Exploring the Causes of Conflict in Franchised Restaurant Industry: Evidences from the Court Records Siti Nurhayati Khairatun Mohd Sharif Iowa State University

Home , Burgers Bar, Franchising, Pizza Hut Israel

Iowa State University Capstones, Theses and Graduate Theses and Dissertations Dissertations

2018 Exploring the causes of conflict in franchised restaurant industry: Evidences from the court records Siti Nurhayati Khairatun Mohd Sharif Iowa State University

Follow this and additional works at: https://lib.dr.iastate.edu/etd

Recommended Citation Mohd Sharif, Siti Nurhayati Khairatun, "Exploring the causes of conflict in franchised restaurant industry: Evidences from the court records" (2018). Graduate Theses and Dissertations. 16419. https://lib.dr.iastate.edu/etd/16419

This Dissertation is brought to you for free and open access by the Iowa State University Capstones, Theses and Dissertations at Iowa State University Digital Repository. It has been accepted for inclusion in Graduate Theses and Dissertations by an authorized administrator of Iowa State University Digital Repository. For more information, please contact [email protected].

Exploring the causes of conflict in franchised restaurant industry: Evidences from the court records

Siti Nurhayati Khairatun Mohd Sharif (Siti Nurhaya Mohd Sharif)

A dissertation submitted to the graduate faculty

in partial fulfillment of the requirements for the degree of

DOCTOR OF PHILOSOPHY

Major: Hospitality Management

Program of Study Committee: Tianshu Zheng, Major Professor Eulanda Sanders Byron Brehm-Stecher Young-A Lee Eric D. Olson Thomas Schrier

The student author, whose presentation of the scholarship herein was approved by the program of study committee, is solely responsible for the content of this dissertation. The Graduate College will ensure this dissertation is globally accessible and will not permit alterations after a degree is conferred.

Iowa State University

Ames, Iowa

2018

TABLE OF CONTENTS

Page

LIST OF FIGURES ...... iv

LIST OF TABLES ...... v

ABBREVIATIONS ...... vi

ACKNOWLEDGEMENTS ...... viii

ABSTRACT ...... ix

CHAPTER 1: INTRODUCTION ...... 1 Background of the Study ...... 1 Problem Statement ...... 3 Purpose of the Study ...... 4 Objectives of the Study ...... 5 Significance of the Study ...... 5 Research Questions ...... 6 Dissertation Organization ...... 7 Definition of Terms...... 7

CHAPTER 2: REVIEW OF LITERATURE ...... 11 An Overview of Global Franchising Industry ...... 11 Franchising Development in the U.S...... 15 Restaurant Franchising in the U.S...... 17 Dynamics Relationship in Franchising ...... 20 Control by the Franchisor over Franchising Affairs ...... 20 Satisfaction of the Franchisees ...... 21 Conflict between Franchisor and Franchisee ...... 22 Theories on Conflict in Franchising ...... 23 Trends in Franchise Research ...... 32 Research Design of this Study ...... 37

CHAPTER 3: METHODOLOGY ...... 40 Introduction ...... 40 Content Analysis Framework of this Study ...... 40 Triangulation in Data Collection ...... 41 Data Triangulation Protocol ...... 42 Methodological Triangulation Protocol ...... 44 Representativeness of Samples ...... 46 Data Collection Process ...... 47 iii

Coding Frame...... 48 Unit of Analysis ...... 49 Retrieval of the Data ...... 50 Data Analysis Methods ...... 56 First Phase: Manual Coding ...... 56 Intercoder Reliability Test ...... 61 Second Phase: CAQDAS Coding ...... 64 Data Management ...... 67 Prior to Research Process...... 68 During the Research Process ...... 69 After the Completion of Research Process ...... 70

CHAPTER 4: FINDINGS ...... 71 Introduction ...... 71 Findings...... 71 IFA Database ...... 71 New York State Unified Court System ...... 75 Chapter Summary ...... 121

CHAPTER 5: DISCUSSION AND RECOMMENDATIONS ...... 122 Introduction ...... 122 Discussion ...... 122 Implications of the Findings ...... 129 Theoretical Implications ...... 129 Practical Implications...... 130 Limitations and Future Research ...... 132

REFERENCES ...... 134

APPENDIX A: AGREEMENT OF NEW YORK OFFICIAL REPORTS SERVICE ...... 162

APPENDIX B: LIST OF NEW YORK STATE COURT CASES...... 163

APPENDIX C: LIST OF THEMES GENERATED USING NVIVO 11 ...... 165

LIST OF FIGURES

Page

Figure 1 Content analysis framework adapted from Zhang and Wildemuth (1999) ...... 38

Figure 2 Data analysis procedures using five analytic phases ...... 44

Figure 3 Flowchart of court records retrieval process ...... 50

Figure 4 Screenshot of New York Official Reports Service webpage ...... 51

Figure 5 Screenshot of search results from New York Official Reports Service ...... 52

Figure 6 Screenshot of a case retrieved ...... 52

Figure 7 Screenshots of IFA webpage ...... 54

Figure 8 Flowchart of IFA database retrieval process ...... 54

Figure 9 Summary findings of court records for each 10-year duration ...... 58

Figure 10 Flowchart of the first phase: Manual coding ...... 59

Figure 11 Flowchart of the intercoder reliability test process ...... 61

Figure 12 Screenshot of an Excel worksheet ...... 64

Figure 13 Screenshot of themes generated using NVivo ...... 65

Figure 14 Flowchart of the second phase: CAQDAS coding ...... 66

Figure 15 Summary findings of the types of restaurant business models...... 72

Figure 16 Left: Summary findings of case initiators; Right: Types of franchisees who initiated the legal actions ...... 73

Figure 17 Summary findings of the most popular franchise business model ...... 74

Figure 18 Summary findings of the types of conflict in restaurant franchising ...... 78

Figure 19 Summary findings of types of judgments sought by the aggrieved parties ...... 96

LIST OF TABLES

Page

Table 1 Literature on conflict in franchising from 2010 to 2015 ...... 29

Table 2 Types of documents used as data sources in franchising-related studies ...... 34

Table 3 Information on states court records service by Thomson Reuters WestLaw ...... 43

Table 4 Coding matrix: Themes for conflict ...... 47

Table 5 Coding matrix: Themes for causes of action ...... 48

Table 6 Coding matrix: Themes for court’s opinions ...... 48

Table 7 Number of cases retrieved based on search terms ...... 50

Table 8 Distribution of court records retrieved from 1957 to 2016 ...... 58

Table 9 Percentage agreement of intercoder reliability for theme conflict ...... 61

Table 10 Percentage agreement of intercoder reliability for theme causes of action ...... 62

Table 11 Percentage agreement of intercoder reliability for theme court’s opinions ...... 63

Table 12 Descriptions of parties in the court records ...... 71

Table 13 Categorization matrix of types of conflict between the franchisors and the franchisees ...... 75

Table 14 Causes of action for each case in restaurant franchising ...... 79

Table 15 Categorization matrix of causes of action for each case ...... 88

Table 16 Causes of action on issues relating to provisions in agreements ...... 93

Table 17 Lawsuits dismissed or reversed due to jurisdictional reason ...... 97

Table 18 Court’s opinions for each case based on their causes of action ...... 99

Table 19 Categorization matrix of court’s opinions for each case ...... 109

Table 20 Summary findings of all cases analyzed ...... 118

ABBREVIATIONS

Lengthy names are referenced in abbreviations as follows:

ADR Alternative dispute resolution

BFA British Franchise Association

CCFA China Chain Store & Franchise Association

CAQDAS Computer Assisted Qualitative Data Analysis Software

EFF European Franchise Federation

EU European Union

FFF French Franchise Federation

F&B Food and beverage

FDD Franchise Disclosure Document

GCC Gulf Cooperative Council

IFA International Franchising Association

ITA International Trade Administration

JTC Judicial Technology Committee

MENA Middle East and North Africa

MFA Malaysian Franchise Association

NFMP National Franchise Mediation Program

NLRB National Labor Relations Board

NRA National Restaurant Association

PACER Public Access to Court Electronic Records

QSR Quick Service Restaurant

UFOC Uniform Franchise Offering Circular vii

U.S. United States

U.S. CB U.S. Census Bureau

U.S. SBA U.S. Small Business Administration

viii

ACKNOWLEDGEMENTS

First and foremost, I am grateful to Almighty God for His blessings and His willingness that I could complete my dissertation in timely manner.

Throughout this three-and-a-half-year journey, there are so many people I want to thank for assisting, motivating, and guiding me along the way. I would especially like to thank Dr.

Tianshu Zheng, for his guidance, advice, encouragement, and help at all levels of my struggle.

Many thanks are due to Dr. Eulanda Sanders and Dr. Young-A Lee for sharing their immense knowledge and providing their insightful feedback on my work. I also would like to thank Dr.

Eric Olson and Dr. Thomas Schrier for giving useful feedback and suggestions that have contributed to the successful completion of my dissertation. I owe a special appreciation to Dr.

Byron Brehm-Stecher for serving as my committee member in Food Sciences minor. Also, I want to extend my thankfulness to Dr. Eunha Jeong for graciously attending my final oral exam as a substitute committee member.

To the darlings of my heart, Sofiyyah and Humayrah, thank you for your understanding, sacrifice and patience along this journey. To Syed Ahmad Omar, I cannot find words to describe how I should love, appreciate, and respect you more. Your true love, presence, and support are truly irreplaceable. To my dearly loved parents, thank you so much for your unconditional love, support, and prayers that have orchestrated my life path until I have become who I am today.

Last but not least, this golden opportunity to accomplish my doctoral degree would be beyond the bounds of possibility without the financial aid and scholarship from the Malaysian

Ministry of Higher Education and my sponsoring university, Universiti Putra Malaysia.

Therefore, I would like to express my gratitude for their confidence and support for awarding me the scholarship. ix

ABSTRACT

Relationships between franchisees and franchisors are susceptible to conflicts. Conflict is inevitable throughout its operation and expansion in restaurant franchising industry. This exploratory study employed a content analysis using a data triangulation of New York court records spanning from 1957 to 2016 and IFA corporate databases. This process produced 23 cases relating to restaurant franchising. A methodological triangulation of a manual coding and

CAQDAS generated findings to identify restaurant business models involved in the lawsuits, categorize types of conflicts between franchisees and franchisors, determine the most prevalent cause of action that led to the lawsuits, and interpret the court’s opinion, among others. Three coding matrices consisting of themes for types of conflict, themes for causes of action, and themes for court’s opinions, were developed to guide the analysis framework. The findings revealed that the courts dismissed three lawsuits on the jurisdictional grounds at the preliminary litigation stage. Out of the 20 cases, the courts found that 13 cases filed by the franchisees had no meritorius causes of action. This leads to a belief that the franchisees did not obtain sufficient advice from their attorneys or they did not arbitrate their conflicts before filing the lawsuits. This dissertation proposes future avenues of research to address the limitations encountered in this study. The primary theoretical implication of this study is that parties in franchising may recognize the red flags in conflict before advancing to the litigation stage. This would help the parties of interest to mitigate the tension of their relationship. Among the practical implications of this study include the recommendation for a better franchising regulation which safeguards the interests of all stakeholders. Policymakers should consider mandating arbitration clauses in the franchising agreements in order to balance the relationship between franchisees and franchisors.

Keywords: coding matrix, conflict, content analysis, content analysis, franchising, restaurants 1

CHAPTER 1. INTRODUCTION

Background of the Study

International Franchise Association (IFA) President & CEO Steve Caldeira said recently that, "Franchising is an American success story. Independently-owned and operated local franchise businesses are growing faster, creating more jobs at a quicker pace and producing higher sales growth than other businesses. Franchising is a vital engine of economic expansion in the United States..." (IFA, 2015). As such, the franchising industry is a catalyst for creating more new entrepreneurs and venturing into exclusive geographical territory. More than 70 countries around the globe acknowledge the operation of franchise business systems (IFA, 2016). In the

U.S. alone, the total franchised units were recorded at 795,932 establishments in 2016, with a total combination of full service and quick service restaurant (QSR) accounting for 198,083 of those units (IHS Economics, 2016). Interestingly, the food sector is still prevailing with 25% of the total franchise market share (Franchise Direct, 2016). The franchise business model has attracted many entrepreneurs, particularly in the food and beverage (F&B) sector, for many reasons, including more financial advantages and lower risk compared to independently-owned restaurants (Keeling, 2001), higher profitability (Shelton, 1967), cost and time saving during the startup stage (Mendelsohn, 1990), relatively low expenses for expansion (Shane, 1996), and higher survival rate (Williams, 1992).

However, despite the fact that the franchise sector is flourishing domestically and internationally, it is not without any compelling issues or conflict. Because of the unique relationships in franchises, franchising is a conducive platform for the parties of interest in franchise to initiate a lawsuit (Miller, n.d). A great deal of dissatisfaction has occurred in the franchise relationship due to the lack of power balance between parties and resulting conflict 2 experienced in the relationship (Hough, 1986). This imbalance has been observed by Spencer

(2007) where the clauses contained in the franchising agreements are normally biased towards the franchisor’s interests instead of the franchisee’s. Conflict between the franchisor and franchisee has been identified as one of the factors for the broken relationships in franchises

(Frazer & Winzar, 2005). As a result of this situation, the failure rate in restaurant industry was recorded as high as 60% during the first year of operation (Parsa, Self, Njite, & King, 2005), while approximately 80-90% of restaurants went out of business within the first five years (Justis

& Judd, 1989). In a survey of 70 franchisees of fast food restaurants, it was reported that 23% did not manage to break even after the second full year of operation (Wadsworth, 1999). Parsa et al. (2005) also found that the failure rate for franchised restaurant chains over three-year period was cumulated at 57%, and 70% to 75% of new franchised units ceased operation (Lafontaine &

Shaw, 1998).

As the franchising affairs are more complex than they appear on the franchise agreement, parties in franchises could be experiencing contradictory objectives through their business relationship, and this may lead to dissatisfaction of either party and spark the conflict (Grace,

Weaven, Frazer, & Giddings, 2013). According to the International Franchise Association report, the National Franchise Mediation Program (NFMP) was established to assist parties in franchising to overcome their disputes. Since NFMP’s establishment in 1993, more than 90% of dispute cases referred to them were settled through mediation processes. Early recognition of problematic relationships might be useful to mitigate the loss and failure of franchised restaurants (Holmberg & Morgan, 2004). With a continuous expansion of the franchising industry, more empirical research is still needed in understanding the causes of conflict in franchise relationships. Combs, Michael, & Castrogiovanni (2004) suggest that future research 3 should attempt to investigate the causes of franchise failure. Thus, this study attempts to identify the factors that drive the aggrieved parties to seek remedy from the courts.

Prior franchising research employed an exploratory approach to study a broad area of the franchising business models. These research topics include understanding the organizational leadership role in a franchising context (DiPietro, Severt, Welsh, & Raven, 2008), predicting the consumer's behavior in using the online ordering method to buy pizza (Young, Clark, &

McIntyre, 2006), identifying site selection factors for successful franchise restaurants (Park &

Khan, 2006), evaluating the benefits of promotion strategies practiced by urban franchise restaurants (Jackson, Titz, & Defranco, 2004), examining the performance of chain management of multi-unit franchisees (Bradach, 1995), and investigating the internationalization structure from an international franchise perspective (McIntyre & Huszagh, 1995). Owing to the nature of the research which is subject to latent flexibility, this current study uses an exploratory approach to determine the prevailing conflicts that occurred between the franchisor and franchisee, with the data retrieved from court records.

Problem Statement

As the franchised restaurant sector grows tremendously, it also comes with its complex affairs and conflicts. The distinctiveness of business format franchising compared to other types of business models lies in the structure of the relationship between the franchisee and franchisor

(Spinelli & Birley, 1996), which essentially is a relational exchange bounded by contractual agreement between both parties (Harmon & Griffiths, 2008). In a real-world business scenario, franchise relationships are complicated and easily exposed to conflict (Tikoo, 2005). Failure in franchise relationships is empirically linked with conflicting goals during the business operation

(Frazer & Winzar, 2005). Often, the non-compliance of terms and conditions in the agreement by 4 franchisors causes tension and frustration among franchisees that lead to conflict in the relationship (Brody, 2008). Moreover, earnings claimed by the franchisor as stipulated in the disclosure document, encroachment issues, and covenants not to compete are among the themes of legal suits filed by the parties of interest (Miller, n.d). This is despite the fact that limited guidelines exist for managing franchise systems strategically (Hoffman & Preble, 1991).

Advance recognition of the early indicators of conflict is vital to mitigate the disintegration of the franchise relationship and therefore merits further investigation. Understanding the causes of conflict that are preventable during the ongoing business activities would make the parties in the franchising industry more satisfied.

Purpose of the Study

The purpose of this study is to explore the characteristics of conflicts experienced by franchisees and franchisors in restaurant franchising based on the New York State court records.

This study also attempts to describe the causes of action filed by the dissatisfied parties and to interpret the court’s opinion in addressing the causes of action claimed by the aggrieved parties.

This study will employ data and methodological triangulations methods to produce meaningful information to answer the research questions. The findings of this study contribute to the theoretical and practical implications particularly in restaurant franchising and in franchising industry generally.

Given the fact that franchising business systems are developed on various agreements throughout their operation and expansion, every franchised unit also comes with numerous conflicts. Therefore, understanding the characteristics of conflicts at the litigation stage is important to mitigate the disintegration of the franchisees and franchisors relationship at the early stage and to prevent the collapse of their relationship. Hence, this study aims to close the 5 gap as few guidelines currently exist to manage the conflict effectively (Hoffman & Preble,

1991). As such, three coding matrices are constructed to serve as guidelines for the franchise stakeholders in recognizing the red flags in conflict during the business operation. Policymakers might consider mandating the inclusion of alternative disputes dissolutions in the franchise agreements in effort to balance the power of the franchisors.

Objectives of the Study

The primary objectives of this study are:

1. to explore the characteristics of conflicts experienced by the franchisees and franchisors

based on the lawsuits filed in New York State.

2. to identify the causes of action that led to the lawsuits filed by the dissatisfied parties.

3. to examine the court’s opinions based on the causes of action claimed by the case

initiators.

3. to develop the coding matrices that serve as guidelines in recognizing red flags in

conflict.

Significance of the Study

Interweaving the findings, this study contributes to the theoretical and practical aspects of franchised restaurant operations and the franchising industry in general. From a theoretical perspective, conflict relational theory proposes that the contractual performance by the franchisors is the measure for the franchisees’ satisfaction. In this current study, the characteristics of conflicts experienced by the dissatisfied parties in restaurant franchising were explored to understand the underlying reasons why the parties seek court intervention to settle their conflicts. Under institutional theory, this study highlights the conflict themes from court 6 records and posits an important contribution to the taxonomy on the restaurant franchising. In regard to conflict management theory, the findings in this current study add to that theory by identifying theme in the court’s opinions.

The lawsuits filed by either franchisor or franchisee indicates the seriousness of the conflict that needed a judicial interpretation to settle the core issues. As an effort to understand the conflict implications of restaurant franchising, the data analyzed in this study were retrieved from court records. Early recognition of red flags in conflicts could be an imperative action to preclude the collapse of franchise relationships. Thus, findings in this study provide substantial insights for the authority, policymakers and the industry to improve the existing regulations.

From a practical standpoint, this study offers a batch of conflict themes in recognizing the red flags during business transactions. The fiasco resulting from conflict in the franchising industry could be detrimental to the relationship between franchisor and franchisee and further impact the whole industry. This study endorses the application of several theoretical frameworks underpinning the implementation of the effective franchise structures in real-world situations.

The findings also provide a solid framework for future research to address the limitations of this current study.

Research Questions

This study is designed to provide answers to the following questions:

1. What are the characteristics of conflict in restaurant franchising as experienced by the

franchisees and franchisors based on the New York State court records?

a. What are the types of franchising business models involved in the lawsuits?

b. Who were the case initiators: franchisees or franchisors? Were they international or

domestic? 7

2. Based on the court records, what causes of action were filed in courts?

a. What types of conflict that gave rise to the causes of action filed in courts?

b. Which causes of action were the most prevalent?

c. How did the court address the conflicts based on the causes of action filed?

Dissertation Organization

This dissertation is presented in accordance with a conventional format as outlined by the

Graduate College at Iowa State University. It consists of five major chapters and is organized as follows: Chapter 1 provides the introduction to the study, Chapter 2 encapsulates the literature to lay out the study structure, Chapter 3 describes the methodology employed in this study, Chapter

4 progresses to the presentations of the findings, and Chapter 5 summarizes the study and the findings, provides discussions, presents the implications to theoretical and practical perspectives, explains the limitations, and proposes future research. A reference list is attached at the end of

Chapter 5. Appendices are annexed after the reference list.

Definition of Terms

Terms used in this study are defined as follows:

Alternative dispute resolution (ADR) : A type of dispute resolution that seeks to limit the costs of litigation by using alternative such as mediation and arbitration. Alternative dispute resolution options are voluntary, and often involve a neutral third party to make decisions

(Business Dictionary, 2018).

Computer Assisted Qualitative Data Analysis Software (CAQDAS) : This term introduced by Fielding and Lee in 1991, that refers to the wide range of software available that supports a variety of analytic styles in qualitative work including NVivo, ATLAS.ti, and MAXQDA. These 8 tools assist the researchers to store, manage, organize, and reconfigure data for analytic reflection

(Gibbs, Clarke, Taylor, Silver, & Lewins, 2011; Saldana, 2009).

European Union (EU) : The European Union is a political and economic union consists of

28 countries that are located primarily in Europe. The union was formed in 1951 with only 6 countries including Belgium, Germany, France, Italy, Luxembourg and the Netherlands. The primary idea is to foster economic cooperation among its members countries. The goal of the

European Union is to enhance economic, social and territorial cohesion and solidarity among member countries (European Union, 2018) .

Franchise : Any continuing commercial relationship or arrangement, whatever it may be called, in which the terms of the offer or contract specify, or the franchise seller promises or represents, orally or in writing, that —

(a) the franchisee will obtain the right to operate a business that is identified or associated with the franchisor's trademark, or to offer, sell, or distribute goods, services, or commodities that are identified or associated with the franchisor's trademark;

(b) the franchisor will exert, or has authority to exert, a significant degree of control over the franchisee's method of operation, or provide significant assistance in the franchisee's method of operation; and

(c) as a condition of obtaining or commencing operation of the franchise, the franchisee makes a required payment or commits to make a required payment to the franchisor or its affiliate

(Federal Trade Commission Franchise Rule, 16 C.F.R. Part 436.1).

Franchisee : A person to whom a franchise is granted (Federal Trade Commission

Franchise Rule, 16 C.F.R. Part 436.1). 9

Franchisor : Any person who grants a franchise and participates in the franchise relationship. Unless otherwise stated, it includes subfranchisors (Federal Trade Commission

Franchise Rule, 16 C.F.R. Part 436.1).

Franchise Disclosure Document (FDD) : The Franchise Disclosure Document (FDD) is a legal document that franchisors must furnish to franchisees, as regulated by the Federal Trade

Commission. This document must be received by the prospective franchisee no later than 14 days prior to the signing of the franchise agreement. The FDD contains 23 sections of material information about a franchise operation. Prior to 2008, FDD is known as Uniform Franchise

Offering Circular (UFOC). In 2007, FTC amended the Federal Franchise Rule, among others, to change the name of UFOC to FDD (Franchise Direct, 2017).

National Franchise Mediation Program (NFMP) : The National Franchise Mediation

Program was established in 1994 by an ad hoc group of franchisors who sought a way to resolve disputes between franchisors and franchisees. Its objective is to resolve conflicts without litigation. The program is managed by a Steering Committee, comprised of an equal number of franchisors and franchisees (International Institute for Conflict Prevention & Resolution, 2018).

National Labor Relations Board (NLRB) : The National Labor Relations Board is an independent U.S government agency established in 1935. Its main objective is to enforce the labor law in the U.S. This agency is also responsible to monitor and safeguard employees' rights to create unions as their bargaining representative. The agency also provides remedy for unfair labor practices committed by private sector employers and unions (National Labor Relations

Board, 2018).

Quick Service Restaurant (QSR) : A type of restaurant that offers limited menu, limited service and inexpensive. The basic concept of QSR’s operation is to prepare and serve the food quickly. QSR model is used in restaurant chains such as KFC, McDonald’s, Pizza Hut and

Subway (Ottenbacher & Harrington, 2009; Ninemeier & Perdue, 2005).

CHAPTER 2. REVIEW OF LITERATURE

An Overview of Global Franchising Industry

Franchising is a popular business model nowadays. Franchisor, as defined by Merriam-

Webster (2016), is the legal entity that grants a franchise. The franchise relationship consists of two firms, the franchisor and the franchisee, which are formed by a contract that legally binds their actions and is legally enforceable to each other (Rubin, 1978). The franchisor allows an individual or a firm, referred to as a franchisee, to operate in a specific geographical location of their business. The exclusive right of territory granted by the franchisor to the franchisee is based on fair discretion of the franchisor and stipulated in the franchise agreement agreed by both parties. The franchisor owns the parent company, its intellectual properties (patents, copyrights, trademarks or industrial designs), and products or services, but the franchisor grants the right to enjoy the privileges of those intellectual properties to the franchisee. In return, the franchisee should pay the franchisor various kinds of fees for a specific duration of time as agreed by both parties (Mendelsohn, 2004). Franchising operates in two distinct formats: product franchising and business-format franchising (U.S. Small Business Administration (SBA), 2016). In product franchising, the distribution right of product is granted to the franchisee within a specific territory exclusively. To compare, business-format franchising offers more complex rights to the franchisee including the usage of trademarks, standardized services and products, and ongoing supports from the franchisor (Dicke, 1992).

Franchising is considered an international success story where many countries around the globe have benefitted from its business models. As reported by International Trade Association

(ITA), the system of franchising is adopted by many small and medium-scaled businesses, which generates jobs and provides people a promising route to entrepreneurship (ITA Global Franchise 12

Team, 2016). In the U.S., data show that a new franchise unit is set up every eight minutes

(AZFranchises.com, 2016). The franchise business in the U.S. is currently valued at more than

$2.1 trillion. There are over 300 franchise frameworks with more than 900,000 franchise establishments, which offer almost 18 million jobs. The franchising business model exists in many business categories including F&B (QSR and full service restaurants), product-distribution services (gas stations with convenience stores), and automotive, business services, commercial and residential services, lodging, personal services (fitness and beauty), real estate, and retail

(food and product) (IHS Economics, 2016).

Globalization has become the significant force that affects global consumption patterns, particularly among younger populations (Ger & Belk, 1996). Taking advantage of this emerging opportunity, franchising firms have benefited from the global trend that led to standardization of products and services (Levitt, 1993). International brands such as Jimmy John’s Sandwiches,

Hampton Hotel, Supercuts, Servpro, Subway, McDonald's, 7-Eleven, Dunkin’ Donuts, Denny’s

Inc., and Anytime Fitness, to name a few, are ranked in the world’s 500 top franchise systems

(Entrepreneur.com, 2016). Those franchising business models were developed in and originated in the U.S. As the franchise system has gained popularity outside the U.S. territory as well, the system has expanded across regions, including Europe and Central Asia, East Asia and the

Pacific, Africa, Latin America and the Caribbean, the Middle East and North Africa, and South

Asia (World Bank, 2016).

Since the introduction of franchise-chains of McDonald’s, KFC, and Pizza Hut in the

1970s, the franchise segment in Australia has expanded rapidly. In 2008, Australia noted 71,400 franchising systems which generated $131 billion in sales (Frazer, Weaven, & Wright, 2008).

Australia recorded a tremendous growth of franchise-systems from 693 in 1998 to 1,160 in 2014. 13

In 2014, over 79,000 units of franchise models (70,000 franchise units and 9,000 firm-owned units) were registered compared with 73,000 units in 2012. Given this data, the number of franchise outlets per capita in Australia is thrice than that of the U.S. ( Business View Magazine ,

2015). Not surprisingly, Australia is known as the franchising powerhouse of the world.

Approximately $144 billion in 2014 contributed to the Australian economy annually, a significant increase from $131 billion in 2012. The franchise sector contributes to an expanding employment rate (5.4% raise in 2014) with more than 460,000 employees recruited (Franchising

Australia Survey, 2014).

In Europe, European Franchise Federation (EFF) membership consists of 21 official franchise associations from the European countries. The franchising industry’s contribution to the total employment share was estimated at 10.8% in 2009 across Europe. Interestingly, the franchise average annual turnover growth was recorded high at 7.8% during the crisis years between 2008 and 2011. The proportion of domestic franchise brands varies from 30% to 85% depending on the strong establishment of the franchise systems from one country to another. For instance, France has the highest proportion of domestic franchise brands (85%) compared to

Croatia (30%) because France stabilized and modernized its economy over the previous decades

(EFF, 2012).

According to China Chain Store & Franchise Association (CCFA) statistics, the franchising sector in China recorded approximately CNY 2.5 trillion in total sales in franchise retails in (CCFA, 2012). This figure indicates an exponential growth from CNY 300 billion in

2010 (Edwards, 2011). Currently, China has more than 4,500 franchise systems that provide more than 5 million job opportunities (ITA) Franchising Top Markets Report, 2016). 14

The Middle East and North Africa (MENA) region has a steady growth in the franchising industry at 27% per annum and is now worth more than $30 billion. The Gulf Cooperative

Council (GCC) has become a promising platform for the franchising sector in the MENA region with a total overall population of 1.4 billion and a GDP of $1.9 trillion. With a flourishing change of customer trends in dining and a rapid influx of international tourists, the F&B sector, particularly fast food, is thriving as the top franchising choice in the MENA region (Arab

Business Review, 2016).

As one of the Southeast Asian countries, Malaysia strongly promotes the franchising industry with approximately 480 new franchises venturing into the market in 2013. In 2014 alone, more than 700 franchises were registered in Malaysia, with more than 6,000 outlets operating (Franchise Daily, 2016). The franchising industry in Malaysia was worth RM26.8 billion in 2015, an increase of 2.6% from the previous year (The Star, 2015). The Malaysian

Government is committed to supporting entrepreneurship development through franchising. In that regard, the Malaysian Franchise Association (MFA) was established in 1994 with several objectives—to advocate franchising programs to the public, to serve as a resource for the industry, and to fill relational gaps between the industry and the Malaysian Government in many ways such as financial aid and training (MFA, 2016).

All of these facts clearly indicate that the franchising industry is well accepted by the global commerce community as one of their rapid expansion strategies locally or internationally.

In brief, over 70 countries allow franchise chains to operate in their countries (IFA, 2016).

However, franchising is vulnerable to numerous conflicts that may be detrimental to the business relationship such as ceasing operation or changing ownership. Therefore, it is crucial to identify 15 the core reasons that cause the relational conflicts within the franchising industry so that some preventive measures could be considered for future action.

Franchising Development in the U.S.

The historical development of the franchise system varies from one country to another.

Generally, several authors consider that the franchising business concept started in Europe as early as the 1850s where several European brewers granted rights to particular bars to market their products (Daszkowski, 2015; Herman, 2015). In the mid-1970s, after the establishment of the French Franchise Federation (FFF) in 1971, the EFF in 1972, and the British Franchise

Association (BFA) in 1977, franchising became a prominent business model in the European

Union (EU) (Abell, 2013). The establishment of those franchise associations was, and continues to be, primarily aimed at representing the franchisors’ concerns, safeguarding their interests within the commercial industry (Preble & Hoffman, 1999), and building networks across business communities (Larson, 1991). Also, the associations serve both franchisor and franchisee as an advisory council, a self-regulatory mechanism, and arbitrator in disputes (Knight, 1986).

The long franchising history in the U.S. dates back to the 1840s. Initially, the franchising business model was used by Cyrus McCormick to expand the distribution of his reapers (Haulk,

2015). Another entrepreneur, Isaac M. Singer, grew his sewing machine manufacturing plant through a distributorship concept, known as a franchisee (FranChoice, 2012). The economic force during the post-war era led the franchising industry to experience its exponential growth

(Blackford & Kerr, 2015). Almost 400 U.S. based firms penetrated the global market through international expansion, with nearly 39,000 business units operating in Canada, Japan, Australia,

U.K., and Europe (Preble & Hoffman, 1995). One of the success factors is that the American concept of franchising is focused intensively on marketing, consumer profiling, and motivations 16 of entrepreneurs (Rothenburg, 1973). As reported in 2007 U.S. Census Bureau (U.S. CB) statistics, the number of franchise establishments has reached 4.3 million units, covering 295 sectors with total employment of almost 60 million people.

During its infancy, the franchise system was unregulated and led to a series of many fraudulent acts, deceptive cases, and unfair practices. These situations burdened those franchisees with huge legal implications for their financial state, including bankruptcy proceedings. This distressful scenario resulted in the establishment of IFA with the intention of regulating the industry (Daszkowski, 2015). In the early 1970s, the IFA was formed with voluntary membership. The IFA consistently took proactive steps with the U.S Congress and the

Federal Trade Commission (FTC) on reforming the industry’s relations with franchisees. The

IFA’s mission is “to enhance and safeguard the business environment for franchisors and franchisees worldwide.” In line with this mission statement, the IFA introduced the Uniform

Franchise Offering Circular (UFOC) in 1978, requiring franchisors to provide detailed information to their prospective franchisees. The document was amended in 2007 to include the latest industry trends and was renamed the Franchise Disclosure Document (FDD) (IFA, 2015).

As far as the IFA is concerned, the challenge remains to balance federal and state legislation to accommodate industry demands. For example, ten states require registration by the franchisors for disclosure document but no registration is necessary under federal laws (Emerson, 2015). As of today, the franchising business model exists with a regulatory package through numerous acts and codes of conduct. Along with a robust expansion, the system continues to improve through trial and error in real-world implementation. As a result, franchising is one the most profoundly regulated sectors in the U.S (Daley, 2013) with a dual regulation compliance at the federal and state levels (Spandorf, 2010). 17

Prior to 1971, there was no compilation of data available on U.S. franchising. The U.S.

Department of Commerce then initiated the publication of Franchising in the Economy. After being discontinued in 1986, it was replaced by the 2007 Economic Census Franchise Report.

This report is a collaborative work between the U.S. CB and IFA and it offers comprehensive data on the franchising industry in the U.S. (Lafontaine & Slade, 2015; Smith, 2010).

In many instances, the U.S. courts play a significant role in defining industrial disputes that require judicial interpretation. In a recent development on a joint-employer interpretation debacle, it was decided that McDonald’s USA LLC, the master franchisor, and their franchisees were held jointly liable for unfair employment practices at their franchise restaurants, as both were joint employers (Hoover, 2016). This controversial decision has led to extensive reviews of franchise relationships on several fronts (Wells, 2016). Prior to this controversial case, both franchisor and franchisee were considered as part of a principal-agent relationship, as stipulated in agreements (Opincar, 2016). However, they are now considered joint employers. Based on the court rulings, the National Labor Relations Board (NLRB) has issued a new directive to enforce the implementation of joint employment, not only to the franchising industry, but also to other economic sectors (Lamar, 2015). On the other hand, the court rulings have impacted negatively the franchisor’s expansion plans and furthered U.S. economic growth (FRANdata, 2015).

