Franchisors draft franchise agreements to ensure that their rights will be enforced. When the drafting review is not comprehensive, the result may be troubling outcomes. The U.S. Court of Appeals for the Eighth Circuit recently held that perhaps it is not that easy to see the ambiguity in a contract. In the case of Home Instead v. Florance, (8th Cir. July 16, 2013), 2013 U.S. App. LEXIS 14336, two of the four federal judges looking at the language concluded that the language was ambiguous and a dissent by a single circuit court judge was insufficient to affirm the decision of the U.S. District Court for the District of Nebraska. As a result, the injunction against franchise termination that was denied by the district court needs to be reconsidered on remand.
Home Instead Inc. franchises senior care services. Home Instead and Friend of a Friend Inc., David Florance and Michelle Florance (collectively referred to in the opinion as Friend) originally executed franchise agreements in 1997 and 1999 that allowed Friend to open two Home Instead franchises. In 2012, when the agreements were set to expire, Home Instead and Friend began negotiating another renewal. Home Instead attempted to raise the minimum monthly performance requirement in the renewal agreement, but Friend asserted its 2002 agreements locked in the performance requirement. Friend sought a preliminary injunction when the parties reached an impasse during the negotiations seeking to enjoin termination of the franchises during the renewal term. The district court denied the injunction and this appeal followed.
