Singh v. Wireless Vision, LLC, 2023 WL 2752584 (E.D. Cal. Mar. 31, 2023)

A federal court in the Eastern District of California recently denied a subfranchisor’s motion to change venue to the Eastern District of New York, holding that its Operator Agreement was a franchise agreement under California law, thus making its forum-selection clause invalid under the California Franchise Relations Act (CFRA).

Singh and Ameritel entered into an Operator Agreement which granted Singh the right to sell exclusively T-Mobile services and products. At the time of the agreement, Singh paid Ameritel a $10,000 good faith deposit.

Singh spent at least $160,000 purchasing equipment and building a store. The Operator Agreement was later assigned to Wireless Vision and terminated by Wireless Vision several months later. 

Singh sued Wireless Vision alleging breach of contract, violation of the CFRA, violations of the California Labor Code, and unfair business practices. Wireless Vision filed a motion to change venue pursuant to the Operator Agreement’s forum selection clause. Singh opposed the motion, arguing that the forum-selection clause was void under the CFRA. 

The court denied Wireless Vision’s motion to change venue, agreeing that the forum-selection clause in the Operator Agreement was unenforceable because the CFRA voids any provision in a franchise agreement restricting venue to a forum outside California.

The court held that the Operator Agreement satisfied the definition of a franchise under California law. Singh: (1) was granted the right to engage in the business of selling goods at a price determined by T-Mobile or Ameritel Management in accordance with T-Mobile standard procedures and was not allowed to engage in the sale of other cellular services; (2) was told he would have a branded T-Mobile store containing signs and displays listing the T-Mobile brand and trademarks; and (3) satisfied the franchise fee requirement by making a $10,000 deposit. The court further concluded that, while Singh’s payments may have gone to third parties, Wireless Vision benefited from the payments because they were used to improve the premises which remained in their possession after the Operator Agreement was terminated.