In the past I reported on a dispute between Pinnacle Pizza, franchisee, and Little Caesar Enterprises (LCE), franchisor of Little Caesars pizza shops. Pinnacle Pizza invented the tagline “Hot ‘N Ready” for a particular promotional program, which was then adopted by the franchise chain. Pinnacle Pizza sued LCE, claiming that it, not LCE, owned the tagline. The court of appeals ultimately affirmed the trial court on LCE’s ownership and also held that Pinnacle Pizza breached the franchise agreement by challenging the validity of LCE’s trademark rights in “Hot ‘N Ready.”
Fast forward to the renewal time for the franchise agreement. LCE refused to renew the franchise agreement with Pinnacle Pizza (now Sioux Falls Pizza Company, Inc.). If you guessed that LCE was none too pleased with Pinnacle Pizza’s previous lawsuit, so displeased that it refused to renew, you’d be right. The decision involves whether LCE had the latitude to refuse to renew, made a bit more complicated by a change to the franchise agreement as the result of a class action suit against LCE that Pinnacle Pizza didn’t bring but also didn’t opt out of. The trial court held that LCE has the right to terminate the franchise agreement because of the prior breach and Sioux Falls Pizza has 35 days from the date of the order to terminate its operations.
Sioux Falls Pizza Co., Inc. v. Little Caesar Enterprises, Inc., No. CIV 11–4047–RAL(D.S.D. March 14, 2012).
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