Alert - Musavi v. Burger King Corporation—Questioning the Enforceability of Out-Of-State Forum Selection Clauses in Franchise Agreements
A recent decision from the United States District Court for the Central District of California has eroded further the strength of the California Franchise Relations Act (the “CFRA”) by providing franchisors with a potential avenue to avoid the CFRA’s prohibition concerning out-of-state forum selection clauses. In Musavi v. Burger King Corporation (2013 U.S. Dist. LEXIS 154467), the plaintiffs were the owners of four (4) Burger King franchises in California. In January 2013, Burger King unilaterally terminated the franchises for a variety of alleged defaults and breaches. Burger King and the plaintiffs then entered into a “Limited License Agreement” (the “LLA”) which provided the plaintiffs with the right to continue operating their franchises until May 29, 2013, so that they could...