Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Liberty Tax franchisee allegedly breaches agreement, infringes trademarks, (Dec 11, 2015)

By Greg Hammond, J.D.

JTH Tax, Inc., doing business as Liberty Tax Service, claims that the owner of two franchised Liberty Tax locations in Massachusetts has violated his franchise agreement, willfully and maliciously infringed Liberty’s marks, and breached two promissory notes, according to a complaint filed in the federal district court in Norfolk, Virginia (JTH Tax, Inc. v. D’Alto, December 9, 2015).

In particular, Liberty Tax claims that it terminated the defendant’s 2010 franchise agreement based on breach of contract, trademark infringement, and failure to pay amounts owed. Liberty Tax further alleges that the defendant failed to comply with post-termination duties because (1) he has not removed Liberty signs from his office; (2) he continues to identify himself as a Liberty franchisee; (3) he continues to use items from Liberty bearing the franchisor’s marks; (4) he has retained his former Liberty phone numbers; (5) he has retained all copies of customer information, lists, tax returns, files and records; (6) he has retained the Liberty operations manual; and (7) and he has failed to comply with the franchise agreement’s non-competition and non-solicitation covenants.

The five-count complaint consequently alleges breach of the franchise agreement, trademark infringement, accounts receivable, and breach of promissory notes. Liberty Tax seeks injunctive relief; judgment of 19 percent of the preparation fees for tax returns prepared by the defendant; the franchisee’s profits wrongfully gained from his trademark infringement, along with treble damages as a result of the defendant’s allegedly willful, malicious, and bad faith trademark infringement; judgment in the amount of $165,495.49, representing the amounts due and unpaid under the promissory notes; as well as costs and attorney fees.

The case is No. 2:15cv536.

Attorneys: Gary A. Bryant (Wilcox & Savage, P.C.) for JTH Tax, Inc.

Companies: JTH Tax, Inc.

News: FranchisingDistribution