Meehan v. United Consumers Club Franchising Corp.

Harry Meehan, Sr. and Harry Meehan, Jr. (plaintiffs) entered into a franchise agreement with United Consumers Club Franchising Corporation (Consumers Club) (defendant). The agreement gave the Meehans a franchise right to sell memberships to a buying club. The Meehans’ franchise failed. The Meehans sued Consumers Club in federal district court for fraud. The complaint alleged that the Meehans had signed the franchise agreement in reliance on multiple representations by Consumers Club regarding earnings, success rates, pricing, warranties, support, and service and that these representations turned out to be false or misleading. Consumers Club moved to dismiss the complaint. Consumers Club argued that the fraud claims were unsupportable because the franchise agreement contained a term stating that the Meehans expressly disclaimed any reliance on any representations by Consumers Club regarding sales, profits, earnings, and similar subjects. Specifically, the franchise agreement stated, either directly or through an incorporated document, that: no Consumers Club representative was authorized to make any representations about those matters, no one from Consumers Club had made any representations about those matters, and that the Meehans should not rely on any representations that anyone from Consumers Club might have made about those matters. The district court granted the motion to dismiss. The Meehans appealed.