Shane’s Rib Shack is a growing, fast casual barbecue franchise with restaurants in a dozen states. Shane’s terminated a franchise agreement with a franchisee after the franchisee incurred several operational defaults. The franchisee sued, seeking damages and injunctive relief to stop the termination. Arnall Golden Gregory, which has advised Shane’s on its growth, was tapped to defend the company’s position and uphold the termination.
After the franchisee obtained an ex parte temporary restraining order preventing Shane’s from terminating the franchise agreement, AGG litigators had just two days to prepare for a daylong evidentiary hearing to determine if the court would issue an interlocutory injunction keeping the store open. The attorneys spent the day before the hearing preparing founder Shane Thompson and his inspector, who completed the audits, for their testimony. In addition to preparing them to explain their story, they had to prepare them for expected cross examination on the subjective nature of the audits, the past troubles between these parties and the treatment of other franchisees. The attorneys spent that evening finalizing direct testimony outlines and researching applicable franchise law.
At the hearing, plaintiffs called a surprise witness, a former, disgruntled employee who said that he had intentionally defaulted certain franchisees at Mr. Thompson’s direction. Mr, Thompson, his inspector and the franchisee representative also testified. After a seven-hour evidentiary hearing, the court heard legal arguments and asked for competing draft orders from counsel within 48 hours. Two days later, the court entered the order Arnall Golden Gregory attorneys submitted, denying all relief to the plaintiff, immediately reinstating the termination of the franchise and finding the former employee without any credibility. Adding to this success, Shane’s recovered a significant portion of its attorney’s fees from the terminated franchisee and replaced the franchisee with a successful operator.