Contracts – arbitration — franchises

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U.S. Court of Appeals for the 7th Circuit

Civil

Contracts – arbitration — franchises

The owner-operator of a franchise is obligated to arbitrate under a franchise agreement because she received direct benefits from the agreement despite not having signed the document.

“Analogizing Thompson to the facts of this case, the district court found that the Ms. Everett only ‘exploited, or benefit-ted from, the contractual relationship her husband and EAGB had with PDRI. EAGB presumably was profitable because of the PDRI franchise.’ In other words the court determined that as Mr. Everett’s spouse and co-owner she had a right to share the profits of the franchise, but that the benefits were indirect since they derived through her husband and the corporation. We find this to be too narrow an interpretation of direct benefits estoppel. Instead we find that Ms. Everett was not merely exploiting the contractual relationship among EAGB, Mr. Everett and PDRI, but rather the benefit of the contract itself—namely owning and operating a PDRI franchise. Ms. Everett received the same benefits as her husband, which included benefitting from trading upon the name, goodwill, reputation and other direct contractual benefits of the franchise agreement.” Reversed and Remanded.

12-3407 & 13-1036 Everett v. Paul Davis Restoration, Inc.

Appeals from the United States District Court for the Eastern District of Wisconsin, Griesbach, J., Cudahy, J.