In Maaco Enterprises., Inc. v. Cintron, No. 99-CV-5935, 2000 WL 669640 (E.D. Pa. May 17, 2000), Maaco, a franchisor of auto painting and body repair centers, was awarded lost future royalties even though it had terminated the franchise relationship based on the franchisees' failure to perform.
Rather than engaging in a proximate cause analysis, the Cintron court relied on a traditional contract analysis under Pennsylvania law, which governed the franchise agreement, to support the award of lost future royalties in a breach of contract case.
The Cintron court reasoned that because Pennsylvania law allowed for the recovery of lost profits--"the difference between what the plaintiff[s] actually earned and what they would have earned had the defendant not committed the breach"--Maaco was entitled to receive the lost future royalties that it would have received had the franchisee not breached the franchise agreement. Id.
Applying Pennsylvania law, the court held that, as the nonbreaching party, Maaco was entitled to be placed in nearly the same position that it would have occupied had there been no breach. Id.