June 30, 2025|Franchise Frontlines
June 30, 2025 | U.S. District Court for the Eastern District of Texas | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Amos L. Mazzant of the Eastern District of Texas enforced a mandatory forum-selection clause in a Maaco Franchise Agreement and granted the franchisor’s motion to transfer the case to the Western District of North Carolina. The plaintiffs alleged that Maaco and its affiliates misrepresented key terms before execution, failed to provide adequate support, and engaged in retaliatory conduct. The franchisor defendants denied those allegations and relied on the Franchise Agreement’s requirement that all litigation be brought exclusively in courts located in Charlotte, North Carolina. The court agreed and concluded that the clause was mandatory, enforceable, and broad enough to cover all of the franchisee’s claims, including fraud-based and statutory allegations. The court further determined that no “extraordinary circumstances” justified disregarding the parties’ agreed-upon forum.
Relevant Background
According to the plaintiffs’ allegations, they entered into a Maaco Franchise Agreement in April 2020 to operate an auto body repair center in Irving, Texas. They allege that Maaco induced the transaction through misrepresentations about fleet accounts, territory rights, and various fees. They further allege that they experienced inadequate support after opening, and that a Maaco officer allegedly berated one of the plaintiffs at a corporate event. Maaco disputes these allegations.
The Franchise Agreement contained a forum-selection clause requiring that any action “arising out of or relating to” the Agreement be brought only in state or federal courts located in Charlotte, North Carolina. After the plaintiffs filed suit in Texas state court asserting breach of contract, fraud, negligent misrepresentation, Texas Deceptive Trade Practices Act claims, declaratory relief, and assault, the defendants removed the case to federal court and moved to transfer under 28 U.S.C. § 1404(a). The plaintiffs opposed transfer, arguing that alleged fraudulent inducement made the clause unenforceable.
Decision
Judge Mazzant began by examining the text of the clause and concluded that it was mandatory based on its requirement that claims “shall be commenced, litigated, and concluded only” in courts in Charlotte, North Carolina. He noted that under North Carolina law, language of this kind is “quintessentially mandatory,” and the plaintiffs did not dispute that the clause was drafted in mandatory terms.
The plaintiffs argued that their fraudulent-inducement allegations rendered the entire contract unenforceable, which they claimed should invalidate the clause as well. The court disagreed, applying the Fifth Circuit’s rule that fraud directed at the contract as a whole does not affect a forum-selection clause unless the alleged fraud specifically concerns the inclusion or negotiation of the clause itself. The plaintiffs did not allege or present evidence that the clause was independently procured through fraud. Given the strong presumption in favor of enforcing mandatory forum-selection clauses, the court held that the clause was valid and enforceable.
Judge Mazzant then addressed whether the plaintiffs’ claims fell within the clause’s scope. He interpreted the phrase “arising out of or relating to” broadly, consistent with North Carolina authority, and found that each of the plaintiffs’ claims—including fraud, negligent misrepresentation, statutory claims, and even the alleged assault—stemmed from the parties’ franchise relationship. When the allegations concern conduct tied to the formation, performance, or obligations of the Franchise Agreement, they “relate to” the Agreement and fall within a clause drafted with this breadth.
Because the clause was enforceable, the court applied the modified Atlantic Marine analysis. Judge Mazzant found that the public-interest factors did not “overwhelmingly disfavor” transfer. He observed that the Western District of North Carolina had a less congested docket, making transfer more efficient; that North Carolina had a strong interest in adjudicating disputes involving companies headquartered there; and that the remaining public-interest factors— familiarity with governing law and conflict-of-laws considerations—were neutral. No factor weighed against transfer, and the court emphasized that “extraordinary circumstances” are required to override a valid forum-selection clause. The plaintiffs did not meet that burden.
Judge Mazzant therefore granted the motion to transfer and ordered the case moved to the Western District of North Carolina.
Looking Forward
This decision reinforces the strength of mandatory forum-selection clauses in Franchise Agreements and shows how courts may enforce such provisions even when franchisees raise significant allegations. The ruling reflects the principle—well established in the Fifth Circuit—that allegations of fraudulent inducement directed at the franchise relationship generally do not invalidate a venue clause unless the alleged fraud specifically concerns the clause itself. It also illustrates that broadly drafted language covering disputes “arising out of or relating to” the agreement may encompass a wide range of contract-based and tort-based allegations.
For franchisors, this case highlights the value of precise drafting when designating exclusive venues. A clearly worded clause can prevent forum shopping and ensure litigation proceeds in the franchisor’s chosen jurisdiction. While venue decisions are always dependent on allegations and procedural posture, this ruling underscores that franchisors who include mandatory and exclusive forum-selection clauses may be able to maintain control over venue even in the face of aggressive claims. The decision is tied closely to the allegations and timing in this matter, but the principles reflected here provide useful guidance for franchisors seeking to enforce their contractual rights across multiple jurisdictions.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
