Franchise 101: Location, Location, Location! Forum Selection Clause Overcomes Jurisdictional Challenges; and Topped Off Appeal
Franchisor 101: Location, Location, Location! Forum Selection Clause Overcomes Jurisdictional Challenges
A Louisiana district court held that a franchisee waived its right to remove a dispute with its franchisor from state court to federal court, based on the forum selection clause in the parties’ franchise agreement.
Real estate franchisor 1 Percent Lists Franchises, LLC (“1 Percent”), organized and headquartered in Louisiana, entered into a franchise agreement with Sell Smart, LLC (“Sell Smart”), a Washington limited liability company, for a franchised real estate agency in King County, Washington. 1 Percent sued for breach of the franchise agreement in Louisiana state court, claiming that Sell Smart began engaging in competitive business practices.
Sell Smart removed the action to federal court on the basis of the parties’ residing in different states. 1 Percent subsequently filed a motion for remand.
The franchisor alleged that Sell Smart waived its statutory right of removal by executing a franchise agreement that expressly provided for jurisdiction and venue “in any state or federal court of competent jurisdiction located in St. Tammany or Orleans Parish, Louisiana.” This clause further provided that the parties “waive any objection to the jurisdiction and venue of such courts.” Sell Smart argued this clause did not amount to a clear and unequivocal waiver of the right to remove.
A defendant may waive its right to removal by (1) explicitly stating that it is doing so; (2) allowing the other party the right to choose venue; or (3) establishing exclusive venue in the contract. However, for a contractual clause to prevent a party from exercising its right to removal, the clause must give a clear and unequivocal waiver of that right. Ambiguous language cannot constitute a clear and unequivocal waiver.
For a forum selection clause to be exclusive, it must go beyond establishing that a particular forum will have jurisdiction and must clearly demonstrate the parties’ intent to make that jurisdiction exclusive.
After analyzing the franchise agreement, the district court determined that the parties’ forum selection clause provided that both 1 Percent and Sell Smart consented and irrevocably submitted to the jurisdiction and venue set forth in that provision. The court stated that if the clause stopped there, it would not have provided a clear and unequivocal waiver of the right to remove.
However, the inclusion of additional language that stated that Sell Smart “waived any objection to the jurisdiction and venue of such courts” did constitute a clear and unequivocal waiver.
The choice to initiate litigation against franchisees in either state court or federal court in the franchisor’s home state is often a strategic one that franchisors want to insulate from challenge. Franchisors should evaluate whether the forum selection clauses in their franchise agreements afford maximum protection when selecting their venue of choice.
1 Percent Lists Franchises, LLC v. Sell Smart, LLC, Case No. 25-2153 Section: “G”(1) (E.D. La. Jan. 23, 2026).
Franchisee 101: Topped Off Appeal
The Connecticut court of appeals held that petroleum retailers were not franchisees, and therefore not entitled to the protections afforded under the Connecticut Petroleum Franchise Act (CPFA).
Banford Quick Mart, LLC, Seaport Quick Mart, LLC, and Dayville Quick Mart, LLC (the “Retailers”) operated convenience stores at gas stations. Aldin Associates Limited Partnership (“Aldin”) leased the convenience stores to each of the Retailers. Pursuant to the contract, the Retailers were to sell fuel and other petroleum products “for the account of” Aldin. Aldin arranged the delivery of fuel to each Retailer.
The Retailers also entered into a Commissioned Agent Agreement with Aldin, which provided that Aldin owns all fuel until sold to retail customers, and that the Retailers must hold all sales proceeds in trust for the benefit of Aldin. Aldin exercised full discretion to establish prices.
Aldin terminated the agreement with 120 days’ written notice as required by the parties’ agreement. The Retailers filed a lawsuit against Aldin alleging violation of the Petroleum Franchise Act and Connecticut Unfair Trade Practices Act. The Retailers sought monetary damages for the violations and a declaratory judgment that the termination notice violated the Petroleum Franchise Act, as well as an injunction barring Aldin from terminating the leases.
The lower court rendered a judgment in favor of Aldin, finding that the relationship between the parties did not constitute franchises under the CPFA. The Retailers appealed.
The CPFA defines a franchise relationship as “the respective motor fuel marketing or distribution obligations and responsibilities of a franchisor and a franchisee which result from the marketing of motor fuel under a franchise.” A franchisor is defined as “a refiner or distributor…who authorizes or permits, under a franchise, a retailer or distributor to use a trademark in connection with the sale, consignment, or distribution of motor fuel.” A franchisee is defined as “a retailer or distributor…who is authorized or permitted, under a franchise, to use a trademark in connection with the sale, consignment, or distribution of motor fuel.”
In analyzing the above provision, the court determined that the Retailers were agents of the seller, not the seller itself, because Aldin retained ownership of the motor fuel until the time it was transferred to the customer.
Aldin argued that the Retailers maintained limited duties related to the sale of petroleum. The court agreed that under the contractual arrangement, the Retailers’ responsibilities were limited to facilitating the sale of motor fuels on behalf of Aldin and for Aldin’s benefit.
The Retailers primarily collected funds generated by the prices Aldin set, whereas Aldin retained ownership of the fuel, ownership of the property where the fuel is held, equipment for dispensing the fuel, and responsibility for maintenance and repairs. As such, the Retailers are not franchisees as defined in the CPFA, but merely agents.
The court held that because there was no franchise relationship, the Retailers were not entitled to protection under the CPFA.
In states where the benefits and protections for gas station and convenience store retailers are broader than the federal Petroleum Marketing Practices Act (PMPA), such owners facing termination by their supplier should have experienced counsel review all agreements to determine whether a franchise relationship can be established under state-specific petroleum franchise statutes.
Branford Quick Mart, LLC v. Aldin Assocs. Ltd. P’ship, Case No. AC47519 (Conn. App. Ct. Jan. 27, 2026).