Something Sweet v. Nick-N-Willy's Franchise

237 P.3d 923
CourtCourt of Appeals of Washington
DecidedJuly 13, 2010
Docket64241-3-I
StatusPublished

This text of 237 P.3d 923 (Something Sweet v. Nick-N-Willy's Franchise) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Something Sweet v. Nick-N-Willy's Franchise, 237 P.3d 923 (Wash. Ct. App. 2010).

Opinion

237 P.3d 923 (2010)
156 Wash.App. 817

SOMETHING SWEET, LLC, a Washington Limited Liability Company; Kirk Brandenburg and Jill Brandenburg, husband wife, Appellants,
v.
NICK-N-WILLY'S FRANCHISE COMPANY, LLC, a Colorado Limited Liability Company; Michael Moore; and Patti Moore, Respondents.

No. 64241-3-I.

Court of Appeals of Washington, Division 1.

June 1, 2010.
Publication Ordered July 13, 2010.

*924 Howard Morrill, Simburg, Ketter, Sheppard & Purdy, LLP, Seattle, WA, for Appellants.

Joel Wright, Rosemary Moore, Lee Smart PS Inc., Matthew Boyle, Seattle, WA, for Respondents.

LAU, J.

¶ 1 Kirk and Jill Brandenburg, owners of a Nick-N-Willy's pizza store franchise, sued Nick-N-Willy's and its King County developers, Michael and Patti Moore, based on alleged violations of the Franchise Investment Protection Act, chapter 19.100 RCW. The Brandenburgs claimed that Nick-N-Willy's failed to disclose a material fact in violation of RCW 19.100.170(2) and that the Moores were subfranchisors who failed to properly register a franchise offering with the state. The superior court dismissed these claims on summary judgment. We affirm.

FACTS

¶ 2 Nick-N-Willy's Franchise Company, LLC, sells two types of franchises. The first type is for operating Nick-N-Willy's pizza stores, which includes two basic models. The "outlet" model sells only "take-and-bake pizzas," which are preassembled but unbaked pizzas. Customers are expected to take these pizzas home and use their own ovens to *925 bake them. The "restaurant" model sells both take-and-bake pizzas and prepared pizzas that customers can eat at the store.

¶ 3 The second type of franchise is for "area development marketing." An area development marketing franchisee buys the right to solicit and recruit potential Nick-N-Willy's store franchisees in a given geographic region. The area developer is also required to provide support services to Nick-N-Willy's store franchisees in the specified area.

¶ 4 Michael Moore bought an area development marketing franchise covering King County in July, 2005.[1] He contacted Kirk and Jill Brandenburg, owners of Something Sweet, LLC, after they submitted an inquiry on Nick-N-Willy's web site about setting up their own Nick-N-Willy's pizza business. He invited them to attend an open house, where a Nick-N-Willy's executive encouraged them to work with Moore to pursue a store franchise. Moore provided the Brandenburgs with Nick-N-Willy's uniform franchise offering circular and proposed franchise agreement in May 2006. The franchise agreement did not require franchisees to specify which model they would follow, and it provided that Nick-N-Willy's could change store operating methods in the future. Moore introduced the Brandenburgs to a retail space broker who helped them negotiate a lease at the Snoqualmie Ridge mall. Because there was already a pizza business in the mall, the lease prohibited them from providing cooked pizzas. The Brandenburgs agreed to this term because they wanted to operate an outlet store, which would sell only take-and-bake pizzas. Nick-N-Willy's granted a store franchise to Something Sweet effective September 6, 2006.[2]

¶ 5 In August 2008, the Brandenburgs sued Nick-N-Willy's and the Moores for rescission and damages under the Franchise Investment Protection Act (FIPA). They alleged Nick-N-Willy's failed to disclose that it was planning to discontinue the outlet store model at the time they purchased the franchise. They also claimed the Moores were subfranchisors and violated the act by failing to register a franchise offering. Nick-N-Willy's and the Moores moved for summary judgment, arguing that Nick-N-Willy's did not abandon its take-and-bake only stores, the Moores were not subfranchisors, and the Moores were not required to register. The superior court dismissed the Brandenburgs claims and denied their motion for reconsideration. They sought direct review in our Supreme Court, which transferred the case to this court.

