May 22, 2025|Franchise Frontlines
May 22, 2025 | Appellate Court of Maryland | Unreported Opinion
Executive Summary
In Urban Bar-B-Que Systems, LLC v. Aboarob, 2025 WL 1466007 (Md. Ct. Spec. App. May 22, 2025), the Appellate Court of Maryland vacated a trial judgment in a multi-claim, multi-location franchise dispute because the trial court failed to issue factual findings or legal conclusions following a three-day bench trial. The case involved a franchisor’s allegations of unpaid royalties, unauthorized operation of competing brands, premature closure of a franchised location, and violations of in-term and post-term covenants. The franchisee asserted extensive counterclaims related to a subsequent ownership transition of the franchisor, alleged misrepresentations, and alleged violations of Maryland franchise law. The trial court ruled for neither party based on credibility but provided almost no explanation. Because the trial court’s singular statement did not satisfy Maryland Rule 2-522(a) and prevented meaningful appellate review, the appellate court ordered a complete remand for a new trial. The opinion emphasizes the importance of structured findings in franchise litigation and provides instructive guidance for franchisors navigating complex disputes involving multiple claims, competing-brand issues, post-acquisition transitions, and alleged noncompliance with franchise regulatory requirements.
Relevant Background
Urban Bar-B-Que Systems, LLC (“Urban BBQ”) and the franchisee, Pasil Aboarob, entered into franchise agreements for two Maryland Urban BBQ restaurants: one on Wilkens Avenue in Baltimore City and one in Hanover. According to the allegations, both agreements required the franchisee to pay a six-percent royalty on gross sales, follow brand standards, and comply with in-term and post-term covenants not to compete. Urban BBQ alleged that the franchisee failed to remit royalties timely, opened and operated other restaurant brands during the franchise term without written approval, and closed one location early. For the Wilkens Avenue location, Urban BBQ alleged that the franchisee operated a Steak ’n Shake and opened two Ledo Pizza locations without the franchisor’s written consent, in violation of the in-term noncompete. For the Hanover location, Urban BBQ alleged the franchisee permanently closed the restaurant in August 2019, allegedly before the end of the agreement’s term, which the franchisor claimed triggered liquidated damages for thirty-six months of royalties. Urban BBQ also asserted the right of first refusal to assume the franchisee’s lease and further alleged that post-termination competition within ten miles entitled it to additional liquidated damages.
The franchisee filed broad counterclaims asserting that around July 1, 2019, Urban BBQ’s prior owners entered into a Membership Purchase Agreement to sell the franchisor to Clucksters, LLC. The franchisee alleged, among other things, that after this transaction, certain individuals and entities associated with the acquiring group made misrepresentations regarding brand support, distributor relationships, royalty obligations, and Urban BBQ’s franchise registration status under the Maryland Franchise Act. The franchisee claimed he was harmed by alleged distributor changes, alleged vendor-related issues, and claimed improper conduct in connection with an Assignment of Income Rights. The counterclaims included allegations of fraudulent misrepresentation, negligence, tortious interference with contractual relations, fraudulent conveyance, Maryland Franchise Act violations, civil conspiracy, and requests for declaratory relief concerning the rights and obligations under the Wilkens Avenue franchise agreement.
The parties proceeded to a three-day bench trial involving multiple witnesses, documentary exhibits, financial materials, communications between franchise leadership and the franchisee, and evidence concerning the sale of Urban BBQ, royalties, garnishments, and franchise operations. Both sides contended the evidence supported their respective claims. Urban BBQ argued that the franchisee materially breached both agreements. The franchisee argued, in part, that Urban BBQ and related entities failed to support operations, made misrepresentations, and violated Maryland franchise registration requirements. The franchisee also disputed liability for royalties, termination-related payments, and liquidated damages, and raised defenses related to garnishment difficulties.
At the end of trial, the court issued an extremely brief oral ruling. The judge stated that the matter “really comes down to a matter of credibility” and that he did not find either side’s testimony sufficiently credible to prove any remaining count by a preponderance of the evidence. No written findings followed. This single conclusory statement resolved the entire case against both parties, leaving all claims and counterclaims denied without specific analysis. Because the presiding Senior Judge later became unavailable for recall duty, post-trial clarification was not possible. Both parties appealed.