Restaurant Franchising in the U.S.

Restaurant establishments can exist in either franchise chains or independently-owned business models (Sen, 1998). Restaurants are commonly independently-owned or company- owned (Roh, 2002) and are managed by a sole proprietor or partnership (Brown, 2007). In contrast, restaurant franchise chains could be multi-unit (Kaufmann & Dant, 1996) or single-unit ownership (Caves & Murphy, 1976). According to statistics reported by the National Restaurant 18

Association (NRA), there were about 630,511 restaurants registered in the U.S. in 2015. The restaurant industry in the U.S has generated almost $800 billion sales in 2016 with 14.4 million jobs (NRA, 2016). Franchising can be categorized into two types: domestic and international business models (Moore, Petty, Palich, & Longenecker, 2008). Generally, international franchising consists of two systems: franchising by domestic companies overseas and franchising by international companies within a host country (Williams, 1994).

Many authors have described competitive advantages of selecting a franchise over an independent business (Baron & Schmidt 1991; Ayling 1988; Knight, 1986). Franchising also functions to promote company growth and prolong the survival of new franchisors (Shane,

1996). A variety of continuous supports provided by the franchisor to the franchisee is one of the reasons why people selected franchising (Withane, 1991). Indeed, franchising is a proven business structure that minimizes potential risks of starting a new business (Khan, 2015) and during business operation (Baron & Schmidt, 1991). Other main factors of why restaurant operators choose franchising include lack of capital, the need for more people, and a lack of time

(Siebert, 2004). Franchising was also used to overcome the monitoring problems in managing distance franchise outlets (Martin, 1988). Significantly, the franchising royalty structure and monitoring technology were perceived as improving the coordination route between franchisor and franchisee networks (Lal, 1990). In addition, franchising also provides a strategy to disperse units across vast geographical areas (Combs & Castrogiovanni, 1994) and allows the franchisee to duplicate the franchisor’s business model (Preble & Hoffman, 1995). For instance,

McDonald’s has opened its restaurants at 36,000 locations in over 100 countries (Statista, 2015).

Without losing its international appeal, McDonald’s franchising success is empowered by its menu localization approach (Kelly, 2012). 19

After World War II, the franchising industry experienced rapid growth because of the return of veterans that needed jobs. But since there were not many jobs available, operating a franchise outlet was the best alternative (Illetschko, 2010). Almost every consumer product and service was franchised, including coin-operated laundries, day-care centers, lawn-care services, fast-food restaurants, car dealers, gas retailers, and motels. At this time, the industry was self- regulated by the individual firms (Blackford & Kerr, 2015). For example, A&W Root Beer was the first known franchise beverage distributor in U.S history. Started in 1924, the early establishment of A&W was not standardized in many ways except the A&W root beer and its trademark (Smith, 2013).

Since the early growth of franchising, restaurant chains, particularly fast-food, have become the most popular sector compared to others (Preble & Hoffman, 1995). In line with this development, restaurant chains have emerged as a compelling force in the franchising industry

(Bradach, 1998). However, businesses are exposed to litigation risk due to their complicated activities, with no exception with the restaurant franchising industry. Because franchising deals with a system (Rothenburg, 1973), the disputes are inevitable, primarily through the expansion process (Minkler, 1992). Some disputes resulted in changing of ownership of the restaurant and operation closure (Watson & Everett, 1996), while others have ended up bankrupt, merged, or acquired (Bruno & Leidecker, 1988). All these consequences are considered as failures except a merger, which could create a new business entity (Carroll & Delacroix, 1982). About 60% of restaurants failed during their first three-year of operation (Parsa, Self, Njite, & King, 2005). On the other hand, the loan default rate of franchise restaurants is marginally higher than independently-owned outlets (Jackson, 2014). Business loan default is an indicator of financial issues, which normally emerge at the end of the credit cycle (Richter, 2016). 20

Early recognition of factors that lead to disputes could deter severe broken relationships between franchisor and franchisee. When the potential reconciliation is feasible, it will help to foster the business relationship which consequently could lead to profitability.

Dynamics Relationship in Franchising

A franchise relationship is created, nurtured, and terminated from a dynamic structure that consists of three relational components: control by the franchisor, satisfaction of the franchisee, and conflict that occurs throughout the business operation. It is important to note that this discussion will not engage in debates on the recent U.S. Supreme Court decision that upheld a relationship between franchisor and franchisee as a joint-employer. Even though the court decision has prompted many agitated responses, primarily from the industry players, the focus of this section is to highlight the importance of the collaborative ties between the franchisor and the franchisee in operating their business affairs.

Control by the Franchisor over Franchising Affairs

A contract is the crux in a franchise relationship. This legal document is designed to manifest the duties, responsibilities, and rights of both franchisor and franchisee throughout the business operation cycle. The control vested in the franchisor is stipulated in the contract clauses, which cover extensive aspects of business activities, including types of products sold or services rendered, price, hours of operation, inventory, insurance, staffing, financial aspects, exterior and interior premise layout, decor, and menus (Khan, 2015; Rubin, 1978). The control over these components is intended to protect the franchisor’s intellectual property, to safeguard the standardization features of the brand, and to retain the customer’s perception of the brand image

(Hackett, 2011). It should be noted that control could exist either in centralized or decentralized 21 formats. Centralized control is where the power is retained at the top management of an organization, and decentralization could be the delegation of power to the lower management

(DuBrin, 2009). Most of QSR establishments adopt the decentralized system. It is suggested that the control power allows the franchisor to make decisions for the franchisee including to providing solutions to a rising conflict (Stephenson & House, 1971). The most common control practiced by the franchisor concerns leasing affairs (Barkoff & Selden, 2008). On the negative side, dominant termination power could be used to suppress the franchisee’s right to retain a profitable outlet by transferring the ownership to the franchisor (Klick, Kobayashi, & Ribstein,

2006). It was observed that a proportionate balance of power in the franchise relationship could affect the franchisees’ satisfaction and lead to a sound financial performance (Parsa, 1996). In practice, franchise agreements are usually drafted to protect the franchisors’ interests, not the franchisees’ (Kashyap, Antia, & Frazier, 2012).

Satisfaction of the Franchisees

Franchisees’ satisfaction is a substantial factor in staying franchise relationships (Grace,

Weaven, Frazer, & Giddings, 2013). Some empirical studies learned about franchisees’ satisfaction from various lenses: for instance, franchisees’ satisfaction was measured over the franchisors' pre-opening support, central purchasing, congeniality, and ongoing business support

(Roh & Yoon, 2009); franchisees’ levels of satisfaction were correlated with their post-purchase intentions (Hing, 1999); participative communication were positively linked with franchisees’ satisfaction and performance (Gassenheimer, Baucus, & Baucus, 1996); and the coercive source of power imposed by the franchisor was confirmed to reduce the franchisee’s satisfaction, which could lead to conflict in the franchise channels (Lusch, 1976). It is important to note that the franchisees’ satisfaction is founded on how well the franchisor meets their expectations 22 throughout the business operation (Altinay, Brookes, Madanoglu, & Aktas, 2014). A study on tying agreement among the QSR franchisees suggested that franchisees’ satisfaction was the compelling factor for higher morale, strong cooperation, low termination rates, and the small number of legal actions being initiated (Hunt & Nevin, 1974).

Conflict between Franchisor and Franchisee

Conflict stands as one of the intriguing variables that influenced the franchisee’s exit from the relationship (Frazer & Winzar, 2005). Thus, managing conflict is a crucial affair to sustain franchise relationships (Grace et al., 2013). A model predicting the termination practices by the franchisors indicated that a mature franchise system was prone to discontinue with the relationship compared to an immature system (Frazer & Terry, 2002). With vested power in franchisor’s capacity, the arising conflict should be resolved promptly to deter the collapse of the relationship operating system (Stephenson & House, 1971). The franchisor, in an effort to maximize their compliance, should play a participative role strategically for the franchisees rather than giving directives in addressing the conflict (Davis, 2012). Emphasis on additional regulation has been studied by Lusch (1976) based on the franchisees’ need for conflict resolution due to the coercive source of power by the franchisor. Frazer and Winzar (2005) concluded that the degrees of conflict are strongly related to the franchisee’s decision to exit from the relationship. Parsa (1996) confirmed that most of the franchised restaurants failed due to internal factors including managerial approaches. In many conflict situations, regulatory responses are characteristically more reactive than proactive in approach. 23

Theories on Conflict in Franchising

A broad spectrum of franchising has been studied in many empirical works where the scholars employed various theoretical frameworks to explore the research questions or to test the hypotheses developed. Among the earliest literature on franchising was the theory of resource scarcity among firms in preferring the franchise business model (Oxenfeldt & Kelly, 1969). The franchising business concept was preferred because the firms can expect higher returns from the company outlets. In the resource scarcity theory, the primary reason for creating franchising is the financial capital needed to expand the business. Kaufmann and Dant (1996) explained further the underlying reason why new entrepreneurs preferred the franchising concept. First, the franchisees provide the financial capital necessary for expansion, and second, the franchisees manage the outlets better than company employees would if the units were company owned. The cost of expansion is made by the franchisees’ contribution in unit-level investment, and this vested interest reduces the risks of them acting opportunistically (Alon, Ni, & Wang, 2012).

Franchising is a blanket term for business firms using the franchising format to operate and expand their commercial brands. In practice, business-format franchise and product franchise are two common franchising formats (Kauffman & Rangan, 1990). Additionally, the manufacturing franchise format is feasible, primarily in the beverage industry such as soft drinks and mineral drinking water (Spencer, 2010). The business-format franchise operates by granting licenses to the franchisees to adopt the business structure developed by the franchisors. QSR establishments are an example of a business-format franchise. On the other hand, the product franchise offers the exclusive rights to the franchisees to sell or distribute consumer products or services supplied by the franchisor. The franchisee may opt to use its own brand or the franchisor’s brand. In both formats, the franchisee must pay various fees including a franchise 24 fee (one-time upfront payment), royalty fee, license fee, and marketing or advertising fee to the franchisor in a stipulated time and manner (Rubin, 1978).

In a manufacturing franchise, the manufacturer is granted exclusive rights through a contract to process products described by the franchisor (Spencer, 2010). The business operation is monitored by the franchisor from time to time. The privileges enjoyed and profit earned by the franchisee are subject to terms and conditions agreed upon by both parties in the agreement.

Overall, the franchise structure of business-format, product franchise, and manufacturing franchise varies depending on the franchisor’s business model. The distinctiveness of business format franchising relative to other types of business models lies in the structure of the relationship between the franchisee and franchisor (Spinelli & Birley, 1996). This relationship is a relational exchange bound by contractual agreements between both parties (Harmon &

Griffiths, 2008).

For the theoretical framework, this exploratory study referred to relational conflict theory

(Spinelli & Birley, 1996), institutional theory (Scott, 2007), and conflict management theory

(Antia, Zheng & Frazier, 2013) to delineate the research structure. The core premises discussed under relational conflicts are solidarity, role integrity, and mutuality. In solidarity, the individual business transactions must be completed through the implementations of contract law. In franchise relationships, both parties observe each behavior and develop trust in order to remain positive in the relationship. As for role integrity, both parties (franchisor and franchisee) must adhere to what they have agreed upon and put forth effort to meet their expectations. In practice, this is performed by signing the franchise disclosure document. Also, mutuality deals with the even distribution of commercial transactions between both franchisor and franchisee. Any potential conflict that appears in the franchise relationship is actually the result of dissatisfied 25 franchisees or franchisors and if left unsolved will definitely culminate in a legal dispute

(Spinelli & Birley, 1996).

Legal mechanisms are enacted to impose regulatory control over the progress of franchise development and affairs. Effective regulation accomplishes its objectives. Institutional theory is well founded by three major forces: regulative, normative and cultural-cognitive (Scott, 2007).

The regulative force is sourced from government and industry regulation and policies. The normative strand involves values, expectations, and standards. In regard to the cultural-cognitive, it deals with the organizational and social structures that shape the behaviors of the members.

The institutional theory pays intensive attention to several issues that occur in franchise relationships such as measuring the estimated risks and offering reliable information which is accessible and applicable by the franchisee. The disclosure should guarantee that the franchisee will be able to carry out his duty upon the information given. Lacking all these elements may result in ineffective regulation. Therefore, the aims of the enacted law are not achievable

(Spencer, 2008).

Under the conflict management theory, any dissatisfied party will initiate legal action to reach a resolution. This theory observes the franchise ownership structure, which varies from one entity to another, type of litigation initiation and resolution, as well as the litigation outcomes.

These components are vital to prevent future disputes which may cause monetary losses and reputation damage to the franchising industry (Antia et al., 2013).

In real-world business scenarios, the franchise relationship is complicated and always vulnerable to conflict (Tikoo, 2005). Thus, a franchise business is subject to contentious disputes and conflict. Disputes are defined as a short-term disagreement between parties in which most of 26 the time the issues could be negotiable and solved amicably, while conflict is understood as long- term non-negotiable issues between parties which have deepened for some time (Burton, 1990).

Conflict arises when there is an inconsistency between the reality and intended reaction by the parties in franchising (Cordell, 2015). Conflict occurs at all levels of franchise operations, particularly during the expansion process (Kauffman & Rangan, 2005). During the growing stage of a business, consistent support from the franchisor is crucial. In the absence of this element, the franchisee’s satisfaction towards the franchise system would be affected and could lead to relational conflicts (Justis & Judd, 1989). Further, lack of mutual understanding and conflict in franchise partnerships have been identified to contribute to the disintegration of the franchise business industry (Doherty, 2009).

In the franchise context, the term failure is not defined uniformly. UFOC Guidelines describe turnover as a failure to stay in the existing business under many given instances, including a transfer of the existing unit to a new franchisee, cancellations of the franchised units for any justified reasons, non-renewals of existing contract where the existing unit might be closed, sold, or taken over by the company itself, re-acquisitions by the franchisor and converting the existing unit into company-owned, and other reasons why the unit is not profitable. Depending on the circumstances, turnover could have a broader definition than failure

(Walker & Cross, 1988). Some studies indicate that a business failure is associated with acquisition by the franchisor or purchase by other franchisees (Stanworth & Purdy, 1998).

In an Australian Franchising Task Force Report (1991), the team identified two major categories of franchising failure: internal factors and external factors. For internal factors, causes for failure include under-capitalization of the franchisor, robust expansion of the units, low quality of products sold or services rendered, poor franchisee selection, and franchisor greediness 27 for profits. As for the external factors, the causes could be depreciation of the Australian dollar, higher import duties, cheaper products or services offered by other competitors, and a slump in the domestic economy (Buchan, 2005). Other than those factors, the franchising failure was caused by the passive franchise system, extensive or diverse franchise systems, and the implementation of master franchise where monitoring is difficult (Shane, 1998).

In an empirical study by Weaven, Frazer, Giddings, and Grace (2010) on causes of conflict in the Australian franchising industry, they found that the conflict may occur in two circumstances: ex-ante and ex-post . In the ex-ante situation, the cause of conflict is due to poor franchisee pre-investment selection, which leads to incompatible personalities in the franchising system. During the ex-pos t course, the reasons for conflict are franchisees contradicting expectation as they fail to match the reality and expectation of operating a franchise business, misleading advice from franchisor’s advisory panel, lacking franchisor support in many ways, and an inefficient two-way communication system in conveying corporate information. This was confirmed in another study where the main causes of substantial disputes were related to a lack of system compliance by the franchisee, communication problems, misrepresentation issues, and a lack of franchisee profitability (Giddings, Weaven, Grace, & Frazer, 2011). Based on interviews among the franchisees and franchisors, Storholm and Scheuing (1994) found that the franchisees perceived the primary sources of conflict caused by the franchisors were opportunistic behavior of franchisor to gain more profits, unfair termination of franchise, monopolized procurement through franchisor, ambiguous use of advertising revenues, and irregular structure of franchise agreement. Their findings also revealed that franchisors perceived the conflicts were caused by the franchisees including the non-compliance of provisions 28 stipulated in franchise agreements, default in royalties, and disclosure of proprietary data to the third party.

Among the common issues in franchise-related litigation initiated by franchisees against franchisors are breach of contract, violation of franchise regulations, misrepresentation and fraud, and breach of the implied covenant of good faith and fair (Brody, 2008). Compliance issues could be the most crucial piece in any franchise business, as the operational standardization is the core element for a successful relationship in franchising (Elango & Fried,

1997). The impact of non-compliance is hefty, including the rescission of rights for franchisees and the potential for personal liability for misrepresentation (Eydt & Levitt, 2013). However, only limited guidelines exist for managing franchise systems strategically (Hoffman & Preble,

1991). As the result of conflicts in the franchisor-franchisee relationship, termination of a franchise becomes the final call to end the conflict. Frazer and Terry (2002) identified non- compliance or breach of operating standards as some underlying reasons for the franchise contract being terminated. About 14% of conflicts between the franchisor and the franchisee are resolved through the legal process in the courts (Giddings et al., 2011).

Over the decades, many scholars attempted to provide answers to an intriguing question on how to mitigate and provide the best resolution to conflicts in franchising. The industry disputes require court intervention when the parties fail to resolve their disagreement after the arbitration process. Litigation proceedings between franchise parties of interest indicate a serious manifestation of conflict (Antia et al., 2013). This legal process is described as open behavioral disagreements between the firms (Pondy, 1967). Franchising regulatory-related issues have been addressed by academicians and legal practitioners. For instance, some works dealt with franchising encroachment issues (Vincent, 1998), the nature of code of ethics among 29 international franchise associations (Preble & Hoffman, 1999), the antitrust issues in franchising agreement (McDavid & Steuer, 1999), legal consideration in franchise agreement renewal

(Tractenberg, Cauhan, & Luciano, 2003), regulating the franchise relationship (Steinberg &

Lescatre, 2004), a comparison of legal framework in E.U. and U.S. franchising (Kieninger,

2005), and imperative application of laws to international franchising contracts (Lapiedra, Palau,

& Reig, 2012), just to name a few.

It is important to identify the research gaps before proceeding with this current study. As mentioned earlier, the conflict between franchisor and franchisee in franchised restaurants is a less studied area in franchising industry. This gap offers an opportunity to explore the potential factors for the industry to mitigate the consequences of the conflict. In order to determine the number of existing studies investigated conflicts in franchising, recent literature was reviewed and retrieved from Iowa State University Library database. The advanced search feature was used and the keywords of selection were “conflict” and “franchise”. The search result generated

166 articles related to conflict in franchising. Next, only peer-reviewed articles dated from 2010 to 2015 were selected, resulting in ten articles for review. A summary of the article review consists of author(s) of the article, research context, sample selection, methods employed, and findings, is presented in Table 1.

Table 1

Literature on conflict in franchising from 2010 to 2015

Author(s) Context Sample(s) Method Findings

Wu (2015) Taiwan 246 franchisees quantitative: survey knowledge sharing, trust, conflict management, financial performance, and brand reputation are key factors for franchisees to remain in the franchise system.

Marie Doherty, China 9 franchised retail qualitative: relational constructs of Chen, & Alexander firms (both franchisor interviews power, control, support, and (2014) and franchisee) conflict are obvious in the franchise relationship. Regulatory support is the most crucial to foster the relationship.

Weaven, Grace, Australia 345 franchisees quantitative: mail effective strategies that Frazer, & Giddings survey promote pre- and post-entry (2014) information, open communication exchange, transparent conflict management systems, and personalized support towards the franchisee needs.

Pýnar, McCuddy, Turkey 192 franchisees quantitative: survey franchisor should address & Eser (2014) ethical issues and conflict in maintaining a long-term relationship with franchisee.

Grace et al. (2013) Australia 339 franchisees quantitative: mail confirmation of a survey franchisee’s normative expectations indicated that the franchisor has complied with the terms and conditions as stipulated, thus reducing the potential conflict.

Table 1 (continued)

Author(s) Context Sample(s) Method Findings

Antia et al. (2013) U.S. FDD 1997, 2000, and qualitative: content franchise ownership 2003); Bond’s analysis structure significantly Franchise Guide (1991 played important role in to 2004); Entrepreneur making conflict Magazine (1987- management options. 2003); web sources

Frazer, et al. Australia 11 case studies qualitative: in-depth the expectation gap, trust in (2012) protocol discussions the franchise relationship, with franchisors and relational satisfaction, and franchisees perceived conﬂict were identified as the reasons of conflict in franchising.

Winsor, Manolis, U.S. 3 groups of franchisees quantitative: survey manifest conflict can have Kaufmann, & from Menneke long-lasting negative Kashyap (2012) company impacts on franchisee satisfaction with the relationship and willingness to comply with franchisor’s terms.

Giddings, Weaven, Australia 24 interviewees mix methods: pre-entry franchise Grace, & Frazer (franchisors Stage 1: database knowledge was likely to (2011) and franchisees, from Franchise reduce conflict in franchising Australia Survey franchising relationship. consultants, lawyers, 2006 mediators, accountants Stage 2: semi- and brokers) structured face-to- face interviews Stage 3: eleven case studies Stage 4: mail survey of franchisees

Weaven, Frazer, & Australia 24 franchising experts mix methods: lack of due diligence was Giddings (2010) (lawyers and qualitative interviews linked with the presentation mediators) with industry experts, of unrealistic expectations. case studies, and mail survey to franchisees

Based on the brief review, it can be concluded that despite a demand for a research focusing on legal issues surrounding conflict in franchising (Lafontaine, 2014), this area receives the least attention from scholars. Recently, Lafontaine (2014) urged the prospect franchising research direction to pay more attention to the regulatory realm that forms the contractual 32 relationship in franchising. As such, the industry needs more empirical studies with regards to its legal interpretation to provide a clear understanding about the franchise structure and its stakeholders’ relationships. With a broad compass of franchising research, a significant gap with regards to court interpretation still exists. This study aims at identifying the causes of action of the lawsuits filed and scrutinizing the judicial reasoning on franchise conflict in the U.S. landscape, particularly in New York State, which appears not to have been previously studied.

Trends in Franchise Research

The continuous growth in the franchising industry offers diverse contexts to be investigated empirically. The extensive issues spurred between the franchisor and franchisee have prompted numerous research studies since the early development of franchising (Hunt &

Nevin, 1975; Hunt, 1972; McCarthy, 1970). Particularly when the franchisor made attempts to mitigate the risk of competition, the disputes occurring between the franchisor and franchisee had been the focus of much empirical research (Barrett, 1992). Among the three types of franchising systems—namely, product franchises, manufacturing franchises or business format franchises (Spencer, 2010) —studies on business format franchising are more dominant than those of product franchising (Nijmeijer, Fabbricotti, & Huijsman, 2014). The business format franchising encompasses numerous sectors including restaurant chains, hotel chains, and travel agents (Spencer, 2010). The franchise restaurant sector is the most prevalent based on its dollar sales and number of units compared to the other sectors, and this became the main focus for diverse research studies undertaken under the franchising extension (Nijmeijer et al., 2014;

Kostecka, 1988).

In a literature study reported in the Cornell Hospitality Quarterly (CHQ) from 2008 to

2011, the restaurant sector was the focus of most studies, particularly in the food service 33 management, accounting and financial, and human resource management areas (Law, Leung, &

Cheung, 2012). In a review of eight journal databases including Abi/Inform, Cochrane Library,

EconLit (EBSCO), Emerald, PsycINFO, PubMed/ Medline, Scopus and Web of Science, 126 franchising-focused articles were examined. The study result indicated that behavioral and interaction issues between the franchisor and franchisee (46%) have gained keen interest from researchers including studies of ownership structure and financial performance (Nijmeijer et al.,

2014).

In a recent study by Mohammed, Guillet, and Law (2015), they reviewed 292 hospitality economics research-related articles from three top online databases, such as ProQuest Business,

Sciencedirect, and EBSCOhost. They found that 96% of studies focused on microeconomics topics, which dealt with demand, supply, market segmentation, prices, and elasticity. By comparison, the macroeconomics segment represented only 12% of the total scrutinized articles.

Based on the reviews conducted in those studies, particularly on the franchising-related articles, no research specifically addressed the legal-related issues in franchise restaurants.

With regards to the research methodology, these literature review studies also found that researchers prefer the quantitative approach of data collection over qualitative approach. Survey questionnaires were used in 48 out of 133 articles, while 41 articles used qualitative data, and two articles employed mixed methods (Law et al., 2012). About 101 out of 126 articles analyzed have quantitative data, whereas only seven articles were found to employ mixed methods

(Nijmeijer et al., 2014). In another study, 51% of the 292 articles examined employed quantitative techniques, especially regression analysis (Mohammed et al., 2015). The mixed methods approach appeared to have received the least attention from the researchers in all those studies. 34

Content analysis has been adopted in many research studies to gather data from various sources. According to Weber (1990), content analysis is used as a systematic tool and replicable technique for coagulating a set of words of text into fewer content themes through a specific method of coding. Various types of text data can be retrieved and collected for content analysis including electronic or print form, which are available from interview transcription in numerous publications (Kondracki, Wellman, & Amundson, 2002) and even social media (Lai & To,

2015). Decisions on employing content analysis should be based on the objectives for understanding the phenomena presented in the text or document, interpreting (by categorizing and coding) them to obtain a meaningful result (Mayring, 2000). The direction of a journal over a 26-year study was determined by implementing content analysis in a strategic management literature review (Furrer, Thomas, & Goussevskaia, 2008).

Several qualitative research works used content analysis to investigate the content of documents from various sources of data, including archival documents. The information extracted from those archival documents are utilized to provide answers to various organizational issues and to guide future organizational decisions. A list of franchising-related studies used various types of documents as data sources is presented in Table 2.

Table 2

Types of documents used as data sources in franchising-related studies

Author(s) Type of documents

Brookes (2014) franchise firms’ operating procedures and manuals, company newsletters, employee magazines, internal memos, financial accounts and reports

Antia et al. (2013) 411 litigation cases involving franchisors and franchisees were extracted from the PACER website

Zachary, McKenny, Short, Davis, & Wu (2011) the Franchise 500 list published in Entrepreneur Magazine 2010

Winter, Szulanski, Ringov, & Jensen (2012) proprietary dataset of 11-year, from 1991 until 2001, extracted from a US-based franchise association

Rondán-Cataluña, Navarro-García, data used as international codes of franchising Gámez-González, & Rodríguez-Rad (2012) associations

Hsu & Jang (2009) financial data retrieved from the Standard and Poor's COMPUSTAT database on 100 restaurant firms traded on the New York Stock Exchange (NYSE), the America Stock Exchange (AMEX), and the National Association of Securities Dealers Automated Quotations (NASDAQ)

Lafontaine & Blair (2008) franchise industry census data from 1972 until 1986 available from the US Department of Commerce (USDOC)

Altinay & Wang (2006) firm’s expansion proposals, annual reports, letters, memoranda, agenda, minutes of meetings, formal reports, press releases, brokers’ reports, trade journals, and newspaper articles

Brickley, Misra, & Van Horn (2006) annual reports of Bond’s Franchise Guide

Bates (1995) characteristics of Business Owners (CBO) database compiled by the US Census Bureau from 1984 to 1987

In a recent article reviewing franchising-related publications for more than a 30-year duration, it was evident that content analysis on franchising census data available has become the primary trend among the researchers (Wright & McAuley, 2012). Doherty (2007) suggested that qualitative studies are increasingly employed to study international franchise research. 36

According to her further, these qualitative studies offer rich data and provide a better understanding of operational issues.

With widespread issues emerging in franchise affairs, a number of studies are devoted to franchising failures. One of those studies suggests feasible recommendations to the industry and the government on mitigating the failure cases among the franchising players through regulatory mechanisms (Antia et al., 2013; Grewal & Dharwadhar, 2002; Dant & Schul, 1992). As the issues pertaining to conflict in the franchising industry are gaining more interest from researchers, future research approaches must address the concerns related to franchise conflict

(Galanter, 1983).

Due to the widespread availability of court documents in digital archival form, researchers can now conveniently access the court documents and use them as research materials of choice in conducting content analysis. According to the U.S. Courts website, a court record is defined as “a written account of the proceedings in a case, including all pleadings, evidences, and exhibits submitted in the course of the case”. Electronically available court records provide a dataset to gain information on case management and the parties involved. Those records present judicial opinions of contemporary business disputes in manageable forms (Judicial Technology

Committee (JTC) Resource Bulletin, 2014). A judicial opinion is defined by Kerr (2007) as

“written decisions authored by judges explaining how they resolved a particular legal dispute and explaining their reasoning”. The utilization of judicial records and documents are common in legal research, but social science research has attempted to make use of these archival materials to their fullest extent. A few business-related studies, for example, refer to court records as their samples: a case study was conducted based on several litigation cases to measure the functions of relational contracts in a long-term business relationship (Baker & Choi, 2015), and 411 litigation 37 cases were extracted from the Public Access to Court Electronic Records (PACER) website to determine the conflict management options made by the franchisors and franchisees in disputes

(Antia et al., 2013).

As a matter of fact, the relationships in the franchising system are primarily established through a set of legal documents. Unfortunately, lack of empirical research addressing the underlying causes of their conflicts might contribute to more complicated issues that are detrimental to their relationship. It appears that franchising industry and its legal affairs are experiencing an endogenous connection. This current study attempts to bridge the gaps that exist in the franchising industry by providing evidence accessible from the court records.

Research Design of this Study

Franchising-related research has long been gaining interest from many researchers to investigate its unique and broad context (Nijmeijer et al., 2014; Combs et al., 2004; Quinn &

Doherty, 2000; Elango & Fried, 1997). The qualitative approach is an umbrella term for a diverse approach in research work including mixed methods, phenomenology, ethnography, inductive thematic analysis, grounded theory, case study, discourse analysis, and narrative analysis (Guest, Namey, & Mitchell, 2013). However, in response to multi-disciplinary topics in the franchise research domain, a quantitative approach has taken a great share in many research studies (Law et al., 2012). An early literature observation made over 13 years (1986 to 1999) demonstrated that a qualitative approach was not evident in franchising-related research (Young,

McIntyre, & Green, 2000). The absence of qualitative studies in franchise research is a drawback in understanding the genuine experiences among franchisors and franchisees (Gauzente, 2002).

In effort to provide answers to the research questions, this exploratory study applied a content analysis inductive approach (Yin, 2016; Mayring, 2000), which is considered the most 38 appropriate research design to delve into the causes of franchise conflict, to understand those parties’ causes of action, and to decipher the court opinion in solving those arising conflicts.

Inductive approach is the generation of themes and categories from the raw data to make meaningful findings through a summative content analysis (Hsieh & Shannon, 2005). The summative content analysis begins with a quantifying process of the words or textual contents, then it broadens the coded themes into latent interpretations (Zhang & Wildemuth, 2009).

Basically, the primary data were obtained from New York court record system: the court cases reported and accessible online for 60-year period of 1957 until 2016 as the sample. After executing the preliminary elimination procedures, the data were cross-verified using the IFA database as a validity check. The court documents were analyzed in two phases of coding: manual and Computer Assisted Qualitative Data Analysis Software (CAQDAS) in order to increase the validity and reliability of the findings. Two types of content were interpreted: manifest content and latent content. Manifest content concerns about the “surface” meaning of words and latent content requires “deep” interpretation of the language structures (Neuendorf,

2002). The quotation format for the excerpts of each court record is adopted from The Bluebook

(The Columbia Law Review Association et al., 1991). In brief, this study adapts the content analysis framework as suggested by Zhang and Wildemuth (2009). The content analysis framework is outlined in Figure 1. 39

Figure 1. Content analysis framework adapted from Zhang and Wildemuth (2009).

CHAPTER 3. METHODOLOGY

Introduction

This chapter outlines the rationale of the research methods employed for this dissertation.

This exploratory study used a qualitative method in presenting the data collection process and the subsequent analysis. The first part of this chapter explains the research design selected for this study. Next, triangulations of methods and data show how the data were analyzed using several techniques. Then, the representativeness of samples elaborates the selection process of themes used to reduce the threats to validity and to enhance the trustworthiness of the data. Further, data collection steps and data analysis methods clarify all procedures accomplished for the collection of data and the decision for analysis. To complete this chapter, the final section describes the data management taken during the data collection process and data analysis methods to ensure the data quality and integrity of the findings. The purpose and sample used in this study justify the mechanisms of the entire research methods in order to address the research questions.

Content Analysis Framework of this Study

This study used exploratory content analysis to address the research questions pertaining conflicts arising in franchising relationships, particularly between franchisors and franchisees. In an effort to provide answers to those research questions, this study adapts the content analysis framework suggested by Zhang and Wildemuth (2009) in the following steps: 1) decide if content analysis is the most appropriate research design; 2) identify representativeness of samples; 3) determine unit of analysis; 4) collect data from the New York State court records and

IFA database; 5) analyze data using data and methodological triangulations; 6) assess the coding consistency; 7) report the methods and the findings; and 8) draw conclusions from the findings. 41

The content analysis framework was developed to limit the data sources and to establish the coding frame. All data were obtained from the New York State Unified Court System via online access. The time frame for those cases was restricted to cases filed between year 1957 until 2016. In an effort to correspond with the objectives and to provide answers to the research questions, the franchising cases were limited to the restaurant sector only.

During the content analysis, data and methodological triangulations were employed to enhance the trustworthiness of the data. Further, coding schemes were established inductively by manual in four cycles (Yin, 2016; Marying, 2000). In the first cycle, the PI must determine the level of abstraction of the data. Next, the data should be analyzed by developing thematic and coded categories inductively. During the third cycle, the data were categorized into a specific franchising sector. Further, the data were refined into thematic categories to infer their manifest and latent meanings in the final cycle. After the completion of manual coding, the data was cross-verified using CAQDAS: Microsoft Excel and NVivo.

Triangulation in Data Collection

The fundamental purpose of performing triangulation in the data collection process is to obtain data from various sources by implementing multiple methods or theories (Arksey &

Knight, 1999). The triangulation approach may exist in four primary settings: data triangulation, theoretical triangulation, investigator triangulation, and methodological triangulation (Denzin,

1989). A combination of those triangulations is possible and contributes to the accuracy of the study (Carpenter, 2011). Moreover, Shenton (2004) suggested that triangulation of data could be employed from a diverse range of documents. Additionally, Krippendorff (2013) states that

“content analysis is a research technique for making replicable and valid inferences from texts

(or other meaningful matter) to the contexts of their use” (p. 24). For this current study, data and 42 methodological triangulation approaches were incorporated during the data collection process to increase the trustworthiness of data.

