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Parlour Enterprises, Inc. V. The Kirin Group, Inc. – Farrell’s Franchisor Obtains A Reduction Of Damages On Appeal.
August 26, 2007
This case arose involved some of the same people that founded the Farrell’s restaurant. Franchisee sued franchisor for recovery of lost profits, lost franchise fees, and consequential expenses sustained by plaintiffs when defendants unilaterally terminated their agreement to permit plaintiff to develop subfranchises, the court of appeals ruled that the award of lost profits was speculative where based on projections for businesses that never opened and unsupported by facts showing those profits would actually have materialized. Defendants’ and franchisor’s wrongful termination of agreement to permit development of subfranchises did not permit recovery of damages by potential subfranchisees for interference with prospective business advantage where evidence showed that potential economic advantage was lost when potential owner of proposed business site, with whom subfranchisor was negotiating lease, elected not to purchase the property, and not because of any misrepresentations or other misconduct by defendants.