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Posted on Tue, 11/8/2011 - 12:19 AM by
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Franchisees must pay for teachers slapping their "flat buns" even if they can't watch teacher do it. Jeffrey Hallbeck was a Hardee's franchisee for almost 40 years; at one time he owned 21 Hardee's franchises. As the Hardee's system disappeared from the Illinois market, Hallbeck says that advertising all but disappeared. Hallbeck's last store was in Ottawa. Opened in 1985, the store was also the last store in the area; Hardee's corporate had even pulled out of the area with the closure of the last franchisor-owned outlet. Hallbeck said that the nearest Hardee's were 73 miles and 100 miles away, and the nearest corporate outlet more than 200 miles. Although Hallbeck did not get the benefit of television advertising, he claimed that the racy Hardee's televison commercials generated negative publicity in his rural community. Specifically, the "Patty Melts For You" and "Flat Buns" were alleged to have drawn criticism. Hallbeck closed his last store in February 2009. Since his franchise agreement was to expire in June 2010, Hardee's sued for lost future royalties and advertising fund contributions. On November 3, 2011 the federal court granted Hardee's motion to dismiss Hallbeck's counterclaims. It said that Hardee's did not violate the implied covenant of good faith due to running the allegedly "lewd" advertisements, and that it had not violated the implied covenant by treating Hallbeck differently from other franchisees, nor by closing the franchisor-owned store in Hallbeck's market area. The court quoted the franchise agreement language giving the franchisor "sole discretion" over the advertising funds, and providing that the manner in which the franchisor treated other franchisees did not affect its rights to enforce the terms of Hallbeck's contract. __________________________________________________________ Hardee's Food Systems Inc. v. Jeffrey Hallbeck, November 3, 2011, E.D. Missouri For franchisee: Gregory Mollett, Greensfelder & Hemmer (St Louis), L. Michael Hankes, Hankes & Valas (Boston) For franchisor: Michael Fisher, Stolar Partnership (St Louis), Peter Klarfeld Gray Plant Mooty (Washington DC)
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