Forum Selection Dispute: Tim Hortons Franchisees Suing Parent Company Over Provision Forcing Contract Disputes Into a Miami Court
On May 3rd, 2018, The Star reported that Canadian fast food giant Tim Hortons is a facing a lawsuit from an organization representing a large group of American franchisees. According to the report, Great White North Franchisee Association (GWNFA), which filed the lawsuit, represents nearly half of all U.S.-based Tim Hortons franchisees.
The dispute in this case is over the validity of a forum selection clause. The parent company of Tim Hortons, Restaurant Brand International, requires all American franchisees to sign a contract that stipulates that any future franchise disputes will be litigated in a Miami, Florida court. However, GWNFA argues that this forum selection clause is illegitimate.
Forum selection clauses often cause confusion for business owners. While they are important, they are also legally complex and often misunderstood. Our law firm seeks to bring some clarity to this complex legal issue. Here, our experienced Miami franchise law attorneys answer some frequently asked questions about forum selection provisions in business contracts.
What is a Forum Selection Clause?
Contractual agreements can stipulate where (and how) future disputes will be resolved. Businesses may voluntarily agree that a certain court is the appropriate venue to resolve all potential contractual issues. In most cases, forum selection clauses stipulate the process by which disputes will be resolved. For example, a business contract may contain a clause that calls for disputes to be resolved in South Florida, and that calls for the dispute to be handled through arbitration.
Why Does the Forum Selection Matter?
Venue selection is extremely important. First, it offers a big advantage for both parties: clarity. In some cases, theoretically, multiple different courts could have jurisdiction. Knowing where any disputes will be resolved is inherently useful. Next, certain locations offer very basic, wholly practical advantages. If your company is headquartered in Miami, it may just be easier to deal with disputes in your own backyard. There can be tremendous cost savings to have your disputes handled locally. Finally, many laws and procedures vary by jurisdiction, particularly between states. The lack of familiarity with an outside jurisdiction can create problems for a company.
Are All Forum Selection Clauses Valid?
No. Forum selection clauses must meet certain standards. While Florida courts want to uphold the voluntarily agreed upon intentions of the contracting parties, they will not do so automatically. To ensure that a forum selection provision is valid, it must be properly structured and well-drafted. If you are considering using a forum selection clause in a commercial agreement, please be sure to consult with a qualified legal professional.
Speak to a Skilled Miami Contract Law Lawyer Today
At Pike & Lustig, LLP, our top-rated Florida commercial law attorneys have the skills and experience needed to represent businesses of all sizes. If you need legal guidance, please do not hesitate to contact us to for a free case evaluation. From our primary office in West Palm Beach, and our second location in Miami, we serve franchise law clients throughout Southeast Florida.