Data Triangulation Protocol

Data triangulation can be obtained from multiple sources or at different times to increase the quality of data (Hair, Celsi, Money, Samouel, & Page, 2011), which compensates for the weaknesses in the existing data (UNAIDS, 2010) and therefore strengthens the validity and reliability of the findings. For this current study, a set of archival documents containing data on the franchise firms and court records were retrieved and gathered from two primary data sources:

IFA database and New York State Unified Court System. Both data sources are publicly accessible online.

The IFA website is a one-stop information center for the franchise industry in the U.S. with various publications and resources. These publications present a great range of issues, reports, and data related to franchising. The IFA website also provides the latest detailed information on active franchising firms, mostly franchisors or master franchisors, so the potential franchisees are able to study and do their homework before deciding on the investment.

Importantly, most of the information available in the IFA website is accessible by the public without a need to register for an account. The registration for an account is required and restricted for registered memberships only. Basically, the franchising firm’s information includes, but is not limited to, the business description, total of investment per outlet, types of support offered, contact person, and qualifications of the potential franchisees. As the nature of court records reported is not in standard format and some are very briefly reported, the data from the IFA website can be used to cross-verify the information gaps that exist from the court records. Archival documents containing data from court records were retrieved and collected 43 from New York State Unified Court System website, which is managed and maintained by

Thomson Reuters Westlaw, a legal research service provider. Court records are authentic and serve as essential data for research, which can be used in a broader context (Schlanger &

Lieberman, 2006). The website of the New York State Unified Court System offers exponential legal-related resources for both criminal and civil jurisdictions for New York State. Among the services available is a compilation of opinions of New York State Courts since 1956, which is accessible by the public at no cost.

The rationale of selecting and examining the New York State court records compared to other states is that New York State has the largest online database of franchise-related cases. This website is professionally managed by Thomson Reuters Westlaw, a legal research service provider. A quick review on Thomson Reuters Westlaw website, via link https://govt.westlaw. com/SiteList, shows that only four states—Alaska, California, Michigan, and New York— provide public access to their court records. Unfortunately, Thomson Reuters Westlaw is not managing other states court records. To compare among those four states, in terms of convenient and records availability, New York State database is the most suitable data source of court records for this study. The information obtained from those states court records is detailed in

Table 3. Moreover, in a QSR master franchisor case study, it was concluded that New York State has the highest franchisor-initiated cases (Drahozal, 2014).

Table 3

Information on states court records service by Thomson Reuters Westlaw

States Title of service Availability Remarks

Alaska Alaska Case Law Service limited to case reports (1962- a search by word using franchise 2017) franchising franchisors franchisor franchisee franchisees franchises generated 127 cases containing those terms

California California Public Law limited to briefs and search by case name, docket Library Briefs Service petitions: number, and date California Supreme Court (cases since 1990). California Courts of Appeal (cases since 1996)

Michigan Michigan Official Reports Supreme Court (Michigan a search by word using franchise Reports) (1942-2000). franchising franchisors Court of Appeals (Michigan franchisor franchisee franchisees Appeals Reports) (1977- franchises generated: 2000) 226 cases for Supreme Court. 151 cases for Court of Appeals

New York New York Officials Report opinions of the New York a search by word using franchise Service Court of Appeals, the franchising franchisors Appellate Division, the franchisor franchisee franchisees Appellate Term, the Supreme franchises produced 2187 cases Court and miscellaneous containing those terms courts since January 1, 1956

Methodological Triangulation Protocol

Several strategies in methodological triangulation can be employed to provide confirmation of findings, thus increasing the trustworthiness of data and strengthen the understanding of the phenomena of interest being studied (Denzin, 1989). It is suggested by

Anney (2014) that trustworthiness criteria may demonstrate the credibility, transferability, confirmability, and dependability of the findings in qualitative studies.

For this study, the inductive approach of data analysis method is adapted from Yin (2016) and Mayring (2000) with some modifications to fit the current research design. The inductive 45 approach is when a researcher interprets raw data from textual materials to derive meaningful themes or concepts (Thomas, 2006). Yin (2016) outlines five analytic phases: compiling, disassembling, reassembling, interpreting and concluding. The first three analytic phases were performed in two major stages: manual coding and CAQDAS. Manual coding performed in the first stage consisted of four cycles. In the next phase, the data coding process used CAQDAS, for example Excel and NVivo, to cross-verify the themes selected in the study and to reduce the threats to validity (Siccama & Penna, 2008). This method was also used to mitigate the potential drawbacks that emerged in the manual coding process. The flowchart of the data analysis, as outlined in step 5 of the content analysis framework, is presented in Figure 2.

Figure 2. Data analysis procedures using five analytic phases. 46

Representativeness of Samples

Qualitative studies are often subject to discriminatory treatments from the quantitative club members because of the common selection of nonprobability samples (Gobo, 2007). From a statistical standpoint, nonprobability sampling techniques are defined as an unknown population selected as samples (Sekaran & Bougie, 2013). In general, if the samples are not representative in character, the researchers cannot draw a generalization from the findings of the research (Polit

& Beck, 2010). As a matter of practicality, both samples in quantitative and qualitative sampling approaches offer distinctive requirements within their own exclusivity (Gobo, 2007). Samples representativeness can be acquired by implementing the following protocols as suggested by

Hair et al. (2011): defining the target population, selecting the sampling frame, designing the sampling method, drawing the sample size, and executing the sampling plan. The decisions on selecting the themes or variables should be dictated by the research interest (Spaeth, 1997).

Determining the unit of analysis deals with interpretive issues which, includes judgmental and selection processes (Kirk & Miller, 1986). It is a challenge for inexperienced and neophyte qualitative researchers to prove rigor because there is no acceptable standard to refer as guidelines (Rolfe, 2006). Due to the distinctive characteristics in philosophical positions and objectives between quantitative and qualitative works, Sandelowski (1993) suggests that alternative frameworks to establish rigor are acceptable. Given the fact that qualitative research is versatile in nature, the analysis procedures involved should be rigorous (Houghton, Casey,

Shaw, & Murphy, 2013). Qualitative researchers recommend carrying out the implementation of verification strategies in an effort to attain the rigor throughout the inquiry process, including integral and self-correcting steps (Morse, Barrett, Mayan, Olson, & Spiers, 2002). In addition to manual analysis, conducting qualitative data analysis using computer-based software could 47 benefit the research process, because it is quick, consistent, and rigorous, which can achieve analytic methods not achievable by manual techniques (Weitzman, 1999).

In line with above suggestions, this exploratory study employed a purposive sampling technique (Babbie, 2008) to provide a representativeness to the sample selected. In determining the nonprobability sampling, it is important to rely on the researcher’s expertise to draw the sample (Smith & Albaum, 2005). For the record, the principal investigator (PI) of this study has several years of experience in legal practice, and this background is essential to develop the sampling design. To begin, the target population was defined to correspond to the research questions. In an effort to answer the research questions, the PI used court records as a data source to identify the cause of conflict in franchise relationships (Antia et al., 2013). To confine the research scope, the data used in this study was restricted to the database of New York State, which has the highest number of court records available online. Next, the court records were filtered to focus on the cases filed either by the franchisors or franchisees. A literature review was used to construct the relevant themes for this study.

Data Collection Process

A systematic data collection process in content analysis is essential to ensure the accuracy of data retrieved and collected in order to preserve data integrity and to offer scientific validity of research findings. Content analysis also aims to generate reliable and valid inferences from texts to the contexts of their use (Krippendorff, 2013). This exploratory study applied the inductive approach using content analysis (Mayring, 2000) to address the research questions:

Further, the data collection process is elaborated in several components, namely: coding frame, unit of analysis and retrieval of the data. 48

Coding Frame

Three coding matrices were created to frame the selected themes based on the data and the literature (Strauss & Corbin, 2008). Each coding matrix represents themes and addresses specific research questions. Excel software was used to generate the themes from the excerpts of the court cases reported from 1957 until 2016. Excerpts from 23 cases were copied and pasted into an Excel spreadsheet and analyzed using “Find & Select” feature. Highest recurring themes were then selected and categorized in separate tables. Themes in Table 4 answers the first question and its sub-questions; themes in Table 5 and Table 6 respond to the second question and its sub-questions. Figure 14 shows a flowchart of the coding process using Excel.

Table 4

Coding matrix: Themes for conflict

Main theme Sub-themes

non-compliance

fraud

unfair competition

Conflict unauthorized use of trademarks or trade name

interference

disruption of product or services

misrepresentation

Duress

Table 5

Coding matrix: Themes for causes of action

Main theme Sub-themes

Claims Issues on Seeking

termination of encroachment monetary damages agreement(s) unfair competition summary judgment

deception to public injunctive relief

Causes of indemnifications motion to dismiss complaint action inducement restitution

breach or violation use of trademarks or trade name specific order of agreement(s) or regulations jurisdiction

provisions in agreements

Table 6

Coding matrix: Themes for court’s opinions

Main theme Sub-themes

Jurisdiction Preliminary order Causes of action Orders

Court’s Within motion or injunction with merit motion or injunction opinions granted granted

Outside motion or injunction without merit motion or injunction dismissed or reversed dismissed or denied

Unit of Analysis

The unit of analysis in this study was all court cases filed by either party (franchisor or franchisee) in New York State and available from the New York State Unified Court System 50 website. According to Holsti (1969), content analysis comprises of a systematic mechanism of gathering, categorizing, analyzing, and summarizing the non-numeric data into purposeful information, which allows the drawing of valid deductions or inferences in an objective manner.

Content analysis has been employed to investigate broad topic areas in legal-related research works (Hall & Wright, 2008) and to examine the trends and patterns that exist in the court records (Stemler, 2001).

Retrieval of the Data

The data retrieval process was completed in two steps consecutively, starting with data collection from the New York State court records service and followed by a validity check from

IFA database. During the first step, in order to use the New York State court records service, the user must agree and accept the terms of use electronically. Upon reaching the New York Official

Reports Service site, the PI used a set of key terms to locate the court records related to the franchising industry. Each attempt used a single key term such as “franchise”, “franchises”,

“franchising”, “franchisor”, “franchisors”, “franchisee”, and “franchisees” to retrieve the court records. The final search was completed by using the combination of key terms “franchise franchises franchising franchisor franchisors franchisee franchisees”, which produced 2,187 court cases. As the result, each attempt showed different numbers of cases. The search steps and case retrieving processes are presented in Figure 3. The search terms used and the number of cases generated are tabulated in Table 7.

Figure 3. Flowchart of court records retrieval process.

Table 7

Number of cases retrieved based on search terms

Search term(s) No. cases

Franchise 2038

Franchises 442

Franchising 77

Franchisor 150

Franchisors 31

Franchisee 289

Franchisees 116

Franchise franchises franchising franchisor 2,187 franchisors franchisee franchisees

The screenshot of New York Official Reports Service webpage during the records searching process is shown in Figure 4. The search engine allows several ways of retrieving court records: word, citation, decision date, case name, judge and opinion type, and docket number or counsel. Given the exploratory approach employed in this study, search by word is the most appropriate option compared to others because other search options need specific information before the search engine can locate the records. 52

Figure 4. Screenshot of New York Official Reports Service webpage.

The search results generated from the New York Official Reports Service webpage is presented in Figure 5. All information was correct as retrieved on 06/03/2017. The list of records is organized in reverse chronological order. For each report, key terms were pre-coded with yellow highlight for a quick skimming. A sample of record retrieved is shown in Figure 6.

During the second step of data retrieving from IFA website, users’ ID is not required to login into the website to access the data. Upon arriving at the IFA website homepage via this link http://www.franchise.org/, several search boxes allow the user to type in key search of a specific category: industry category, investment level, domestic or international settings, and general key search.

Figure 5. Screenshot of search results from New York Official Reports Service.

Figure 6. Screenshot of a case retrieved. 54

Under the “By category” search box, nearly 60 sectors are available to narrow down the search. In regard to F&B category, food sectors consisting of nine different types— “Food:

Baked goods”, “Food: Candy/popcorn/snacks”, “Food: Ice cream/smoothies/yogurt”, “Food:

International”, “Food: Meal preparation”, “Food: Pizza”, “Food: Restaurants”, “Food:

Specialty”, and “Food: Sports Pubs/Wings”. For this study, specific industry selected is “Food:

Restaurants”. Alternatively, name of a corporation can be searched using the “By Keyword” search box.

Screenshots of the IFA webpage are shown in Figure 7 on how the search for the industry or the corporation was made. The flowchart of the database retrieving process from IFA website is presented in Figure 8.

Figure 7. Screenshots of IFA webpage. Above: search for sector; Below: search for corporate.

Figure 8. Flowchart of IFA database retrieval process. 56

Data Analysis Methods

At this analysis stage, the methodological triangulation protocol consisted of two major phases. The first phase involved manual coding, which observed three stages of inductive approach as suggested by Mayring (2000) — namely, determining levels of abstraction, establishing inductive categories, and refining thematic categories. The next phase describes the application of CAQDAS to cross-verify the themes identified in the first phase. The CAQDAS protocol follows the suggestion made by Siccama and Penna (2008), which consists of interrogating interpretations, scoping data, establishing saturation, maintaining audit trails, and creating visual representation using screenshots. In this study, the online version in portable document format (PDF) data was obtained from the New York State court records and processed through two major phases: manual coding and CAQDAS.

First Phase: Manual Coding

At this stage, analysis started with the court records in which coding was performed to subdivide the textual data into categories and offers understanding to the readers of the current research interest (Dey, 1993). A coding matrix provides guidelines during the content analysis process. Four cycles of manual coding were performed using inductive approach consecutively.

Each cycle of coding is explained precisely to address the research questions. Codes may exist in various forms of words, phrases, sentences, or whole paragraphs, either unconnected or connected to a focus context (Basit, 2003). They were later categorized in a systematic manner through a complete cycle (Saldana, 2009). The process continued until a saturation stage was reached where no further coding is achievable (Guest, Bunce, & Johnson, 2006). 57

First Cycle

All 2,187 franchising-related cases were analyzed at this first cycle by determining the levels of abstraction (Mayring, 2000). Each court record is downloadable via a link embedded in the case title. All cases were downloaded and kept in the PI’s personal computer folder for further analysis. After completion of this cycle, the data collected were presented in a descriptive manner. According to Glass and Hopkins (1984), descriptive data of a specific event refers to the collection of data that is organized, tabulated, depicted, and described in the data collection process.

Second Cycle

During this cycle, the inductive approach was employed by establishing the inductive categories. The search engine retrieved a total of 2,187 court records containing terms “franchise franchises franchising franchisor franchisors franchisee franchisees”. These cases dealt with various subject matters and involved numerous parties of interest. In an effort to create inductive categories, each record was skimmed through to eliminate irrelevant themes. This elimination process is also referred to as the data cleaning process and may be used interchangeably in this dissertation. Following are several criteria applied during the elimination process:

1. Duplicate entry of cases.

2. Cases initiated by customers, consignees, employees, government agencies, financial

institutions, and professional firms (real estate agents, accounting firms and law firms).

3. Subject matters involving personal injury claims, tax-related cases, labor relation, and

deceased’s estate.

4. Withdrawn, discontinued, and ongoing trials. 58

In order to ensure saturation is reached, the data cleaning process was repeated three times in a back-and-forth manner. A check list of cases was created to record each re-coding process undertaken. After the completion of this cycle, the total number of cases specified the actual franchisor and franchisee relationship was 140 records.

Third Cycle

This process began with 140 court cases after the completion of first and second cycles.

Folders were created in the PI’s personal laptop to keep the downloaded cases safely and easy for future use. During this cycle, data were classified into two groups to confine the scope of court records. First classification draws out pattern of franchising court records according to year they were reported. A pattern of court records from 1957 until 2016 was organized chronologically in a 10-year duration, for example: 1957 to 1966, 1967 to 1976, 1977 to 1986, 1987 to 1996, 1997 to 2006, and 2007 to 2016.

Second classification was performed to distribute those court records into franchising sectors. All 140 cases were refined into a specific sector — restaurant franchising (IFA, 2017).

Given the fact that the formats of court records reported vary from one case to another — for instance, parties of interest, cause of action, date of filing, place of action or jurisdiction — there was no similar cases reported. A cross-verification process was conducted using IFA database to determine the sector involved for each case was accurate. This process also identified parties in the action whether a franchisor or a franchisee. After the completion of second classification step, this process yielded 23 restaurant franchising with various business models. A total number of court records retrieved from 1957 until 2016 is presented in Table 8. For a quick reference, a summary finding of those records is displayed in Figure 9.

Table 8

Distribution of court records retrieved from 1957 to 2016

1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 3 0 3 0 3 2 1 0 3 2

1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1 0 3 1 1 2 0 1 1 1

1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 2 0 0 1 4 3 4 3 2 2

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 3 4 0 2 3 2 3 2 4 1

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2 3 4 4 1 1 5 3 0 3

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 7 4 4 2 5 3 3 6 2 5

Note . All information is correct as at 06/03/2017

Figure 9. Summary findings of court records for each 10-year duration.

Fourth Cycle

This cycle was initiated with 23 court cases involved with restaurant franchising. Each case was printed out in hard copy, arranged according to the reporting year chronologically and numbered accordingly. Each case was assigned with an identifier, for example Case01, Case02, and so on. The list of cases referred to and analyzed in this research is attached in Appendix B.

Next, the themes selected followed the coding matrix which was inductively derived from the data or the literature (Strauss & Corbin, 2008). The entire process of first phase involving the manual coding is shown in Figure 10.

Figure 10 . Flowchart of the first phase: Manual coding. 61

Intercoder Reliability Test

An intercoder reliability test was conducted to provide appropriate reliability coefficients for each theme coded (Krippendorff, 2013). The first coder is the PI herself and the second coder is a former legal practitioner who had been practicing in civil litigation for many years. The first coder briefly trained the second coder. An online calculator – ReCal2 was used to compute the reliability coefficient for coded data. In order to run ReCal2 tool, several requirements should be observed: use only nominal data, data coded by the two coders should appear in similar unit of analysis, codes must be in numerical form, and input file should be formatted accordingly

(Freelon, 2011).

The acceptable intercoder reliability index used in this exploratory study is .70 as recommended by Lombard, Snyder-Duch, and Bracken (2002). An intercoder reliability test was run separately for each major theme coded as conflict, causes of action, court’s opinions, and their sub-themes. Each code value for themes was represented as 1 if the theme appeared in the unit of analysis and as 0 for absent. Several disagreements of the coded themes were corrected by consulting the second coder. Figure 11 exhibits a flowchart demonstrating the intercoder reliability test process. The results of percentage agreement for themes conflict, causes of action, and court’s opinions are presented in Table 9, Table 10, and Table 11 respectively.

Figure 11 . Flowchart of the intercoder reliability test process.

Table 9

Percentage agreement of intercoder reliability for theme conflict

Sub-themes Percentage agreement

Non-compliance 78.3%

Fraud 73.9%

Unfair competition 100%

Unauthorized use of trademark/tradename 100%

Interference 95.7%

Disruption of products and services 100%

Misrepresentation 87%

Duress 95.7%

Table 10

Percentage agreement of intercoder reliability for theme causes of action

Sub-themes Percentage agreement

Claims termination of agreement(s) 100%

breach or violation of agreement(s) or regulations 95.7%

Issues on encroachment 100%

indemnification 100%

inducement 100% use of trademarks and trade name 100%

jurisdiction 100%

provisions in agreements 95.7%

Seeking monetary damages 95.7%

summary judgment 100%

injunctive relief 100% motion to dismiss complaint 100%

restitution 100%

specific order 100%

Table 11

Percentage agreement of intercoder reliability for theme court’s opinions

Sub-themes Percentage agreement

Jurisdiction within 100%

outside 100% Preliminary order motion or injunction granted 100%

motion or injuncted dismissed or reversed 100% Causes of action with merit 100%

without merit 100% motion or injunction granted 100% Orders motion or injuncted dismissed or denied 100%

Second Phase: CAQDAS Coding

This phase used Microsoft Excel to create a coding matrix and NVivo 11 software, developed by QSR International, to analyze the rich text-based data — the court records. The purpose of implementing CAQDAS as part of the coding process is to cross-verify the themes coded during the manual phase. Two cycles of coding were involved at this phase: creation of coding matrix using Excel and cross-verification using NVivo.

Creation of Coding Matrix using Excel

This process began with 23 court cases involving restaurant franchises. Each case was first downloaded in PDF, labeled with a unique identifier and then saved in the PI’s personal laptop before the analysis started. A table was created in an Excel worksheet containing 23 court cases with their own identifier. Each case was retrieved in PDF and then analyzed individually.

A manual verification was employed on the hard copies of court cases by checking them 65 individually to ensure each case was coded accordingly. Themes from Excel were generated using an editing feature “Find & Select” to complete the coding process. The coding matrices are presented in Table 4, Table 5, and Table 6. The themes extracted from the excerpts of the court records during manual phase were copied and pasted into the worksheet in sequence of the identifiers. Then, the coding process was concluded by reporting the frequency of the themes emerged. It should be noted that only relevant themes to the current study were selected and listed. Figure 12 shows a screenshot of an Excel worksheet.

Figure 12 . Screenshot of an Excel worksheet.

Cross-verification using NVivo

This phase started with importing all 23 court cases in PDF into the NVivo “Internals

Sources” folder. Each case retained its identifier for easy reference. The coding process was employed in two cycles. The first cycle involved a general coding process using “Nodes” where all cases were pooled and coded simultaneously. The themes generated in this first cycle were copied and pasted into Excel for a tabulating purpose. The purpose of performing this first cycle 66 was to obtain the most frequent themes generated from all cases. During the second cycle, each case was coded individually to identify the recurring themes. The coding matrices in Table 4,

Table 5, and Table 6 were referred to match and verify the themes. A ‘Node” folder was created for each selected theme. Then, the coding process was completed for each case. The results produced in the “Node” were saved in PDF for future reference and kept in the PI’s personal laptop. This second cycle was run three times to ensure the accuracy of the themes. One of the screenshots of the selected themes generated in NVivo “Node” is shown in Figure 13.

Figure 13. Screenshot of themes generated using NVivo.

A list of themes that frequently emerged during the cross-verification stage using NVivo is attached in Appendix C. Figure 14 presents a flowchart of the CAQDAS coding process. 67

Figure 14. Flowchart of the second phase: CAQDAS coding.

Data Management

This section explains the organization of data and steps involved in the research cycle to preserve the trustworthiness of the data and the quality of the findings. The objectives of good data management are to safeguard reliable verification of results and to promote future research established on well-founded information (Whyte & Tedds, 2011). For this study, the data management structure adopts the concepts introduced by Steneck (2007) which consist of data ownership, data collection, data protection, and data sharing for a responsible conduct of research. The research process was divided into three stages, namely: prior to the research process, during the research process, and after the completion of research process. 68

Prior to the Research Process

This process involves a series of courses taken by the PI in order to enhance and to prepare for research skills before the research process begins. As part of the graduation requirements, a student should take some courses in research methodology. Thus, the PI completed BUSAD 644X Business Research Methods, RESEV 552 Basic Education Statistic, and RESEV 580 Introduction Qualitative Research Method to meet those requirements. Besides that, one of the doctoral candidacy conditions require the PI to take a mixed methods course.

Therefore, PI accomplished RESEV 550 Educational Research which is designed to provide an understanding of mixed methods approach in a research. To gear-up for the research process, the

PI received a certificate of completion for attending GRST 565 Research Ethic to gain useful knowledge on responsible conduct of research and research ethics. More, the PI also attended

Spring Faculty Conference titled, “Research from Start to Finish: The Responsible Conduct and

Open Access of Research” held in Iowa State University on April 2016. Several in-person consultations were arranged with the liaison librarians at the Parks Library Iowa State University to get their best point of views on how to access the court records appropriately. In an effort to learn more on qualitative data approach, the PI participated in two workshops on qualitative research analysis conducted by Dr. Johnny Saldana and Dr. Carolynn Tubbs.

One of the important issues in conducting research is determining the data ownership

(Steneck, 2007). In this current study, the original dataset of court records was obtained from the

New York State Unified Court system website. The New York Official Reports Service reserves the copyright of the data at all times. However, the findings resulted from the research done by the PI is copyrighted to the PI and Iowa State University. 69

During the Research Process

During this process, all data collection procedures followed an appropriate research protocol in order to generate valid and reliable findings (Steneck, 2007). After the access agreement was signed electronically, the PI could access the archival database for unlimited hours. According to the New York Official Reports Service website, user must agree on the fair use of the materials contained in the archival database. A screenshot of the electronic version of the access and use agreement is attached in Appendix A. The agreement clearly states the license to access and limitations as follows:

The license includes the right to quote from the New York Official Reports Service

(appropriately cited and credited) in memoranda, briefs and similar work product created

by User in the regular course of its research and work. User may also create printouts of

the New York Official Reports Service for personal use and for distribution to third

parties…User may not copy, download, store, publish, transmit, transfer, sell or

otherwise use the New York Official Reports Service or any portion of the New York

Official Reports Service, in any form or by any means, except (i) as expressly permitted

by this Agreement, or (ii) if not expressly prohibited by this Agreement, as allowed under

the fair use provision of the Copyright Act (17 U.S.C.A. § 107). The New York Official

Reports Service may not be downloaded and stored or used in an archival database or

other searchable database. User may not sell, license or distribute the New York Official

Reports Service (including printouts) to third parties or use the New York Official

Reports Service as a component of or as a basis for any material offered for sale, license

or distribution. 70

To comply with the above conditions, the PI ensures that all court records are kept safely in her personal laptop accessible with a password. The court records downloading process was completed within the month of June by the PI herself and only those documents were used for this research. All memos and coding books were always in the PI’s personal possession and kept securely at the PI’s personal locked compartment. These steps were taken to protect the data from potential accident, loss or theft which could jeopardize the research process (Steneck,

2007). The PI also created a back-up file for all research materials to reduce the risk of losing them. On the other hand, the data accessed from the IFA website were only for real time viewing. Therefore, no data from IFA website was downloaded.

After the Completion of Research Process

After the dissertation is approved by the committee members during the final defense and obtains an approval from the Graduate College, the final process is to upload the manuscript to the Iowa State University ProQuest database. After the completion of this stage, all downloaded and stored data should be eliminated from the PI’s personal laptop. All printed materials, memos, and coding books related to the research process should be destroyed appropriately to ensure the integrity of the research protocol.

CHAPTER 4: FINDINGS

Introduction

This chapter consists of two sections. The first section presents the findings generated from the content analysis performed using two data sources: the IFA database and New York

State Unified Court System. The purpose of this study was to investigate types of conflict that are being filed in court in restaurant franchising involving franchisees and franchisors. The data obtained from the IFA website generated findings in this study and answered the following research questions: What types of restaurant business models are involved in the lawsuits? How many cases were initiated by the franchisors or franchisees? What types of parties, international or domestic, dominated the lawsuits in New York State? Next, based on the court records, this study identified what were the causes of action and which causes of action were the most prevalent in restaurant franchising lawsuits. This study further presents the courts’ opinions to address the franchise conflicts. The second section summarizes the entire chapter.

Findings

IFA Database

IFA database was used to cross-verify the primary data obtained from the New York

State court records to provide answers to the first question and its sub-questions. IFA database confirmed the corporate data of 23 cases with various business models. The findings identified the parties in the court records—whether a franchisor or a franchisee. The descriptions of parties are exhibited in Table 12. The findings of the types of business models in franchised restaurants is summarized in Figure 15.

Table 12

Descriptions of parties in the court records

Case(s) Restaurant business model Case initiator

Case01 retail ice cream products franchisee

Case02 retail ice cream products franchisee

Case03 retail ice cream products franchisor

Case04 retail ice cream products franchisor

Case05 QSR offering fried chicken, pizza, and ribs franchisor

Case06 fast food specialized in hotdogs franchisor

Case07 Oriental-type steak franchisee

Case08 family-oriented Italian cuisine franchisor

Case09 fast food franchisee

Case10 coffee and baked goods franchisor

Case11 retail ice cream products franchisor

Case12 retail ice cream products franchisee

Case13 coffee and baked goods franchisor

Case14 fast food specialized in hotdogs franchisee

Case15 QSR and fast casual offering sandwiches franchisee

Case16 Swiss-based café franchisee

Case17 retail ice cream products franchisee

Case18 retail ice cream products franchisor

Case19 subs, wraps, salads, soups, and desserts franchisee

Case20 Kosher burgers franchisee

Case21 fast casual offering Southwestern menu franchisee

Case22 fast food offering subs, sandwiches, and salads franchisee

Case23 Kosher burgers franchisee 73

Figure 15. Summary findings of the types of restaurant business models.

Based on the findings, ice cream outlets dominated the types of business models in franchised restaurant conflict with a total of eight cases (Case01, Case02, Case03, Case04,

Case11, Case12, Case17, and Case18) followed by specialty restaurants (five cases: Case08,

Case19, Case20, Case21, and Case23). Fast food restaurants, baked good outlets, and QSR business models comprise of four (Case06, Case09, Case14, and Case22), three (Case10,

Case13, and Case16), and two cases (Case05 and Case15) respectively, were identified to encounter conflicts. The findings also found that only one Asian restaurant (Case07) was involved in the franchising conflict.

The findings indicated that a total of 14 restaurant franchisees (Case01, Case02, Case07,

Case09, Case12, Case14, Case15, Case16, Case17, Case19, Case20, Case21, Case22, and

Case23), initiated the lawsuits filed in New York State compared to nine restaurant franchisors

(Case03, Case04, Case05, Case06, Case08, Case10, Case11, Case13, and Case18), who initiated the legal suits. Among the eight cases in ice cream business model, five cases (Case01, Case02,

Case11, Case12, and Case17) were initiated by the franchisees. In determining which party is the case initiator, only the first instance in the lawsuit is considered for each case. It appeared that 74 some court records reported several legal proceedings and consolidated them into one proceeding.

The findings showed that out of 14 franchisees who initiated the legal actions, only three are international franchisees—namely from Israel (Case12), Canada (Case16), and Greece

(Case22) whereas the rest are domestic franchisees. The summary findings of the case initiators and types of franchisees who initiated the legal actions were presented in Figure 16.

Figure 16 . Left: Summary findings of case initiators; Right: Types of franchisees who initiated the legal actions.

Specifically, the findings revealed that those ice cream outlets were owned by the same corporate entity: Case01, Case02, Case03, Case04, Case11, Case12, Case17, and Case18. The first case of ice cream store was reported in 1957 (Case01), followed with two cases in year 1959

(Case02 and Case03), one case (Case04, Case11, and Case12) for year of 1965, 1984, and 1988 respectively, and two cases (Case17 and Case18) in year 2004. Furthermore, out of eight cases reported operating as ice cream business model, five cases (Case01, Case02, Case11, Case12, and Case17) were initiated by the franchisees including one international franchisee from Israel

(Case12). On the other hand, the franchisor had initiated four cases (Case03, Case04, Case11, 75 and Case18) against its franchisees. Case18 was unique because the franchisor initiated the appeal proceeding against a lawsuit initiated by its three franchisees. The summary findings of the most popular franchise business model in conflict is presented in Figure 17.

Figure 17. Summary findings of the most popular franchise business model.

New York State Unified Court System

New York State court records were used as the unit of analysis in this study to answer the second question and its sub-questions. Numerous types of conflicts between the franchisors and the franchisees, particularly in restaurant franchising, occurred at any level through their business journey. Using the categorization matrix to classify the themes, it appeared that all conflicts originated from various agreements entered by the franchisors and franchisees. As such, the types of conflict are divided into eight categories—namely (i) unfair competition, (ii) unauthorized use of trademarks or trade name, (iii) interference, (iv) fraud, (v) disruption of products supply or services, (vi) non-compliance, (vii) misrepresentation, and (viii) duress. The 76 types of conflict between the franchisors and franchisees are categorized and presented in Table

13.

Table 13

Categorization matrix of types of conflict between the franchisors and the franchisees

Case(s) Excerpts from the court records Types of conflict(s)

Case01 “…the representation made by them [defendants] therein that they were misrepresentation the title owners of the premises was false.”

Case02 “…the defendant allegedly permitted certain motor vehicles and bicycles unfair competition to be in plaintiff’s area and vend Carvel products…”

Case03 “…to restrain the defendant for using the name “Carvel” upon a motor unauthorized use of vehicle used to deliver and sell ice cream products…in the absence of trademarks or trade written authorization…” name

Case04 “…the defendants without the knowledge and consent of the Carvel trade- unauthorized use of mark owner, wrongfully made and sold or distributed signs and handbills trademarks or trade to franchisees bearing the Carvel name and trade-marks.” name

Case05 “The franchise agreement contained a restrictive covenant which unfair competition prevented Wenke [respondents] from competing with plaintiff within a described market area for a period of one year following the breach or termination of the agreement.”

Case06 “The lease was purportedly terminated by the petitioner because of the non-compliance respondent’s failure to make certain payments under the franchise agreement. The petition however fails to indicate which payments under the franchise agreement were delinquent and constituted basis of the notice of termination.”

Case07 “In response to an inquiry by the New York State Liquor Authority non-compliance concerning plaintiff’s proposed operation and defendant’s status in this franchise business…plaintiffs asserted that the defendant failed to perform its agreement to aid and advise them.”

Case08 “[Petitioner] commenced the present proceeding…on the grounds that the non-compliance only agreement which provided for arbitration was between the [respondents] and Sbarro Licensing of Virginia.”

Case09 “…a failure to complete construction in a timely fashion resulted non-compliance in a loss to the Yuans [respondents] of their lease, franchise, and approximately $90,000 already paid to Sbarro organization [appellant].”

Case10 “…whether or not the release in question was procured by means of duress duress…”

Table 13 (continued)

Case(s) Excerpts from the court records Types of conflict(s)

Case11 “Respondents’ Carvel store failed…Carvel Corporation [Plaintiff] brought misrepresentation; non- a breach of contract action against respondents immediately after the store compliance failed…respondents commenced an action…against Thomas Carvel [appellant]…on the ground that he induced them to purchase a franchise…”

Note . This case contains a consolidation of two separate actions.

Case12 “…the plaintiffs appeal from an order of the Supreme Court…[among interference; disruption others] 1) terminating the plaintiff’s executive license to sell Carvel of products and services; products in Israel; 2) taking any action to solicit or advertise for a new non-compliance licensee...; 3) interfering with or attempting to halt or disrupt shipments by suppliers to the plaintiffs…”

Case13 “No payments were made on these [franchise and loan] agreements…for unfair competition the purchase price. The defendants raise defences…that Dunkin’ Donuts had omitted the locations of competing franchises…”

Case14 “...period of time set forth in the franchise agreement was unreasonably fraud short…that the claim accrues at such time as all of the facts establishing the alleged fraud...”

