Ruling May Redraft Franchise Contracts Law

Atlanta Journal Constitution:

Sean Lupton-Smith’s continuing legal fight with Atlanta Bread Co. may have already affected the way franchise contracts are written in Georgia.

The state Supreme Court on June 29 ruled that Atlanta Bread Co.’s noncompete clause — a key issue in a lawsuit brought by Lupton-Smith, a former franchisee — was unenforceable.

In light of the ruling, franchisors are concerned for their ability to keep franchisees from opening competing businesses, said Karen Spencer, a franchise consultant and chief executive of Fran-Systems.

“A lot of people are very upset about it,” she said.

The International Franchise Association had filed an amicus brief in favor of Atlanta Bread Co.’s position, saying the “case is important to preserving the franchise model.” More.