February 03, 2026|Franchise Frontlines
February 3, 2026 | U.S. District Court, Eastern District of Louisiana | Unpublished Opinion
Executive Summary
In a February 3, 2026 order, Judge Sarah S. Vance of the U.S. District Court for the Eastern District of Louisiana granted in part and denied in part a motion to dismiss counterclaims brought by franchisor 1 Percent Lists Franchises, LLC arising out of a terminated real estate franchise. The franchisor asserted claims for breach of contract against the franchisee entity and breach of guaranty against the individual owner. Applying Louisiana law pursuant to the Franchise Agreement’s choice-of-law clause, the court held that the franchisor sufficiently pleaded breach of contract based on failure to meet minimum performance standards and that the contract’s remedies were cumulative rather than exclusive. The court also held that the franchisor adequately pleaded breach of guaranty except as to the alleged violation of a non-compete provision, which the court construed narrowly in light of an amendment that carved out certain brokerage activity. The decision underscores the importance of precise drafting in performance standards, cumulative-remedies clauses, and post-termination restrictions.
Relevant Background
Jessica Wynne Vogel initially entered into a Franchise Agreement with 1 Percent Lists Franchises, LLC on February 5, 2021. The agreement was later replaced by a June 23, 2021 Franchise Agreement between the franchisor and Vogel’s wholly owned entity, One Percent Lists Carolinas, LLC.
The Franchise Agreement included minimum performance standards requiring specified transaction volumes over successive years. It also contained a termination provision allowing the franchisor to terminate for failure to meet those standards and included a non-compete provision applicable for two years following termination. An Owner’s Guaranty bound Vogel personally to the franchisee’s obligations.
In July 2023, the franchisor issued a termination letter alleging failure to meet minimum performance standards. The franchisor further alleged that Vogel continued operating a real estate brokerage in violation of the non-compete provision.
The franchisee and Vogel moved to dismiss the franchisor’s counterclaim for breach of contract and third-party claim for breach of guaranty under Rule 12(b)(6).
Decision
The court began by applying Louisiana law, consistent with the Franchise Agreement’s governing-law clause.
Breach of Contract – Minimum Performance Standards
Under Louisiana law, a breach of contract claim requires (1) existence of a contract, (2) breach, and (3) damages. The court held that the franchisor sufficiently pleaded each element.
The franchisee argued that the Franchise Agreement provided a specific remedy for failure to meet minimum performance standards—namely, the franchisor’s right to sell an additional franchise in the county—and that this remedy precluded a breach claim. The court rejected that interpretation.
The Minimum Performance Standards provision stated that if sales goals were not met, the franchisor “will obtain the right to sell one more franchise in that county.” However, the court found that nothing in the agreement made that remedy exclusive. The agreement also contained a termination provision expressly allowing termination for failure to meet performance standards and a cumulative remedies clause providing that contractual remedies were not exclusive and could be exercised in addition to other remedies permitted by law or equity.
The court held that the franchisee’s interpretation—treating the additional franchise right as the sole remedy—misread the contract and ignored the cumulative remedies clause. Accordingly, the breach of contract claim survived dismissal.
Breach of Guaranty
The franchisor also asserted a breach of guaranty claim against Vogel individually. The court held that the guaranty adequately alleged a contractual obligation and breach based on the franchisee’s alleged failure to meet minimum performance standards. That portion of the claim survived.
However, the court reached a different conclusion regarding the alleged violation of the non-compete provision.
The original non-compete clause broadly prohibited the franchisee and its owners from having any interest in a “Competitive Business” within specified geographic areas for two years after termination. The Franchise Agreement defined “Competitive Business” to include any business offering real estate brokerage services.
Exhibit B to the agreement amended the non-compete clause by adding language stating that “Competitive Business” shall not include the franchisee or owner “owning, operating or working as licensed broker for a business that offers, sells or advertises real estate brokerage services.”
The franchisor argued that the amendment applied only if the franchisee terminated the agreement under a specific section and that the carve-out should not apply to termination by the franchisor. The court rejected that reading, finding that it would produce an “absurd or unreasonable” result under Louisiana contract interpretation principles.
Construing the amendment logically and harmonizing the provisions, the court held that the carve-out excluded Vogel’s brokerage activity from the definition of “Competitive Business” for purposes of post-termination restrictions. As a result, the court dismissed the guaranty claim to the extent it was based on alleged violation of the non-compete provision, while allowing the guaranty claim to proceed on other alleged breaches.
Looking Forward
This decision offers several drafting and enforcement lessons for franchisors.
First, cumulative remedies clauses matter. Where a franchise agreement provides that rights and remedies are cumulative, courts are unlikely to infer exclusivity absent explicit language. Franchisors should ensure that remedial provisions do not inadvertently limit available enforcement tools.
Second, minimum performance standards should be paired clearly with termination rights. This opinion reinforces that failure to meet performance metrics can support termination and damages claims when properly structured.
Third, precision in amendments is critical. The court’s narrow construction of the non-compete provision turned on the wording of Exhibit B. Ambiguity in carve-outs—particularly those introduced by “notwithstanding” clauses or multi-part subsections—can materially alter post-termination rights.
Finally, guaranties remain powerful enforcement tools. Even where a non-compete theory fails, a well-drafted guaranty may sustain personal liability for underlying contractual breaches.
For franchisors, the broader message is straightforward: courts will enforce the agreement as written. Clarity, internal consistency, and careful drafting of amendments are essential to preserving enforcement leverage after termination.
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 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.