Case15 “Contending that plaintiff had reneged on its promise to make non-compliance contractually-fixed contribution on behalf of four of its franchise...those agreements require plaintiff to spend at least 3% of its monthly gross sales for advertising and to contribute of that sum to the advertising cooperative…”

Case16 “…to prevent plaintiffs from fulfilling obligations of a 1996 interference; non- United States franchise agreement and thereby obtaining sole compliance and exclusive franchise rights to open Mvenpick restaurants throughout United States.”

Case17 “…to recover damages for breach of a franchise agreement and tortious interference; non- interference with existing and prospective business relationships…” compliance

Case18 “Several franchisees of Carvel Corporation…complaining of the unfair competition distribution of Carvel’s products through supermarkets that competed with the franchisees.”

Case19 “…based on the representations made by plaintiff concerning information misrepresentation supplied to it by defendant...that the defendants’ representations, which were not contained in the prospectus…”

Case20 “the subject licensing agreement, which granted it the right to use the non-compliance defendants “Marks and Operating System” in exchange for a lump sum payment and royalties, is a franchise agreement…that the defendants did not register an offering prospectus prior to entering into the subject agreement with the plaintiff.” 78

Table 13 (continued)

Case(s) Excerpts from the court records Types of conflict(s)

Case21 “…Market development agreement (MDA) which authorized them non-compliance [plaintiffs] to open three restaurants…they failed to open any additional restaurants within the time allotted…”

Case22 “Petitioners failed to show that the petition was served on a person non-compliance authorized to receive service of process…commencement of the proceeding was untimely”

Case23 “…failure to indemnify the plaintiff for legal fees incurred in defending a unauthorized use of federal trademark infringement action…also breach of contract based upon trademarks or trade the defendants’ delivery of meat to the plaintiff in nonrefrigerated trucks name; non-compliance and their lack of authority to assign a certain logo.”

From the analysis, it is found that non-compliance of various kinds of agreements and procedural law appears to dominate the types of conflicts that occurred between the franchisors and franchisees. The findings indicated that non-compliance was reported in 13 cases out of 23 restaurant franchising cases. Next, unfair competition was found to occur in four cases. Further, three cases were identified to experience each of the following conflicts: misrepresentation, interference, and unauthorized use of trademarks and tradename. On the other hand, conflict in duress, fraud, and disruption in products supply and services were found to occur in one case respectively. It should be noted that five cases have a combination of more than one conflict —

Case11, Case12, Case16, Case17, and Case23. The summary findings of the types of conflicts in restaurant franchising is shown in Figure 18. 79

Figure 18. Summary findings of the types of conflicts in restaurant franchising.

Either franchisor or franchisee can initiate a lawsuit by presenting their causes of action.

Generally, parties may claim for two primary reasons—namely breach or violation of various agreements or regulations, and termination of various agreements—in order to initiate the lawsuits. Some cases may contain several causes of action. However, it is the court’s duties to determine whether every lawsuit brought to the court’s attention has a valid cause of action to be decided upon. Therefore, it is important to identify various kinds of causes of action for each case filed in restaurant franchising that becomes the court’s reasoning to decide accordingly. In an effort to provide a better understanding of how to identify the causes of action in a case, it is necessary to include the facts of the case, which were extracted and summarized from the court records as shown in Table 14.

Table 14

Causes of action for each case in restaurant franchising

Case(s) Excerpts from the court records

Case01 Facts of the case: ...the movants leased to defendant Carvel Stores Realty Corporation a parcel which they owned...that pursuant to the terms of the written lease they constructed, at their own expense, a Carvel Dari- Freeze store...known as Carvel Store No. 183, in accordance with plans and specifications prepared and submitted by the said defendant, which approved and accepted said structure when it was completed; that in the lease the movants represented that they had title to the parcel of land...foregoing structure was later erected, and agreed that the lease could be assigned only to franchised operators of the defendant Carvel Store No. 138...The plaintiff executed a franchise contract with defendant...plaintiffs entered into possession of said store...[plaintiffs] alleged that said Carvel Store No.183 erected on the movant’s property as aforesaid encroached on property belonging to the Commonwealth of Pennsylvania...the Commonwealth of Pennsylvania instituted an action against the movants to compel them to remove the encroachments...by a decree...within 90 days to remove from the highway...advertising device and telephone booth...further directed...within 60 days...remove from the refreshment stand structure...

Cause(s) of action: “...as a result of said encroachment plaintiffs, as assignees-lessees could not and did not quietly enjoy said premises. Consequently, they seek judgment from the movants for the return of the rent and taxes paid by them, totalling $6,431.37...”

Case02 Facts of the case: By that [franchise] agreement, defendant agreed, that so long as the plaintiff complied with all the terms of said agreement, defendant “will not own, operate, or franchise any retail store for the sale of Frozen Dairy Products within one-half mile in a metropolitan area or 2 miles in a suburban area in either direction...deemed to cover a metropolitan area.

Cause(s) of action: There are 3 causes of action in this case: i) a reformation of said agreement to alter plaintiff’s exclusive area of operation from one-half mile in either direction...to a one-half mile radius from plaintiff’s store; a purported fraud by the defendant in representing that the meaning of said provision was a one-half mile radius from the store, and that defendant had taken a survey on plaintiff’s market on the basis of one-half mile in every direction from his store. ii) alleged unfair competition that defendant allegedly permitted certain motor vehicles and bicycles to be in plaintiff’s area and vend Carvel products...said vehicles, being owned by Carvehicles Corporation, an independent corporation, which franchises them out to individuals. The plaintiff alleges that defendant controls and owns the Carvehicles Corporation. iii) the nature of unfair competition and for damages of $10,000 by reason of defendant having allegedly permitted the Carvel product vended from the said motor vehicle and bicycles to be of inferior quality.

Table 14 (continued)

Case(s) Excerpts from the court records

Case03 Facts of the case: The franchise agreement authorizes the defendant to use the name “Carvel Dari-Freeze” in the operation of a retail store at the location indicated...that “nothing herein contained shall be construed to give operator any right or license in or to the use of the Carvel name or of any symbol, device, or design of Carvel, other than as is specifically authorized hereunder or as may be hereafter authorized by Carvel in writing.

Cause(s) of action: “To restrain the defendant from using the name “Carvel” upon a motor vehicle used to deliver and sell ice cream products at a location other than the retail store at which defendant is authorized to sell ice cream products pursuant to its franchise.”

Case04 Facts of the case: The plaintiff is engaged in the business of manufacturing and selling to distributors under franchise, various types of soft ice cream...the plaintiff introduced a new product...advertised it heavily among its franchised dealers, but to little avail...The Carvel Farms Corporation set about marketing its [new product] through Bohack Super Markets. This step was taken despite a passage in the Carvel Standard Operation Procedure Manual Number 704...distributed to all the franchise dealers. The defendant and other dealers met...and agreed to use advertising signs, printed by the defendant...in the colors and style used by Carvel, to advertise the [new product] for sale in their own establishments at a price of 45 cents, 30 cents less than the Bohack price. The plaintiff commenced this action to enjoin the making or use of such advertising material.

Cause(s) of action: There are four causes of action: i) the wrongful making, sale or distribution of signs and handbills to plaintiff’s franchisees, bearing the Carvel name and trade-marks. ii) the trade-marks are registered in the State of New York as trade-marks and service marks and that the defendants made and distributed colourable imitations without consent, to deceive the public. iii) there exists a likelihood of dilution of the distinctive quality of Carvel name and trade-marks. iv) the plaintiff is obligated to its franchisees to protect the value and exclusivity of the Carvel name. The complaint seeks money damages and injunctive relief.

Case05 Facts of the case: The plaintiff corporation issued a franchise...to defendant Wenke for the operation of a take-out food business. The agreement contained a restrictive covenant which prevented Wenke from competing with plaintiff with a described market area for a period of one year following the breach or termination of the agreement. When Wenke....selling his business to one Volpe, Wenke and plaintiff entered into a release so that a new franchise could be issued to Volpe. The agreement released Wenke “from all liability under contract...which is cancelled in its entirety.

Cause(s) of action: Whether the issue on release agreed by both parties upon cancellation or termination of the franchise agreement could be intended to apply to the restrictive covenant.

Table 14 (continued)

Case(s) Excerpts from the court records

Case06 Facts of the case: This proceeding arises out of a franchise agreement executed by the petitioner, as franchiser, and the respondent’s predecessors in interest, as franchisees...and a lease executed by the petitioner...as “landlord”, and the respondent...as “tenant” ...On February 11, 1972 the petitioner wrote to the respondent: “Reference is made to the Franchise Agreement between us dated November 8, 1968. Pursuant to Article 13 you...are required to pay us...weekly franchise fees no later than Friday of each week for the preceding week...the weeks for which weekly franchise fee payments are past due” ...The respondent indicates that it received the aforesaid notice of arrears on Monday February 14, 1972. It is undisputed that the franchise fee for the week ending January 30 was paid by the respondent on February14, 1972 and the franchise fee for the week ending February 6, 1972 was paid by the respondent on February 24, 1972. The petitioner, relying on paragraph 26 of the franchise agreement, which provides “notice...shall for all purposes be deemed to have been given to and received by the party for whom entitled on the date the notice was so mailed...

Cause(s) of action: “The petitioner claims that since the respondent’s payment of February 24, 1972 was three days late, it constituted a default under the franchise agreement, and the petitioner was entitled to terminate the lease...and the respondent will be required to quit and surrender the lease premises.”

Case07 Facts of the case: ...It appears that defendant’s principal office and place of business is in Florida...It advertised in New York in the Wall Street Journal, soliciting licensees of its franchise operation, and plaintiffs responded by letter to the defendant in Florida. As a result plaintiffs signed an application for such a license and defendant, in Florida, accepted it, the total price being $20,000. Plaintiffs paid $5,000 to the defendant and were to pay the balance when they completed construction of their restaurant and secured their liquor license. Defendant agreed to forward the franchise license to plaintiffs upon receipt of the remaining $15,000...Soon thereafter plaintiffs asserted that the defendant failed to perform its agreement to aid and advise them, and they sought to rescind the contract and demanded the return of $5,000 payment. Defendant refused the demand and the plaintiffs instituted the action to recover the money by service of summon and complaint in Florida.

Cause(s) of action: The defendant moved for dismissal of the complaint upon the ground that the lacked of jurisdiction because defendant is a foreign corporation and did no business in the State, either generally or in connection with this transaction. The plaintiffs contend that under the contract they became the agents of defendants in this State, that their acts, therefore were the acts of defendants, and such acts constituted doing business in this State and thus subjected defendant to the jurisdiction of this State.

Table 14 (continued)

Case(s) Excerpts from the court records

Case08 Facts of the case: ...It was clear from the beginning that the Yuans were given reason to believe...that they were dealing with “Sbarro”, a single business entity which, only because of legal technicalities, contracted under the various names., Sbarro New York and Sbarro Licensing of Virginia, or Sbarro Holding Company, Inc. The basic concept understood by the Yuans was that Sbarro would build and have ready for operation, at an agreed cost, a fast-food restaurant duplicating the other Sbarro franchises operated in New York and other States...Prior to the signing of the sublease, the franchisees were not told they would have to contract with different named Sbarro corporations... A year after the execution of the original franchise agreement, that other Sbarro corporations came into the picture. This was after the Yuans had already invested about $40,000. The Sbarro corporation finally involved in the Yuan franchise deal included Sbarro Licensing, Inc., Franchise Contracting and Equipment Corporation, in addition to Sbarro Holding, Inc., Sbarro New York and Sbarro Licensing of Virginia, Inc...The only corporation not part of the Sbarro group was the owner/landlord of the Fairfax, Virginia Mall...the landlord claiming construction of the restaurant was not timely commenced (by [Sbarro] Franchise Contracting and Equipment Corp.), terminated the lease, thereby foreclosing the Yuans from opening the franchised restaurant...

Cause(s) of action: Two actions have been consolidated. “The petitioner commenced the present proceeding to stay the arbitration...on the grounds that the only agreement which provided for arbitration was between the Yuans [respondents] and Sbarro Licensing of Virginia. The Yuans instituted a second proceeding to join Sbarro Licensing of New York and Franchise Contracting and Equipment Corp., other Sbarro corporations involved in the franchise purchase by the Yuans, as respondents in the then pleading arbitration proceeding.

Case09 Facts of the case: ...the Yuans signed a franchise agreement with [Sbarro] Licensing. The contract required them to sublease their store from Holding, and provided that a breach of the sublease would also constitute a breach of the primary agreement...[Sbarro] Licensing of Virginia, a subsidiary of Licensing which had been established to comply with Virginia law with regard to establishing franchises in that State, succeeded Licensing as the entity dealing with the Yuans. The agreement between the Yuans and Licensing of Virginia was the only one which contained an arbitration clause...the Yuans and Holding entered into a subleasing agreement and Licensing transferred a $20,000 payment which the Yuans had previously made to it, to Holding as security for the sublease...the Yuans also entered into an agreement to have Contracting, another Sbarro operation, to construct the restaurant. Checks made out to contracting were subsequently indorsed and deposited by Licensing...Licensing of Virginia entered into a contract with a Fairfax, landlord to construct the store, but a failure to complete construction in a timely fashion resulted in a loss to the Yuans of their lease.

Cause(s) of action: “The Yuans, pursuant to their contract with Licensing of Virginia, now seek to arbitrate their dispute, with not only Licensing of Virginia, but Licensing, Holding, and Contracting as well.”

Table 14 (continued)

Case(s) Excerpts from the court records

Case10 Facts of the case: “...An immediate trial of the issue raised on Dunkin’ Donuts of America’s motion to dismiss defendant’s counterclaims on the basis of the release would not dispose of the case but would require the court to conduct two separate trials.”

Cause(s) of action: “There are issues of fact as to whether or not the release in question was procured by means of duress which preclude dismissal of defendant’s counterclaims.”

Case11 Facts of the case: “...[the respondents] entered into various agreements with Carvel Corporation for the purchase of franchise...Respondent’s Carvel Store failed...Carvel Corporation brought a breach of contract action against respondents immediately after the store failed. Note . Two actions have been consolidated.”

Cause(s) of action: The respondents commenced an action against Thomas Carvel in his individual capacity on the ground that he had induced them to purchase a franchise and had personally guaranteed their success. In another proceeding, Thomas Carvel moved a for an order granting summary judgment in his favour on the ground that none of the writings or acts which form the basis for plaintiff’s complaint were executed or performed by him in his individual capacity.

Case12 Facts of the case: ...the defendant Carvel Corporation (Carvel) entered into two contracts with the plaintiffs’ assignor entitled “Carvel International License Agreement” (License Agreement) and Carvel International Management Agreement (Management Agreement). By the terms of these agreements, Carvel sold to the plaintiffs the right to establish and franchise 20 Carvel ice cream stores throughout the “State of Israel and Israeli occupied territories...(Areas)”...The License Agreement provided that the “Licensee’s right to establish Carvel Stores shall be exclusive, subject to the exceptions contained herein, both for the Area as herein defined and for the duration of the Agreement”. The Management Agreement provided that “Carvel will supply management procedures and techniques, the equipment, products, ingredients, supplies and packaging materials as needed by the Distributor and its retail licensees from time to time in the conduct of their respective distributorship and Carvel Store businesses, all in accordance with specifications, methods, information and expertise supplied by Carvel...”...the plaintiffs had opened seven...Carvel ice cream stores in Israel...An attorney from Carver’s legal department sent to Israel to inspect the Carvel stores and facilities allegedly found unauthorized machinery and ingredients being used to make the ice cream and products sold in Carvel stores...Carvel served notice of breach of contract to the plaintiffs...The plaintiffs then learned that Carvel had contacted an Israeli newspaper about publishing the following advertisement: “Commercial Ice Cream Manufacturer Wanted to produce and wholesale Carvel ice cream products throughout Israel. Contact: Carvel Corporation.

Cause(s) of action: “The plaintiffs filed this suit alleging breach of contract, fraud and intentional interference with the contractual and business relationships between the plaintiffs and their sublicensees[and] sought damages and an injunction against any action by Carvel to terminate the agreements or to advertise for a new licensee.”

Table 14 (continued)

Case(s) Excerpts from the court records

Case13 Facts of the case: The defendants purchased a Dunkin’ Donuts shop from MAA Associates and subsequently entered into franchise and loan agreements with Dunkin Donuts. No payments were made on these agreements or on promissory notes given to MAA by the defendants for the purchase price...The defendants...contending that Dunkin’ Donuts had omitted the locations of competing franchises from a list supplied before the defendants entered into the franchise agreement...a violation of the General Business Law’s disclosure requirements...and constituted common law fraud and misrepresentation under General Business Law...

Cause(s) of action: “Dunkin’ Donuts seeks to recover fees and damages based on the breaches of the franchise and loan agreements, as well as injunctive relief.”

Case14 Facts of the case: ...The claims of the plaintiff franchisee alleging fraud and violation of General Business Law article 33, commonly referred to as the New York State Franchise Sales Act (Franchise Act), are time barred pursuant to a provision of the parties’ franchise agreement. This provision indicates that “ [a]ny and all claims and actions arising out of or relating to the Agreement, the relationship of Franchisee and Franchisor, or Franchisee’s operation of the Franchised business...shall be commenced within one (1) year from the occurrence of the facts fiving rise to such claim or action”...[Earlier] The Supreme Court found that the period of time set forth in the franchise agreement was unreasonably short, and would allow for a claim to accrues and expire before the execution of the agreement...

Cause(s) of action: “The franchisees’ claim of enforcement of the limitations of the agreement for alleged fraud and violation of General Business Law.”

Case15 Facts of the case: ...Plaintiff operates restaurants in New York pursuant to franchise or license agreements between it and defendants, the Florida headquartered franchiser. Contending that plaintiff had reneged on its promise to make contractually-fixed contributions on behalf of four of its franchises to an area advertising cooperative, defendant terminated those four franchises...In any event, the allegations of the complaint are refuted by the franchise and license agreements. Contrary to the plaintiff’s allegations, those agreements require plaintiff to spend at least 3% of its monthly gross sales for advertising and to contribute a designated portion of that sum to the advertising...the agreements allow plaintiff only 10 days, not 30, within which to cure any default in paying its advertising dues...defendant gave plaintiff 48 days within which to cure a default...

Cause(s) of action: Plaintiff commenced this action for breach of contract, injunctive relief and monetary damages. Defendant appeals from an order granting plaintiff’s motion for a preliminary injunction enjoining defendant from terminating plaintiff’s franchises and denying defendant’s motion to vacate the temporary restraining order and to dismiss the complaint.

Table 14 (continued)

Case(s) Excerpts from the court records

Case16 Facts of the case: “This is an action by a Canadian franchisee and its Delaware subsidiary against Swiss-based franchiser companies...to prevent plaintiffs from fulling obligations of a 1996 United States franchise agreement and thereby obtaining sole and exclusive franchise rights to open Mvenpick restaurants throughout United States.”

Cause(s) of action: “The plaintiffs alleged for breach of contract and tortious conduct by the franchiser.”

Case17 Facts of the case: “...The plaintiff, owner of a Carvel franchise, has pointed to no provision of the franchise agreement which would prohibit the distribution of Carvel products in supermarkets or convenience stores. Although the franchise agreement prohibited the opening of another Carvel store...within a quarter of a mile of the plaintiff’s store...”

Cause(s) of action: This is an appeal for an order from the Supreme Court, made by plaintiff to recover damages for breach of a franchise agreement and tortious interference with existing and prospective business relationships...The complaint alleges of continuing wrongs occurring until the end of October 1999. The Supreme Court improperly determined that the action was time-barred.

Case18 Facts of the case: ...Until the early 1990’s, Carvel ice cream was distributed only through franchised stores, and Carvel had repeatedly told its franchisees it had no plans to sell through supermarkets. A decline in Carvel’s fortunes caused it to change its mind, however, and Carvel adopted a “supermarket program.” The program called for sales to supermarkets by Carvel itself and by those franchisees that chose to participate in the program-which required franchisees to pay substantial license fees and to upgrade their stores. Most franchises chose not to participate. From 1993 to 2000, the supermarket program grew rapidly, while many franchised stores went out of business...Several franchisees of Carvel Corporation sued...complaining of the distribution of Carvel’s products through supermarkets that competed with the franchisees...The franchisees asserted that Carvel’s supermarket program was harmful to them...Among their grievances are that Carvel sold to supermarkets at bargain prices; that it issued coupons to customers that Carvel would redeem from supermarkets but not from franchisees; and that those coupons were printed on bags that Carvel required franchisees to use in their stores...they contend...Carvel’s supermarket program was not “consistent with the customary practices and standards in the franchise industry...

Cause(s) of action: The franchisees’ tort claim is that Carvel unlawfully interfered with the relationships between the franchisees and their customers...by implementing its supermarket program, Carvel induced the customers not to buy Carvel products from the franchisees...whether that inducement was tortious interference under New York law...the franchisees [also] claim that Carvel did use wrongful “economic pressure”...

Table 14 (continued)

Case(s) Excerpts from the court records

Case19 Facts of the case: ...plaintiff’s claims pursuant to General Business Law...based on representations made by plaintiff concerning information supplied to it by defendant...Issues of fact exist as to the extent and reasonableness of plaintiff’s reliance on defendant’s alleged oral representations...General Business Law...requires that an offering prospectus be registered with the Attorney General prior to the offer or sale of franchise, plaintiff alleged that defendant’s representations, which were not contained in the prospectus...The defendants rely on release and waiver clauses...

Cause(s) of action: “The plaintiff claims for common-law tort and for breach of contract.”

Case20 Facts of the case: ...The defendants own and operate a kosher hamburger restaurant...under the name “Burger Bar’...The parties entered into a “licensing agreement,” which permitted the plaintiff, in exchange for a fee, to open a new restaurant using the “Burger Bar” name and logo. Under the terms of the agreement, the plaintiff was required to purchase all of its supplies from the defendants, and pay the defendants royalties.

Cause(s) of action: The plaintiff subsequently commenced this action against the defendants alleging...that the parties’ agreement was actually a franchise agreement within the ambit of Franchise Sales Act, and that the defendants violated the Franchise Sales Act by failing to register an offering prospectus with the Attorney General...The plaintiff sought relief, among other things, the return of the money it had paid pursuant to the agreement, and the award of an attorney’s fee.

Case21 Facts of the case: ...In 2003, plaintiff and non-party entered into a Moe’s market development agreement (2003 MDA), which authorized them to open three restaurants in Albany County in accordance with a development schedule. They paid $50,000 fee to Moe’s for this right and thereafter opened one restaurant in the Town of Guilderland, Albany County. They otherwise failed to open any additional restaurants within the time allotted by the 2003 MDA. Accordingly, in early 2005, Moe’s terminated the agreement, but, at the same time, offered to consider a new agreement. That offer led to this action...the 2005 MDA referenced the franchise development fee as having been previously paid, granted plaintiffs the right to open two additional restaurants (for a total of three) and required that the first additional restaurant open by February 2006 and the second by December 2006. One site proposed by plaintiffs in 2005 for a restaurant on Wolf Road in the Town of Colonie, Albany County was not approved by Moe’s. The first (and only) restaurant opened by plaintiffs under 2005 MDA was on Central Avenue in Colonie, but it did not open until December 2006, which was after the deadline set in the 2005 MDA...terms of the 2005 MDA provided that failure to comply with the development schedule would result in the agreement “automatically expiring,”...Moe’s had also entered into an MDA in 2004 with a corporation controlled by defendant Jonathan Trager...Moe’s and Trager entered into a new MDA (2007 Trager MDA)...included a grant to Trager of exclusive development rights for a five-mile radius around his area of responsibility...This exclusive rights did not apply to the two restaurants already operated by plaintiffs...Trager did, however, open a restaurant on Wolf Road in Colonie, albeit at a different location on the road than plaintiffs had proposed in 2005...

Table 14 (continued)

Case(s) Excerpts from the court records

Cause(s) of action: Plaintiffs commenced this action in late 2007 asserting five causes of action. After extensive disclosure, defendants made motions for summary judgment. Supreme Court dismissed all causes of action as to Moe’s, dismissed all but the fifth cause of action (alleging tortious interference with contract) as to Raving Brands and of the three causes of action asserted against the remaining defendants, dismissed one cause of action. Plaintiffs appeal, limiting their argument to their breach of contract causes of action against Moe’s and Raving Brands that were dismissed. Plaintiffs contend...whether Moe’s acted in good faith under the 2005 MDA, Specifically, they assert that Moe’s breached the 2005 MDA by not approving locations they proposed for a third restaurant and also granting an exclusive are to Trager in 2007 that foreclosed plaintiffs from adding a third restaurant in...Albany County area.

Case22 Facts of the case: ...The provision of the parties’ agreements on which petitioners rely concerns only service of a notice required by the agreements, not service of process required by the [New York Civil Practice Law and Rules] CPLR...commencement of the proceeding was untimely since the purported service occurred more than 90 days after the awards were received.

Cause(s) of action: “[The petitioner] petitioned to vacate two arbitration awards...to disqualify respondent’s counsel, and to stay the proceeding, and dismissing the proceeding...”

Case23 Facts of the case: ...the plaintiff knew what the defendants were offering to sell...to multiple persons at the same time that the plaintiff and the defendants entered into their agreement, and that the plaintiff was both aware of and complicit in the defendants’ violation of the Franchise Sales Act...the plaintiff alleged the defendants of breach of contract by delivering meat to the plaintiff in nonrefrigerated trucks and because the lacked authority to assign a certain logo to the plaintiff at the time that the agreement was entered to...[the defendants] failed to indemnify the plaintiff for legal fees incurred in defending a federal trademark infringement action...

Cause(s) of action: ...In an action, the plaintiff commenced to recover damages for violation of the Franchise Sales Act...and for the principal sum of $98,982 on the cause of action alleging breach of contract based on the defendant’s [faulty of product] delivery ...failure to indemnify the plaintiff for the legal fees it incurred in the trademark action...

The findings revealed that the causes of action and its sub-themes—encroachment, inducement, indemnifications, unauthorized use of trademarks and trade name, court’s jurisdiction, and provisions in various agreements—are the most recurring themes in the cases reported. 89

Based on the findings, it was found that no two cases have similar facts that gave rise to the lawsuits. A summary finding presented in Table 15 shows the causes of action sub-themes identified from the 23 cases.

Table 15

Categorization matrix of causes of action for each case

Case(s) Excerpts from the court records Cause(s) of action

Case01 “...as a result of said encroachment plaintiffs, as assignees-lessees claims for breach of could not and did not quietly enjoy said premises. Consequently, agreement; issues on they seek judgment from the movants for the return of the rent and encroachment; seek judgment taxes paid by them, totalling $6,431.37...” for return of rent and taxes paid (restitution)

Case02 There are three causes of action in this case: claims for breach of “...i) a reformation of said agreement to alter plaintiff’s exclusive agreement; issues on area of operation from one-half mile in either direction...to a one- provisions of agreement; half mile radius from plaintiff’s store; a purported fraud by the unfair competition; seek for defendant in representing that the meaning of said provision was a summary judgment one-half mile radius from the store, and that defendant had taken a survey on plaintiff’s market on the basis of one-half mile in every direction from his store... ii) alleged unfair competition that defendant allegedly permitted certain motor vehicles and bicycles to be in plaintiff’s area and vend Carvel products...said vehicles, being owned by Carvehicles Corporation, an independent corporation, which franchises them out to individuals. The plaintiff alleges that defendant controls and owns the Carvehicles Corporation... iii) the nature of unfair competition and for damages of $10,000 by reason of defendant having allegedly permitted the Carvel product vended from the said motor vehicle and bicycles to be of inferior quality...”

Case03 Plaintiff makes application for a temporary injunction for a claims for breach of permanent injunction to restrain the defendant from using the agreement; issues on name “Carvel” upon a motor vehicle used to deliver and sell ice trademarks and trade name; cream products at a location other than the retail store at which seek temporary injunction for defendant is authorized to sell ice cream products pursuant to its a permanent injunction to franchise... restrain the use of trade name

Table 15 (continued)

Case(s) Excerpts from the court records Cause(s) of action

Case04 There are four causes of action: claims for breach of ...first...the wrongful making, sale or distribution of signs and handbills agreement; issues on to plaintiff’s franchisees, bearing the Carvel name and trade- trademark and trade name; marks...second... the trade-marks are registered in the State of New deception to public; seek York as trade-marks and service marks and that the defendants made judgement for damages and distributed colourable imitations without consent, to deceive the and injunctive relief public...third...there exists a likelihood of dilution of the distinctive quality of Carvel name and trade-marks...fourth...the plaintiff is obligated to its franchisees to protect the value and exclusivity of the Carvel name...The complaint seeks money damages and injunctive relief...

Case05 “Whether the issue on release agreed by both parties upon cancellation claims for termination of or termination of the franchise agreement could be intended to apply to agreement; issues on the restrictive covenant” release; restrictive covenant (provisions in agreement); seek judgment to dismiss the complaint

Case06 “The petitioner claims that since the respondent’s payment of February claims for termination of 24, 1972 was three days late, it constituted a default under the agreement; issues on late franchise agreement, and the petitioner was entitled to terminate the payment (provisions in lease...and the respondent will be required to quit and surrender the agreement); seek holdover lease premises.” proceeding to dismiss

Case07 The defendant moved for dismissal of the complaint upon the ground claims for breach of that the lacked of jurisdiction because defendant is a foreign agreement; issues on corporation and did no business in the State, either generally or in complaint jurisdiction; connection with this transaction. The plaintiffs contend that under the seek to rescind the contract they became the agents of defendants in this State, that their contract and return of acts, therefore were the acts of defendants, and such acts constituted $5,000 payment doing business in this State and thus subjected defendant to the (restitution) jurisdiction of this State.

Case08 Two actions have been consolidated...The petitioner commenced the claims for breach of present proceeding to stay the arbitration...on the grounds that the only agreement; issues on joint agreement which provided for arbitration was between the Yuans action of arbitration [respondents] and Sbarro Licensing of Virginia. The Yuans instituted a proceeding and stay of second proceeding to join Sbarro Licensing of New York and arbitration; seek for a Franchise Contracting and Equipment Corp., other Sbarro corporations specific order involved in the franchise purchase by the Yuans, as respondents in the then pleading arbitration proceeding.

Case09 The Yuans, pursuant to their contract with Licensing of Virginia, now claims for breach of seek to arbitrate their dispute, with not only Licensing of Virginia, but agreement; issues on Licensing, Holding, and Contracting as well. The latter three entities, arbitration proceeding; claiming that they are not the parties to any contract with the seek for a specific order Yuans...seek to avoid participation in the arbitration.

Table 15 (continued)

Case(s) Excerpts from the court records Cause(s) of action

Case10 “There are issues of fact as to whether or not the release in question claims for termination of was procured by means of duress which preclude dismissal of agreement; issue on defendant’s counterclaims...requiring the defendants to pay all real release; seeking for estate taxes and basic rent into court...” restitution

Case11 ...the respondents commenced an action against Thomas Carvel in his claims for breach of individual capacity on the ground that he had induced them to purchase agreement; issues on a franchise and had personally guaranteed their success. In another inducement in personal proceeding, Thomas Carvel moved for an order granting summary capacity; seek for judgment in his favour on the ground that none of the writings or acts summary judgment which form the basis for plaintiff’s complaint were executed or performed by him in his individual capacity.

Case12 “The plaintiffs filed this suit alleging breach of contract, fraud and claims for breach of intentional interference with the contractual and business relationships agreement; issues on between the plaintiffs and their sublicensees. The plaintiffs sought provisions in agreement; damages and an injunction against any action by Carvel to terminate seek injunction against the agreements or to advertise for a new licensee.” termination of agreement

Case13 “Dunkin’ Donuts seeks to recover fees and damages based on the claims for breach of breaches of the franchise and loan agreements, as well as injunctive agreement; issues on relief...” breach of agreements; seek injunctive relief

Case14 “The franchisees’ claim of enforcement of the limitations of the claims for violation agreement for alleged fraud and violation of General Business Law...” franchise regulations; issues on provisions in agreement; motion to dismiss the complaint

Case15 “Plaintiff commenced this action for breach of contract, injunctive claims for breach of relief and monetary damages. Defendant appeals from an order contract; issues on granting plaintiff’s motion for a preliminary injunction enjoining provisions in agreement; defendant from terminating plaintiff’s franchises and denying seek injunctive relief and defendant’s motion to vacate the temporary restraining order and to monetary damages dismiss the complaint...”

Case16 “The plaintiffs alleged for breach of contract … by the franchiser...” claims for breach of contract; issues on provisions in agreement; seek motion to dismiss the complaint

Case17 This is an appeal for an order from the Supreme Court, made by claims for breach of plaintiff to recover damages for breach of a franchise agreement and franchise agreement; tortious interference with existing and prospective business issues on provisions in relationships...The complaint alleges of continuing wrongs occurring agreement; seek damages until the end of October 1999. The Supreme Court improperly and motion to dismiss determined that the action was time-barred... earlier order

Table 15 (continued)

Case(s) Excerpts from the court records Cause(s) of action

Case18 The franchisees’ tort claim is that Carvel unlawfully interfered with the claims for breach of relationships between the franchisees and their customers...by agreement; issues on implementing its supermarket program, Carvel induced the customers economic pressure and not to buy Carvel products from the franchisees...whether that inducement; seek inducement was tortious interference under New York law...the damages franchisees [also] claim that Carvel did use wrongful “economic pressure” ...

Case19 “The plaintiff claims for common-law tort and for breach of claims for breach of contract...” contract; issues on provisions of agreement; seek summary judgment

Case20 The plaintiff subsequently commenced this action against the claims for violation; defendants alleging...that the parties’ agreement was actually a issues on agreement status franchise agreement within the ambit of Franchise Sales Act, and that and offering prospectus; the defendants violated the Franchise Sales Act by failing to register an seek for damages, offering prospectus with the Attorney General...The plaintiff sought summary judgment, return relief, among other things, the return of the money it had paid pursuant of money paid and to the agreement, and the award of an attorney’s fee... attorney’s fee

Case21 Plaintiffs commenced this action in late 2007 asserting five causes of claims for breach of action. After extensive disclosure, defendants made motions for contract; issues of summary judgment. Supreme Court dismissed all causes of action as to provisions in agreement; Moe’s, dismissed all but the fifth cause of action (alleging tortious seek summary judgment interference with contract) as to Raving Brands and of the three causes of action asserted against the remaining defendants, dismissed one cause of action. Plaintiffs appeal, limiting their argument to their breach of contract causes of action against Moe’s and Raving Brands that were dismissed. Plaintiffs contend that Moe’s breached the 2005 MDA by not approving locations they proposed for a third restaurant and also granting an exclusive are to Trager in 2007 that foreclosed plaintiffs from adding a third restaurant in....Albany County area.

