GMAC Real Estate LLC v. Fialkiewicz
Connecticut General Statutes §36b-61(2)(D) provides an exception to the Connecticut Business Opportunity Investment Act for the sale of a marketing program in connection with licensing a registered trademark. After the District Court confirmed an arbitration award, GMAC Real Estate LLC appealed, arguing that because the franchise contract licensed the trademarks "GMAC Real Estate" and "Premier Service," it met an exception in C.G.S. §36b-61(2) for "the sale of a marketing program made in conjunction with the licensing of a registered trademark." The statute provides, "`Business opportunity' means the sale or lease . . . of any product . . . or service which is sold . . . for the purpose of enabling the purchaser-investor to start a business, and in which the seller represents that . . . (D) the seller will provide a sales program or marketing program . . . provided sections 36b-60 to 36b-80 . . . shall not apply to the sale of a marketing program made in conjunction with the licensing of a registered trademark or service mark." The 2nd Circuit found that GMAC did not prove the arbitrator manifestly disregarded the law. "Arguably," wrote the 2nd Circuit, " `GMAC Real Estate' is not a federally registered mark as required by the CBOIA, and `Premier Service' was not licensed in conjunction with the franchise agreement." Alternatively, GMAC asserted the CBOIA was not applicable, because the contract did not constitute a "business opportunity" offered to permit the purchaser-investor to start a business. The defendant, GMAC observed, operated as a broker both before and after it signed the contract. In Eye Associates v. IncomRx Sys., a 1990 decision, the 2nd Circuit found that a business can be started, pursuant to the CBOIA, if the business-opportunity purchaser's business undergoes "substantial changes, modifications or additions" in connection with the purchase of the business opportunity. Here, the defendant provided evidence that, as a result of the contract, internal processes for accounting and marketing changed. The arbitrator's decision did not result from a "manifest disregard of the law," and the 2nd Circuit affirmed the judgment of the District Court, Chatigny, J.