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AMI 2805 Issues—Claim for Damages Based on Unlawful Practices of Franchisors

Arkansas Supreme Court Committee On Jury Instructions-Civil

Ark. Model Jury Instr., Civil AMI 2805
Arkansas Model Jury Instructions-Civil
December 2023 Update
Arkansas Supreme Court Committee On Jury Instructions-Civil
Chapter 28. Franchise Practices Act
AMI 2805 Issues—Claim for Damages Based on Unlawful Practices of Franchisors
[Plaintiff] claims damages from [defendant] and has the burden of proving five essential propositions:
First, that [plaintiff] sustained damages;
Second, that [defendant] granted a franchise to [plaintiff];
Third, that the performance of the franchise contemplated or required [plaintiff] to establish or maintain a place of business in the State of Arkansas;
Fourth, that [defendant] or [defendant]'s officer or employee, directly or indirectly,
[(1) prohibited the right of free association among [plaintiff] and other franchisees for any lawful purpose;] [or]
[(2) required or prohibited any change in management of [plaintiff] unless the requirement or prohibition of change was for reasonable cause, which cause was stated in writing by [defendant];] [or]
[(3) restricted the sale of any equity or debenture issue or the transfer of any security of a franchisee or in any way prevented or attempted to prevent the transfer, sale, or issuance of shares of stock or debentures to employees, personnel of the franchisee, or heirs of the principal owner, provided the basic financial requirements of the franchisor are complied with, if the sale, transfer, or issuance does not have the effect of accomplishing a sale of the franchise;] [or]
[(4) provided any term or condition in any lease or other agreement related to a franchise, which term or condition directly or indirectly violates any provision of Arkansas franchise law on which I have instructed you;] [or]
[(5) refused to deal with [plaintiff] in a commercially reasonable manner and in good faith;] [or]
[(6) collected a percentage of [plaintiff]'s sales as an advertising fee but did not use the funds for the purpose of advertising the business conducted by [plaintiff];] and
Fifth, that [defendant]'s conduct was a proximate cause of [plaintiff]'s damages.
[If you find from the evidence in this case that each of these propositions has been proved, then your verdict should be for [plaintiff]; but if, on the other hand, you find from the evidence that any of these propositions has not been proved, then your verdict should be for [defendant].]
In the fourth element, use those bracketed provisions that are justified by the evidence.
Do not use the final bracketed paragraph if the case is submitted on interrogatories.
This instruction is based on Ark. Code Ann. § 4-72-206. No instruction has been prepared for § 4-72-206(1), which makes it an unlawful practice “[t]o require a franchisee at [the] time of entering into a franchise arrangement to assent to a release, assignment, novation, waiver, or estoppel which would relieve any person from liability imposed by this chapter.” The Committee believes this provision could be the basis of a claim for damages. However, it would ordinarily operate to negate a defense by a franchisor. In the event there is a fact issue related to this provision, the practitioner should prepare an appropriate instruction.
The Committee has not proposed a definition of “commercially reasonable.” In Miller Brewing Co. v. Ed Roleson, Jr., Inc., 365 Ark. 38, 45, 223 S.W.3d 806, 812 (2006), the Supreme Court noted that the Arkansas Franchise Practices Act does not define “commercially reasonable manner” and opted not to offer its own definition of the term. Instead, the court held that “whether (franchisor) dealt with the franchisee in a commercially reasonable manner and in good faith is a fact question for the jury.” The Committee notes that even in the context of the Uniform Commercial Code, courts have noted that commercial reasonableness “is a flexible concept.” See, e.g., Marks v. Powell, 162 B.R. 820, 829 (E.D. Ark. 1993).
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