ANALYSIS

Material Omission

¶ 6 The Brandenburgs argue that the trial court improperly dismissed their material omission claim on summary judgment because Nick-N-Willy's presented no evidence to disprove their allegation that it was planning to discontinue the outlet model at the time they purchased their franchise. This court reviews a summary judgment order de novo, engaging in the same inquiry as the trial court. Simpson Tacoma Kraft Co. v. Dep't of Ecology, 119 Wash.2d 640, 646, 835 P.2d 1030 (1992). Summary judgment is proper when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Huff v. Budbill, 141 Wash.2d 1, 7, 1 P.3d 1138 (2000). The court must construe facts and reasonable inferences from those facts in the light most favorable to the nonmoving party. Michak v. Transnation Title Ins. Co., 148 Wash.2d 788, 795, 64 P.3d 22 (2003). However, the nonmoving party may not rely on mere allegations, denials, opinions, or conclusory statements, but must set forth specific *926 facts to show there is a genuine issue for trial. Int'l Ultimate, Inc. v. St. Paul Fire & Marine Ins. Co., 122 Wash.App. 736, 744, 87 P.3d 774 (2004).

¶ 7 The legislature enacted FIPA to curtail franchisor sales abuses and unfair competitive practices. East Wind Express, Inc. v. Airborne Freight Corp., 95 Wash.App. 98, 102, 974 P.2d 369 (1999). To prevent these practices, FIPA generally requires franchise offers to be registered with the state and material information be disclosed to prospective franchisees. Corp. v. Atlantic Richfield Co., 122 Wash.2d 574, 579-80, 860 P.2d 1015 (1993). The information disclosed must be accurate and cannot omit material facts.

It is unlawful for any person in connection with the offer, sale, or purchase of any franchise or subfranchise in this state directly or indirectly:
....
(2) To sell or offer to sell by means of any written or oral communication which includes an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements made in light of the circumstances under which they were made not misleading.

RCW 19.100.170(2).

¶ 8 In Morris v. International Yogurt Co., 107 Wash.2d 314, 729 P.2d 33 (1986), our Supreme Court addressed when a fact would be considered material under FIPA.

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Related

Simpson Tacoma Kraft Co. v. Department of Ecology
835 P.2d 1030 (Washington Supreme Court, 1992)
Corp v. Atlantic-Richfield Co.
860 P.2d 1015 (Washington Supreme Court, 1993)
East Wind Express, Inc. v. Airborne Freight Corp.
974 P.2d 369 (Court of Appeals of Washington, 1999)
Morris v. International Yogurt Co.
729 P.2d 33 (Washington Supreme Court, 1986)
Michak v. Transnation Title Ins. Co.
64 P.3d 22 (Washington Supreme Court, 2003)
State v. Armendariz
156 P.3d 201 (Washington Supreme Court, 2007)
Cerrillo v. Esparza
142 P.3d 155 (Washington Supreme Court, 2006)
Thompson v. Hanson
219 P.3d 659 (Washington Supreme Court, 2009)
Huff v. Budbill
1 P.3d 1138 (Washington Supreme Court, 2000)
Kilian v. Atkinson
50 P.3d 638 (Washington Supreme Court, 2002)
Michak v. Transnation Title Insurance
148 Wash. 2d 788 (Washington Supreme Court, 2003)
Cerrillo v. Esparza
158 Wash. 2d 194 (Washington Supreme Court, 2006)
State v. Armendariz
160 Wash. 2d 106 (Washington Supreme Court, 2007)
Thompson v. Hanson
167 Wash. 2d 414 (Washington Supreme Court, 2009)
International Ultimate, Inc. v. St. Paul Fire & Marine Insurance
87 P.3d 774 (Court of Appeals of Washington, 2004)
Something Sweet, LLC v. Nick-N-Willy's Franchise Co.
237 P.3d 923 (Court of Appeals of Washington, 2010)

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Bluebook (online)
237 P.3d 923, Counsel Stack Legal Research, https://law.counselstack.com/opinion/something-sweet-v-nick-n-willys-franchise-washctapp-2010.