Court Watch

Two recent cases in which franchisees alleged fraud and misrepresentation by the franchisor during the sales and disclosure process have illustrated the inconsistent nature of the evidence that certain courts will allow the claimant to present to prove the claims. In February 2006, the U.S. District Court for the Southern District of Florida found that a Lady of America franchisee was not entitled to present parol evidence of allegedly misleading statements made by the franchisor during the sales process because the franchise agreement contained both a merger and integration clause and a 'clear and unambiguous disclaimer' of all such representations made by the franchisor before the execution of the agreement. The court further held that because the allegedly misleading statements were not admissible, the franchisee could not prove that franchisor had violated the Florida Franchise Act or Florida 'little FTC Act.' Lady of America Franchise Corp. v. Malone, 2 Bus. Franch. Guide (CCH) '13,562 (S. D. Fla. Feb. 13, 2006).