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Court Watch

By Darryl A. Hart and Griffith Towle
November 30, 2006

Boilerplate Choice of Law Provision Causes Application of California Franchise Relations Act to Out-of-State Franchisee

Use of boilerplate clauses sometimes can backfire as illustrated in a recent Memorandum and Order Re Motion to Dismiss issued by Judge Charles R. Breyer of the U.S. District Court, Northern District of California. In Gabana Gulf Distribution, Ltd., et al v. Gap International Sales, Inc., et al, CCH Bus. Fran. Guide '13,420 (USDC N.D. Cal., Aug. 14, 2006), the court found that the good cause termination provisions of the California Franchise Relations Act ('CFRA') apply to a 'Distributor Agreement' between Gap International Sales, Inc., a Delaware corporation with its principal place of business in California ('Gap'), and Gabana Gulf Distribution, Ltd., a company formed in the United Kingdom with its principal place of business in Switzerland ('Gabana').

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