Question

1-800-Got Junk? is a junk removal franchise business headquartered in Vancouver, British Columbia, Canada. In late 2003, Got Junk entered a franchise agreement with Millenium Asset Recovery Inc. The agreement stated that the franchisee, Millennium, would pay a percentage of its gross revenue to Got Junk on every junk removal job it performs. In 2007, Got Junk terminated Millennium’s franchise on the grounds that Millennium deliberately had not reported certain jobs and the gross revenue derived from such jobs. Was Got Junk right in terminating the agreement? Why or why not? [1-800-Got Junk? LLC v. Superior Court (Millennium Asset Recovery, Inc.), Cal.App.4th, Second Dist., Div. Three. (2010).]

Answer 1

A franchise agreement was made betweeb Got Junk and Millenium in late 2003.A franchise agreement is similar that of contract agreement and all the terms and elements hold same for the franchise agreement as well.

As part of the agreement,the washington law was to be applied in case of any breach of contract.In 2007 Millenium breached the contract by not reporting the gross revenues to the franchisor Got Junk.There is definitely breach of contract by the franchisee Millenium.

However,Washington law provides for enhanced protection of franchisees and reduces the control of franchisor.So the CFRA(California Franchise Relations Act) does not apply in this case and is overridden by the washington law which governs the policy of contract termination.

Hence,Got Junk is not right in terminating the agreement with the Millenium and needs to follow washington law for termination of contract,which protects Millenium in this case.