Case22 “[The petitioner] petitioned to vacate two arbitration awards...to claims for breach of disqualify respondent’s counsel, and to stay the proceeding, and agreement; issues on dismissing the proceeding...” arbitration proceeding; seek for motion to dismiss the complaint

Case23 ...In an action, the plaintiff commenced to recover damages for claims for breach of violation of the Franchise Sales Act...and for the principal sum of contract; issues on $98,982 on the cause of action alleging breach of contract based on the indemnification and defendant’s [faulty product] delivery...failure to indemnify the plaintiff authorization for the use for the legal fees it incurred in the trademark action... of trademarks; seek for damages

In other words, each case appears to have a unique factual background that constitutes its own causes of action. Table 6 in previous chapter serves as a guideline to generate the themes— namely types of claims, the issues relating to the causes of action, and types of judgments sought by the parties. The findings indicated that 17 cases (Case01, Case02, Case03, Case07, Case08,

Case09, Case11, Case12, Case13, Case15, Case16, Case17, Case18, Case19, Case21, Case22, and Case23) were arising out of breach or violation of agreements, three cases (Case05, Case06, and Case10) arose out of termination of agreements and three cases (Case04, Case14, and

Case20) for other reasons than breach or termination of agreements—violation of franchise regulations and arbitration awards. Out of the 17 cases alleged for breach or violation of agreements, 12 cases (Case01, Case02, Case07, Case09, Case12, Case15, Case16, Case17,

Case19, Case21, Case22, and Case23) were initiated by the franchisees against the franchisors whereas five cases (Case03, Case08, Case11, Case13, and Case18) were initiated by the franchisors against their franchisees.

The findings indicated that all cases have more than one cause of action. From the 23 cases analyzed, there are eight sub-themes identified constituting the issues in causes of action— encroachment, unfair competition, deception to public, indemnifications, inducement, unauthorized use of trademarks or trade name, jurisdiction, and provisions in agreement. Out of eight issues in causes of action sub-themes, issues relating to the provisions in the agreements was the most prevalent, appearing in 19 out of the 23 cases. The provisions in agreements may include the clauses of limitations, release, restrictive covenant, arbitration, or any specific clauses that are available in those agreements. Those 19 cases containing the excerpts from the court records relating to provisions in the agreements are listed in Table 16.

Table 16

Causes of action on issues relating to provisions in agreements

Case(s) Excerpts from the court records

Case02 “...will not own, operate, or franchise any retail store for the sale of Frozen Dairy Products within one-half mile in a metropolitan area or 2 miles in a suburban area in either direction on 28-28 Francis Lewis Boulevard, Bayside, L.I., N.Y...”

Case03 “...nothing herein contained shall be construed to give operator any right or license in or to the use of the Carvel name or of any symbol, device, or design of Carvel, other than as is specifically authorized hereunder or as may be hereafter authorized by Carvel in writing...”

Case04 “...The contract contains provisions which set forth Bartomeo’s right to use the Carvel name and products...”

Case05 “...the release of defendant Wenke from all liability under the contract and the cancellation of the contract in its entirety could only mean a release of possible future liability under the restrictive covenant...”

Case06 Section 20.01 of the lease provided... “If at any time during the term of this lease: (f) Tenant shall default in the performance of any terms, covenants or conditions of a franchise agreement made on the 8 th day of November, 1968 by and between...[Respondent’s predecessors in interest] and the landlord named herein. Landlord, at its option may terminate this lease on at least ten days’ notice to tenant, and upon such termination, tenant shall quit and surrender the leased premises to landlord and tenant shall remain liable provided in Section 20.02 of this article... Pursuant to Article 13 you...are required to pay us...weekly franchise fees no later than Friday of each week for the preceding week...the weeks for which weekly franchise fee payments are past due...Pursuant to Article 24 of the Franchise Agreement, we are hereby giving you notice that we will exercise our right to terminate the Franchise Agreement... Paragraph 26 of the Franchise Agreement which provides “notice...shall for all purposes be deemed to have been given to and received by the party for whom entitled on the date the notice was so mailed...

Case08 ...as was required by the terms of the agreement originally with Sbarro New York. Later, Sbarro Licensing of Virginia, an entity created only to comply with Virginia Law requiring franchisors of Virginia to be Virginia corporations, replaced Sbarro New York on the original agreement. The sublease with Sbarro Holding, Inc., incorporated the franchise agreement with Sbarro Licensing of Virginia. The control of the parent corporation was such that it conditioned compliance of a contract with one subsidiary with compliance of contractors of other offshoot corporations...

Case09 “...The agreement between the Yuans and Licensing of Virginia was the only one which contained an arbitration clause...”

Case10 “...as to whether or not the release in question was procured by means of duress which preclude dismissal of defendants’ counterclaims...”

Table 16 (continued)

Case(s) Excerpts from the court records

Case12 ...The Licensing Agreement further provided that the “Licensee’s right to establish Carvel stores shall be exclusive, subject to the exceptions contained herein, both for the Area as herein defined and for the duration of the Agreement.” The Management Agreement provided that: “Carvel will supply management procedures and techniques, the equipment, products, ingredients, supplies and packaging materials as needed by the Distributor and its retail licensees from time to time in the conduct of their respective distributorship and Carvel Store businesses, all in accordance with specifications, methods, information and expertise supplied by Carvel and all pursuant to the terms and conditions of this Agreement...

Case14 ...pursuant to a provision of the parties’ franchise agreement... “[a]ny and all claims and actions arising out of or relating to the Agreement, the relationship of Franchise and Franchisor, or Franchisees’ operation of the franchised business...shall be commenced within one (1) year from the occurrence of the facts giving rise to such claim or action...

Case15 “...provision of the license agreements...requires plaintiff to “file any suit against Arby’s [defendant] only in the federal or state court having jurisdiction where Arby’s [defendant’s] principal office is then located...”

Case16 “...the franchise agreement expressly provides that action arising from it are to be governed by Ontario law and that the parties consent to Ontario jurisdiction...”

Case17 “...the franchise agreement prohibited the opening of another Carvel store on Ridge Road within a quarter of a mile of the plaintiff’s store...”

Case18 ...Those agreements were of two types...Type A, “included a specific restriction on Carvel’s rights to compete with its franchisees, providing that Carvel “will not establish or license another person to establish a Carvel store” within a quarter mile of the franchisee’s store on the same street...including a reference to “a unique system for the production, distribution, and merchandising of Carvel products”...Type B...contained the “unique system” language, but not the quarter-mile restriction... license granted to the franchisee was “non-exclusive” and that Carvel “in its sole and absolute discretion” could license other Carvel stores and could sell its products “through the same or different delivery systems or other distribution channels...Each agreement contains a New York choice of law clause...

Case19 “...The disclaimers were not generalized boilerplate exclusions, but were contained in a separate rider...that plaintiff failed to provide written notice of any breach pursuant to article 18.2 of the franchise agreement...”

Case20 “...Under the terms of agreement, the plaintiff was required to purchase all of its supplies from the defendants, and pay the defendant royalties...”

Case21 ...Section 7 of MDA addresses site selection, and two sentences from 7.1 are the focus of this dispute. The first states that “franchisor shall either accept or reject the proposed site utilizing its then-current site selection policies and procedures.” Later, paragraph 7.1 provides...”developer acknowledges and agrees that franchisor may reject any proposed site for any reason in its sole discretion...Under section 12 of 2005 MDA entitled “termination,”...Section 3 of the 2005 MDA labeled “Term” provided that the agreement “shall automatically expire, without any action on the part of either party being necessary, on the date after operations of the final restaurant to be developed hereunder are required to commence as set forth on the Development Schedule...

Table 16 (continued)

Case(s) Excerpts from the court records

Case22 “...The provision of the parties’ franchise agreements on which petitioners rely concerns only service of a notice required by the agreements...”

Case23 “...as the legal expenses incurred by the plaintiff in connection with the trademark action filed against it by a third party fall squarely and unambiguously within the ambit of the indemnification clause of the parties’ agreement...”

In each case, party who initiated the lawsuit was also seeking specific judgments. In this regard, there are six sub-themes identified under theme “seeking judgments”—monetary damages, summary judgment, injunctive relief, motion to dismiss complaint, restitution, and specific order. It should be noted that the theme “injunctive relief” may include permanent or temporary injunctions sought.

The findings indicated most parties sought motion to dismiss complaint. The distribution of parties seeking for specific judgments are as follows: five cases (Case05, Case06, Case14,

Case16, and Case22) sought motion to dismiss complaint, four cases (Case02, Case11, Case19, and Case21) sought summary judgment, two cases (Case18 and Case23) sought monetary damages, and two cases (Case03 and Case12) also sought injunctive relief. With regard to seeking a specific order and restitution, the findings revealed only two cases (Case08 and

Case09) and three cases (Case01, Case07, and Case10) respectively. On the other hand, five cases (Case04, Case13, Case15, Case17, and Case20) reported that the parties sought a combination of two judgments. The summary findings of types of judgments sought is presented in Figure 19. 97

Figure 19. Summary findings of types of judgments sought by the aggrieved parties.

In this study, the analysis was conducted based on the court’s opinion sub-themes — court’s jurisdiction, preliminary order, causes of action, and orders. In the first sub-theme

“court’s jurisdiction”, the courts would dismiss or order reversed the lawsuit for jurisdictional reasons. The findings indicated three lawsuits (Case07, Case15, and Case16) filed were dismissed or reversed by the courts due to jurisdictional reasons. The dismissal or reversal is classified as the court’s “preliminary order”. The list of cases dismissed or reversed is listed in

Table 17.

Table 17

Lawsuits dismissed or reversed due to jurisdictional reasons

Case(s) Excerpts from the court records

Case07 Causes of action: The defendant moved for dismissal of the complaint upon the ground that the lacked of jurisdiction because defendant is a foreign corporation and did no business in the State, either generally or in connection with this transaction. The plaintiffs contend that under the contract they became the agents of defendants in this State, that their acts, therefore were the acts of defendants, and such acts constituted doing business in this State and thus subjected defendant to the jurisdiction of this State.

Court’s opinion: ...In denying the motion Special Term enumerated six acts by defendant which it concluded constituted the transaction of business in New York, to wit, (1) advertising in the Wall Street Journal , (2) telephone negotiations between plaintiffs in New York and defendant in Florida, (3) defendant sent plans, forms, manuals and other material to plaintiffs in New York in connection with the franchise, (4) defendant corresponded by mail with New York State Alcoholic Control Division in behalf of plaintiffs in order to further its business potential within this State, and (6) the above communications extended over a period of one year...We find, however, that such acts were insufficient to confer jurisdiction over defendant. It is undisputed that defendant had and has no office in this State, no agent or employee or telephone listing here, and that all of its negotiations with plaintiff were in and from Florida. The mere mailing of literature and advice into this State does not subject a non-resident to New York jurisdiction...the order denying the motion to dismiss the complaint should, therefore, be reversed, the motion granted and the complaint dismissed.

Case15 Causes of action: “Plaintiff commenced this action for breach of contract, injunctive relief and monetary damages. Defendant appeals from an order granting plaintiff’s motion for a preliminary injunction enjoining defendant from terminating plaintiff’s franchises and denying defendant’s motion to vacate the temporary restraining order and to dismiss the complaint.”

Court’s opinions: Order unanimously reversed on the law without costs, plaintiff’s motion denied, injunction vacated, defendant’s motion granted and complaint dismissed...Supreme Court erred in denying defendant’s motion. The third and fourth causes of action...the fifth and sixth cause of action that relate to the Oneida and Canastota franchises, must be dismissed on the basis of the “Choice of Forum” provision of the license agreements. That provision requires plaintiff to “file any suit against Arby’s [defendant] only in the federal or state court having jurisdiction where Arby’s [defendant’s] principal office is then located”, thus precluding plaintiff’s commencement of this action in New York...” It is the policy of the courts of this State to enforce contractual provisions for...selection of a forum for litigation”...Here, the plaintiff failed to sustain its burden...of showing that the provision is the product of fraud or overreaching or is unreasonable or unfair, or that its enforcement would contravene some public policy of the forum...In any event, the allegations of the complaint are refuted by the language of the franchise and license agreements...Thus the complaint must be dismissed for failure to state a cause of action...The factual allegations in the complaint are refuted by documentary evidence...In view of our determination, we need not address defendant’s remaining contention on appeal...

Table 17 (continued)

Case(s) Excerpts from the court records

Case16 Causes of action: “The plaintiffs [a Canadian franchisee and its Delaware subsidiary] alleged for breach of contract and tortious conduct by the franchiser.”

Court’s opinions: Order, Supreme Court...which granted defendants’ motion to dismiss the complaint on the ground of forum non conveniens, unanimously affirmed, with costs...The motion court properly exercised its discretion in holding that defendants had demonstrated that the balance of the relevant factors...tipped in favour of dismissal of this New York action and resolution of the parties’ dispute in an Ontario proceeding: neither plaintiffs nor defendants are New York residents; the action concerns a franchise agreement that was neither negotiated nor executed in New York; the franchise agreement expressly provides that actions arising from it are to be governed by Ontario law and that the parties consent to Ontario jurisdiction...Plainly, plaintiffs are capable of advancing the claims they would pursue here in Ontario. That the complaint contains allegations to the effect that the defendants interfered with plaintiffs’ efforts to obtain financing to open a New York restaurant, proof of which might require testimony from the New York contractors, potential local financiers, and Port Authority employees, does not, on balance, justify burdening a New York court with resolution of a dispute arising from an agreement negotiated and executed by foreign parties outside the United States, calling for the application of foreign law, and necessitating the testimony of foreign parties who are already litigating Canadian actions over the precise issues that plaintiffs seek to litigate here...

The content analysis for the next themes “causes of action” and “orders” started with 20 court cases after the dismissal of three cases due to jurisdictional reasons. The courts’ opinions were based on the evidences rendered before the judges. The findings uncovered that the courts found 13 cases (Case01, Case02, Case04, Case05, Case06, Case11, Case14, Case17, Case18,

Case19, Case20, Case21, and Case22) as having no merit in their causes of action and thus, the courts denied the motions filed. On the other hand, motions were granted by the courts only in seven cases (Case03, Case08, Case09, Case10, Case12, Case13 and Case23). Excerpts from each case describing the causes of action and court’s opinion are presented in Table 18.

100

Table 18

Court’s opinions for each case based on their causes of action

Case(s) Excerpts from the court records

Case01 Causes of action: “...as a result of said encroachment plaintiffs, as assignees-lessees could not and did not quietly enjoy said premises. Consequently, they seek judgment from the movants for the return of the rent and taxes paid by them, totalling $6,431.37...”

Court’s opinions: ...A covenant for quiet enjoyment can be broken only by an eviction, actual or constructive...where an actual eviction takes place there is, no question but that the covenant is thereby broken. Where, however, the eviction is constructive, no breach of covenant for quiet enjoyment can occur without a surrender of the premises...According to the leading authority on this subject..., the forgoing rule “has its foundation in the reason that the covenantee, who has obtained possession, should not be permitted to recover breach of the covenant for a mere failure or defect of title, so long as he is left in possession, as he may never be disturbed and thus never suffer damage.” According to the complaint in the case at bar the plaintiffs vacated the premises on October 31, 1955, and paid rent until February 1956. They rescinded their purchase, lease agreement and franchisee agreement by notice to the defendant Carvel, dated March 28, 1956, and the alleged consent decree was not entered until March 4, 1957, almost a year and a half after the plaintiffs had vacated the premises. Obviously there was no actual eviction in this case... Accordingly the first cause of action is dismissed as against the movants with leave to plead over alleging facts that the encroachments, the removal of which were consented to the decree of March 4, 1957, interfered with the plaintiff’s use and possession of any portion of the premises involved for which they paid rent and taxes. Settle order.

Case02 Causes of action: There are three causes of action in this case: ...i) a reformation of said agreement to alter plaintiff’s exclusive area of operation from one-half mile in either direction...to a one-half mile radius from plaintiff’s store; a purported fraud by the defendant in representing that the meaning of said provision was a one-half mile radius from the store, and that defendant had taken a survey on plaintiff’s market on the basis of one-half mile in every direction from his store... ii) alleged unfair competition that defendant allegedly permitted certain motor vehicles and bicycles to be in plaintiff’s area and vend Carvel products...said vehicles, being owned by Carvehicles Corporation, an independent corporation, which franchises them out to individuals. The plaintiff alleges that defendant controls and owns the Carvehicles Corporation... iii) the nature of unfair competition and for damages of $10,000 by reason of defendant having allegedly permitted the Carvel product vended from the said motor vehicle and bicycles to be of inferior quality...

101

Table 18 (continued)

Case(s) Excerpts from the court records

Court’s opinions: ...that there is no merit to plaintiff’s [first] cause of action for reformation, and that defendant is entitled for summary judgment dismissing the same. The second cause of action is based on allegations that plaintiff has seen bikes and vehicles with the name “Carvel” within a one-half mile radius of plaintiff’s store, and that he saw the cycle operator selling Carvel ice cream in that area... On the basis of said bare allegations plaintiff alleges unfair competition in violation of his exclusive franchise and seeks to have defendant restrained from permitted such bicycles and vehicles within his area. The doctrine of unfair competition cannot be applied to such a factual situation having nothing in common with the law of unfair competition. There is no claim of “deception practiced on the public to the detriment of those whose skill and energy have produced in their product a standard of quality found desirable by the consuming public,” which is the “essence of unfair competition” ...Furthermore, plaintiff’s exclusive franchise does not cover or touch open Carvel bikes and vehicles. The agreement specifically states: “ retail store for the sale of Frozen Dairy Products ”. Clearly plaintiff’s franchise relates to a retail store within the area. Plaintiff’s claims are against bicycles and vehicles. The complaint must fall under the express terms of the agreement, since defendant never agreed not to permit or allow bikes and vehicles within plaintiff’s area...The third cause of action directed to a purported sale of a Carvel product on a single occasion by a truck during a rainstorm when the product was not covered, cannot be considered as unfair competition, since there is here also no unconscionable competition or deception practiced on the public. The complaint is not directed against the use of the name “Carvel” by the truck. Such a claim would be clearly without merit since plaintiff has no proprietary right in the name or the product as such. If any one has a property interest in the name or the product, it is the defendant...Accordingly, upon all the papers and proof submitted, this court is of the opinion that the defendant has established defenses to all three causes of action, and that as a matter of law, there being no merit to plaintiff’s causes of action, the defendant is entitled to summary judgment dismissing all three causes of action. Plaintiff has failed to show any facts sufficient to require a trial of any genuine issue of fact. Defendant’s motion for summary judgment is in all respects granted. Submit order.

Case03 Causes of action: Plaintiff makes application for a temporary injunction for a permanent injunction to restrain the defendant from using the name “Carvel” upon a motor vehicle used to deliver and sell ice cream products at a location other than the retail store at which defendant is authorized to sell ice cream products pursuant to its franchise...

Court’s opinions: ...The franchise agreement authorizes the defendant to use the name “Carvel Dari-Freeze” in the operation of a retail store at the location indicated...the agreement further provides that “nothing herein contained shall be construed to give operator any right or license in or to the use of the Carvel name or of any symbol, device, or design of Carvel upon a motor vehicle used to distribute Carvel products at locations other than the retail store mentioned in the agreement is in violation of the franchise in the absence of written authorization which has not been demonstrated... Settle order accordingly providing for a bond to reimburse the defendant for any damages which he may sustain by reason of the injunction if the court finally decides that plaintiff was not entitled to such relief.

102

Table 18 (continued)

Case(s) Excerpts from the court records

Case04 Causes of action: There are four causes of action: ...first...the wrongful making, sale or distribution of signs and handbills to plaintiff’s franchisees, bearing the Carvel name and trade-marks...second... the trade-marks are registered in the State of New York as trade-marks and service marks and that the defendants made and distributed colourable imitations without consent, to deceive the public...third...there exists a likelihood of dilution of the distinctive quality of Carvel name and trade-marks...fourth...the plaintiff is obligated to its franchisees to protect the value and exclusivity of the Carvel name...The complaint seeks money damages and injunctive relief...

Court’s opinions: ...The plaintiff’s motion for a preliminary injunction pursuant to CLPR 6301 and 6311, enjoining the defendants and their respective agents, servants, employees and partners, pending determination of the above-entitled action, from in any manner, either direct or indirectly...is denied... It is alleged and not contradicted on this motion that the defendant, Bartomeo, has the right under a contract with the plaintiff to use the trade name and trade-marks of Carvel and that he may obtain advertising material from any source he chooses. It is also established that the advertising material used conforms in style and color to that generally used by Carvel. The only question of substance apparently is the price at which the defendant is now offering the product. The defendants have shown, without contradiction, that the legal owner of the trade name “Carvel” and of certain trade- marks is not the plaintiff, but one Thomas Carvel...the statute governing practice in this State no longer requires that an action must be prosecuted by the real party in interest...In this case, the rule of liberality is applied to the pleading. But by its words “plaintiff is obligated to the owner of the Carvel name and trade-marks to protect and preserve the value and exclusivity of the same”; and “pursuant to said obligation, plaintiff has and continues to specify and control all signs, displays and representations”, plaintiff has first, negated the legal ownership in itself, second indicated by failure to be specific, an intent not to divulge the real nature of its interest and third, alleged no right, but only an obligation. Such allegations in nowise equate with any concept of “ownership”. In short, the complaint is fatally defective because it fails to allege any interest in the plaintiff sufficient to maintain the action...Furthermore, the complaint does not allege that defendant does not sell its products to the purchasing public in the proper form or that the defendant is selling an adulterated product and thereby damaging plaintiff’s name, trade-marks or reputation...plaintiff alleges defendant, a dealer franchised by the plaintiff, has infringed plaintiff’s trade name and trade-marks merely by advertising the fact that it sells plaintiff’s products. Such an allegation is nonsense. The allegations of the complaint do not constitute causes of action...

Case05 Causes of action: “Whether the issue on release agreed by both parties upon cancellation or termination of the franchise agreement could be intended to apply to the restrictive covenant”.

Court’s opinions: ...Judgment of the Supreme Court...made upon an order of said court which granted defendant’s motion to dismiss the complaint, affirmed, without costs...At the time the release of June 13, 1966 was executed and delivered, there was no existing controversy between the parties. Therefore, the release of defendant Wenke from all [liabilities] under the contract and the cancellation of the contract in its entirety could only mean a release of possible future liability under the restrictive covenant...

103

Table 18 (continued)

Case(s) Excerpts from the court records

Case06 Causes of action: “The petitioner claims that since the respondent’s payment of February 24, 1972 was three days late, it constituted a default under the franchise agreement, and the petitioner was entitled to terminate the lease...and the respondent will be required to quit and surrender the lease premises.”

Court’s opinions: ...the circumstances herein do not constitute a proper basis for instituting a holdover summary proceeding. Although the petitioner argues that the respondent’s three-day delay in paying the franchise fees due for the week ending February 6, 1972 constituted a sufficient basis for triggering the alleged conditional limitation contained in section 20.01 of the lease...actually constitutes a mere condition subsequent rather than a conditional limitation sufficient to support a summary proceeding...The respondent here has invested hundreds of thousands of dollars in securing the specified franchise and lease, both of which, as noted, have unexpired terms of more than 15 years without regard to renewal options. Under these circumstances, the petitioner’s attempt to abrogate the respondent’s rights under the franchise agreement and lease, predicated on mere technicalities, or...petty distinctions is an attempt to use the courts in a plan to improperly evict the respondents... Accordingly, the respondent’s motion to dismiss the petition is granted and the petitioner’s cross motion is denied.

Case07 Order reversed due to jurisdictional reasons.

Case08 Causes of action: Two actions have been consolidated. “The petitioner commenced the present proceeding to stay the arbitration...on the grounds that the only agreement which provided for arbitration was between the Yuans [respondents] and Sbarro Licensing of Virginia. The Yuans instituted a second proceeding to join Sbarro Licensing of New York and Franchise Contracting and Equipment Corp., other Sbarro corporations involved in the franchise purchase by the Yuans, as respondents in the then pleading arbitration proceeding.

Court’s opinions: ...The relationship as between the franchisor and the franchisee was awesome. The company was to the Yuans: developer, architect, builder, lawyer, supplier and guidance counsellor. Considering the obvious disparity between the parties, the association was, of necessity, founded on confidence on the part of the Yuans in the integrity and fidelity of Sbarro. As such, neither party had the right, under rules of equity, to take selfish advantage of the trust or to permit either party, particularly the franchisor, to benefit by prejudicing the other. Since hard bargaining is an impossible ingredient with parties in these relationships, each must act with the utmost good faith and with full knowledge, understanding and consent of the other...The shifting of funds from one corporate entity to another, most of them bearing the Sbarro name in the corporate title, is further evidence of the control of the parent corporation of its “co-operating” corporations...On point is the fact that a check for $28,000, made out by the Yuans to Franchise Contracting and Equipment Corporation, was indorsed and deposited by Sbarro New York. This in itself supports the instrumentality theory...In truth, these corporations were indeed the instrumentalities of the owning company, the Sbarro franchise organization. It follows that if all corporations are as one corporation, then a contract with any of the subsidiaries is binding on the entire corporation. Accordingly, the contract between Sbarro Licensing of Virginia, requiring the arbitration of disputes, will be applied to Sbarro Holding as if that corporation were a signatory to the agreement...Accordingly, the application of Sbarro Holding, Inc., to stay arbitration is denied. The application of [respondents] for an order joining Sbarro Licensing, Inc., and Franchise Contracting and Equipment Corporation is granted.

104

Table 18 (continued)

Case(s) Excerpts from the court records

Case09 Causes of action: The Yuans, pursuant to their contract with Licensing of Virginia, now seek to arbitrate their dispute, with not only Licensing of Virginia, but Licensing, Holding, and Contracting as well. The latter three entities, claiming that they are not parties to any contract with the Yuans requiring arbitration, seek to avoid participation in the arbitration.

Court’s opinions: ...where one corporation merely act as the alter ego of a second corporation, the second corporation can be compelled to participate in an arbitration proceeding although it is not a signatory of the contract containing the arbitration clause which was, however, signed by the alter ego. The corporate veil will be pierced (1) to achieve equity, even absent fraud, where the officers and employees of a parent corporation exercise control over the daily operations of a subsidiary corporation and act as the true prime movers behind the subsidiary’s actions...and/or (2) where a parent corporation conducts business through a subsidiary which exists solely to serve the parent...In light of the thorough integration of the entire Sbarro franchising operation, Licensing, Licensing of Virginia, Holding, and Contracting should all participate in the arbitration.

Case10 Causes of action: “...There are issues of fact as to whether or not the release in question was procured by means of duress which preclude dismissal of defendant’s counterclaims...”

Court’s opinions: ...Order dated February 5, 1982, modified by adding thereto a provision requiring the defendants- respondents to pay into court all real estate taxes and basic rent as they become due...Order affirmed. …An immediate trial of the issues raised on Dunkin’ Donuts of America’s motion to dismiss defendant’s counterclaims on the basis of the release would not dispose of the case but would require the court to conduct two separate trials. Special Term did not abuse its discretion in ordering consolidation since common questions of law and fact are presented in the action to terminate the franchise agreement and the proceeding to dispossess for non-payment of rent. However, the defendants-respondents should be required to keep current in their basic rent and real estate tax payments to more fully protect the Dunkin’ Donuts of New York, Inc...

Case11 Causes of action: Two years later, the respondents commenced an action against Thomas Carvel in his individual capacity on the ground that he had induced them to purchase a franchise and had personally guaranteed their success. In another proceeding, Thomas Carvel moved a for an order granting summary judgment in his favour on the ground that none of the writings or acts which form the basis for plaintiff’s complaint were executed or performed by him in his individual capacity.

Court’s opinions: ...Order reversed, without costs or disbursements, motion granted, and action dismissed against Thomas Carvel...The court erred in denying his [Thomas] motion. The only reason given by the court was the motion was made on the eve of trial...is not in itself a sufficient reason for denying the motion...Thomas Carver’s motion is meritorious. He acted in his capacity as a representative of carvel Corporation at all times. There is no indication that he ever personally guaranteed respondents’ success, or that he made any fraudulent statements to respondents. Furthermore, the agreements signed by respondents clearly indicate that they were dealing with Carvel Corporation, and not directly with Thomas Carvel. Therefore, there is no basis upon which to hold him liable and his motion for summary judgment should have been granted...

105

Table 18 (continued)

Case(s) Excerpts from the court records

Case12 Causes of action: “The plaintiffs filed this suit alleging breach of contract, fraud and intentional interference with the contractual and business relationships between the plaintiffs and their sublicensees. The plaintiffs sought damages and an injunction against any action by Carvel to terminate the agreements or to advertise for a new licensee.”

Court’s opinions: ...In an action seeking an injunction and damages...the plaintiffs appeal from an order of the Supreme Court...which denied their motion for a preliminary injunction...Ordered that the order is reversed, with costs, and the motion is granted to the extent of enjoining the defendants [pending litigation] from: (1) terminating the plaintiffs’ exclusive license to sell Carvel products in Israel; (2) taking any action to solicit or advertise for a new licensee to open and operate Carvel stores in Israel or to grant anyone other than the plaintiffs the exclusive license now held by the plaintiffs; (3) interfering with or attempting to halt or disrupt shipments by suppliers to the plaintiffs; and (4) taking any other action directly or indirectly to interfere with the plaintiffs’ or their continued shipment of goods and supplies to the plaintiffs; and it is further, Ordered that the preliminary injunction is granted on condition that the plaintiffs maintain the undertaking posted pursuant to this court’s order...In this case at bar, the plaintiffs have demonstrated the necessity of injunctive relief in order to preserve the status quo pending trial. The defendants are clearly attempting to terminate the plaintiffs’ exclusive licensing agreement and, absent of preliminary injunction, there is no assurance that the plaintiffs will be able to stay in business pending trial. Such interference with an ongoing business, particularly one involving a unique product and an exclusive licensing and distribution arrangement, risks irreparable injury and is enjoinable...In the absence of any proof that Carvel will be harmed by the granting of injunctive relief in order the status quo, the existence of disputed factual issues should not preclude the remedy...

Case13 Causes of action: “Dunkin’ Donuts seeks to recover fees and damages based on the breaches of the franchise and loan agreements, as well as injunctive relief.”

Court’s opinions: ...the order is affirmed, with costs to the plaintiff payable by the defendant...An earlier grant of summary judgment in favour of Dunkin’ Donuts was reversed by this court. On the more fully- developed record presented in the present appeal, however, we hold that Dunkin’s Donuts has established its entitlement both to summary judgment on the majority of its causes of action and to dismissal of the defendants’ defences and counterclaims. Financial information supplied by Dunkin’ Donuts proves that it is exempt from the specific disclosure requirements of General Business Law...and was thus not required to furnish the location of competing franchises...In any event, the defendants’ allegations of a violation of the statute’s disclosure provisions have been adequately refuted. The defendants have also failed to establish that they were damaged by the existence or nondisclosure of competing franchises in the vicinity of their shop...Dates and sales figures, also supplied by Dunkin’ Donuts establish that the defendants’ sales were not adversely affected by other franchises which opened after the defendants began operation. Without damages there can be no action for fraud...The defendants’ defences and counterclaims are dismissed, and summary judgment is awarded to Dunkin’ Donuts on those causes of action seeking to recover fees and damages on the loan and franchise agreements fees as well as an injunction prohibiting the defendants from holding themselves out as operating a Dunkin’ Donuts shop...plaintiff’s third cause of action...summary judgment was properly withheld...

106

Table 18 (continued)

Case(s) Excerpts from the court records

Case14 Causes of action: “The franchisees’ claim of enforcement of the limitations of the agreement for alleged fraud and violation of General Business Law...”

Court’s opinions: Ordered that the judgment is reversed insofar as appealed from, on the law, with costs, that branch of the defendants’ motion to dismiss the second cause of action is granted, and the complaint is dismissed in its entirety...The Supreme Court [earlier] found that the period of time set forth in the franchise agreement was unreasonably short, and would allow for a claim to accrue and expire before the execution of the agreement. This was error. The agreement indicates that the claim accrues at such time as all of the facts establishing the alleged fraud, which necessarily include detrimental reliance, may be established. This can be no earlier than the time of the execution of the agreement. The franchisee’s remaining contentions with regard to enforcement of the limitations provision of the agreement are without merit. In light of our determination, we need not address the defendants’ remaining contentions...

Case15 Order reversed due to jurisdictional reasons.

Case16 Complaint dismissed due to jurisdictional reasons.

Case17 Causes of action: This is an appeal for an order from the Supreme Court, made by plaintiff to recover damages for breach of a franchise agreement and tortious interference with existing and prospective business relationships...The complaint alleges of continuing wrongs occurring until the end of October 1999. The Supreme Court improperly determined that the action was time-barred...

Court’s opinions: ...Ordered that the order is affirmed, with costs...We affirm the order granting the defendant’s motion to dismiss the complaint for reasons other than those cited by the Supreme Court... Nevertheless, we conclude that the motion to dismiss the complaint was properly granted since it fails to state a cause of action...Although the franchise agreement prohibited the opening of another Carvel store...the plaintiff did not plead the existence of a Carvel store or for that matter, any store selling Carvel products within that quarter-mile radius. The plaintiff’s cause of action sounding in tortious interference with existing and prospective business relationships was duplicative of the plaintiff’s cause of action sounding in breach of a franchise agreement and failed to assert an independent wrong...

Case18 Causes of action: The franchisees’ tort claim is that Carvel unlawfully interfered with the relationships between the franchisees and their customers...by implementing its supermarket program, Carvel induced the customers not to buy Carvel products from the franchisees...whether that inducement was tortious interference under New York law...the franchisees [also] claim that Carvel did use wrongful “economic pressure” ...

107

Table 18 (continued)

Case(s) Excerpts from the court records

Court’s opinions: ...whether the franchisees have a valid tort claim for “interference with prospective economic relations. We hold that they do not. The franchisees claim that Carvel did use wrongful “economic pressure”, but that argument is ill-founded for two independent reasons. First, it is ill-founded because the economic pressure that must be shown is not, as the franchisees assume, pressure on the franchisees, but on the franchisees’ customers. As federal courts applying New York law have recognized, conduct constituting tortious interference with business relations is, by definition, conduct directed not at the plaintiff itself, but at the party with which the plaintiff has or seeks to have relationship...Here, all Carvel did to the franchisees’ customers was to make Carvel goods available in supermarkets at attractive prices; this...was not “pressure” on these third parties but legitimate “persuasion”, and thus tortious interference with economic relations was not established... The crux of franchisees’ complaint is that Carvel distributed its products through competitive channels, to an extent and in a way that was inconsistent with the franchisor-franchisee relationship. The mere institution of a coupon program was not “economic pressure” rising to the level of “wrongful” or “culpable” conduct ...” The majority concludes... holding that where a defendant acts in its own economic self-interest, the standard applicable to a tortious interference claim is whether the defendant employed “wrongful means” or committed “egregious wrongdoing”...thus posits that “it is not relevant here whether we characterize Carvel and its franchisees as competitors”...Carvel’s conduct in selling ice cream cakes to supermarkets, in or of itself, is not coercive in nature and is not compelling evidence of improper economic pressure. Moreover, Carvel’s supermarket sales were not specifically aimed at inducing particular customers away from the franchisees; such sales were aimed at supermarket customers in general...Concluding that the franchisees’ claim does not meet the improper conduct standard…

Case19 Causes of action: “The plaintiff claims for common-law tort and for breach of contract.”

