“But They Were Not My Client”: The Prospect of a Franchisor’s Outside Counsel Being Liable to an Aggrieved Franchisee
Next year (i.e., 2022) marks the thirty-fifth anniversary of the 1987 California Court of Appeal decision that “sent a chill through the franchise bar.” In Courtney v. Waring, the California Court of Appeal determined that franchisees could advance a claim of negligence against franchisor counsel with respect to the preparation of an offering circular, which is the predecessor of today’s federally mandated Franchise Disclosure Document (FDD).
Although the Courtney decision was limited to whether the franchisees’ complaint sufficiently set forth a claim of negligence and not whether franchisor counsel was truly liable for the alleged wrongs, the decision is the foundation for numerous legal treatises and secondary sources that opine that franchisor counsel could be liable to a franchisee that entered into a franchise transaction based on a flawed prospectus or disclosure document.
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“’But They Were Not My Client’: The Prospect of a Franchisor’s Outside Counsel Being Liable to an Aggrieved Franchisee,” by Charles S. Marion and Ari N. Stern* was published in the Summer 2021 edition of the Franchise Law Journal (Vol. 41, No. 1), a publication of the American Bar Association’s Forum on Franchising.
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* Ari N. Stern is a partner in the Boston office of O’Hagan Meyer, PLLC.