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Court Watch

By Charles G. Miller and Darryl A. Hart

Franchise Agreement Is Not a Personal Services Contract

As previously reported in this publication, a dispute arose between McDonald's and certain transferee franchisees over whether McDonald's promised to extend the franchise terms of some of the assigned restaurants as part of the transfer. Husain et al. v. McDonald's Corporation, et al., Bus. Fran. Guide (CCH) '14,530 (FBLA, March 2011). Ultimately, McDonald's refused to grant the desired extensions and maintained that the concerned franchise agreements had expired when their terms ended. The franchisees sought a preliminary injunction to keep the agreements in effect pending trial, and McDonald's sought a declaration that the agreements had ended. The California Superior Court granted the franchisees' motion for a preliminary injunction and denied McDonald's request. The matter proceeded to appeal.

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