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Court Watch

By Cynthia M. Klaus and Meredith A. Bauer

Franchisor Found Liable For Former Franchisee's Lease Obligations

In light of a rise in abandonment by franchisees of their franchised locations, franchisors are resorting to unprecedented measures to attempt to ensure that no interruption in services occurs to the customers of the abandoning franchisee. Some franchisors have undertaken the practice of entering the franchised location and managing its operations until a purchaser is found. However, a recent case arising from the Texas Court of Appeals serves to remind franchisors to exercise caution when resorting to such measures. Cottman Transmission Systems, L.L.C. et al. v. FVLR Enterprises, L.L.C., 2009 WL 2488505 (Tex. Ct. App. Aug. 17, 2009).

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