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Case Brief - Essay Example

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Case Brief

The franchise agreement consisted of a printed form prepared by respondent, and, with a specific exception for income from property management services, provided in pertinent part as follows: “Franchise {appellant} agrees to pay… a ‘service fee’ equal to 6 percent of Franchisee’s gross income derived from all transactions for which a real estate license or securities license is required.
At the franchise location covered by the agreement, in addition to negotiating real estate sales and purchases for clients, appellant also maintained an escrow department which represented to the public at large that it was operating under a Century 22 franchise. Appellant charged its sellers and buyer separate and distinct fees for escrow services from fees collected on sales commissions.
Appellant was not licensed to act as an escrow agent under the general provisions of financial Code section 17000 et seq. (the Escrow Law). However, appellant did act as an escrow agent under an exception to the Escrow Law-- Financial Code section 17006, subdivision (d).
The terms of the franchise agreement provided that appellant corporation was to maintain certain prescribed records and reports to respondent those transactions for which a service fee was payable. During the time of the agreement, appellant failed to report any transactions or income received from the operation of its ‘escrow” business.
Upon the termination of the franchise agreement, respondent conducted an audit of the books and records of appellant’s franchise. The audit was authorized by the franchise agreement. During the audit, respondent discovered that appellant had not paid a service fee for the income derived from escrow services. Respondent demanded payment from appellant, and from defendant, Nick Rockton. Appellant and defendant Nick Rockton refused to pay since they did not think that the agreement covered income derived from escrow services. This ...Show more


defendant, Nick Rockton, is the sole stockholder and principal operating officer of Rockton Realty, Inc. Nick Rockton was engaged as a real estate broker for Rockton Realty, Inc. Respondent, Century…
Author : steuberanahi
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