We are pleased to announce the relocation of our offices, effective as of May 31, 2011, and our new association, as "of counsel" to Ezra Brutzkus Gubner LLP in Woodland Hills, California. Our new address and telephone numbers will be:

21650 Oxnard Street, Suite 500

Woodland Hills, CA  91367

Telephone:  818-827-9229

Fax:  818-449-4808

As mentioned in our March 2011 Newsletter [click here], the law on the recovery of future royalties remains uncertain. We concluded in March that based on recent case law, every franchise agreement should acknowledge the franchisor's right to recover future royalties and provide that the franchisee's obligation to pay these royalties survives the termination of the agreement.

However, a recent case decided by a Court applying North Carolina law not only held that it was not necessary for a franchise agreement to provide for the recovery of prospective damages, but also found that the franchisor had properly calculated those lost profits.

On the absence of any provision in the franchise agreement, the Court stated that lost profit damages were "reasonably supposed to have been within the contemplation of the parties," and that an express written agreement was therefore not required.  On the calculation of those damages, the Court affirmed the franchisor's formula, which used the average weekly sales of the franchised unit multiplied by the number of weeks in the period for which it sought relief times the average historical royalty rate paid to the franchisor, holding that "using past profits as a basis for calculating future lost profits is a widely accepted methodology."

Undoubtedly, there will be future cases on these subjects.