Court’s opinions: ...Order, Supreme Court...to the extent appealed from as limited by the briefs... granted the defendants’ motion for summary judgment dismissing the complaint and denied plaintiff’s cross motion for summary judgment dismissing certain affirmative defences, unanimously modified, on the law, to the extent of reinstating the seventh, eighth, ninth and tenth causes of action pursuant to the Franchise Act...and dismissing the individual defendants’ second affirmative defences and the corporate defendant’s first, second, and sixth affirmative defences to the extent that they rely on release and waiver clauses, and otherwise affirmed, without costs...The court erred in dismissing plaintiff’s claims...based on the representations made by plaintiff concerning information supplied to it by defendant, and in not dismissing affirmative defences based on those representations. Accordingly, defendant’s attempt to utilize the representations as a defense must be rejected...The court correctly held that reliance is an element of a fraud claim under the Franchise Act...However, issues of fact exist as to the extent and reasonableness of plaintiff’s reliance on defendant’s alleged oral representations... Plaintiff properly alleged that defendant’s representations, which were not contained in the prospectus, ran afoul of General Business Law... However, the court correctly dismissed plaintiff’s common-law fraud claims. The disclaimers were not generalized boilerplate exclusions, but were contained in a separate rider, which plaintiff’s principal read and initiated, stating specifically that she was not relying on any representations by defendants...The court also correctly dismissed plaintiff’s claims for breach of contract, as it is uncontroverted that plaintiff failed to provide written notice of any breach pursuant to...the franchise agreement... Reargument granted and, upon reargument, the decision and order of this Court entered...recalled and vacated and a new decision and order substituted therefor; leave to appeal to the Court of Appeal denied...

108

Table 18 (continued)

Case(s) Excerpts from the court records

Case20 Causes of action: The plaintiff subsequently commenced this action against the defendants alleging...that the parties’ agreement was actually a franchise agreement within the ambit of Franchise Sales Act, and that the defendants violated the Franchise Sales Act by failing to register an offering prospectus with the Attorney General...The plaintiff sought relief, among other things, the return of the money it had paid pursuant to the agreement, and the award of an attorney’s fee.

Court’s opinions: ...Ordered that the judgment is reversed, on the law, those branches of the plaintiff’s motion which were for summary judgment on the cause of action alleging a violation of the Franchise Sales Act and for an award of an attorney’s fee in the sum of $27,709.25, are denied...The appeals from the intermediate orders must be dismissed...The issues raised on the appeals from the orders are brought up for review and have been considered on the appeal from the judgment...It is also undisputed that the defendants did not register an offering prospectus prior to entering into the subject agreement with the plaintiff...the defendants raised a triable issue of fact as to whether they were exempt from the registration requirement pursuant to General Business Law...even if the defendants violated the Franchise Sales Act by failing to register an offering prospectus, the plaintiff must still prove that it sustained damages as a result of the violation, and must further prove that the violation was “wilful and material” in order to be entitled to an award of an attorney’s fee...The plaintiff’s failure to make a prima facie showing of its entitlement either to damages or an award of an attorney’s fee provides an additional basis for denial of its motion for summary judgment...The parties’ remaining contentions are without merit...

Case21 Causes of action: Plaintiffs commenced this action in late 2007 asserting five causes of action. After extensive disclosure, defendants made motions for summary judgment. Supreme Court dismissed all causes of action as to Moe’s, dismissed all but the fifth cause of action (alleging tortious interference with contract) as to Raving Brands and of the three causes of action asserted against the remaining defendants, dismissed one cause of action. Plaintiffs appeal, limiting their argument to their breach of contract causes of action against Moe’s and Raving Brands that were dismissed. Plaintiffs contend...that Moe’s breached the 2005 MDA by not approving locations they proposed for a third restaurant and also granting an exclusive are to Trager in 2007 that foreclosed plaintiffs from adding a third restaurant in...Albany County area.

Court’s opinions: ...an order of the Supreme Court...granted a motion by defendant’s Moe’s Southwest Grill, LLC and Raving Brands, Inc. for summary judgment dismissing the breach of contract causes of action against them...We agree with Supreme Court that Moe’s did not breach plaintiff’s 2005 MDA when it granted exclusive rights in the 2007 Trager MDA...plaintiffs’ agreement had expired before Moe’s entered into the 2007 Trager MDA. Plaintiffs were required under the 2005 MDA to open one restaurant by February 2006 and a second by December 2006. Under section12 of the 2005 MDA entitled “termination”, Moe’s could have terminated the agreement with written notice when plaintiffs failed to establish the first restaurant in a timely fashion; but Moe’s did not elect to do so. Under the unambiguous terms of the agreement, the failure of plaintiffs to meet the final date for opening the second restaurant resulted in the agreement automatically expiring without the necessity of notice, written or otherwise. Plaintiffs’ estoppel argument premised upon continuing communications between the parties was not raised before Supreme Court and, in any event, is unavailing...

109

Table 18 (continued)

Case(s) Excerpts from the court records

Case22 Causes of action: “[The petitioner] petitioned to vacate two arbitration awards...to disqualify respondent’s counsel, and to stay the proceeding, and dismissing the proceeding...”

Court’s opinions: ...Judgment, Supreme Court...entered...denying the petition... unanimously affirmed, without costs...Petitioners failed to show that the petition was served on a person authorized to receive of process pursuant to CPLR 311 (a) (1). The provision of the parties’ franchise agreements on which petitioners rely concerns only service of a notice required by the agreements, not service of process required by the CPLR. Moreover, commencement of the proceeding was untimely, since the purported service occurred more than 90 days after the awards were received...In any event, the petition fails to present a basis for vacating the arbitration awards. The omission of a reference to a tax withholding requirement from one of the awards does not create an explicit conflict with any law or public policy requiring tax withholding...We have reviewed petitioner’s remaining contentions and find them without merit...

Case23 Causes of action: ...In an action, the plaintiff commenced to recover damages for violation of the Franchise Sales Act...and for the principal sum of $98,982 on the cause of action alleging breach of contract based on the defendant’s [faulty product] delivery... failure to indemnify the plaintiff for the legal fees it incurred in the trademark action...

Court’s opinions: ...the defendants appeal, as limited by their brief...entered July 20, 2011...upon a decision of the same court dated March 9, 2011...made after a nonjury trial on the issue of liability, and upon a decision of the same court dated May 26, 2011...made after a nonjury trial on the issue of damages, (a) is in favour of the plaintiff and against them in the principal sum of $98,982 on the cause of action alleging breach of contract based upon their failure to indemnify the plaintiff for legal fees incurred in defending a federal trademark infringement action, and (b) failed to make any determination with respect to their counterclaims, and the plaintiff cross-appeals, as limited by its brief, from...same judgment as, upon the decision dated March 9, 2011, (a) in effect, dismissed the cause of action to recover damages for violation of the Franchise Sales Act, and (b) failed to award it damages on the causes of action alleging breach of contract based upon the defendants’ delivery of meat to the plaintiff in nonrefrigerated trucks and their lack of authority to assign a certain logo... After a trial on the issue of liability...the Supreme Court...found that the cause of action to recover damages for the defendants’ alleged violation of the Franchise Sales Act based on the doctrine of in pari delicto should be dismissed, found that defendants’ liable to indemnify the plaintiff for legal fees incurred in defending a trademark infringement action...Accordingly, upon remittal, a trial must be conducted on the issue of the plaintiff’s damages for the defendants’ breach of the parties’ agreement...at the time that the agreement was entered into...

The categorization matrix of court’s opinions for each case is exhibited in Table 19 to show the themes derived from the court’s opinions.

110

Table 19

Categorization matrix of court’s opinions for each case

Case(s) Excerpts from the court records Court’s opinions

Case01 ...A covenant for quiet enjoyment can be broken only by an eviction, actual or no actual eviction; constructive...where an actual eviction takes place there is, no question but that cause of action the covenant is thereby broken. Where, however, the eviction is constructive, dismissed no breach of covenant for quiet enjoyment can occur without a surrender of the premises...According to the leading authority on this subject..., the forgoing rule “has its foundation in the reason that the covenantee, who has obtained possession, should not be permitted to recover breach of the covenant for a mere failure or defect of title, so long as he is left in possession, as he may never be disturbed and thus never suffer damage.” According to the complaint in the case at bar the plaintiffs vacated the premises on October 31, 1955, and paid rent until February 1956. They rescinded their purchase, lease agreement and franchisee agreement by notice to the defendant Carvel, dated March 28, 1956, and the alleged consent decree was not entered until March 4, 1957, almost a year and a half after the plaintiffs had vacated the premises. Obviously there was no actual eviction in this case... Accordingly the first cause of action is dismissed as against the movants with leave to plead over alleging facts that the encroachments, the removal of which were consented to the decree of March 4, 1957, interfered with the plaintiff’s use and possession of any portion of the premises involved for which they paid rent and taxes. Settle order.

Case02 ...that there is no merit to plaintiff’s [first] cause of action for reformation, and no merit in cause of that defendant is entitled for summary judgment dismissing the same. The action; doctrine of second cause of action is based on allegations that plaintiff has seen bikes and unfair competition vehicles with the name “Carvel” within a one-half mile radius of plaintiff’s cannot be applied; store, and that he saw the cycle operator selling Carvel ice cream in that area... franchise agreement On the basis of said bare allegations plaintiff alleges unfair competition in does not cover the violation of his exclusive franchise and seeks to have defendant restrained issues claimed; from permitted such bicycles and vehicles within his area. The doctrine of plaintiff’s claims unfair competition cannot be applied to such a factual situation having nothing denied in common with the law of unfair competition. There is no claim of “deception practiced on the public to the detriment of those whose skill and energy have produced in their product a standard of quality found desirable by the consuming public,” which is the “essence of unfair competition” …Furthermore, plaintiff’s exclusive franchise does not cover or touch open Carvel bikes and vehicles. The agreement specifically states: “ retail store for the sale of Frozen Dairy Products ”. Clearly plaintiff’s franchise relates to a retail store within the area. Plaintiff’s claims are against bicycles and vehicles. The complaint must fall under the express terms of the agreement, since defendant never agreed not to permit or allow bikes and vehicles within plaintiff’s area...The third cause of action directed to a purported sale of a Carvel product on a single occasion by a truck during a rainstorm when the product was not covered, cannot be considered as unfair competition, since there is here also no unconscionable competition or deception practiced on the public.

111

Table 19 (continued)

Case(s) Excerpts from the court records Court’s opinions

The complaint is not directed against the use of the name “Carvel” by the truck. Such a claim would be clearly without merit since plaintiff has no proprietary right in the name or the product as such. If anyone has a property interest in the name or the product, it is the defendant...Accordingly, upon all the papers and proof submitted, this court is of the opinion that the defendant has established defenses to all three causes of action, and that as a matter of law, there being no merit to plaintiff’s causes of action, the defendant is entitled to summary judgment dismissing all three causes of action. Plaintiff has failed to show any facts sufficient to require a trial of any genuine issue of fact. Defendant’s motion for summary judgment is in all respects granted. Submit order.

Case03 ...The franchise agreement authorizes the defendant to use the name “Carvel absence of written Dari-Freeze” in the operation of a retail store at the location indicated...the authorization has not agreement further provides that “nothing herein contained shall be construed to been demonstrated give operator any right or license in or to the use of the Carvel name or of any by the defendant; symbol, device, or design of Carvel upon a motor vehicle used to distribute plaintiff’s motion Carvel products at locations other than the retail store mentioned in the granted agreement is in violation of the franchise in the absence of written authorization which has not been demonstrated... Settle order accordingly providing for a bond to reimburse the defendant for any damages which he may sustain by reason of the injunction if the court finally decides that plaintiff was not entitled to such relief.

Case04 ...The plaintiff’s motion for a preliminary injunction pursuant to CLPR 6301 no merit in cause of and 6311, enjoining the defendants and their respective agents, servants, action; plaintiff’s employees and partners, pending determination of the above-entitled action, motion denied from in any manner, either direct or indirectly...is denied... It is alleged and not contradicted on this motion that the defendant, Bartomeo, has the right under a contract with the plaintiff to use the trade name and trade-marks of Carvel and that he may obtain advertising material from any source he chooses. It is also established that the advertising material used conforms in style and color to that generally used by Carvel. The only question of substance apparently is the price at which the defendant is now offering the product. The defendants have shown, without contradiction, that the legal owner of the trade name “Carvel” and of certain trade-marks is not the plaintiff, but one Thomas Carvel...the statute governing practice in this State no longer requires that an action must be prosecuted by the real party in interest...In this case, the rule of liberality is applied to the pleading. But by its words “plaintiff is obligated to the owner of the Carvel name and trade-marks to protect and preserve the value and exclusivity of the same”; and “pursuant to said obligation, plaintiff has and continues to specify and control all signs, displays and representations”, plaintiff has first, negated the legal ownership in itself, second indicated by failure to be specific, an intent not to divulge the real nature of its interest and third, alleged no right, but only an obligation. Such allegations in nowise equate with any concept of “ownership”.

112

Table 19 (continued)

Case(s) Excerpts from the court records Court’s opinions

In short, the complaint is fatally defective because it fails to allege any interest in the plaintiff sufficient to maintain the action...Furthermore, the complaint does not allege that defendant does not sell its products to the purchasing public in the proper form or that the defendant is selling an adulterated product and thereby damaging plaintiff’s name, trade-marks or reputation...plaintiff alleges defendant, a dealer franchised by the plaintiff, has infringed plaintiff’s trade name and trade-marks merely by advertising the fact that it sells plaintiff’s products. Such an allegation is nonsense. The allegations of the complaint do not constitute causes of action...

Case05 ...Judgment of the Supreme Court...made upon an order of said court which no merit in cause of granted defendant’s motion to dismiss the complaint, affirmed, without action; defendant’s costs...At the time the release of June 13, 1966 was executed and delivered, motion to dismiss there was no existing controversy between the parties. Therefore, the release of the complaint defendant Wenke from all [liabilities] under the contract and the cancellation granted of the contract in its entirety could only mean a release of possible future liability under the restrictive covenant...

Case06 ...the circumstances herein do not constitute a proper basis for instituting a no merit in cause of holdover summary proceeding. Although the petitioner argues that the action; respondent’s respondent’s three-day delay in paying the franchise fees due for the week motion to dismiss ending February 6, 1972 constituted a sufficient basis for triggering the alleged the petition granted; conditional limitation contained in section 20.01 of the lease...actually petitioner’s cross constitutes a mere condition subsequent rather than a conditional limitation motion denied sufficient to support a summary proceeding...The respondent here has invested hundreds of thousands of dollars in securing the specified franchise and lease, both of which, as noted, have unexpired terms of more than 15 years without regard to renewal options. Under these circumstances, the petitioner’s attempt to abrogate the respondent’s rights under the franchise agreement and lease, predicated on mere technicalities, or...petty distinctions is an attempt to use the courts in a plan to improperly evict the respondents... Accordingly, the respondent’s motion to dismiss the petition is granted and the petitioner’s cross motion is denied.

Case07 “...We find, however, that such acts were insufficient to confer jurisdiction order reversed due over defendant...” to jurisdictional reasons

Case08 ...The relationship as between the franchisor and the franchisee was awesome. petitioner’s The company was to the Yuans: developer, architect, builder, lawyer, supplier application to stay and guidance counsellor. Considering the obvious disparity between the proceeding denied; parties, the association was, of necessity, founded on confidence on the part of respondent’s the Yuans in the integrity and fidelity of Sbarro. As such, neither party had the application for an right, under rules of equity, to take selfish advantage of the trust or to permit order to join the either party, particularly the franchisor, to benefit by prejudicing the other. parties granted Since hard bargaining is an impossible ingredient with parties in these relationships, each must act with the utmost good faith and with full knowledge, understanding and consent of the other...

113

Table 19 (continued)

Case(s) Excerpts from the court records Court’s opinions

The shifting of funds from one corporate entity to another, most of them bearing the Sbarro name in the corporate title, is further evidence of the control of the parent corporation of its “co-operating” corporations...On point is the fact that a check for $28,000, made out by the Yuans to Franchise Contracting and Equipment Corporation, was indorsed and deposited by Sbarro New York. This in itself supports the instrumentality theory...In truth, these corporations were indeed the instrumentalities of the owning company, the Sbarro franchise organization. It follows that if all corporations are as one corporation, then a contract with any of the subsidiaries is binding on the entire corporation. Accordingly, the contract between Sbarro Licensing of Virginia, requiring the arbitration of disputes, will be applied to Sbarro Holding as if that corporation were a signatory to the agreement...Accordingly, the application of Sbarro Holding, Inc., to stay arbitration is denied. The application of [respondents] for an order joining Sbarro Licensing, Inc., and Franchise Contracting and Equipment Corporation is granted.

Case09 ...where one corporation merely act as the alter ego of a second corporation, appellant’s motion the second corporation can be compelled to participate in an arbitration to stay arbitration proceeding although it is not a signatory of the contract containing the denied; [earlier] arbitration clause which was, however, signed by the alter ego. The corporate judgment affirmed veil will be pierced (1) to achieve equity, even absent fraud, where the officers and employees of a parent corporation exercise control over the daily operations of a subsidiary corporation and act as the true prime movers behind the subsidiary’s actions...and/or (2) where a parent corporation conducts business through a subsidiary which exists solely to serve the parent...In light of the thorough integration of the entire Sbarro franchising operation, Licensing, Licensing of Virginia, Holding, and Contracting should all participate in the arbitration.

Case10 ...Order dated February 5, 1982, modified by adding thereto a provision [earlier] order requiring the defendants-respondents to pay into court all real estate taxes and affirmed; appellant’s basic rent as they become due...Order affirmed. …An immediate trial of the motion granted issues raised on Dunkin’ Donuts of America’s motion to dismiss defendant’s counterclaims on the basis of the release would not dispose of the case but would require the court to conduct two separate trials. Special Term did not abuse its discretion in ordering consolidation since common questions of law and fact are presented in the action to terminate the franchise agreement and the proceeding to dispossess for non-payment of rent. However, the defendants-respondents should be required to keep current in their basic rent and real estate tax payments to more fully protect the Dunkin’ Donuts of New York, Inc...

114

Table 19 (continued)

Case(s) Excerpts from the court records Court’s opinions

Case11 ...Order reversed, without costs or disbursements, motion granted, and cause of action has action dismissed against Thomas Carvel...The court erred in denying his no basis; appellant’s [Thomas] motion. The only reason given by the court was the motion was motion for summary made on the eve of trial...is not in itself a sufficient reason for denying the judgment granted motion...Thomas Carver’s motion is meritorious. He acted in his capacity as a representative of carvel Corporation at all times. There is no indication that he ever personally guaranteed respondents’ success, or that he made any fraudulent statements to respondents. Furthermore, the agreements signed by respondents clearly indicate that they were dealing with Carvel Corporation, and not directly with Thomas Carvel. Accordingly, respondents were on notice that they were not dealing with Thomas Carvel personally. Therefore, there is no basis upon which to hold him liable and his motion for summary judgment should have been granted...

Case12 ...In an action seeking an injunction and damages...the plaintiffs appeal appellant’s appeal from an order of the Supreme Court...which denied their motion for a granted for earlier preliminary injunction...Ordered that the order is reversed, with costs, and order for the motion is granted to the extent of enjoining the defendants [pending preliminary litigation] from: (1) terminating the plaintiffs’ exclusive license to sell injunction against Carvel products in Israel; (2) taking any action to solicit or advertise for a respondent new licensee to open and operate Carvel stores in Israel or to grant anyone other than the plaintiffs the exclusive license now held by the plaintiffs; (3) interfering with or attempting to halt or disrupt shipments by suppliers to the plaintiffs; and (4) taking any other action directly or indirectly to interfere with the plaintiffs’ or their continued shipment of goods and supplies to the plaintiffs; and the defendants are further directed to continue to ship all supplies, machinery, parts and materials necessary to the sale of Carvel ice cream and ice cream products in Israel to the plaintiffs; and it is further, Ordered that the preliminary injunction is granted on condition that the plaintiffs maintain the undertaking posted pursuant to this court’s order...In this case at bar, the plaintiffs have demonstrated the necessity of injunctive relief in order to preserve the status quo pending trial. The defendants are clearly attempting to terminate the plaintiffs’ exclusive licensing agreement and, absent of preliminary injunction, there is no assurance that the plaintiffs will be able to stay in business pending trial. Such interference with an ongoing business, particularly one involving a unique product and an exclusive licensing and distribution arrangement, risks irreparable injury and is enjoinable...In the absence of any proof that Carvel will be harmed by the granting of injunctive relief in order the status quo, the existence of disputed factual issues should not preclude the remedy...

Case13 ...the order is affirmed, with costs to the plaintiff payable by the no merit in defences defendant...An earlier grant of summary judgment in favour of Dunkin’ and counterclaims Donuts was reversed by this court. On the more fully-developed record by defendant; presented in the present appeal, however, we hold that Dunkin’s Donuts plaintiff’s motion has established its entitlement both to summary judgment on the majority granted of its causes of action and to dismissal of the defendants’ defences and counterclaims.

115

Table 19 (continued)

Case(s) Excerpts from the court records Court’s opinions

Financial information supplied by Dunkin’ Donuts proves that it is exempt from the specific disclosure requirements of General Business Law...and was thus not required to furnish the location of competing franchises...In any event, the defendants’ allegations of a violation of the statute’s disclosure provisions have been adequately refuted. The defendants have also failed to establish that they were damaged by the existence or nondisclosure of competing franchises in the vicinity of their shop...Dates and sales figures, also supplied by Dunkin’ Donuts establish that the defendants’ sales were not adversely affected by other franchises which opened after the defendants began operation. Without damages there can be no action for fraud...The defendants’ defences and counterclaims are dismissed, and summary judgment is awarded to Dunkin’ Donuts on those causes of action seeking to recover fees and damages on the loan and franchise agreements fees as well as an injunction prohibiting the defendants from holding themselves out as operating a Dunkin’ Donuts shop...plaintiff’s third cause of action...summary judgment was properly withheld...

Case14 Ordered that the judgment is reversed insofar as appealed from, on the law, no merit in causes with costs, that branch of the defendants’ motion to dismiss the second of action by cause of action is granted, and the complaint is dismissed in its entirety... plaintiff; The Supreme Court [earlier] found that the period of time set forth in the defendant’s motion franchise agreement was unreasonably short, and would allow for a claim to dismiss the to accrue and expire before the execution of the agreement. This was error. second cause of The agreement indicates that the claim accrues at such time as all of the action granted; facts establishing the alleged fraud, which necessarily include detrimental plaintiff’s complaint reliance, may be established. This can be no earlier than the time of the dismissed execution of the agreement. The franchisee’s remaining contentions with regard to enforcement of the limitations provision of the agreement are without merit. In light of our determination, we need not address the defendants’ remaining contentions...

Case15 “...causes of action that relate to the Oneida and Canastota franchises must order reversed due be dismissed on the basis of the “Choice of Forum” provision...Here, to jurisdictional plaintiff failed to sustain its burden...” reasons

Case16 “...the franchise agreement expressly provides that action arising from it complaint dismissed are to be governed by Ontario law and that parties consent to the Ontario due to jurisdictional jurisdiction...” reasons

Case17 ...Ordered that the order is affirmed, with costs...We affirm the order defendant’s motion granting the defendant’s motion to dismiss the complaint for reasons other to dismiss plaintiff’s than those cited by the Supreme Court...Nevertheless, we conclude that the complaint granted; motion to dismiss the complaint was properly granted since it fails to state plaintiff failed to a cause of action.... The plaintiff’s cause of action sounding in tortious state causes of interference with existing and prospective business relationships was action duplicative of the plaintiff’s cause of action sounding in breach of a franchise agreement and failed to assert an independent wrong...

116

Table 19 (continued)

Case(s) Excerpts from the court records Court’s opinions

Case18 ...whether the franchisees have a valid tort claim for “interference with defendants' motion prospective economic relations. We hold that they do not. The franchisees to dismiss the claim that Carvel did use wrongful “economic pressure”, but that argument appellant's motion is ill-founded for two independent reasons. First, it is ill-founded because had no merit; the economic pressure that must be shown is not, as the franchisees tortious interference assume, pressure on the franchisees, but on the franchisees’ customers. As with economic federal courts applying New York law have recognized, conduct pressure not constituting tortious interference with business relations is, by definition, established conduct directed not at the plaintiff itself, but at the party with which the plaintiff has or seeks to have relationship...Here, all Carvel did to the franchisees’ customers was to make Carvel goods available in supermarkets at attractive prices; this...was not “pressure” on these third parties but legitimate “persuasion”, and thus tortious interference with economic relations was not established... The crux of franchisees’ complaint is that Carvel distributed its products through competitive channels, to an extent and in a way that was inconsistent with the franchisor-franchisee relationship. The mere institution of a coupon program was not “economic pressure” rising to the level of “wrongful” or “culpable” conduct ...” The majority concludes... holding that where a defendant acts in its own economic self-interest, the standard applicable to a tortious interference claim is whether the defendant employed “wrongful means” or committed “egregious wrongdoing”...thus posits that “it is not relevant here whether we characterize Carvel and its franchisees as competitors”...Carvel’s conduct in selling ice cream cakes to supermarkets, in or of itself, is not coercive in nature and is not compelling evidence of improper economic pressure. Moreover, Carvel’s supermarket sales were not specifically aimed at inducing particular customers away from the franchisees; such sales were aimed at supermarket customers in general...Concluding that the franchisees’ claim does not meet the improper conduct standard…

Case19 ...Order, Supreme Court...to the extent appealed from as limited by the defendant’s motion briefs... granted the defendants’ motion for summary judgment dismissing granted for the complaint and denied plaintiff’s cross motion for summary judgment summary judgment dismissing certain affirmative defences, unanimously modified, on the law, dismissing to the extent of reinstating the seventh, eighth, ninth and tenth causes of plaintiff’s claims; action pursuant to the Franchise Act...and dismissing the individual plaintiff’s cross defendants’ second affirmative defences and the corporate defendant’s motion denied; first, second, and sixth affirmative defences to the extent that they rely on plaintiff’s fraud release and waiver clauses, and otherwise affirmed, without costs...The claim and claim for court erred in dismissing plaintiff’s claims...based on the representations breach of contract made by plaintiff concerning information supplied to it by defendant, and dismissed; leave to in not dismissing affirmative defences based on those representations. appeal denied Accordingly, defendant’s attempt to utilize the representations as a defense must be rejected...The court correctly held that reliance is an element of a fraud claim under the Franchise Act...However, issues of fact exist as to the extent and reasonableness of plaintiff’s reliance on defendant’s alleged oral representations...

117

Table 19 (continued)

Case(s) Excerpts from the court records Court’s opinions

Plaintiff properly alleged that defendant’s representations, which were not contained in the prospectus, ran afoul of General Business Law... However, the court correctly dismissed plaintiff’s common-law fraud claims. The disclaimers were not generalized boilerplate exclusions, but were contained in a separate rider, which plaintiff’s principal read and initiated, stating specifically that she was not relying on any representations by defendants...The court also correctly dismissed plaintiff’s claims for breach of contract, as it is uncontroverted that plaintiff failed to provide written notice of any breach pursuant to...the franchise agreement... Reargument granted and, upon reargument, the decision and order of this Court entered...recalled and vacated and a new decision and order substituted therefore; leave to appeal to the Court of Appeal denied...

Case20 ...Ordered that the judgment is reversed, on the law, those branches of the plaintiff’s motion plaintiff’s motion which were for summary judgment on the cause of for damages and action alleging a violation of the Franchise Sales Act and for an award of attorney’s fees an attorney’s fee in the sum of $27,709.25, are denied...The appeals from denied; failed to the intermediate orders must be dismissed...The issues raised on the make prima facie appeals from the orders are brought up for review and have been entitlement; no considered on the appeal from the judgment...It is also undisputed that the merit in other defendants did not register an offering prospectus prior to entering into the causes of action subject agreement with the plaintiff...even if the defendants violated the Franchise Sales Act by failing to register an offering prospectus, the plaintiff must still prove that it sustained damages as a result of the violation, and must further prove that the violation was “wilful and material” in order to be entitled to an award of an attorney’s fee...The plaintiff’s failure to make a prima facie showing of its entitlement either to damages or an award of an attorney’s fee provides an additional basis for denial of its motion for summary judgment...The parties’ remaining contentions are without merit...

Case21 ...an order of the Supreme Court...granted a motion by defendant’s Moe’s defendant’s motion Southwest Grill, LLC and Raving Brands, Inc. for summary judgment for summary dismissing the breach of contract causes of action against them...We agree judgment with Supreme Court that Moe’s did not breach plaintiff’s 2005 MDA when dismissing it granted exclusive rights in the 2007 Trager MDA...plaintiffs’ agreement plaintiff’s claim for had expired before Moe’s entered into the 2007 Trager MDA. Plaintiffs breach of contract were required under the 2005 MDA to open one restaurant by February granted; plaintiffs’ 2006 and a second by December 2006. Under section12 of the 2005 MDA appeal denied entitled “termination”, Moe’s could have terminated the agreement with written notice when plaintiffs failed to establish the first restaurant in a timely fashion; but Moe’s did not elect to do so. Under the unambiguous terms of the agreement, the failure of plaintiffs to meet the final date for opening the second restaurant resulted in the agreement automatically expiring without the necessity of notice, written or otherwise. Plaintiffs’ estoppel argument premised upon continuing communications between the parties was not raised before Supreme Court and, in any event, is unavailing...

118

Table 19 (continued)

Case(s) Excerpts from the court records Court’s opinions

Case22 ...Judgment, Supreme Court...entered...denying the petition... unanimously no merit in affirmed, without costs...Petitioners failed to show that the petition was petitioner’s causes served on a person authorized to receive of process pursuant to CPLR 311 of action; service is (a) (1). time barred The provision of the parties’ franchise agreements on which petitioners rely concerns only service of a notice required by the agreements, not service of process required by the CPLR. Moreover, commencement of the proceeding was untimely, since the purported service occurred more than 90 days after the awards were received...In any event, the petition fails to present a basis for vacating the arbitration awards. The omission of a reference to a tax withholding requirement from one of the awards does not create an explicit conflict with any law or public policy requiring tax withholding...We have reviewed petitioner’s remaining contentions and find them without merit...

Case23 ...the defendants appeal, as limited by their brief...entered July 20, plaintiff’s causes of 2011...upon a decision of the same court dated March 9, 2011...made after action granted in the a nonjury trial on the issue of liability, and upon a decision of the same first instance; order court dated May 26, 2011...made after a nonjury trial on the issue of for a new trial on damages, (a) is in favour of the plaintiff and against them in the principal defendants’ sum of $98,982 on the cause of action alleging breach of contract based counterclaims and upon their failure to indemnify the plaintiff for legal fees incurred in on the issue of defending a federal trademark infringement action, and (b) failed to make damages any determination with respect to their counterclaims, and the plaintiff cross-appeals, as limited by its brief, from...same judgment as, upon the decision dated March 9, 2011, (a) in effect, dismissed the cause of action to recover damages for violation of the Franchise Sales Act, and (b) failed to award it damages on the causes of action alleging breach of contract based upon the defendants’ delivery of meat to the plaintiff in nonrefrigerated trucks and their lack of authority to assign a certain logo... After a trial on the issue of liability...the Supreme Court...found that the cause of action to recover damages for the defendants’ alleged violation of the Franchise Sales Act based on the doctrine of in pari delicto should be dismissed, found that defendants’ liable to indemnify the plaintiff for legal fees incurred in defending a trademark infringement action...Accordingly, upon remittal, a trial must be conducted on the issue of the plaintiff’s damages for the defendants’ breach of the parties’ agreement...at the time that the agreement was entered into...

A summary finding of 23 cases is exhibited in Table 20 consists of cases with identifier, case initiator, business model, types of conflicts, causes of action and its sub-themes, and court’s opinions and its sub-themes.

Table 20

Summary findings of all cases analyzed

Case Business Types of Causes of action Court’s opinions Case(s) initiator model conflict(s)

Claims Issues on Seeking Jurisdiction Preliminary order Causes of action Orders

Case01 franchisee ice cream MR BV EC RSN WI MIG WOM MID

Case02 franchisee ice cream UC BV PA; UC SJ WI MIG WOM MID

Case03 franchisor ice cream TM BV TM IR WI MIG WM MIG

Case04 franchisor ice cream TM BV TM; DP MD; IR WI MIG WOM MID

Case05 franchisor QSR UC TA PA MDC WI MIG WOM MID

Case06 franchisor fast food NC TA PA MDC WI MIG WOM MID 119

Case07 franchisee Asian NC BV JD RSN OS MID N/A N/A

Case08 franchisor specialty NC BV PA SO WI MIG WM MIG

Case09 franchisee fast food NC BV PA SO WI MIG WM MIG

Case10 franchisor BG D TA PA RSN WI MIG WM MIG

Case11 franchisor ice cream MR; NC BV INDC SJ WI MIG WOM MID

Case12 franchisee* ice cream IF; PS; NC BV PA IR WI MIG WM MIG

Case13 franchisor BG UC BV PA IR WI MIG WM MIG

Case14 franchisee fast food F TA PA MDC WI MIG WOM MID

Table 20 (continued)

Case Business Types of Causes of action Court’s opinions Case(s) initiator model conflict(s)

Claims Issues on Seeking Jurisdiction Preliminary order Causes of action Orders

Case15 franchisee QSR NC BV PA IR; MD OS MID N/A N/A

Case16 franchisee* BG IF; NC BV PA MDC OS MID N/A N/A

Case17 franchisee ice cream IF; NC BV PA MD; MDC WI MIG WOM MID

Case18 franchisor ice cream UC BV UC; INDC MD WI MIG WOM MID

Case19 franchisee specialty MR BV PA SJ WI MIG WOM MID

Case20 franchisee specialty NC BV PA MD; SJ; RSN WI MIG WOM MID

Case21 franchisee* specialty NC BV PA SJ WI MIG WOM MID 120

Case22 franchisee fast food NC BV PA MDC WI MIG WOM MID

Case23 franchisee specialty TM; NC BV INDF; TM MD WI MIG WM MIG

Note. * = international; BG = baked goods; QSR = quick service restaurant; MR = misrepresentation; UC = unfair competition; TM = unauthorized use of trademarks and tradename; NC = non-compliance; D = duress; IF = interference; PS = disruption of products and service; F = fraud; BV = breach or violation of agreements/regulations; TA = termination of agreement; EC = encroachment; DP = deception to public; INDF = indemnifications; INDC = inducement; JD = jurisdiction; PA = provisions in agreements; MD = monetary damages; SJ = summary judgment; IR = injunctive relief; MDC = motion to dismiss complaint; RSN = restitution; SO = specific order; WI = within; OS = outside; MIG = motion or injunction granted; MID = motion or injunction denied or reversed; WM = with merit; WOM = without merit; N/A = not applicable. 121

Chapter Summary

In this chapter, the content analysis was employed to examine two types of data sources:

IFA database and the New York court records. Using the IFA database as the supplementary data source, this study identified the types of franchised restaurant business model involved in the legal actions, determined which parties in restaurant franchising are dominating the legal actions, and learnt whether international or domestic players are involved in the lawsuits. Next, the New

York court records—spanning from the year 1956 to 2016, were analyzed as the primary data source. The court records were used to investigate the types of conflicts in restaurant franchising that are being filed in courts, the causes of action in each case, the most prevalent causes of action, and the court’s opinion for each case. The findings contribute to the theoretical and practical implications.

