Unlike many recent franchisee-friendly decisions relating to the employee/employer relationship, the District Court of Northern California recently ruled in favor of a janitorial and cleaning maintenance franchise system.

The franchisees of Jani-King of California, Inc. in Juarez v. Jani-King of California, Inc.  were unable to establish their claims against the franchisor under California labor laws and the California Franchise Investment Law (CFIL). Accordingly, the District Court granted Jani-King’s Motion for Summary Judgment.

The Jani-King franchisees argued that they were fraudulently induced to enter a franchise system where Jani-King evaded paying wages and job benefits yet retained the control of an employer/employee business arrangement.  The District Court disagreed.  Evidence provided by Jani-King established that franchisees had discretion to hire and fire employees, decline customer accounts, and purchase their own supplies.  

The franchisees also brought claims under the CFIL allegeding that Jani-King made false earnings claims, misrepresented the amount of work available, failed to disclose fees and costs properly, and failed to provide language translations of required contracts. The District Court barred the allegations under the parol evidence rule as they were contradicted by the terms of the franchise agreement signed by the franchisees.   The court also ruled the allegations time barred by the applicable state statute of limitations.

This is a positive development for franchisors who have feared that neighboring courts may follow the recent Coverall decisions of Massachusetts.  We will continue to monitor and report new decisions as disgruntled janitorial franchisees continue to bring cases under various state franchise relationship and labor laws.