Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Painting franchisor seeks declaratory judgment in dispute with franchisee, (Aug 21, 2014)

By Linda O’Brien, J.D., LL.M.

A residential painting franchisor is seeking a declaratory judgment that it is not liable to a franchisee for alleged violations of the Florida Franchise Act and breach of contract, according to a complaint filed in the federal district court of Philadelphia (Certa Pro Painters, Ltd., Inc. v. Kish, August 20, 2014).

Certa Pro Painters, Ltd., Inc. is the national franchisor of CertaPro franchises, which offer residential painting and decorating services. CertaPro owns the mark “CertaPro” and “CertaPro Painters,” which are registered with the U.S. Patent and Trademark Office, as well as numerous other marks. CertaPro franchisees are licensed to use its proprietary marks, authorized to operate under a CertaPro franchise agreement, and required to follow CertaPro’s standards and specifications.

The complaint alleges that, in August 2013, CertaPro and Jonathan Kish executed a franchise agreement and zip code agreement under which Kish was granted the right to operate a CertaPro franchise in the zip codes identified as the Winter Park, Florida territory for a period of ten years. Kish acknowledged receipt of CertaPro’s franchise disclosure statement (FDD) and executed a compliance certification in which he verified that no CertaPro employee made any statement that was inconsistent with the information contained in the FDD. Kish also stated that he had consulted with an attorney regarding the franchise agreement.

In May 2014, CertaPro received a letter from Kish, asserting various claims for misrepresentations regarding former CertaPro franchisees operating in the territory; alleging that CertaPro’s failed to provide marketing, advertising, and business assistance; and complaining about the grant of a license to another franchisee to operate in a territory adjacent to Kish’s territory. Kish alleged claims of breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, fraud in the inducement, negligent misrepresentation, and violations of the Florida Franchise Act (FFA), the complaint states.

According to the complaint, Kish’s claims cannot be sustained because the franchise agreement contains a choice-of-law provision, designating Pennsylvania law as governing disputes relating to the construction and interpretation of the franchise agreement. There allegedly was no evidence that Kish’s allegations of fraud, fraud in the inducement, and negligent misrepresentation involved the choice-of-law provision. Moreover, the franchisor maintained that Kish’s claim under the FFA must fail, since he did not allege that CertaPro made any misrepresentations that are unlawful under the FFA. Section 20.1.1 of the franchise agreement expressly disclaims any representations regarding the success of the franchised business.

The plaintiff asserts claims under the Florida Franchise Act. The action seeks declaratory relief, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 2:14-cv-04871-JD.

Attorneys: F. Joseph Dunn (Fisher Zucker, LLC) for Certa Pro Painters, Ltd., Inc., a/k/a Certa ProPainters, Ltd.

Companies: Certa Pro Painters, Ltd., Inc.

News: FranchisingDistribution PennsylvaniaNews