Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Franchisor of Safari Kid centers sues former prospective franchisee for infringing mark, (Dec 16, 2015)

By Peter Reap, J.D., LL.M.

Safari Kid, the franchisor of learning centers for young children under the SAFARI KID mark, has filed suit in the federal district court in San Francisco against a couple, Mahzad Irani and Feradoon Irani, their company, and ten John Doe defendants, alleging that the defendants are operating a learning center using the franchisor’s trademark and trade secrets without authorization (Safari Kid, Inc. v. Irani, December 14, 2015).

According to the complaint, in early 2013, the Iranis asked the franchisor about opening a Safari Kid franchise. In response to the inquiry, Safari Kid provided the Iranis with its Franchise Disclosure Document. In reliance on the parties’ ongoing negotiations, the franchisor provided the Iranis with the standard Safari Kid system training. Although the franchisor asked the Iranis to sign its franchise agreement, which required payment of an initial $50,000 fee, the Iranis delayed repeatedly, the franchisor asserts. They asked for more time to pay the initial fee, and Safari Kid agreed to give them six months to do so. Despite this accommodation, the Iranis never signed the franchise agreement.

In early 2015, the Iranis opened their learning center under the name "Safari Kid” and began advertising, using the safarikidschool.com domain name, which the Iranis had registered. Shortly thereafter, Safari Kid again requested that the Iranis sign the franchise agreement, pay the initial fee, and begin paying royalties as required under the franchise agreement. Once again the Iranis refused, claiming for the first time that they were not franchisees in the Safari Kid system.

Following demands by the franchisor that the Iranis comply with the Safari Kid franchise requirements and the franchise agreement, the Iranis changed the name of their learning center to “Dot to Dot" and stopped using the safarikidschool.com domain name. However, the complaint alleged that third party advertising, including Internet sites such as yelp.com, still referred to the Iranis' business as "Safari Kid”; the Iranis continued to own the safarikidschool.com domain name; and the Iranis remained in possession of proprietary, confidential, and trade secret materials owned by the franchisor and relating to the operation of a Safar Kid learning center.

The complaint includes claims under the Lanham Act for trademark infringement and false designation of origin. It also alleges violations of the Anticybersquatting Consumer Protection Act and the California Uniform Trade Secrets Act, among other claims. The franchisor requests injunctive relief and damages, including an award of its attorney fees.

Attorneys: Eric A. Handler (Donahue Fitzgerald LLP) for Safari Kid, Inc. and Safari Kid Franchising, LLC.

Companies: Safari Kid, Inc.; Safari Kid Franchising, LLC

News: FranchisingDistribution CaliforniaNews