agreement, because they read Paragraph 5 of the Agreement to contain a right to auto-renewal for all franchisees before March 17, 2027, so long as they remain in good standing. However, other Zarco Group Home Instead franchisees have filed similar actions in Nebraska and California.

The franchisor filed motions to either (1) transfer this action to the District of Nebraska, or (2) dismiss this case on the merits, arguing that it is barred by res judicata. In the alternative, the franchisor requests the court should stay the case until the earlier filed cases resolve.

Motion to Dismiss, Transfer, or Stay. The franchisor sought to either (1) transfer this action to the District of Nebraska, or (2) dismiss this case on the merits as barred by res judicata. In the alternative, the franchisor argued the court should stay this case until the earlier cases resolve. The court ruled that the case should be stayed, as this case is the last-filed of three related actions. The court first noted that the three related matters appear to be identical except for the specific plaintiffs at issue, and address the same portion of the same contract. The court indicated that it would be prudent, as this was the last-filed of the three related actions, to stay this case pending resolution of the California district court’s motion to dismiss, stay, or transfer. The court also noted that this would promote comity between the federal district courts.

The court analyzed the case based on the Baatzv. Columbia Gas Transmission, LLC factors in order to determine whether the first-to-file rule applies: (1) the chronology of the actions; (2) the similarity of the parties; and (3) the similarity of the issues or claims. The court first looked at the chronology of the competing actions. The court concluded the chronology favors a stay. The Nebraska action was filed on November 11, 2025, the California action followed on November 21, 2025, and the instant case was filed on November 24, 2025. Although the Nebraska district court dismissed the complaint, the litigation has not yet completely concluded because post-judgment proceedings remain and the California action involving the same Settlement Agreement and same motion to dismiss, transfer, or stay remains pending.

The second Baatz factor the court considered was the similarity of the parties. The court also found this factor favors a stay. The plaintiffs in this action are different legal entities than those in the Nebraska and California actions. However, “the plaintiffs across each action are Zarco Group franchisees seeking to enforce their interpretation of the same provisions of the same Settlement Agreement.”

Finally, the court looked at the third Baatz factor, the similarity of the issues presented. The court determined that the issues here substantially overlap. In each case, the central dispute was over the meaning and enforceability of Paragraphs 5 and 6 of the Settlement Agreement. “Specifically, the parties admit that Plaintiffs ask each court to determine whether Paragraph 5 permits franchisees to obtain an early five-year renewal and whether Paragraph 6 prevents Home Instead from requiring franchisees to transition to the Care Platform during the three-year period established by the Settlement Agreement.” The court also noted that the earlier-filed actions address the same contractual questions presented here.

The court also found no equitable consideration weighed against application of the first-to-file rule.

The Case is No. 4:25-cv-13746-FKB-APP.

Judge: Behm, F.

Attorneys: Alec R. Shelowitz (Zarco Einhorn Salkowski, P.A.) for REM Senior Services Corp. Eric P. Conn (Fahey Schultz Burzych Rhodes PLC) for Home Instead, Inc.

Companies: REM Senior Services Corp.; Home Instead, Inc.

Cases: FranchisingDistribution MichiganNews