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Business litigation over franchise marketing favors franchisor

The courts in Tennessee and other states are familiar with the area of business litigation that deals with franchise law.  A variety of conflicts arise in the context of retail franchise establishments, usually dealing with disputes between the franchisor and the franchisee. A recent court decision demonstrates how varied the conflicts can become in this busy area of business litigation.

A federal district court judge has ruled that a Muslim fried chicken franchise cannot advertise its fried chicken as being "halal" certified, which connotes a religious connotation to the food that is prohibited by the company that issued the franchise. The court ruled that the franchisor had every right to bar its franchisee from advertising its products with religious terminology attached. The decision held that it was not relevant that the company had allowed the franchise to use the advertising in prior years.

The court rejected the owner of eight Kentucky fried chicken franchises in Illinois despite his argument that KFC allowed him to advertise that the food was halal for the past 14 years. The designation tells Muslims that the meat is a choice cut that does not come from a forbidden part of the animal. The terminology also indicates that there is no meat coming from forbidden animals, such as pigs.

The business litigation lawsuit claimed that thousands of Muslims in the area ate at the franchisee's restaurants because they knew that the restaurant sells halal chicken. It was in 2016 or 2017 that KFC demanded that the franchisee stop marketing its food as halal due to the company's passage of a rule that forbids franchises from asserting religious dietary standards about the food. The court pointed out that the franchise agreement between the parties gave the franchisor complete control over how the product was to be marketed and promoted. Any similar dispute involving Tennessee franchise establishments would likely be governed by the same factor, which is that the franchise agreement gives the franchisor complete control over the marketing of the product.

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