SW Legal Educational Publishing

New Parent Franchiser Must Honor Pre-existing Promises to Franchisees
Description Florida high court held that under Florida law, a new parent buyer of a franchise could be liable for tortious interference with a franchisee that suffered losses due to the new parent franchiser's ignoring the existing exclusive territory agreement.
Topic Business Organization
Key Words Franchise, Tortious Interference
C A S E   S U M M A R Y
Facts The 11th Circuit certified the following question to the supreme court of Florida: "Whether Florida law recognizes a claim for tortious interference against a corporation which purchases as a subsidiary a corporation which has a preexisting obligation not to compete against its franchisee, plaintiff herein, and subsequently purchases another subsidiary which is in direct competition with the franchisee?"
Decision "We answer the question in the affirmative provided there is evidence proving the elements of tortious interference with a business relationship." That applied in this case, where the franchisee bought a franchise for the sw legal coast of Florida that promised that the parent company would not compete in that area. The parent company was bought by another company that ignored the exclusive franchise promise. The new parent company was bound by the existing agreement.
Citation Gossard v. Adia Services, Inc., Slip Copy (1998 WL 716707, Sup. Ct., Fla.)
723 So. 2d 182 (Sup. Ct., Fla., 1998)

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