Anthony Ostlund helps franchisee dissolve franchise agreement
Client Issue
Our client, Growing Kids, was the operator of a pre-school as a franchisee of a national organization called Tutor Time. After operating for a relatively short time, Growing Kids realized that Tutor Time was not adding any value to its operations and that the operation could not be economically successful while paying the Tutor Time franchise fees. Growing Kids wanted to unwind the relationship with Tutor Time.
The Anthony Ostlund Approach
Anthony Ostlund started by talking with Tutor Time about a one-time payment in return for dissolving the franchise agreement. Tutor Time was insistent that it could not make that kind of agreement because it would have to be publicly reported and would open the door to other franchisees who also wanted out. When the effort to negotiate failed, we developed a strategy to bring a lawsuit in federal court (assuring the kind of public record that Tutor Time wanted to avoid) and see if Tutor Time would take a more reasonable posture.
Results Achieved
Tutor Time responded to the lawsuit with a motion to dismiss, arguing that the express terms of the franchise agreement must be enforced. When the court rejected Tutor Times arguments and let the case proceed, Tutor Time became much more interested in negotiating a resolution.
Growing Kids, LLC, et al. v. Tutor Time Child Care Systems, Inc.
US District Court, Northern District of Indiana, South Bend Division
