When the Franchisee is Required to Upgrade POS TechThis decision arises from a dispute centered upon the Franchisee’s refusal to upgrade a Point of Sale (“POS”) system, claiming that the Franchisor’s POS replacement was inferior and not suited to the chocolatier’s shop, nor did it meet the Franchisor’s own specifications.

The Franchise Agreement was executed in 2007. In 2012, the Franchisor gave the Franchisee notice to transition to a new POS. The Franchisee refused. Again, in 2015, the Franchisor gave the Franchisee notice to transition to a new POS, which differed from the 2012 system. Again, the Franchisee refused. The Franchisor responded by terminating the agreement.

The Franchisor filed a complaint due to breach of the restrictive covenants and the Franchisee filed counterclaims. The POS issue was addressed in Franchisor’s motion for summary judgment. The agreement at issue contained the following broad language regarding the POS:

  • “When so instructed by US, You shall procure and install [POS equipment] as We specify in our manual or otherwise.”
  • “You shall provide any assistance required by Us to bring such system on-line with Our system at the earliest possible time and You expressly agree that We shall thereafter have the free and unfettered right to retrieve such data and information from Your system as We, in Our sole and exclusive discretion, deem necessary or appropriate.”
  • “You further understand that it may become necessary for You to replace or upgrade the entire cash register system with a larger system capable of assuming and discharging all the tasks and functions specified by Us.”
  • “Following Our testing and determination that it will prove beneficial to You, You agree to install at Your own expense such additions, changes, modifications, substitutions and/or replacements to Your hardware, software, telephone lines, power lines and other related facilities as We direct on those dates and within those times specified by Us in Our sole and exclusive discretion in Our Operating Manual or otherwise.”

The Court ruled that this language was clear, “[t]he termination was valid because Miami Chocolates breached the Agreement by refusing to install the New POS System. No questions of material fact preclude summary judgment on that issue.”

Citation: 2018 U.S. Dist. LEXIS 31977; 2018 WL 1083552

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