March 25, 2026|Franchise Frontlines
March 25, 2026 | United States District Court for the District of New Hampshire
Executive Summary
In a recent decision, Judge McAuliffe of the District of New Hampshire denied a motion for summary judgment in a dispute arising from the sale of a “dealership” that the plaintiff contended was in fact a franchise. The plaintiff alleged that the defendant failed to comply with federal and state franchise disclosure requirements and made misleading representations during the sales process. The defendant argued that the parties’ agreement did not create a franchise relationship and that franchise disclosure laws were therefore inapplicable. The court rejected that characterization, concluding that the relationship satisfied the definition of a franchise under federal law and that the failure to provide a Franchise Disclosure Document constituted an unfair or deceptive practice. However, the court denied summary judgment because the plaintiff failed to establish causation and damages as a matter of law.
Relevant Background
The dispute arose from a 2021 agreement under which MI-BOX of North Florida, LLC acquired the right to operate a business using MI-BOX’s proprietary storage and moving system, equipment, and trademarks within a defined territory. The parties structured the transaction as a “Dealership Agreement,” accompanied by related agreements governing equipment purchases and trademark usage.
The plaintiff alleged that, despite the “dealership” label, the transaction met the legal definition of a franchise and therefore triggered federal and state disclosure obligations. According to the plaintiff, the defendant failed to provide the required Franchise Disclosure Document and supplied misleading financial projections and related materials during the sales process.
The defendant disputed that characterization, maintaining that it sold a dealership rather than a franchise and that it did not exert the level of control or provide the type of assistance required to create a franchisor-franchisee relationship. The parties also disputed whether New Hampshire or Florida law governed the plaintiff’s statutory claims, given the contract’s choice-of-law provision and the Florida-based nature of the business.
Decision
The court first addressed the threshold question of whether the parties’ relationship constituted a franchise under federal law. Applying the FTC Franchise Rule, the court concluded that the transaction satisfied the required elements, including the right to operate a business associated with the defendant’s trademarks, the presence of required payments, and a sufficient degree of operational control or assistance.
In reaching that conclusion, the court relied on both the contractual terms and extrinsic evidence. The agreement imposed requirements relating to branding, equipment sourcing, operational standards, and vendor usage, while also obligating the defendant to provide training, operational materials, software, and other support. The court also noted external indicators suggesting that the defendant itself treated its system as a franchise in other contexts. Based on this record, the court found that the relationship fell within the scope of the FTC Franchise Rule.
Having determined that the transaction constituted a franchise, the court concluded that the defendant was required to provide a Franchise Disclosure Document. It further held that the failure to do so constituted an unfair or deceptive practice under federal law and, by extension, under Florida’s Deceptive and Unfair Trade Practices Act.
The court then addressed the parties’ choice-of-law dispute. Although the contract contained a New Hampshire choice-of-law provision, the court determined that Florida law applied to the plaintiff’s statutory claims because those claims related to contract formation and implicated Florida’s public policy interest in regulating franchise sales within its jurisdiction. The court also concluded that enforcing the contractual provision to avoid Florida’s franchise laws would be inconsistent with those policy interests.
Despite these findings, the court denied summary judgment. The court emphasized that a violation of the franchise disclosure requirements, while sufficient to establish an unfair or deceptive act, does not automatically entitle a plaintiff to judgment. The plaintiff was still required to demonstrate causation and damages. The court found that the plaintiff had not presented evidence showing that it relied on the absence of a disclosure document or that it would have declined to enter into the agreement had the required disclosures been provided. Nor had the plaintiff identified specific damages attributable to the alleged violation.
The court also denied summary judgment on the plaintiff’s fraudulent inducement claim, finding that disputes remained regarding the alleged misrepresentations, their materiality, and whether any reliance was reasonable. Finally, the court dismissed the plaintiff’s rescission claim as a standalone cause of action, noting that rescission is an equitable remedy rather than an independent claim.
Looking Forward
This decision highlights a recurring issue in franchise litigation: whether business arrangements labeled as “dealerships,” “licenses,” or similar structures may nonetheless be treated as franchises under applicable law. The court’s analysis underscores that courts may look beyond contractual labels and examine the substance of the relationship, including operational control, required payments, and trademark usage, when applying the FTC Franchise Rule.
At the same time, the decision illustrates that identifying a franchise relationship and even establishing a disclosure violation may not be sufficient, standing alone, to obtain judgment. Plaintiffs must still demonstrate that the alleged violation caused actual harm. Absent evidence that the franchisee would have acted differently or suffered identifiable damages, courts may decline to grant summary judgment even where regulatory noncompliance is found.
The ruling also reflects the limits of contractual choice-of-law provisions in this context. Courts may decline to enforce such provisions where doing so would undermine the application of state franchise or consumer protection statutes tied to the location of the business or the parties’ relationship. For franchisors operating across multiple jurisdictions, this serves as a reminder that compliance obligations may not be avoidable through contractual drafting alone.
More broadly, the case illustrates how disputes over franchise classification, disclosure obligations, and alleged inducement may turn on detailed factual records. Even where certain legal issues are resolved, claims may proceed if material factual disputes remain regarding reliance, causation, and damages.
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 Partner at Buchalter LLP 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.
