In December, the Supreme Court issued a significant ruling in a non-franchise industry case, which may have a broad impact on franchise disputes.
Most franchise agreements contain a forum selection clause requiring that any lawsuit in the case of a dispute between the franchisor and the franchisee will take place in the franchisor’s home state. The issue of such forum selection clauses has been hotly contested in a number of franchise cases and the courts have not been uniform in their application of the rule. Now, as a result of the Supreme Court decision in Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Texas, 12-929, 2013 WL 6231157 (U.S. Dec. 3, 2013), the issue seems substantially clarified. This ruling should significantly diminish any chance a franchisee has of changing venues from the franchisor’s chosen court, putting a substantial burden on a franchisee seeking to start or move a lawsuit to a more favorable forum.