Mayhall Fondren Blaize

Franchise agreement disputes are common in business litigation

Franchise litigation between franchisor and franchisee is common in Louisiana and elsewhere. There is often an inherent tension that develops between the local business and the franchisor, which may lead to business litigation. The tension may be partly because the franchisor is removed from the local business, but it often tries to exert powerful influence over that business due to its rights under the franchise agreement.

In one current dispute, a truck franchisor, Volvo Trucks, sued its franchisee Andy Mohr Truck Center with a breach of contract claim asserting that the local business did not live up to its obligations. Volvo claimed that Mohr failed to move into a new facility as requested by the franchisor. It also claimed that the franchisee did not meet its sales goals. Franchise contracts usually contain very demanding controls over the business practices of the local franchisee, and such control is often elusive to enforce by the franchisor and near impossible to meet by the franchisee.  

The suit, filed in 2012 in a federal district court, climaxed in 2015 with a $6.5 million jury verdict in favor of Mohr in its counterclaim against Volvo. Mohr charged that Volvo had not given Mohr the right to the larger retail discounts it had given to Mohr's competitors. The dealership asserted that it lost out on about 1300 truck sales because of Volvo's discriminatory treatment of Mohr.

The verdict also may have reflected losses from Mohr's claim that Volvo failed to give it a Mack Trucks franchise that it had promised. The jury had found that the franchisor had violated the Deceptive Franchise Practices Act. A form of that legislation exists generally in most states, including Louisiana. The United States Court of Appeals will hear the appeal of this business litigation matter filed by Volvo.

Source: trucks.com, "Volvo Truck Dealer Wants Court to Uphold $6.5 Million Award", Clarissa Hawes, Oct. 19, 2016

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