Top Franchise Lawyers Who Only Defend the Franchisee

Economic Theories of Credible Commitments and Their Applicability in Distribution and Franchise Contexts

1. General Theory of Credible Commitments

Williamson distinguishes between credible commitments and credible threats, both of which are relevant primarily in the context of irreversible, specialized investments. Credible commitments are reciprocal actions undertaken to support alliances and promote exchange, serving efficiency by safeguarding relationships where opportunism and incomplete contracting may undermine cooperation. Such commitments are especially vital when parties make transaction-specific investments that are difficult to protect through simple contractual or legal mechanisms alone. The study of credible commitments otherwise receives less attention than credible threats, largely due to the assumption that courts efficiently enforce contracts—an assumption Williamson challenges.

Williamson emphasizes “private ordering,” where parties to exchange relationships develop their own governance structures (such as self-enforcing agreements, use of “hostages,” and bonding mechanisms) to manage the risk that one party will act opportunistically after the other commits irreversible assets. The creation of credible commitments is central to such governance structures, as it deters actions contrary to the mutual interest and substitutes for, or supplements, reliance on legal enforcement.

September 24, 2025
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The Law and Economics of Vertical Restrictions: A Relational Perspective

SUMMARY OF HOW THE ARTICLE’S ECONOMIC THOUGHTS IMPACT ON FRANCHISING
Insights and Discussions on Franchising, Franchisees, and Franchisors: Roles, Relationships, and Legal/Economic Implications

1. Definitions and Nature of the Franchise Relationship

Franchising encompasses various retail arrangements, including “business format franchising,” where a trademarked product, service, or method is licensed to a franchisee (e.g., fast food, muffler shops, convenience stores), and “traditional franchising,” which involves specialized retail services (e.g., automobile dealerships, service stations) where dealers often specialize in a single brand’s products, making the franchisee’s business identity heavily reliant on the franchisor relationship.

Conversely, “franchise” agreements can also be extremely casual, resembling routine retailer-manufacturer transactions, such that the label “franchise agreement” may be attached to loose or minor arrangements.

The franchise relationship is best understood as a long-term “relational exchange,” not as a discrete, one-off transaction; it involves parties entering an ongoing arrangement, partially insulated from market forces, with behavior within the relationship (not just market outcomes) being a key concern.

September 24, 2025
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Good Faith in Allocation: Burke Auto v. FCA

Burke Automotive Group, Inc. (“Burke Auto”) was an automobile dealership that sold vehicles and parts from FCA US LLC, which included the Chrysler, Jeep, Dodge, and RAM brands. The dealership alleged that FCA’s conduct forced it to sell its assets, leading to this lawsuit under the Federal Automobile Dealers’ Day in Court Act (ADDCA), the Illinois Motor Vehicle Franchise Act (IMVFA), and for breach of contract and the covenant of good faith and fair dealing under Illinois common law.

September 19, 2025
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Breach of Trust in the Burger King Venture: Hameed v. Syed

In 2018, Rashid Hameed, Gurmit Singh, and Kaleem Syed purchased four Burger King restaurants in Alaska, forming HS&S Restaurants, Inc. to manage the venture. Syed, with prior experience in the fast-food industry, was appointed to manage the day-to-day operations.

September 19, 2025
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Vague Promises Aren’t Enough: Lessons from Lead-Off v. Congo Brands

Lead-Off Management, Inc., a beverage distributor based in Maryland, filed a lawsuit against Congo Brands Holding Co., Inc., a beverage producer and supplier, alleging promissory estoppel and fraud. The dispute arose when Congo approached Lead-Off in late 2020 to expand its brand presence in the region and gain access to Giant supermarkets.

September 19, 2025
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Forum Selection Clauses Rule the Day: NED v. IROCK

In August 2023, National Equipment Dealers, LLC (NED) and IROCK Crushers LLC (IROCK) entered into an industrial machinery distribution agreement, under which IROCK sold equipment to NED for resale. The agreement included a mandatory forum selection clause requiring legal proceedings to be conducted in Cuyahoga County, Ohio, and a choice of law clause stating that Ohio law would govern the agreement.

September 19, 2025
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Disclosure Duties Have Teeth: Pasture Gate v. Gruzd

In the case of Pasture Gate Holdings, Inc. v. Nadia Gruzd, the U.S. District Court for the Southern District of California addressed claims brought by Pasture Gate Holdings, Inc. (“Plaintiff”) against Nadia Gruzd (“Defendant”) concerning alleged violations of the California Franchise Investment Law (CFIL) and the California Unfair Competition Law (UCL). The Plaintiff, a North Carolina corporation, purchased a franchise business from Gruzd, who was associated with the “AllMed Search” brand, a healthcare recruiting service.

September 22, 2025
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Franchise Compliance Under Scrutiny: Key Lessons from Recent Cases

Subway International B.V. (“SIBV”), the international franchising arm of Subway, entered into a series of master franchise agreements (MFAs) with Subway Russia Franchising Company, LLC (“Subway Russia”) beginning in 1993, granting Subway Russia exclusive rights to develop and operate Subway® restaurants throughout Russia, with the initial MFA allowing for unlimited renewals provided timely notice and full compliance with the contract’s terms.

September 22, 2025
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Good Faith Limits on Right of First Refusal: Monjazeb v. JLRNA

In the case of Monjazeb v. Jaguar Land Rover North America, LLC, the plaintiffs, Arastou Monjazeb, J&L Holdings, Inc., and Jaguar-Land Rover Bellevue, Inc