August 29, 2025|Franchise Frontlines
August 29, 2025 | U.S. District Court for the Central District of Illinois | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Colin S. Bruce of the Central District of Illinois granted summary judgment to Honest Abe Roofing Franchise, Inc. after the defendants did not respond to the franchisor’s motion. Honest Abe alleged that the defendants breached their Franchise Agreement and Personal Guaranty, while the defendants asserted counterclaims for fraudulent inducement and unjust enrichment. Because the defendants filed no opposition, the court applied its local rule deeming Honest Abe’s factual submissions admitted. The court concluded that the counterclaims lacked evidentiary support, that the Franchise Agreement and Guaranty were enforceable, and that Honest Abe was entitled to unpaid fees, liquidated damages, and attorneys’ fees.
Relevant Background
According to the allegations in Honest Abe’s complaint and summary judgment materials, the parties executed a roofing Franchise Agreement in 2019, along with a Personal Guaranty signed by the individual defendants. The franchisor alleged that prior to execution, the defendants received the FDD, which disclosed that franchisees were responsible for ensuring compliance with all federal, state, and local licensing requirements. The Franchise Agreement allegedly required monthly royalties, Brand Development Fund contributions, technology fees, and minimum local advertising expenditures.
Honest Abe asserted that the franchise operated for several years and that the defendants submitted financial records reflecting a net profit over that period. The franchisor further alleged that the defendants began missing several contractual obligations in 2022, including submitting monthly Gross Sales Reports, maintaining required accounting integrations, and meeting advertising spending requirements. Honest Abe issued a Notice of Default in July 2022 and, after asserting that the defaults remained uncured, issued a Notice of Termination later that month.
Honest Abe alleged that the defendants became responsible for unpaid fees, interest, and liquidated damages under the termination provisions. The defendants filed counterclaims, alleging they were misled about licensing requirements and harmed by actions involving a “funding partner.” According to the court, the defendants did not submit evidence supporting their allegations and did not file any response to the summary judgment motion.
Decision
Judge Bruce held that the defendants’ failure to respond triggered the operation of the Central District of Illinois’s local rules, which deem a movant’s statement of facts admitted when not disputed. The court noted that the Seventh Circuit consistently upholds strict compliance with summary judgment rules, including in cases involving pro se litigants. Accordingly, the court evaluated the motion based on the record submitted by Honest Abe.
On the fraudulent inducement counterclaim, the court concluded that the defendants failed to establish essential elements of the claim—particularly damages. The court found no evidentiary support in the record showing that the defendants suffered losses as a result of any alleged misrepresentation. The court also noted that the financial reports submitted to the franchisor reflected overall profit, which the defendants did not rebut. Additionally, the court observed that licensing-related statements alleged by the defendants conflicted with disclosures in the FDD and involved matters of public record, undermining any claim of reasonable reliance. The court therefore granted summary judgment in favor of Honest Abe on the fraudulent inducement claim.
The court similarly rejected the unjust enrichment counterclaim. Citing Illinois law, the court held that unjust enrichment is unavailable where an express contract governs the parties’ relationship. Because the Franchise Agreement contained a merger clause and because the fraud theory failed, the court concluded that the unjust enrichment claim also failed as a matter of law.
On the breach-of-contract claim, the court determined that the Franchise Agreement was valid and enforceable and that the undisputed facts showed uncured defaults and nonpayment of post-termination obligations. The court applied the liquidated damages formula in the Franchise Agreement—based on average monthly fees during the prior year—and concluded that Honest Abe’s calculation was supported by the record. The court also held that the Personal Guaranty was enforceable under Indiana law and found the individual defendants jointly and severally liable. Finally, the court concluded that Honest Abe was entitled to recover attorneys’ fees and costs under the agreement’s fee-shifting clause and found the requested amount reasonable.
Looking Forward
When viewed in light of its procedural posture, this decision may provide franchisors with insight into how courts may analyze enforcement actions when a franchisee does not respond to a properly supported summary judgment motion. Different courts may take varied approaches, but here the court applied local procedural rules strictly, emphasizing the importance of submitting clear, well-supported evidence.
The court’s treatment of the fraudulent inducement counterclaim may also be instructive. Because the allegations contradicted the FDD’s licensing disclosures and were unsupported by financial evidence, the court found that the claim could not proceed. Outcomes will depend heavily on the specific jurisdiction, the drafting of the agreement and disclosures, and the record developed in litigation, but this decision shows how one court evaluated these issues under the facts presented.
For franchisors using liquidated damages provisions, this opinion reflects a willingness by one court to enforce a formula tied to historical royalties and contributions. Courts in other jurisdictions may analyze such clauses differently, but provisions that rely on objective data and predictable calculations may receive more favorable consideration.
Finally, the case highlights that industries involving regulatory licensing may give rise to allegations of misunderstanding or miscommunication. Where agreements and disclosures clearly assign responsibility for compliance, courts may—in appropriate circumstances—view later claims of confusion skeptically, depending on the record and the governing law.
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.