122

CHAPTER 5: DISCUSSION AND RECOMMENDATIONS

Introduction

This chapter presents a discussion that summarizes the entire study and elaborates on the findings. It also explains the implications of findings to both theoretical and practical perspectives, and the limitations encountered during the research. Finally, to conclude this chapter, several recommendations are proposed for future research.

Discussion

To gain a better understanding of the characteristics of the conflicts that occurred between the franchisors and franchisees, this exploratory study uses relational conflict theory

(Spinelli & Birley, 1996), institutional theory (Scott, 2007), and conflict management theory

(Antia et al., 2013) to discuss the theoretical and practical implications of the findings. In an effort to achieve the objectives of this study, inductive content analysis was employed to analyze the court records by investigating the characteristics of the conflict that led to the lawsuits filed by either franchisees or franchisors. All court cases were obtained from the online source, i.e.

New York Court Unified System website, and the parties’ information in the lawsuits were cross-verified with the IFA database. The primary data were then cross-verified with the franchise association database, particularly on the corporate data. The court records can offer rich text-data which provide useful information for the franchising industry because filing a lawsuit is the last resort for the aggrieved party to seek judicial interpretation in resolving the conflicts. Data and methodological triangulations approaches were consolidated to produce reliable and valid findings. After a thorough elimination process of more than two thousand 123 franchise-related court cases over 60-year yields evidence of 23 court cases related to restaurant franchising.

In relational conflict theory by Spinelli and Birley (1996), the structure of franchising is vested in the relationship between the franchisees and franchisors, which is established by contractual norms: solidarity, role integrity, and mutuality that manifest those parties’ relationship. This theory emphasizes that the execution of provisions in the agreement is to ensure the continuity of the relationship during numerous business transactions. Findings from this current study append the relational conflict theory and demonstrate the party’s dissatisfaction by filing a lawsuit against the other. Furthermore, the findings indicate that all lawsuits were filed on the basis of two major conflicts: termination of agreements and breach or violation of agreements and franchising regulations.

Relational conflict theory pays attention to the potential conflict at the profit-maximizing stage in general business format franchising. This theory proposes that the contractual performance by the franchisors is the measure for the franchisees’ satisfaction. In addition to that, this current study explores the characteristics of conflicts experienced by the dissatisfied parties in restaurant franchising that became the causes of action at litigation stage. While it is true that poor contractual performance by the franchisors is one of the key factors in conflict, the theory further suggests that the valuation of trademark enjoyed by both parties is an area prone to conflict. Unfortunately, there is no matrix available to guide the parties in franchising in identifying the area susceptible to conflict. Interestingly, the findings in this current study revealed that non-compliance occurred in 13 cases out of 23 franchised restaurant cases, which makes it the most frequently reported theme conflict compared to other themes. These findings validate a personal reflection on franchise litigation penned by Brody (2008), which identified 124 the non-compliance of terms and conditions stipulated in franchise agreements as one of the determinants for conflict in the franchising business. Therefore, the coding matrices developed in this current study guide the parties in franchising to identify the red flags in conflicts and further to prevent their relationship from deteriorating.

The institutional theory accentuates normative, regulative, and cultural-cognitive components, which integrate within the organization, society and government to create a functional atmosphere (Scott, 2007). In reference to normative aspect, the findings identified a total of eight cases, operating as ice cream outlets, dominated the types of business models in restaurant franchising. The same franchisor company owned all ice cream stores. It appears that the ice cream business model owned by the same franchisor has the most dissatisfied franchisees compared to other business models analyzed. Their dissatisfaction with the franchisor’s actions in many ways had led to the initiation of lawsuits in New York State. For example, in Case12, the franchisor attempted to terminate the franchisee on alleged breach of terms and conditions stipulated in the franchising agreement. The franchisee claimed all business decisions have been approved by the franchisors beforehand. At the same time, the franchisor advertised a recruitment of new franchisee for a higher franchise fees within the same territories. Following is the excerpt from court record of Case12 in that regard:

...Convinced that Carvel was trying to terminate their licensing agreement and resell their

franchise and distribution rights at a higher price, the plaintiffs filed this suit alleging

breach of contract, fraud, and interference with the contractual and business relationships

between plaintiffs and their sublicensees (U.S. Ice Cream Corp. v Carvel Corp., 1988,

para 11). 125

This situation evidently showed that the franchisor practiced poor managerial strategy within its organizational culture. Parsa (1996) confirms that poor managerial approaches within the franchised QSR sector in a matured market can propagate conflict. But this current study submits that conflict could happen in different restaurant business models across all levels of business life cycle. Therefore, a good corporate culture practiced by the franchisor can promote a feasible business model and this is one of the key factors in avoiding conflict that causes the franchisees’ dissatisfaction in operating the restaurant chains business.

The findings in this current study also revealed that a total of 14 cases were initiated by the franchisees in New York State compared to nine franchisors who initiated the lawsuits. This is a contradictory finding from a previous study by Drahozal (2014) that found that New York

State has the highest number of cases initiated by the franchisors. The reason for the incompatible findings between these two studies is that the unit of analysis in Drahozal (2014) focused on QSR master franchisor, and the unit of analysis in this current study is aimed at court cases filed by either franchisee or franchisor, restricted to the New York State court records.

Further, among those franchisees who initiated the lawsuits, three were international franchisees from Israel, Canada, and Greece (Case12, Case16, and Case22 respectively), which suggest that geographical limitations faced by dissatisfied franchisees did not hold them back from initiating a lawsuit against the franchisors.

In regard to regulative element, findings from this current study attempt to reconcile the imbalance power of the franchisors towards the franchisees by drawing attention to the basis of causes of action. All cases were initiated on the basis of either breach or violation of agreements and regulations or termination of agreements. Between these two themes, the findings identified that breach or violation of agreements by franchisors were the most prevalent causes of action in 126 restaurant franchising, totalling 17 out of 23 cases. Evidently, these findings demonstrate that conflict was likely to develop between the parties due to an imbalance between autonomy and control. This situation is affirmed by Dickey, Harrison McKnight, and George (2008) who argue that conflict emerged when the franchisor’s requirement for standardization and control contradicted the franchisee’s eagerness for exclusive autonomy in business operation. On the other hand, these discoveries contradict the findings generated from interviews conducted among franchisees by Storholm and Scheuing (1994) who found that it was termination, and not breach or violation, of agreements by the franchisors as one of the major sources of conflict in franchising business. In essence, by acknowledging the characteristics of the conflicts, this current study proceeds to recommend that franchising regulations should be amended to become more inclusive towards safeguarding the franchisees’ interests and rights.

Under cultural-cognitive component, various actors play important roles to guarantee the aims of the institution are achievable. Here, the actors—organizations, individuals, franchisor and franchisee associations, and policymakers—uphold the beliefs and values embedded through a repeated process over time. The institution is testable, not static, and is subject to readjustment in order to protect the interests of all actors (Zilber, 2008; DiMaggio, 1988). The findings in this current study showcase that provisions in the franchise contractual agreement is a recurring cause of action in the analysis. It signals that the franchisees were the most dissatisfied party in alleging the franchisors did not comply with the provisions as stipulated in the agreements. In franchise practices, agreements in franchise businesses are usually biased toward safeguarding the franchisor’s interests instead of franchisees’ (Kashyap et al., 2012). As a matter of fact, most of franchisees are the new players to business world and invested all their resources—network, money, time, and energy—with an intent to create more wealth. However, in most cases, the 127 franchisor was the party who breached or violated the agreements. The findings show that most franchisees had opted for litigation as they perceived that the lawsuits were the last resort to solve their conflicts. Alternative dispute resolution (ADR) should be considered by the parties in conflict before proceeding to litigation. Currently, the inclusion of ADR clauses in the franchising agreements is optional.

This current study examines the causes of action filed in courts by the aggrieved party, which represents a final stage in conflict management cycle (Antia et al., 2013). The conflict management theory quantifies the litigation initiation process and outcomes due to conflicts between franchisees and franchisors but fails to explore the court’s opinions in addressing the causes of action experienced by those parties. The findings in this current study supplement to that theory by identifying theme court’s opinions. The findings indicated that three lawsuits filed were dismissed or reversed by the courts due to jurisdictional reasons as reported in the court’s preliminary orders. These findings suggest that franchisees did not obtain appropriate legal advice from their attorneys nor they did not arbitrate their conflicts before initiating the lawsuits.

The dismissal or reversal of cases by the court in the preliminary orders, during the initial stage of the case, did not make those cases free from conflicts as claimed by the case initiators. In fact, there were conflicts that became ground for the cases filed in the court. Those franchisees’ perceptions hold true on the basis that most of the conflicts were originated from the franchisors non-compliance of various agreements and other causes of action.

Previous research by Weaven, Frazer, and Giddings (2010) concluded that most of the franchise attorneys found that franchisees involved in conflict with their franchisors did not perform their due diligence accordingly and had no knowledge or understanding on what they were signing in the agreements. This affirmed that the franchisees are the parties who rely 128 heavily on the professional advice rendered by the franchise attorneys. The findings in this current study concluded that the courts found it was justified to dismiss or reverse the cases accordingly based on the parties’ causes of action contained in their pleadings. For example, the court opined in Case07, “We find, however, that such acts were insufficient to confer jurisdiction over defendant”. The franchising system during its expansion crosses geographical boundaries, domestic and international, therefore deciding the right forum selection is crucial before the dissatisfied party can file the lawsuits. Here, it is imperative that the franchisee’s attorney advises their clients accordingly.

Furthermore, the findings in this current study revealed that the courts found 13 cases as having no merit in their causes of action and thus, the courts denied the motions. On the other hand, seven motions were granted by the courts. It should be noted that courts make a judicial decision based on the law in question and on a case-to-case basis depending on the causes of action alleged by the case initiator. The courts do not make decision on the issues of facts. Facts of case, somehow, are important to assist the court to make fair and sound judgments. According to the regulatory institutional principle, the laws and their enforcement regulate individual and organizational behavior (Spencer, 2008; Scott, 2007). The regulatory legitimacy materializes when the institutional system comes into action to protect the right of the industry to survive

(Bruton, Ahlstrom, & Li, 2010). As such, the court fulfils its judiciary role by upholding the rule of law to resolve industry conflicts that become the precedents for the future lawsuits.

This exploratory study submits unprecedented findings that the courts found most of the cases filed by the franchisees did not have meritorious causes of action to warrant the court’s judgments. A pattern derived from a content analysis of court cases reported within a 60-year window demonstrates that conflicts relating to non-compliance of numerous types of agreements 129 were still a compelling concern in the franchising industry. The findings, however, suggest that the franchisees thought their lawsuits posited meritorious causes of action.

Implications of the Findings

The findings in this study offer implications to both theoretical and practical standpoints.

Theoretical Implications

One of the important objectives in conducting this current study is to close the gap in the existing literature. The findings generated from this study expand the literature particularly in franchised restaurant operation, and generally in franchising industry. This study also aimed to gain insights on conflicts experienced by the case initiators, either franchisee or franchisor, based on the lawsuits filed. Previous studies analyzed various types of documents to investigate numerous organizational issues that affected the franchising relationship (Brookes, 2014; Antia et al., 2013; Zachary, McKenny, Short, Davis, & Wu, 2011; Winter, Szulanski, Ringov, &

Jensen, 2012; Rondán-Cataluña, Navarro-García, Gámez-González, & Rodríguez-Rad, 2012;

Hsu & Jang, 2009; Lafontaine & Blair, 2008; Altinay & Wang, 2006; Brickley, Misra, & Van

Horn, 2006; Bates, 1995). A study by Antia et al. (2013), which analyzed court records obtained via PACER database, determined the parties’ options in conflict management. However, no study is found to provide a coding matrix that recognized the conflicts and causes of action in litigation experienced by franchisees and franchisors. This current study proves that the court records are significant data sources to gain insights into the conflicts experienced by the dissatisfied party at the litigation stage. Hence, the use of court records in this current study offers unprecedented findings that are significant to the franchising literature in identifying the types of conflicts which led to the initiation of lawsuits by the dissatisfied party. The findings 130 also pinpoint the most prevalent cause of action that requires the court’s intervention in resolving the conflicts. As such, this study developed coding matrices comprise of a set of themes and sub- themes derived from the court cases. The themes add to the franchising taxonomy, particularly in understanding the conflicts experienced by the case initiators, types of causes of action being filed in courts, and the court’s opinions based on the causes of action. The taxonomy can serve as a guideline, especially by novices in the franchising business, in comprehending the conflicts phenomena recurring in the lawsuits.

Content analysis designs vary from one study to another, depending on their objectives.

In an effort to provide answers to the research questions, this study uses content analysis method to analyze the court records. This method is appropriate for the purpose of this study as set out in the earlier chapter and can be replicated in another study with similar data sources. Even though the data and methodological triangulations frameworks implemented in this study are exploratory in nature and need further empirical studies to test their validity and reliability, they could be useful methods for future research. By the same token, this study also endorses the application of theoretical framework in Antia et al. (2013) which identifies options in addressing the conflict scenario within a broad ambit of franchising industry. The findings of this study, with a focus on restaurant franchising enterprise, suggest the litigation actions taken by dissatisfied parties should be established on meritorious causes of action. This yields a better understanding of the conflict management between the franchisees and franchisors before they progress to the legal battle.

Practical Implications

This current study aims to provide empirical evidence from the court records on what define the conflicts in franchise relationships, particularly between the franchisee and the 131 franchisor. The practical contributions focus on the stakeholders in restaurant franchising industry, including the franchisees or potential franchisees, franchisors, franchise experts, and policymakers. Given that this study scrutinized court cases over a 60-year period, the findings are indispensable to the franchising stakeholders in mitigating the negative impact arising from the potential conflicts, and thus safeguarding their business relationship. The conflicts themes taxonomy as outlined in the coding matrices showcases as red flags in franchise relationship which should be resolved during the arbitration process. Conflicts, at the litigation stage, are always non-negotiable and non-communicable. That is why parties in lawsuits appoint franchise attorneys to negotiate and communicate on their behalf.

As a matter of fact, getting involved in a lawsuit is expensive, time-consuming, public and stressful to many parties. However, the conflicts experienced were so intense that the dissatisfied franchisees decided to obtain the judicial interpretation on the causes of action and asking for compensation to their damages, by alleging that they were entitled for monetary awards too. The outcomes from this study suggest that the ADR process should be improved to have more effective binding. Currently, the arbitration practices between franchisor and franchisee are voluntarily and subject to the arbitration clauses contained in the franchise agreements (Giller, Wiselgren, & Gladdis, 2014). In comparison to the litigation process, arbitration is inexpensive and informal, and offers speedy disposal, yet it results in binding and conclusive decisions. The decisions made during the arbitration process do not have precedential effect on current or future cases (Hershman & Caffey, 2008). Therefore, arbitration is the appropriate platform to settle the conflict before the parties opt for the litigation. Mandatory inclusion of arbitration clauses in the franchise agreement should be considered by the legislators. 132

Limitations and Future Research

This study encountered several limitations. First, not all cases from New York State court records database within 60-year span are available for public access. The project of placing the court records on the internet began in 2004, based on the recommendations made by the

Commission on Public Access to Court Records, to make the non-confidential cases available to public access. Some court cases contain highly sensitive information and therefore, are not reported in the online database. Future research is proposed to examine the court records only available in hard copy to gain more useful data on franchising industry.

Second, the New York State court records database is restricted to court cases filed within the jurisdiction of the New York State courts. In that sense, the findings should not be generalized. This is mainly because of the distinctive circumstances that gave rise to the conflicts: causes of action, parties involved, types of conflicts perceived by those parties, and judicial opinions. Future studies can consider court records from different states and countries to analyze the conflicts phenomena in those contexts. Comparative studies are feasible to generate more impactful insights for the franchising industry.

Third, some court cases are partially reported due to ongoing trials. Where it is applicable, the analysis was performed with caution by removing those cases from the dataset.

The reason for doing so was that the court’s final disposition of cases could be considered for the analysis in this current study and therefore, this process has reduced the number of cases being analyzed. Future longitudinal studies may focus on the ongoing trial cases can be implemented to examine how the parties manage their conflicts throughout the litigation process.

Fourth, some reported cases were incomplete and posed difficulties for analysis purposes, for example, absence of statement containing causes of action or franchise sector involved and 133 therefore, those cases were removed from the dataset. To validate the data from the court records, a validity check using IFA database was performed. Apart from IFA database, many franchising associations provide data that can be utilized to generate meaningful information.

Future comparative studies comprising of several data sources from franchising associations, domestically and internationally, can provide meaningful implications for the industry.

Fifth, this current study used court records and corporate databases as the data sources.

These data are classified as secondary data and have their own disadvantages (Cowton, 1998).

Future studies are recommended to replicate the methodology employed in this study with a different data source of similar type. This replication is intended to determine the generalizability of the original findings (Smith, Ayanian, Covinsky, Landon, McCarthy, Wee, & Steinman,

2011), particularly in addressing the conflicts in franchising industry.

134

REFERENCES

Abell, M. (2013). The Law and Regulation of Franchising in the EU (pp.11-56). UK & USA:

Elgar Intellectual Property Law and Practice.

Alon, I., Ni, L., & Wang, Y. (2012). Examining the determinants of hotel chain expansion

through international franchising. International Journal of Hospitality Management,

31 (2), 379-386. doi: 10.1016/j.ijhm.2011.06.009

Altinay, L., Brookes, M., Madanoglu, M., & Aktas, G. (2014). Franchisees' trust in and

satisfaction with franchise partnerships. Journal of Business Research , 67 (5), 722-728.

http://dx.doi.org/10.1016/j.jbusres.2013.11.034

Altinay, L., & Wang, C. L. (2006). The role of prior knowledge in international franchise partner

recruitment. International Journal of Service Industry Management, 17 (5), 430-443.

http://dx.doi.org/10.1108/09564230610689768

Anney, V. N. (2014). Ensuring the quality of the findings of qualitative research: Looking at

trustworthiness criteria. Journal of Emerging Trends in Educational Research and Policy

Studies (JETERAPS), 5 (2), 272-281.

Antia, K. D., Zheng, X., & Frazier, G. L. (2013). Conflict management and outcomes in

franchise relationships: The role of regulation. Journal of Marketing Research , 50 (5),

577-589. https://doi.org/10.1509/jmr.11.0144

Arab Business Review (2016). The MENA franchising opportunity and success factors .

Retrieved from http://www.arabbusinessreview.com/en/article/mena-franchising-

opportunity-and-success-factors

Arksey, H. & Knight, P. (1999). Interviewing for social scientists: An introductory resource with

examples . Great Britain: SAGE Publications Ltd. 135

Australian Franchising Task Force Report (1991). Franchising task force final report to the

Minister for Small Business and Customs, The Hon David Beddall . Retrieved from

http://trove.nla.gov.au/work/27039567

Ayling, D. (1988). Franchising in the U.K. Quarterly Review of Marketing, 13 (4), 19-24.

AZFranchises.com (2016). Quick franchise facts franchising industry statistics . Retrieved

from http://www.azfranchises.com/quick-franchise-facts/

Babbie, E. (2008). The basics of social research . USA: Thomson Learning, Inc.

Baker, S., & Choi, A. (2015). Contract's role in relational contract. Virginia Law Review, 101 (3),

559-607. Retrieved from http://www.jstor.org/stable/24363260

Barrett, A. (1992). Indigestion at Taco Bell: Franchisees are rebelling against headquarters’

expansion plans. Business Week, 14 , 66-67.

Barkoff, R. M., & Selden, A.C. (2008). Fundamental of franchising (3rd ed.). USA: American

Bar Association.

Baron, S., & Schmidt. R. (1991). Operational aspects of retail franchisees. International

Journal of Retail and Distribution Management, 19 (2), 13-19. https://doi.org/10.1108/

09590559110135061

Basit, T. (2003). Manual or electronic? The role of coding in qualitative data analysis.

Educational Research, 45 (2), 143-154. http://dx.doi.org/10.1080/0013188032000133548

Bates, T. (1995). Analysis of survival rates among franchise and independent small business

startups. Journal of Small Business Management, 33 (2), 26.

Blackford, M. G., & Kerr, K. A. (2015). The company in postwar world. In Vatter, H. G., &

Walker, J. F. (Eds.). History of the U.S economy since World War II (p. 128-148). USA:

Routledge. 136

Bradach, J. L. (1995). Chains within chains: The role of multi-unit franchisees. Journal of

Marketing Channels , 4(1-2), 65-81. http://dx.doi.org/10.1300/J049v04n01_05

Bradach, J. L. (1998). Franchise organizations . Boston, MA: Harvard Business School

Press.

Brickley, J. A., Misra, S., & Van Horn, R. L. (2006). Contract duration: Evidence from

franchising. Journal of Law and Economics , 49 (1), 173-196. https://doi.org /10.

1086/501081

Brody, M. B. (2008). Addressing the most common franchise claims. Franchise World.

Retrieved from https://www.franchise.org/addressing-the-most-common-franchisee-

claims

Brookes, M. (2014). The dynamics and evolution of knowledge transfer in international master

franchise agreements. International Journal of Hospitality Management, 36, 52-62.

https://doi.org/10.1016/j.ijhm.2013.07.005

Brown, D. R. (2007). The restaurant manager's handbook: How to set up, operate, and

manage a financially successful food service operation (4th ed.). USA: Atlantic

Publishing Company.

Bruno, A. V., & Leidecker, J. K. (1988). Causes of new venture failure: 1960s vs. 1980s.

Business Horizons , 31 (6), 51-56. https://doi.org/10.1016/0007-6813(88)90024-9

Bruton, G. D., Ahlstrom, D., & Li, H. L. (2010). Institutional theory and entrepreneurship:

Where are we now and where do we need to move in the future? Entrepreneurship

Theory and Practice, 34 (3), 421-440. doi: 10.1111/j.1540-6520.2010.00390.x

137

Buchan, J. (2005). Franchisor failure in Australia: Impact on franchisees and potential

solutions. In 19th Annual International Society of Franchising Conference , London, UK.

https://dx.doi.org/10.2139/ssrn.1111948

Burton, J. (1990). Conflict: Resolution and prevention . New York: St. Martin's Press.

Business Dictionary (2018). Alternative dispute resolution . Retrieved from

http://www.businessdictionary.com/definition/alternative-dispute-resolution.html

Business View Magazine (2015). Australia’s franchising industry: A growth story. Retrieved

from http://www.businessviewmagazine.com.au/australias-franchising-industry-

a-growth-story/

Carpenter, D. R. (2011). Triangulation as a qualitative research strategy. In Streubert, H. J. &

Carpenter, D. R. (Eds.). Qualitative research in nursing: Advancing the humanistic

imperative. China: Wolters Kluwer Health.

Carroll, G. R., & Delacroix, J. (1982). Organizational mortality in the newspaper industries

of Argentina and Ireland: An ecological approach. Administrative Science Quarterly,

27 , 169-198. doi: 10.2307/2392299

Caves, R. E., & W. F. Murphy, II. (1976). Franchising: Firms, markets, and intangible assets.

Southern Economic Journal, 42 , 572–586. doi: 10.2307/1056250

CCFA (2016). About CCFA . Retrieved from http://www.chinaretail.org/about.asp?typeid=1

Combs, J. G., & Castrogiovanni, G. (1994). Franchisor strategy: A proposed model and

empirical test of franchise versus company ownership. Journal of Small Business

Management, 31 (2), 37–48.

138

Combs, J. G., Michael, S. C., & Castrogiovanni, G. J. (2004). Franchising: A review and avenues

to greater theoretical diversity. Journal of Management, 30 (6), 907-931. https://doi.org/

10. 1016 /j.jm.2004.06.006

Cordell, V. V. (2015). A model of conflict comparison between international and domestic

channels: The manufacturer’s perspective. In Proceedings of the 1989 Academy of

Marketing Science (AMS) Annual Conference (pp. 455-459). Springer International

Publishing. https://doi.org/10.1007/978-3-319-17055-8_92

Cowton, C. J. (1998). The use of secondary data in business ethics research. Journal of Business

Ethics, 17 (4), 423-434. https://doi.org/10.1023/A:1005730825103

Daley, J. (2013). What is the real survival rate of franchise businesses? Entrepreneur.com.

Retrieved from https://www.entrepreneur.com/article/227394

Dant, R. P., & Schul, P. L. (1992). Conflict resolution processes in contractual channels of

distribution. The Journal of Marketing, 56 (1), 38-54. doi: 10.2307/1252131

Daszkowski, S. (2015). The history of franchising. About.com . Retrieved online:

http://franchises.about.com/od/franchisebasics/a/history.htm

Davis, P. J. (2012). A model for strategy implementation and conflict resolution in the franchise

business. Strategy & Leadership , 40 (5), 32-38. https://doi.org/10.1108/10878571211

257168

Denzin, R. (1989). The research act: A theoretical introduction to sociological methods (3rd

ed.). New York: McGraw Hill.

Dey, I. (1993). Qualitative data analysis: A user friendly guide for social scientists . London:

Routledge.

139

Dicke, S. A. (1992). Franchising in America: A development of business method, 1940-1980.

USA: The University of North Carolina Press.

Dickey, M. H., Harrison McKnight, D., & George, J. F. (2008). The role of trust in franchise

organizations. International Journal of Organizational Analysis, 15 (3), 251-282.

https://doi.org/10.1108/19348830710880938

DiMaggio, P. J. (1988). Interest and agency in institutional theory. In L. Zucker (Ed.),

Institutional patterns and organizations: Culture and environment (pp. 3-21). Cambridge,

MA: Ballinger.

DiPietro, R. B., Severt, D. E., Welsh, D. H., & Raven, P. V. (2008). Franchisee leadership traits

vs. manager leadership traits an exploratory study comparing hope, leadership,

commitment and service quality delivery. International Entrepreneurship and

Management Journal , 4(1), 63-78. doi: 10.1007/s11365-007-0042-3

Doherty, A. M. (2007). The internationalization of retailing: Factors influencing the choice of

franchising as a market entry strategy. International Journal of Service Industry

Management , 18 (2), 184-205. https://doi.org/10.1108/09564230710737826

Doherty, A. M. (2009). Market and partner selection processes in international retail

franchising. Journal of Business Research , 62 (5), 528-534. https://doi.org/10.1016/

j.jbusres.2008.06.011

Drahozal, C. R. (2014). Disclosure of franchise disputes. Stanford Journal of Law, Business &

Finance, 19 (2), 281-301.

DuBrin, J.A. (2009). Essentials of Management (8th ed.). USA: CENGAGE Learning.

140

Edwards, W. (2011). The pros and cons of franchising in China. China Business Review .

Retrieved from http://www.chinabusinessreview.com/the-pros-and-cons-of

-franchising-in-china/

Elango, B., & Fried, V. H. (1997). Franchising research: A literature review and synthesis.

Journal of Small Business Management, 35 , 68–82.

Emerson, R. W. (2015). Franchise contract interpretation: A two-standard approach. Michigan

State Law Review , 641-686. Retrieved from https://ssrn.com/abstract=2666305

Entrepreneur.com (2016). 2016 top franchises from entrepreneur’s franchise 500 list.

Retrieved from https://www.entrepreneur.com/franchise500

European Franchise Federation (2012). European franchising report. Retrieved from

http://www.eff-franchise.com/Data/PUBLICATION%202012%20EFF%20

FRANCHISE%20REPORT.pdf

European Union (2018). The EU in brief . Retrieved from https://europa.eu/european-

union/about-eu/eu-in-brief_en

Federal Trade Commission Franchise Rule (16 C.F.R. Part 436.1).

Franchising Australia Survey (2014). Retrieved from https://s3-ap-southeast-2.amazonaws.

com/wh1.thewebconsole.com/wh/1401/images/FranchisingAustralia2014webversion.pdf

Franchise Direct (2016). Food franchise industry report 2016 . Retrieved from http://www.

franchisedirect.com/information/foodfranchiseindustryreport2016/?r=5388

Franchise Direct (2017). Basics of the Franchise Disclosure Document (FDD). Retrieved

from https://www.franchisedirect.com/information/guidetobuyingafranchise/basicsofthe

franchisedisclosuredocumentfdd/29/195/

141

Franchisor (2016). In Merriam-Webster.com . Retrieved from https://www.merriam-

webster.com/dictionary/franchisor

FranChoice (2012). History of franchising. Retrieved from http://www.franchoice.com/

franchise-information-guide/what-is-franchise/history-of-franchising

Franchise Daily (2016). Overview of Malaysia economy and franchise business for Asia

franchises and franchisees. Retrieved from http://franchisingdaily.com/overview-of-

malaysia-economy-and-franchise-business-for-asia-franchises-and-franchisees/

FRANdata (2015). Frandata key findings and survey results: 2015 National labor relations

board joint-employer ruling. Retrieved from http://www.frandata.com/wp-

content/uploads/2016/03/FRANdata_Joint_Employer_Impact_Study.pdf

Frazer, L., & Terry, A. (2002). Factors affecting franchise agreement terminations: Lessons

for the franchising sector. Journal of Small Business Strategy , 13 (1), 105-116. Retrieved

from http://libjournals.mtsu.edu/index.php/jsbs/article/view/498

Frazer, L., Weaven, S., Giddings, J., & Grace, D. (2012). What went wrong? Franchisors and

franchisees disclose the causes of conflict in franchising. Qualitative Market Research:

An International Journal, 15 (1), 87-103. https://doi.org/10.1108/13522751211192017

Frazer, L., Weaven, S., & Wright, O. (2008). Franchising Australia 2008 Survey . Brisbane:

Griffith University.

Frazer, L., & Winzar, H. (2005). Exits and expectations: Why disappointed franchisees leave.

Journal of Business Research , 58 (11), 1534-1542. https://doi.org/10.1016/j.jbusres.

2004.08.001

Freelon, D. (2011). ReCal2: Reliability for 2 coders [Web log post]. Retrieved from

http://dfreelon.org/utils/recalfront/recal2/ 142

Furrer, O., Thomas, H., & Goussevskaia, A. (2008). The structure and evolution of the

strategic management field: A content analysis of 26 years of strategic management

research. International Journal of Management Reviews , 10 (1), 1-23. doi: 10.1111/j.

1468-2370.2007.00217.x

Galanter, M. (1983). Reading the landscape of disputes: What we know and don't know (and

think we know) about our allegedly contentious and litigious society. UCLA Law Review,

31 , 4.

Gassenheimer, J. B., Baucus, D. B., & Baucus, M. S. (1996). Cooperative arrangements

among entrepreneurs: An analysis of opportunism and communication in franchise

structures. Journal of Business Research , 36 (1), 67-79. https://doi.org/10.1016/0148-

2963(95)00164-6

Gauzente, C. (2002). Using qualitative methods in franchise research: An application in

understanding the franchised entrepreneurs' motivations. In Forum Qualitative

Sozialforschung/Forum: Qualitative Social Research, 3 (1)., Art. 20.

http://dx.doi.org/10.17169/fqs-3.1.884

Ger, G., & Belk, R. W. (1996). I'd like to buy the world a coke: Consumptionscapes of the

“less affluent world.” Journal of Consumer Policy , 19 (3), 271-304. https://doi.org/10.

1007/BF00411411

Gibbs, G. R., Clarke, D., Taylor, C., Silver, C., & Lewins, A. (2011). Online QDA: Introduction

to CAQDAS . Retrieved from http://onlineqda.hud.ac.uk/Intro_CAQDAS/

Giddings, J., Weaven, S., Grace, D., & Frazer, L. (2011). Taking care of business: Are

franchise systems structured to promote conﬂict? Australian Dispute Resolution Journal,

22 (1), 41–8. 143

Giller, R. A., Wiselgren, S. L., & Gladdis, L. (2014). Enforcing arbitration awards in

international franchising. Franchise Law Journal, 34 , 351.

Glass, G. V., & Hopkins, K. D. (1984). Statistical Methods in Education and Psychology (2nd

ed.). Englewood Cliffs, NJ: Prentice-Hall.

Gobo, G. (2007). Sampling, representativeness and generalizability. In Seale, C. Gobo, G.

Gubrium, J. F., & Silverman, D. (Eds.). Qualitative research practice: Concise

paperback edition. London: SAGE Publications Ltd.

Grace, D., Weaven, S., Frazer, L., & Giddings, J. (2013). Examining the role of franchisee

normative expectations in relationship evaluation. Journal of Retailing , 89 (2), 219-230.

https://doi.org/10.1016/j.jretai.2012.12.002

Grewal, R., & Dharwadkar, R. (2002). The role of the institutional environment in marketing

channels. Journal of Marketing , 66 (3), 82-97. https://doi.org/10.1509/jmkg.66.3.82.

18504

Guest, G., Bunce, A., & Johnson, L. (2006). How many interviews are enough? An experiment

with data saturation and variability. Field Methods, 18 (1), 59-82. doi: https://doi.org/

10.1177%2F1525822X05279903

Guest, G., Namey, E. E., & Mitchell, M. L. (2013). Collecting qualitative data: A field manual

for applied research. California: SAGE Publications, Inc.

Hackett, W. D. (2011). Franchising: The state of the art. USA: Marketing Classics Press, Inc.

Hair, J. F., Celsi, M. W., Money, A. H., Samouel, P., & Page, M. J. (2011). Essentials of

business research methods. New York, USA: M. E. Sharpe, Inc.

Hall, M. A., & Wright, R. F. (2008). Systematic content analysis of judicial opinions . California

Law Review, 96 (1), 63-122. 144

Harmon, T. R., & Griffiths, M. A. (2008). Franchisee perceived relationship value. Journal of

Business & Industrial Marketing, 23 (4), 256-263. https://doi.org/10.1108/ 0885862

0810865834

Haulk, C. J. (2015). Changes in industry shares of national output. In Vatter, H. G., & Walker, J.

F. (Eds.), History of the U.S. economy since World War II (pp.65-69). U.S.: Taylor &

Francis.

