Banek Incorporated v. Yogurt Ventures U.S.A., Inc.

6 F.3d 357 (1993)

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Nature of the Case

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Facts

P., owned by Mr. and Mrs. Banek, entered into negotiations with D, a Georgia corporation owned by defendants John and Richard Stern, for the purchase of a Freshens Yogurt franchise to be located in Monroe, Michigan. They signed a 'Franchise and Development Agreement' in February 1990. It was an utter failure and P closed its Freshens franchise in March 1992. P filed suit in state court against Yogurt Ventures for breach of contract, various violations of the Michigan Franchise Investment Law (MFIL), violations of the Federal Trade Commission Franchise Rules, common law fraud and misrepresentation, and negligence. P also filed a separate action against John and Richard Stern. The cases were then consolidated and removed to federal court based on diversity jurisdiction. Ds moved for dismissal of all counts. The court ruled that the choice of law provision providing that Georgia law is to govern the rights and obligations of the parties was valid and enforceable under Michigan law and thus dismissed P's claim alleging violations of the MFIL. Ps took an interlocutory appeal on the choice of law ruling.