Gordon & Rees Multi-Office Team Obtains Dismissal Seeking Early Termination of Franchise Agreement

June 2021

On June 24, 2021, Partner Ronald Giller and Associate Stephanie Imbornone of the Florham Park office and Partner Mark Nickel of the Salt Lake City office of Gordon Rees Scully Mansukhani obtained the dismissal of a declaratory action seeking the early termination of a franchise.

The parties had entered into a franchise agreement together with an initial addendum granting the franchisee the right to terminate the franchise early if it satisfied certain condition precedents.  Subsequently, the parties executed another addendum that deleted any termination right previously given under certain enumerated circumstances or for “any reason.”  In the declaratory action, the plaintiff sought to end the franchise early, arguing that the phrase “any reason” in the subsequent addendum was ambiguous and only applied to termination rights supported by an explanation or justification.

Gordon & Rees successfully argued that the phrase “any reason” was unambiguous, the ejusdem generis canon upon which the plaintiff attempted to rely did not apply here, and the subsequent addendum deleted any termination right previously provided to the franchisee.

The Court found that the parties’ intention was clear based on the contract language and dismissed the plaintiff’s declaratory action with prejudice.