Non-payment of royalties gives franchisor right to the franchisee's profits.

Detroit, MI.  The U.S. District Court for Eastern District of Michigan granted M&A's motion for summary judgment on behalf of Allegra Print & Imaging, L.L.C. on its Lanham Act claim against an Illinois franchisee who failed to pay royalties in a timely manner. 

Allegra's Lanham Act claim was upheld for both the period before and the period after the franchisee's termination, because the franchise agreement conditioned the franchisee's authority to use the trademarks upon its payment of royalties. 

When the franchisee failed to pay royalties, its use of the franchisor's trademarks was "unauthorized" under Michigan law. 

In turn, the unauthorized use of the trademarks constituted a violation of the Lanham Act and resulted in an award of the franchisee's gross profits to the franchisor.