Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Goddard School franchisor seeks declaration that franchisee breached agreement, (Oct 27, 2015)

By Greg Hammond, J.D.

The operators of a Goddard preschool in Kentucky failed numerous quality assurance assessments, in violation of a franchise agreement with Goddard Systems, Inc., according to a complaint filed in the federal district court in Philadelphia. Goddard consequently seeks a declaration that it properly terminated the franchise agreement and is entitled to damages and other relief (Goddard Systems, Inc. v. Harris, October 26, 2015).

Goddard Systems, Inc. is the franchisor of THE GODDARD SCHOOL® preschools, which offer public preschool early education programs for children. The franchisor entered into a franchise agreement with various individuals, which was subsequently assigned to THS Inc. After failing to cure numerous quality assurance deficiencies at the franchise location, purportedly demonstrating that the franchisee was not ensuring the health and safety of children in the school, the franchisor terminated the agreement.

The two-count complaint seeks declaratory judgment for termination of the franchise agreement, as well as breach of the franchise agreement for lost future royalties. As relief, Goddard Systems seeks declaratory judgment that: the defendants were in default and materially breached their obligations under the franchise agreement; Goddard Systems had a right to terminate the agreement and require the school to cease operations; and the agreement was properly terminated and the franchisees have no further rights with regard to the agreement.

In addition, Goddard Systems asks for money, compensatory, and consequential damages; an accounting of the profits to which Goddard Systems may be entitled; attorney fees and costs; as well as pre- and post-judgment interest.

The case number is 2:15-cv-05805-MAK.

Attorneys: Constantine T. Fournaris (Wiggin and Dana LLP) for Goddard Systems, Inc.

Companies: Goddard Systems, Inc.; THS Inc.

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