Louisiana Based Franchisor and Its Employees Cannot Avoid Personal Jurisdiction in Washington State

Washington-state based franchisees Greg and Gabriela Skistimas brought suit against Hotworx Franchising LLC in the U.S. District Court for the Western District of Washington alleging misleading and unfair practices related to franchise disclosure and marketing in connection with the sale of HOTWORX sauna and fitness studio. The plaintiffs claimed that Hotworx misrepresented potential profits, failed to provide accurate information on franchise earnings, and breached its obligations under the Federal Trade Commission (FTC) Franchise Rule and Washington State’s franchise laws. They argued that Hotworx’s omissions and misstatements induced them into franchise agreements that did not deliver the promised financial returns.

The defendants challenged whether the district court in Washington had personal jurisdiction over the defendants and moved to compel arbitration. The Court found it had personal jurisdiction over Hotworx employees who had direct involvement as franchise sales…