Herman, M. L. (2015). A brief history of franchising. FranchiseLaw.com . Retrieved online:

http://www.franchise-law.com/Franchise-Law-Overview/A-Brief-History-of-

Franchising.shtml

Hershman, S., & Caffey, A. A. (2008). Structuring a unit franchise relationship. In Barkoff, R.

M., & Selden, A. C. (Eds). Fundamentals of franchising (p.92). USA: ABA Publishing.

Hing, N. (1999). Maximizing franchisee satisfaction in the restaurant industry. Journal of

Consumer Marketing , 16 (5), 502. https://doi.org/10.1108/07363769910289604

Hoffman, R. C., & Preble, J. F. (1991). Franchising: Selecting a strategy for rapid growth.

Long Range Planning , 24 (4), 74-85. https://doi.org/10.1016/0024-6301(91)90008-C

Holmberg, S. R., & Morgan, K. B. (2004). Retail marketing channel franchise failure: A strategic

management perspective and longitudinal analysis. Journal of Marketing Channels, 11 (2-

3), 55-76. http://dx.doi.org/10.1300/J049v11n02_04

Holsti, O. R. (1969). Content analysis for the social sciences and humanities. Reading, MA:

Addison-Wesley.

145

Hoover, K. (2016). Franchisors helping franchisees less due to NLRB's 'joint employer'

ruling. The Business Journals . Retrieved from http://www.bizjournals.com/

bizjournals/washingtonbureau/2016/06/franchisors-helping-franchisees-less-due-to-

nlrbs.html

Hough, A. J. (1986). Power and authority and their consequences in franchise organisations: A

study of the relationship between franchisors and franchisees (Doctoral dissertation,

Polytechnic of Central London). Retrieved from http://ethos.bl.uk/OrderDetails

.do?uin=uk.bl.ethos.372082

Houghton, C., Casey, D., Shaw, D., & Murphy, K. (2013). Rigour in qualitative case-study

research. Nurse Researcher, 20 (4), 12-17.

Hsieh, H. F., & Shannon, S. E. (2005). Three approaches to qualitative content analysis.

Qualitative Health Research, 15 (9), 1277-1288. https://doi.org/10.1177%2F1

049732305276687

Hsu, L. T. J., & Jang, S. S. (2009). Effects of restaurant franchising: Does an optimal franchise

proportion exist? International Journal of Hospitality Management, 28(2), 204-211.

https://doi.org/10.1016/j.ijhm.2008.07.002

Hunt, S. D. (1972). The socioeconomic consequences of the franchise system of distribution.

The Journal of Marketing , 36 , 32-38. doi: 10.2307/1251037

Hunt, S. D., & Nevin, J. R. (1974). Power in a channel of distribution: Sources and

consequences. Journal of Marketing Research , XI , 186-193. doi:10.2307/3150557

Hunt, S. D., & Nevin, J. R. (1975). Tying agreements in franchising. The Journal of

Marketing , 39 , 20-26. doi:10.2307/1250897

IFA (2016). Country profiles. Retrieved from http://www.franchise.org/country-profiles-0 146

IFA (2015). Franchise business projected to again grow faster than the rest of the economy

in 2015 . Retrieved from http://www.franchise.org/franchise-businesses-projected-to-

again-grow-faster-than-the-rest-of-the-economy-in-2015

IHS Economics (2016). Franchise business economic outlook 2016. Retrieved from

http://emarket.franchise.org/FranchiseOutlookJan2016.pdf

Illetschko, K. (2010). Get started in franchising . UK: Teach Yourself.

International Institute for Conflict Prevention & Resolution (2018 ). Franchise procedure:

Franchise mediation program. Retrieved from https://www.cpradr.org/resource-

center/rules/mediation/franchise-procedure

ITA Franchising Tops Market Report (2016). 2016 tops market report franchising country

case study: China. Retrieved from http://trade.gov/topmarkets/pdf/Franchising

_China.pdf

ITA Global Franchise Team (2016). 2016 Top markets report franchising. Retrieved from

http://trade.gov/topmarkets/pdf/Franchising_Executive_Summary.pdf

Jackson, N. (2014). Disenfranchise: Why are Americans still buying into the franchise

dream? Retrieved from https://psmag.com/disenfranchised-why-are-americans-still-

buying-into-the-franchise-dream-be302a668dd4#.wud4e68hy

Jackson, F. H., Titz, K., & Defranco, A. L. (2004). Frequency of restaurant advertising and

promotion strategies: Exploring an urban market. Journal of Food Products Marketing ,

10 (2), 17-31. http://dx.doi.org/10.1300/J038v10n02_02

147

Judicial Technology Committee (JTC) Resource Bulletin (2014). Big data: What state courts

should know. Retrieved from http://www.ncsc.org/~/media/Files/PDF/About%20Us/

Committees/JTC/JTC%20Resource%20Bulletins/Big%20Data%201%200%201-23-

2015%20FINAL.ashx

Justis, R. T., & Judd, R. (1989). Franchising. Cincinnati, OH: South-western Publishing Co.

Kashyap, V., Antia, K. D., & Frazier, G. L. (2012). Contracts, extracontractual incentives, and ex

post behavior in franchise channel relationships. Journal of Marketing Research, 49 (2),

260-276. https://doi.org/10.1509/jmr.09.0337

Kaufmann, P. J., & Dant, R. P. (1996). Multi-unit franchising: Growth and management

issues. Journal of Business Venturing, 11 (5), 343-358. https://doi.org/10.1016/0883-

9026(96)00057-2

Kaufmann, P. J., & Rangan, V. (1990). A model for managing system conflict during

franchise expansion. Journal of Retailing, 66 (2), 155-173.

Keeling, J. M. (2001). Brands have the financing edge. Hotel and Motel Management, 216 (8),

26.

Kelly, N. (2012). McDonald’s’ local strategy, from El McPollo to Le McWrap Chèvre.

Harvard Business Review. Retrieved from https://hbr.org/2012/10/mcdonalds-local

-strategy-from

Kerr, O. S. (2007). How to read a legal opinion: A guide for new law students. The Green Bag,

11 (1), 51-63.

Khan, M. A. (2015). Restaurant franchising: Concepts, regulations and practices (3rd ed.).

Canada: Apple Academic Press. 148

Kieninger, E. M. (2005). The legal framework of regulatory competition based on company

mobility: EU and US compared. German Law Journal , 6, 741.

Kirk, J., & Miller, M. L. (1986). Reliability and validity in qualitative research. Newbury Park,

CA: SAGE Publications, Inc.

Klick, J., Kobayashi, B. H., & Ribstein, L. E. (2006). Incomplete contracts and opportunism

in franchising arrangements: The role of termination causes. In American Law &

Economics Association Annual Meetings . Paper 61. The Berkeley Electronic Press

(Bepress).

Knight, R. M. (1986). Franchising from the franchisor and franchisee points of view. Journal

of Small Business Management , 24 , 8-15.

Kondracki, N. L., Wellman, N. S., & Amundson, D. R. (2002). Content analysis: Review of

methods and their applications in nutrition education. Journal of Nutrition Education and

Behavior , 34 (4), 224-230. doi: 10.1016/S1499-4046(06)60097-3

Kostecka, A. (1988). Franchising in the economy . U.S. Department of Commerce,

Washington DC.

Krippendorff, K. (2013). Content analysis: An introduction to its methodology (3rd ed.). USA:

SAGE Publications, Inc.

Lafontaine, F. (2014). Franchising: Directions for future research. International Journal of

the Economics of Business , 21 (1), 21-25. http://dx.doi.org/10.1080/13571516.2013.

864124

Lafontaine, F., & Blair, R. D. (2008). The evolution of franchising and franchise contracts:

Evidence from the United States. Entrepreneurial Business Law Journal, 3 (2), 381-434.

149

Lafontaine, F., & Shaw, K. L. (1998). Franchising growth and franchisor entry and exit in the US

market: Myth and reality. Journal of Business Venturing, 13 , 95–112. https://doi.org/10.

1016/S0883-9026(97)00065-7

Lafontaine, F., & Slade, M. E. (2015). Franchising and exclusive distribution: Adaptation and

antitrust. In Blair, R., & Sokol, D. (Eds.). The Oxford Handbook of International

Antitrust Economics, Vol.2 . U.S.: Oxford University Press.

Lai, L. S., & To, W. M. (2015). Content analysis of social media: A grounded theory

approach. Journal of Electronic Commerce Research , 16 (2), 138.

Lal, R. (1990). Improving channel coordination through franchising. Marketing Science, 9 (4),

299-318. https://doi.org/10.1287/mksc.9.4.299

Lamar, S. H. (2015). The NLRB’s joint employer decision impacts all employers.

HunterMaclean Attorneys. Retrieved from http://www.huntermaclean.com/news-

publications/the-nlrbs-joint-employer-decision-impacts-all-employers/

Lapiedra, R., Palau, F., & Reig, I. (2012). Managing asymmetry in franchise contracts:

transparency as the overriding rule. Management Decision, 50 (8), 1488-1499.

https://doi.org/10.1108/00251741211262042

Larson, A. (1991). Partner networks: Leveraging external ties to improve entrepreneurial

performance. Journal of Business Venturing, 6, 173-188. https://doi.org/10.1016/0883-

9026(91)90008-2

Law, R., Leung, D., & Cheung, C. (2012). A systematic review, analysis, and evaluation of

research articles in the Cornell Hospitality Quarterly. Cornell Hospitality Quarterly ,

53 (4), 365-381. https://doi.org/10.1177%2F1938965512457458

150

Levitt, T. (1993). The globalization of markets. Harvard Business Review (May-June), 92-

102.

Lombard, M., Snyder‐Duch, J., & Bracken, C. C. (2002). Content analysis in mass

communication: Assessment and reporting of intercoder reliability. Human

Communication Research, 28 (4), 587-604. doi: 10.1111/j.1468-2958.2002.tb00826.x

Lusch, R. F. (1976). Franchisee satisfaction: Causes and consequences. International Journal

of Physical Distribution , 7(3), 128-140. https://doi.org/10.1108/eb014392

Marie Doherty, A., Chen, X., & Alexander, N. (2014). The franchise relationship in China:

Agency and institutional theory perspectives. European Journal of Marketing, 48 (9/10),

1664-1689. https://doi.org/10.1108/EJM-04-2012-0199

Martin, R. E. (1988). Franchising and risk management. The American Economic Review, 78 (5) ,

954-968.

Mayring, P. (2000). Qualitative content analysis. Forum: Qualitative Social Research, 1 (2).

Retrieved from http://217.160.35.246/fqs-texte/2-00/2-00mayring-e.pdf

McCarthy, J. T. (1970). Trademark franchising and antitrust: The trouble with tie-ins.

California Law Review, 50 (5) Art.3, 1085-1119.

McDavid, J. L., & Steuer, R. M. (1999). The revival of franchise antitrust claims. Antitrust

Law Journal, 67 (2), 209-241.

McIntyre, F. S., & Huszagh, S. M. (1995). Internationalization of franchise systems. Journal of

International Marketing, 3 (4), 39-56.

Mendelsohn, M. (1990). The franchisee’s guide. Wilberforce, NSW: Franchisers Association of

Australasia.

Mendelsohn, M. (2004). The guide to franchising (7th ed.). UK: Thomson Learning. 151

MFA (2016). What is EFD? Retrieved from http://www.mfa.org.my/newmfa/efdp/

Miller, C. G. (n.d.). Hot litigation topics in franchising. [Bartko Zankel Bunzel Miller Blog].

Retrieved from http://www.bzbm.com/wp-content/uploads/2012/07/HOT-LITIGATION

TOPICS-IN-FRANCHISING.pdf

Minkler, A. P. (1992). Why firms franchise: A search cost theory. Journal of Institutional &

Theoretical Economics, 148 (2), 240–259.

Mohammed, I., Guillet, B. D., & Law, R. (2015). The contributions of economics to

hospitality literature: A content analysis of hospitality and tourism journals. International

Journal of Hospitality Management , 44 , 99-110. https://doi.org/10.1016/j.ijhm.2014.

10.010

Moore, C. W., Petty, J. W., Palich, L. E., & Longenecker, J.G. (2008). Managing small

business: An entrepreneurial emphasis . USA: South-Western Cengage Learning.

Morse, J. M., Barrett, M., Mayan, M., Olson, K., & Spiers, J. (2002). Verification strategies for

establishing reliability and validity in qualitative research. International Journal of

Qualitative Methods, 1 (2), 13-22. https://doi.org/10.1177%2F160940690200100202

National Labor Relations Board (2018). What we do. Retrieved from https://www.nlrb.gov/what-

we-do

Neuendorf, K. A. (2002). The content analysis guidebook . CA, USA: SAGE Publications, Inc.

New York General Business Law Article 33 § 681. Retrieved from http://law.justia.com/

citations.html

Nijmeijer, K. J., Fabbricotti, I. N., & Huijsman, R. (2014). Making franchising work: A

framework based on a systematic review. International Journal of Management Reviews ,

16 (1), 62-83. doi: 10.1111/ijmr.12009 152

Ninemeier, J.D. & Perdue, J. (2005). Hospitality operations: Careers in the world’s greatest

industry . Upper Saddle River, NJ: Pearson Education.

NRA (2016). Facts at a glance. Retrieved from http://www.restaurant.org/News-Research

/Research/Facts-at-a-Glance

Opincar, S. (2016). 6 hot issues facing the franchise industry in 2016. Industry Insights .

Retrieved from https://mcdonaldhopkins.com/Insights/Blog/Industry-Insights/

2016/02/08/6-hot-issues-facing-the-franchise-industry-in-2016

Ottenbacher, M. C. & Harrington, R. J. (2009). The product innovation process of quick‐service

restaurant chains. International Journal of Contemporary Hospitality Management,

21 (5), 523-541. doi: 10.1108/09596110910967782

Oxenfeldt, A. R., & Kelly, A. O. (1969). Will successful franchise systems ultimately become

wholly-owned chains. Journal of Retailing, 44 (4), 69-83.

Park, K., & Khan, M. A. (2006). An exploratory study to identify the site selection factors for US

franchise restaurants. Journal of Foodservice Business Research, 8 (1), 97-114. http://dx.

doi.org/10.1300/J369v08n01_07

Parsa, H. G. (1996). Franchisor-franchisee relationships in quick-service-restaurant systems.

Cornell Hotel and Restaurant Administration Quarterly , 37 (3), 42-49. https://doi.org/10.

1177%2F001088049603700318

Parsa, H. G., Self, J. T., Njite, D., & King, T. (2005). Why restaurants fail. Cornell Hotel and

Restaurant Administration Quarterly , 46 (3), 304-322. https://doi.org/10.1177%2F

0010880405275598

153

Polit, D. F., & Beck, C. T. (2010). Generalization in quantitative and qualitative research: Myths

and strategies. International Journal of Nursing Studies , 47 (11), 1451-1458. https://doi.

org/10.1016/j.ijnurstu.2010.06.004

Pondy, L. R. (1967). Organizational conflict: Concepts and models. Administrative Science

Quarterly, 12 (2), 296-320. doi:10.2307/2391553

Preble, J. F., & Hoffman, R. C. (1995). Franchising systems around the globe: A status

report. Journal of Small Business Management , 33 (2), 80.

Preble, J. F., & Hoffman, R. C. (1999). The nature of ethics codes in franchise associations

around the globe. Journal of Business Ethics , 18 (3), 239-253. https://doi.org/10.1023/

A:1005733003323

Pýnar, M., McCuddy, M. K., & Eser, Z. (2014). Examining the relationships between ethical

issues in franchising business success and characteristics of franchising businesses: A

study in Turkey. Bogazici Journal of Economics and Administrative Sciences, 28 (1), 1-

26.

Quinn, B., & Doherty, A. M. (2000). Power and control in international retail franchising–

evidence from theory and practice. International Marketing Review, 17 (4/5), 354-372.

https://doi.org/10.1108/02651330010339897

Richter, W. (2016). Business loan delinquencies spike to Lehman moment level. Wolf

Street. Retrieved from http://wolfstreet.com/2016/05/19/delinquencies-of-commercial

-industrial-loans-spike/

Roh, Y. S. (2002). Size, growth rate and risk sharing as the determinants of propensity to

franchise in chain restaurants. International Journal of Hospitality Management ,

21 (1), 43-56. https://doi.org/10.1016/S0278-4319(01)00014-7 154

Roh, E. Y., & Yoon, J. H. (2009). Franchisor's ongoing support and franchisee's satisfaction:

A case of ice cream franchising in Korea. International Journal of Contemporary

Hospitality Management , 21 (1), 85-99. https://doi.org/10.1108/09596110910930205

Rolfe, G. (2006). Validity, trustworthiness and rigour: Quality and the idea of qualitative

research. Journal of Advanced Nursing , 53 (3), 304-310. doi: 10.1111/j.1365-

2648.2006.03727.x

Rondán-Cataluña, F. J., Navarro-García, A., Gámez-González, J., & Rodríguez-Rad, C. J.

(2012). Content analysis and assessment of international codes of franchising

associations. Management Decision , 50 (4), 635-650. https://doi.org/10.1108/002

51741211220228

Rothenburg, A. M. (1973). Franchising: The ultimate in industrial marketing? Industrial

Marketing Management , 2(2), 177-180. https://doi.org/10.1016/0019-8501(73)90077-1

Rubin, P. H. (1978). The theory of the firm and the structure of the franchise contract. The

Journal of Law & Economics , 21 (1), 223-233.

Saldana, J. (2009). The coding manual for qualitative researchers. London: SAGE Publications

Ltd.

Sandelowski, M. (1993). Rigor or rigor mortis: The problem of rigor in qualitative research

revisited. Advances in Nursing Science, 16 (2), 1-8.

Schlanger, M., & Lieberman, D. (2006). Using court records for research, teaching, and

policymaking: The civil rights litigation clearinghouse. University of Missouri-Kansas

City Law Review , 75 , 155.

Scott, W.R. (2007). Institutions and organizations: Ideas and interests. Thousand Oaks, CA:

SAGE Publications, Inc. 155

Sekaran, U., & Bougie, R. (2013). Research methods for business: A skill-building approach

(6th ed.). USA: Cencage Learning, Inc.

Sen, K. C. (1998). The use of franchising as a growth strategy by US restaurant franchisors.

Journal of Consumer Marketing , 15 (4), 397-407. https://doi.org/10.1108/0736376

9810226037

Siccama, C. J., & Penna, S. (2008). Enhancing validity of a qualitative dissertation research

study by using NVivo. Qualitative Research Journal, 8 (2), 91-103. https://doi.org/10.

3316/QRJ0802091

Siebert, M. (2004). Should I franchise my restaurant? Entreprenuer.com. Retrieved from

https://www.entrepreneur.com/article/71884

Shane, S. A. (1996). Hybrid organizational arrangements and their implications for firm

growth and survival: A study of new franchisors. Academy of Management Journal,

39 (1), 216–234. doi: 10.2307/256637

Shane, S. A. (1998). Making new franchise systems work. Strategic Management Journal,

19 (7), 697–707. Retrieved from https://search-proquest-com.proxy.lib.iastate.edu/

docview/231153550?accountid=10906

Shelton, J. P. (1967). Allocative Efficiency vs." X-Efficiency": Comment. The American

Economic Review , 57 (5), 1252-1258.

Shenton, A. K. (2004). Strategies for ensuring trustworthiness in qualitative research projects.

Education for Information , 22 (2), 63-75. doi: 10.3233/EFI-2004-22201

Smith, A. F. (2013). Food and drink in American history: A “full course” encyclopedia . Volume

1: A-L. California: ABC-CLIO, LLC.

156

Smith, N. (2010). Franchises play vital role in U.S. economy. Business News Daily . Retrieved

from http://www.businessnewsdaily.com/213-franchise-businesses-play-vital

-economic-role.html

Smith, S. M. & Albaum, G. S. (2005). Fundamental of marketing research . California, USA:

SAGE Publications, Inc.

Smith, A. K., Ayanian, J. Z., Covinsky, K. E., Landon, B. E., McCarthy, E. P., Wee, C. C., &

Steinman, M. A. (2011). Conducting high-value secondary dataset analysis: An

introductory guide and resources. Journal of General Internal Medicine, 26 (8), 920-929.

https://doi.org/10.1007/s11606-010-1621-5

Spaeth, H. J. (1997). United States Supreme Court judicial database, 1953-1997 terms .

Inter-university Consortium for Political and Social Research.

Spandorf, R. (2010). Structuring licenses to avoid the inadvertent franchise. Landslide

Magazine, 4 (2). Retrieved from http://www.upsidefranchiseconsulting.com/wp-

content/uploads/2015/04/Structuring-Licenses.pdf

Spencer, E. C. (2007). The regulation of the franchise relationship in Australia: A contractual

analysis (Doctoral dissertation). Retrieved from http://epublications.bond.edu.au/cgi/

viewcontent.cgi?article=1041&context=theses

Spencer, E. C. (2008). Conditions for effective disclosure in the regulation of franchising.

International Review of Applied Economics, 22 (4), 509-525. http://dx.doi.org/10.1080

/02692170802138289

Spencer, E. C. (2010). The regulation of franchising in the new global economy . UK: Edward

Edgar Publishing Limited.

157

Spinelli, S., & Birley, S. (1996). Toward a theory of conflict in the franchise system. Journal

of Business Venturing, 11 (5), 329-342. https://doi.org/10.1016/0883-9026(96)00049-3

Stanworth, J., & Purdy, D. (1998). Franchise versus conventional small business failure rates

in the US and UK: More similarities than differences. International Small Business

Journal, 16 (3), 56–69. https://doi.org/10.1177%2F0266242698163003

Statista (2015). Statistics and facts on McDonald's. Retrieved from https://www.statista.com/

topics/1444/mcdonalds/

Steinberg, P., & Lescatre, G. (2004). Beguiling Heresy: Regulating the Franchise Relationship.

Penn State Law Review, 109 , 105-152.

Stemler, S. (2001). An overview of content analysis. Practical Assessment, Research &

Evaluation, 7 (17), 137-146.

Steneck, N. H. (2007). Introduction to the responsible conduct of research. Washington, DC:

U.S. Department of Health and Human Services. Retrieved online http://research.

ucmerced.edu/files/docs/ORI%20Introduction.pdf

Stephenson, P. R., & House, R. G. (1971). A perspective on franchising: The design of an

effective relationship. Business Horizons , 14 (4), 35-42. https://doi.org/10.1016/0007-

6813(71)90074-7

Storholm, G., & Scheuing, E. E. (1994). Ethical implications of business format franchising.

Journal of Business Ethics, 13 (3), 181-188. https://doi.org/10.1007/BF02074817

Strauss, A., & Corbin, J. (2008). Basics of qualitative research (3rd ed.). Thousand Oaks. CA:

SAGE Publications, Inc.

158

The Columbia Law Review Association, The Harvard Law Review Association, the University

of Pennsylvania Law Review, & The Yale Law Journal (1991). The Bluebook: A uniform

system of citation (15th ed.). Cambridge, MA: The Harvard Law Review Association.

The Star (2015). Franchise sector to contribute RM26.8b to GDP. Business News .

Retrieved from http://www.thestar.com.my/business/business-news/2015/05/14/

franchise-sector-to-contribute-rm28-6b-to-gdp/

Thomas, D. R. (2006). A general inductive approach for analyzing qualitative evaluation data.

American Journal of Evaluation, 27 (2), 237-246. https://doi.org/10.1177%2F109

8214005283748

Tikoo, S. (2005). Franchisor use of influence and conflict in a business format franchise

system. International Journal of Retail & Distribution Management, 33 (5), 329-342.

https://doi.org/10.1108/09590550510596713

Tractenberg, C. R., Cauhan, R. B., & Luciano, A. M. (2003). Legal considerations in franchise

renewals. Franchise Law Journal, 23 , 198.

UFOC Guidelines. 16 CFR Parts 436 and 437. Retrieved from https://www.ftc.gov/sites

/default/files/070330franchiserulefrnotice.pdf

UNAIDS (2010). An introduction to triangulation . Geneva: UNAIDS. Retrieved from

http://www.unaids.org/en/media/unaids/contentassets/documents/document/2010/10_4-

Intro-to-triangulation-MEF.pdf.

U.S. Census Bureau (2007). Economic census: Industry snapshot . Retrieved from

https://www.census.gov/econ/census/pdf/franchises_snapshot.pdf

U.S. Courts website. Glossary of legal terms. Federal Judiciary: Administrative Office of the

U.S. Courts. Retrieved from http://www.uscourts.gov/glossary 159

U. S. Small Business Administration (2016). Retrieved from https://www.sba.gov/starting-

business/how-start-business/business-types/franchise-businesses

Vincent, W. S. (1998). Encroachment: Legal restrictions on retail franchise expansion. Journal

of Business Venturing, 13 (1), 29-41.

Wadsworth, F. (1999). Franchisee satisfaction: A report on the fast food industry. In Society

of Franchising conference proceedings .

Walker, B.J., & Cross, J. (1988). Franchisee failures: More questions than answers. Society of

Franchising Conference Proceedings. International Society of Franchising, St. Paul,

Minnesota, USA.

Watson, J., & Everett, J. E. (1996). Do small businesses have high failure rates? Journal of

Small Business Management , 34 (4), 45.

Weaven, S. K., Frazer, L., Giddings, J., & Grace, A. (2010). New perspectives on the causes of

franchising conflict in Australia. Asia Pacific Journal of Marketing & Logistics, 22 (2),

135-155. https://doi.org/10.1108/13555851011026917

Weaven, S. K., Grace, D. A., Frazer, L., & Giddings, J. (2014). Processual antecedents of

perceived channel conflict in franchising. Journal of Business Economics and

Management, 15 (2), 316-334. http://dx.doi.org/10.3846/16111699.2012.711362

Weber, R. P. (1990). Basic content analysis (2nd ed.). Newbury Park, CA: SAGE Publications,

Inc.

Weitzman, E. A. (1999). Analyzing qualitative data with computer software. Health Services

Research, 34 (5 Pt 2), 1241-1263.

Wells, A. (2016). How employer joint liability is changing. Insurance Journal . Retrieved

from http://www.insurancejournal.com/news/national/2016/02/18/398910.htm 160

Whyte, A., & Tedds, J. (2011). Making the case for research data management . DCC Briefing

Papers. Edinburgh: Digital Curation Centre. Available online: http://www.dcc.ac.uk/

resources/briefing-papers

Williams, A. J. (1992). Data on franchised firms and their owner/managers in Australia (1973 to

1990). Franchising Australia and Abroad: Supplement to the Franchising Task Force

Final Report , 37-54.

Williams, R. G. (1994). The development of franchising in Germany. International Journal of

Management, 11 (1), 609-619.

Withane, S. (1991). Franchising and franchisee behavior: An examination of opinions,

personal characteristics, and motives of Canadian franchisee entrepreneurs .

Windsor, Ont.: University of Windsor, Faculty of Business Administration.

Winsor, R. D., Manolis, C., Kaufmann, P. J., & Kashyap, V. (2012). Manifest conflict and

conflict aftermath in franchise systems: A 10-year examination. Journal of Small

Business Management, 50 (4), 621-651. doi: 10.1111/j.1540-627X.2012.00369.x

Winter, S. G., Szulanski, G., Ringov, D., & Jensen, R. J. (2012). Reproducing knowledge:

Inaccurate replication and failure in franchise organizations. Organization Science, 23 (3),

672-685. https://doi.org/10.1287/orsc.1110.0663

World Bank (2016). Countries . Retrieved from http://www.worldbank.org/en/country

Wright, O., & McAuley, A. (2012). Australian franchising research: Review, synthesis and

future research directions. Australasian Marketing Journal, 20 (2), 158-163.

https://doi.org/10.1016/j.ausmj.2011.10.002

Wu, C. W. (2015). Antecedents of franchise strategy and performance. Journal of Business

Research, 68 (7), 1581-1588. https://doi.org/10.1016/j.jbusres.2015.01.055 161

Yin, R. K. (2016). Qualitative research from start to finish (2nd ed.). New York: Guilford Press.

Young, J. A., Clark, P. W., & McIntyre, F. S. (2006). The web as an e-commerce medium: An

exploratory study of consumer perceptions in a restaurant setting. Journal of Marketing

Channels , 14 (1-2), 5-22. http://dx.doi.org/10.1300/J049v14n01_02

Young, J. A., McIntyre, F. S., & Green, R. D. (2000). The international society of franchising

proceedings: A thirteen-year review. Proceedings of the International Society of

Franchising.

Zachary, M. A., McKenny, A. F., Short, J. C., Davis, K. M., & Wu, D. (2011). Franchise

branding: An organizational identity perspective. Journal of the Academy of Marketing

Science , 39 (4), 629-645. https://doi.org/10.1007/s11747-011-0252-7

Zhang, Y., & Wildemuth, B.M. (2009). Qualitative analysis of content. In Wildemuth, B. M.

(Ed.). Applications of social research methods to questions in information and library .

Santa Barbara, California: Libraries Unlimited.

Zilber, T. B. (2008). The work of meanings in institutional processes and thinking. In

Greenwood, R., Oliver, C., Sahlin, K., & Suddaby, R. (Eds.), The SAGE handbook of

organizational institutionalism (pp. 151-169). London, England: SAGE.

162

APPENDIX A: AGREEMENT OF NEW YORK OFFICIAL REPORTS SERVICE

163

APPENDIX B: LIST OF NEW YORK STATE COURT CASES

Case identifier Case citation

Case01 McQuade v Carvel Stores of Pa. 8 Misc.2d 659, 167 N.Y.S.2d 724, N.Y.Sup., October 15, 1957

Case02 Iannarelli v Carvel Stores of N.Y. 18 Misc.2d 930, 187 N.Y.S.2d 628, N.Y.Sup., May 04, 1959

Case03 Carvel Dari-Freeze Stores v Lukon 16 Misc.2d 573, 182 N.Y.S.2d 890, N.Y.Sup., January 17, 1959

Case04 Carvel Farms Corp. v Bartomeo 50 Misc.2d 1073, 272 N.Y.S.2d 507, 150 U.S.P.Q. 398, N.Y.Sup., February 18, 1965

Case05 Chicken Delight E. v Wenke 27 A.D.2d 537, 275 N.Y.S.2d 291, N.Y.A.D. 2 Dept., December 05, 1966

Case06 Nathan's Famous, Inc. v Frankorama, Inc. 70 Misc.2d 452, 333 N.Y.S.2d 708, N.Y.City Civ.Ct., May 10, 1972

Case07 Del Bello v Japanese Steak House 43 A.D.2d 455, 352 N.Y.S.2d 537, N.Y.A.D. 4 Dept., February 22, 1974

Case08 Matter of Sbarro Holding (Shien Tien Yuan) 111 Misc.2d 910, 445 N.Y.S.2d 911, N.Y.Sup., December 16, 1981

Case09 Matter of Sbarro Holding (Shiaw Tien Yuan) 91 A.D.2d 613, 456 N.Y.S.2d 416, N.Y.A.D. 2 Dept., December 06, 1982

Case10 Dunkin' Donuts v Rovegno 100 A.D.2d 532, 473 N.Y.S.2d 221, N.Y.A.D. 2 Dept., March 12, 1984

Case11 Carvel Corp. v Burstein 99 A.D.2d 935, 473 N.Y.S.2d 472, N.Y.A.D. 2 Dept., January 13, 1984

Case12 U.S. Ice Cream Corp. v Carvel Corp. 136 A.D.2d 626, 523 N.Y.S.2d 869, 1988 WL 3540, N.Y.A.D. 2 Dept., January 19, 1988

Case13 Dunkin' Donuts v HWT Assoc. 181 A.D.2d 711, 581 N.Y.S.2d 363, 1992 WL 43611, N.Y.A.D. 2 Dept., March 09, 1992

Case14 Protter v Nathan's Famous Sys. 246 A.D.2d 585, 667 N.Y.S.2d 301, 1998 WL 34519, 1998 N.Y. Slip Op. 00449, N.Y.A.D. 2 Dept., January 20, 1998

Case15 B&R Mgt. & Leasing Corp. v Triarc Rest. Group, Arby's 269 A.D.2d 804, 703 N.Y.S.2d 635, 2000 WL 175789, 2000 N.Y. Slip Op. 01310, N.Y.A.D. 4 Dept., February 16, 2000

164

Case identifier Case citation

Case16 Richtree Inc. v M'venpick Holding A.G. 301 A.D.2d 412, 752 N.Y.S.2d 871, 2003 WL 115974, 2003 N.Y. Slip Op. 10151, N.Y.A.D. 1 Dept., January 14, 2003

Case17 Silverman v Carvel Corp. 8 A.D.3d 469, 778 N.Y.S.2d 515, 2004 WL 1336883, 2004 N.Y. Slip Op. 05230, N.Y.A.D. 2 Dept., June 14, 2004

Case18 Carvel Corp. v Noonan 3 N.Y.3d 182, 818 N.E.2d 1100, 785 N.Y.S.2d 359, 2004 WL 2320368, 2004 N.Y. Slip Op. 07398, N.Y., October 14, 2004

Case19 Emfore Corp. v Blimpie Assoc., Ltd. 51 A.D.3d 434, 860 N.Y.S.2d 12, 2008 WL 1946657, 2008 N.Y. Slip Op. 04187, N.Y.A.D. 1 Dept., May 06, 2008

Case20 Burgers Bar Five Towns, LLC v Burger Holdings Corp. 71 A.D.3d 939, 897 N.Y.S.2d 502, 2010 WL 1079517, 2010 N.Y. Slip Op. 02502, N.Y.A.D. 2 Dept., March 23, 2010

Case21 Yamin v Moe's Southwest Grill, LLC 85 A.D.3d 1381, 924 N.Y.S.2d 226, 2011 WL 2224943, 2011 N.Y. Slip Op. 04803, N.Y.A.D. 3 Dept., June 09, 2011

Case22 Bletas v Subway Intl. B.V. 96 A.D.3d 442, 946 N.Y.S.2d 130, 2012 WL 2036410, 2012 N.Y. Slip Op. 04388, N.Y.A.D. 1 Dept., June 07, 2012

Case23 Burgers Bar Five Towns, LLC v Burger Holdings Corp. 118 A.D.3d 657, 987 N.Y.S.2d 410, 2014 WL 2504702, 2014 N.Y. Slip Op. 03970, N.Y.A.D. 2 Dept., June 04, 2014

165

APPENDIX C: LIST OF THEMES GENERATED USING NVIVO 11

Theme Count

Contract 213 Agreement 133

Lease 102

Area 66

Claim 65

Arbitration 63

Motion 59

Fees 48

Interference 47

Breach 40

Licensing 38

Advertising 36

Agreements 35

Products 35

Service 35

Damages 29

Tortious 28

Payment 27

Sublease 27

Competition 26

Trade 26

Marks 25

Violation 25