Decision
The Appellate Court of Maryland vacated the judgment and remanded for a new trial. The court held that the trial judge failed to comply with Maryland Rule 2-522(a), which requires that in a contested bench trial “the judge… shall prepare and file or dictate into the record a brief statement of the reasons for the decision and the basis of determining any damages.” Urban Bar-B-Que, 2025 WL 1466007, at *8. The appellate court explained that while findings “need not be lengthy,” they cannot be so limited “as to prevent [the appellate court] from adequately assessing the cogency of [the trial court’s] conclusion.” Id. at *8 (quoting Patriot Constr., LLC v. VK Elec. Servs., 257 Md. App. 245, 270 (2023)).
The appellate court emphasized that the trial court admitted extensive documentary evidence—franchise agreements, correspondence, financial documents, franchise transfer agreements, garnishment records, vendor materials, and evidence concerning competing restaurant operations—and heard testimony from multiple witnesses. Yet the trial court made no factual findings regarding any of these matters. Urban Bar-B-Que, 2025 WL 1466007, at *8. The appellate court noted that a preliminary decision to admit documentary evidence “is not the same thing as deciding that what the document says or shows should be believed,” and without findings, the court could not determine whether substantial evidence supported any of the trial judge’s conclusions. Id.
Similarly, the trial court “drew no conclusions of law,” merely stating that neither party proved its claims. Id. The appellate court noted that the trial judge did not address whether the in-term covenant not to compete—containing no geographic limitation—was valid and enforceable; did not interpret the termination provisions of the Hanover agreement; did not evaluate whether liquidated damages applied; and did not address the allegations concerning Maryland franchise registration or the franchisee’s distributor-related allegations. Because the trial court issued no legal analysis on any of these points, the appellate court held that meaningful appellate review was impossible.
The appellate court observed that remand is generally appropriate where a trial court’s lack of findings prevents review. It also noted that because the Senior Judge was no longer available, a new trial before a different judge was necessary to allow proper credibility determinations and factual findings. The court suggested, but did not require, that the trial court consider directing the parties to submit proposed findings of fact and conclusions of law in advance of the new decision to aid in resolving what it characterized as “complex claims.” Id. at *9. For these reasons, the appellate court vacated the judgment and remanded for a full retrial.
Looking Forward
This decision highlights the importance of detailed factual findings and legal conclusions in franchise litigation, where multi-claim cases often turn on the interplay between contractual provisions, royalties, operational support allegations, covenants not to compete, and the franchisor’s rights following the closure or transfer of franchised locations. When a case involves complex issues—particularly those arising during or after a franchisor’s ownership transition—courts rely heavily on a structured trial record that identifies the factual basis for each ruling and applies the appropriate contractual or statutory framework. The appellate division’s remand here serves as a reminder that credibility determinations cannot substitute for findings that address the terms of the franchise agreement and the parties’ respective performance.
The court’s review of the alleged breaches surrounding the in-term and post-term noncompete obligations also provides practical guidance to franchisors. Multi-brand ownership, competing concepts, and franchisee participation in other restaurant businesses can create significant risk if not monitored and addressed promptly. Written approvals, detailed recordkeeping, and clear enforcement of contractual restrictions are essential to mitigating disputes and strengthening future litigation positions.
Additionally, the franchisee’s counterclaims underscore the importance of maintaining regulatory compliance during franchisor transitions. Allegations involving franchise registration requirements, distributor changes, or shifting operational support can surface during periods of system restructuring or acquisition. Franchisors may benefit from review of their transfer processes, communications with franchisees during ownership changes, and internal controls governing supplier transitions and marketing commitments.
Finally, the decision emphasizes the value of litigation readiness in situations where vendor relationships, garnishment issues, or brand acquisition activities intersect with franchise performance. Establishing contemporaneous documentation of franchisee performance, royalty disputes, operational support, and contractual compliance can significantly strengthen a franchisor’s ability to secure enforceable findings at trial. As this case demonstrates, without a clear record and explicit judicial findings, the resolution of franchise disputes may be substantially delayed, requiring retrial and additional expense for all parties.
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.
