Franchisees of a regional wedding publication in the US,
Weddingpages, have filed a court action against The Knot, a
web-based company that recently purchased the franchisor and now
competes on-line with the off-line franchisees.
A majority of franchisees are seeking a court order from the
Supreme Court in New York to stop The Knot from competing with them
and to award monetary damages.
The lawsuit alleges that the franchisees paid for the exclusive
right to use the “Weddingpages” name in their territories. When The
Knot, a start-up company that markets to brides over the internet,
purchased the franchisor of Weddingpages earlier this year, it
required the franchisees to use “The Knot” name in addition to
Weddingpages in their territories. However, it has since allegedly
threatened to take away the right of franchisees to use “The Knot”
name and to circumvent its agreements with franchisees by competing
against them in their own territories.
The lawsuit contends that The Knot has committed fraud and
misrepresentation; violation of state franchise registration and
disclosure laws; breaches of the franchise agreements; violations
of the implied covenant of good faith and fair dealing and other
violations of franchise and state laws.
“The Knot's management has refused to acknowledge the
franchisees' concerns or even meet with us. We had no choice but to
file suit,” said Todd Kabes, one of the franchisees.
A lawyer for the franchisees said, “We are asking the court to
protect the fundamental bargain that the franchisees made - that
they would have exclusive rights to the Weddingpages and Knot names
and concepts in their territories. The fact that The Knot bought
out the franchisor does not change that.”
In a similar case last month, the same Minneapolis law firm
representing the franchisees obtained an injunction against a
franchisor's internet sales into franchisee territories.
