Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Arbitration sought in Subway® franchisee eviction action, (Oct 5, 2015)

By Linda O’Brien, J.D., LL.M.

In an eviction action by the leasing affiliate of the Subway® sandwich shops franchisor, the franchisee should be compelled to arbitrate his claims that the franchisor breached the franchise agreement pursuant to the arbitration provision of the franchise agreement, according to a petition to compel arbitration filed by the franchisor in the federal district court in New Haven, Connecticut (Doctor’s Associates Inc. v. Repins, October 2, 2015).

Doctor’s Associates Inc. (DAI), the franchisor of Subway® sandwich shops, is a Florida corporation with a principal place of business in Connecticut. In May 2002, DAI and Ivars Repins executed a written franchise agreement, which authorized Repins to operate a Subway® store in Wisconsin. The franchise agreement contained a dispute resolution clause, requiring the parties to arbitrate any dispute arising out of the agreement. The arbitration must be in accordance with rules of the American Arbitration Association (AAA) and take place in Connecticut, the agreement stated.

According to the petition, on September 12, 2015, Subway Real Estate, LLC (SRE) was granted a judgment of eviction against Repins by a Wisconsin circuit court. On the same day, Repins filed an answer and affirmative defenses and asserted that DAI was an indispensable party which must be joined to the action. Repins further alleged that he invested over $150,000 to improve his store, DAI allowed other Subway® stores to open nearby thereby harming his existing store, and DAI acted improperly in relation to promotions, advertising, and franchise fee collections.

Additionally, the petition stated that all of Repins’ allegations involving DAI involve claims arising out of the franchise agreement and clearly fall within the scope of the agreement’s arbitration clause. By seeking to raise claims and defenses, or otherwise compel DAI to participate in litigation relating to DAI’s conduct, Repins has wrongfully failed and/or refused to arbitrate his claims, in violation of the franchise agreement, the leasing affiliate claimed. Therefore, he should be compelled to arbitrate his claims in the manner provided in the franchise agreement.

Attorneys: Bethany L. Appleby (Wiggin and Dana LLP) for Doctor’s Associates Inc.

Companies: Doctor’s Associates Inc.

News: FranchisingDistribution ConnecticutNews