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Contracts Keyed to Barnett
The Original Great American Chocolate Chip Cookie Company, Inc. v. River Valley Cookies, Ltd.
Citation:
970 F.2d 273 (7th Cir. 1992)Facts
The Sigels operated a Cookie Company franchise in Aurora, Illinois, which they purchased in 1985 as an investment to be managed by local managers. Between 1987 and 1991, they committed numerous violations of the franchise agreement, including repeatedly failing to furnish insurance certificates, paying invoices late, sending bounced checks, failing health inspections (with issues like oozing cheesecake and undercooked cookies), and underreporting gross sales by more than $40,000 over a three-year period. After the Cookie Company terminated the franchise, the Sigels continued operating, selling cookies made with unauthorized batter under the company’s trademark. The Cookie Company offered to let the Sigels assign the franchise, but they did not do so. The Sigels claimed their violations occurred during a period when the store was being mismanaged by their hired manager and that they ceased when the manager was replaced. The district court found that while the Sigels had provided cause for cancellation under the contract terms, those terms were “commercially unreasonable” and would not be enforced by an Illinois court.
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