Forward Franchising - Las Vegas, Nevada Franchise Attorney Matt Kreutzer

Awuah v. Coverall: Is The Franchising Model Really At Risk?

This week, I attended the International Franchise Association's annual Legal Symposium. One of the hot topics discussed during the Legal Symposium is the recent Massachusetts federal court decision in Awuah v. Coverall North America, Inc. Depending on who you talk to, this decision is either an anomaly or a major threat to franchising as a business model. Personally, I found the case to be worrisome but hoped that the case was just an outlier that would not be followed by other courts. Now, after having listened to some of the speakers at the Legal Symposium, I am not so sure.

For those of you that have not heard of Awuah, the case involved a suit by franchisees against their franchisor, a janitorial cleaning service (Coverall North America).  The franchisees claimed in the lawsuit that Coverall had misclassified them as independent contractors under the Massachusetts Independent Contractor Act (the "Act"), and that they were in reality employees.  Under the Act, a party claiming independent contractor status must show all of the following:  

 

1. The contractor is free from control and direction in connection with the performance of a service;
2. The contractor performs a service that is outside the usual course of the employer’s business; and
3. The contractor is customarily engaged in an independently established trade or profession. 

Update: Domino's Marketing "Narrative" Pays Off

This just in. 

As an update to my March 23 "Hurt Locker" post, Domino's has reported that its makeover strategy has paid off.  In an advertising blitz conducted in January and February 2010, Domino's executives admitted that the company's pizza taste quality was not up to snuff, and used that "narrative" as a way to introduce the public to its new and improved product offering.  According to Domino's, same-store sales have increased a whopping 14.3% in the first quarter of 2010 over the same period in 2009. 

This story underscores the effect that a compelling narrative can have on sales.  When a business finds a new and interesting way to connect with its customers, the results can be remarkable.  That being said, only a quality product or service will keep them coming back.

In the case of Domino's, the long term effect of its marketing campaign remains to be seen.  Customers were obviously convinced to give Domino's another try through the unusual but memorable ads.  But now that they have tried the pizza, will they keep coming back?