COC Services, Ltd. v. CompUSA, Inc
In COC Services, Ltd. v. CompUSA, Inc., 150 S.W.3d 654, 662-70 (Tex. App.--Dallas 2004, pet. denied), the parties signed a letter of intent with a form master franchise agreement attached. 150 S.W.3d at 660.
The letter provided that, if the master franchise agreement were not signed by a certain date, the letter "will expire, and neither of the undersigned shall have any further obligation or liability hereunder with respect to a potential master franchise or license for the development and operation of the Stores. . . ." Id. at 663.
Relying primarily on this language, the court held that, as a matter of law, the parties did not intend to be bound by the master franchise agreement which was never completed and executed. See id. at 665-70.
In COC Services, the plaintiff buyer argued that the following conduct by the seller after signing the letter of intent indicated the parties had entered into a contract although no master franchise agreement was ever signed: the seller sent potential licensees materials indicating the master franchise agreement was already binding; the seller acquiesced in materials the buyer prepared for potential licensees stating that it "currently owns" a franchise; and the seller's representative stated in a meeting that the partners of the buyer were "owners of right for the franchise." COC Servs., 150 S.W.3d at 669.
The court held that the seller's conduct did not eclipse the other factors showing lack of intent to be bound absent execution of a master franchise agreement. Id. at 669-70.
The Court was asked to decide, in the alternative, whether the terms of the letter of intent were unambiguous and conclusively negated any intent to be bound to the unexecuted master franchise agreement. Id.
The Court further determined the evidence of the lack of agreement on key terms did not raise a fact issue whether there was mutual consent to be bound to the master franchise agreement. Id. at 665-66.