Plaintiff Rib City Franchising, LLC, enters into a franchise agreement with Toni Jorgensen for Rib City franchisee. The franchise agreement is sequecently terminated for breach of contract. Toni Jorgensen sell the assets of franchise to Sara Bowen post the franchise Termination. Sara Bowen open a restaurant at the same location, using the same telephone number, website [and website content], and made no changes to the interior restaurant layout, decor, color scheme, wall hangings, artwork, dark-colored wood booths, hanging light fixtures, and hanging window frames previously used in Rib City Grill, and kept the menu basically the same. Sarah Bowen called her new restaurant Pig City BBQ.
While there is a non-compete with franchisees and former franchisee, there is no non-compete with 3rd parties.
Sue anyone that buys former franchisee assets and attempts to operate a completing business using the franchisee system’s décor [referred to as trade dress in legal terms], menu, and steals social media content and accounts on claims of trademark infringement and misappropriation of trade secrets [in common lingo stealing and using].
Outcome: The court said:
• No relief for similar names Pig City and Rib City. The court argued that Pig and Rib sound significantly different. And, Rib City Grill is not ‘conceptually or commercially strong.’ On the spectrum Rib City is a descriptive with diminished enforceability.
• No Relief for using Trade Dress: The décor including interior restaurant layout, decor, color scheme, wall hangings, artwork, dark-colored wood booths, hanging light fixtures, and hanging window frames was not distinctive enough to be trademark protect-able. The décor was not distinctive enough to get trade dress protection.
• No relief for the menu and receipts. The court said that the menu was distributed to the public, so the menu could not be confidential. And the receipts, Rib City said that had to provide it that could not just say is tasted like their receipts.
Lessons to Learn:
1. Do de-identify locations post termination
2. Do create arbitrary and fanciful trademarks not descriptive trademarks
3. Do not share anything that you want to keep confidential
4. Don’t let franchisee have their own URL addresses
5. Maintain control of social media accounts
The lessons learned are not just for the benefit of franchisors. It is for all other franchisees in the system that have to compete with a copycat.
The case: Rib City Franchising, LLC v. Sarah Bowen, et al. in the Central District of Utah.