As the old adage goes nothing lasts forever. Under the Federal Trade Commission [FTC] Franchise Disclosure Rule, Franchisors are required to provide prospective franchisees with accurate and complete disclosures. Failure to provide complete and accurate franchise disclosures can provide fertile ground for franchisee claims of unfair or deceptive trade practices. But, a claim of a franchise disclosure violation should not be left to age and ferment on the counter like a loaf of bread. It will become stale.
The case is Haigh et al. v. Superior Insurance Management Group, Inc. out of the North Carolina. Five franchisees sued their franchisor, Superior Insurance Management Group [Superior Insurance] for unfair or deceptive trade practices, breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and declaratory judgment. Superior Insurance moved to the dismiss claims of-of unfair or deceptive trade practices claiming the statute of limitation had run.
When the period of time specified in a statute of limitations passes, a claim might no longer be filed, or, if filed, may be liable to be struck out if the defense against that claim is, or includes, that the claim is time-barred as having been filed after the statutory limitations period.
In North Carolina, a claim of unfair or deceptive trade practices must be brought in 4 years or the claim is time-barred. The franchisee plaintiff signed their franchise agreements at issue between 2009 and 2011, clearly beyond the 4-year statute of limitations. The court held that
‘Superior Insurance’s failure to provide the disclosure and the resulting Franchise Rule violation were necessarily apparent to the plaintiffs before they signed their franchise agreements[i].’
Franchisee waited too long to bring franchise disclosure disclaims. If the franchisees were harmed by inaccurate or incomplete disclosures in the franchise disclosure [FTC], they would have brought the claims earlier.
Each state has their own statutes of limitation for unfair or deceptive trade practices. And, that the statutes of limitations for unfair or deceptive trade practices, do not apply to breach of contract, breach of the covenant of good faith and fair dealing, and breach of fiduciary duty. These claims have their own statute of limitations. It is well serving if a claim arises, to raise it. And inverse if a claim is raised, look at the date when the events occurred.
If the statute of limitations has expired or passed, it is as if the wrongdoing [if any] did not occur. There will be no recovery, no money damages awarded.
[i] No. 17 CVS 2582 Business Franchise Guide – Explanations, Laws, cases, rulings, new developments ¶16,072