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Legacy Acad. Inc. v. Doles-Smith Enters. Inc.

In a franchisee's suit against the franchisor of daycare businesses, in which the franchisee alleged that the franchisor provided false and misleading information when they entered into the franchise agreement, the franchisee failed to prove its claims for negligent misrepresentation and negligence under O.C.G.A. § 51-1-6, as it failed to prove that it suffered any out-of-pocket economic damages as a result of the alleged misrepresentations.

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These companion appeals from a jury verdict arise out of a dispute between a franchisor of daycare businesses and its franchisee. The franchisor was Legacy Academy, Inc., “Legacy” owned by Melissa and Franklin Turner collectively, the “Legacy Parties”. The franchisee was originally GMI Smith, LLC, and later Doles Smith Enterprises, Inc., both of which were owned by Michele Doles Smith and Gary Smith collectively, the “DSE Parties”. Alleging that false and misleading information had been provided to them when they entered into the franchise agreement, the DSE Parties sued the Legacy Parties and asserted multiple claims, including claims for negligent misrepresentation and negligence under OCGA § 51-1-6 for the breach of duties imposed by federal franchise regulations. The Legacy Parties answered, denying liability, and Legacy asserted counterclaims for lost royalties, lost advertising fees, and attorney fees.

Following a trial, the jury returned a verdict in favor of the DSE Parties on their claims for negligent misrepresentation and negligence and in favor of Legacy on its counterclaims for lost royalties and lost advertising fees. The jury returned a verdict in favor of the DSE Parties on Legacy’s counterclaim for attorney fees. The parties now appeal from the final judgment entered on the jury verdict, challenging the trial court’s rulings on their motions for directed verdict and judgment notwithstanding the verdict “j. n. o. v.” made during the course of the proceedings.

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