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13 Franchise L.J. 1 (1993-1994)

handle is hein.journals/fchlj13 and id is 1 raw text is: Franchisor's Use of RICO:
The Best Defense Might Be a Good Offense
by Charles S. Modell and Frederick K. Hauser II1*
Minneapolis, Minnesota

Frederick K. Hauser III

I. Introduction
Since its inception in 1970, the use of RICO in civil actions
has exploded. The popularity of RICO among plaintiffs can
be traced to its generous remedies, which provide for treble
damages as well as attorneys' fees and costs. Franchisees
have recognized the potential recovery allowed by the stat-
ute and, accordingly, have used it in litigation against their
franchisors in a wide range of contexts. The opposite can
also hold true-RICO can be just as powerful a weapon for
franchisors in dealing with franchisees that have wrongfully
disrupted the franchise system. For the most part, however,
franchisors have neglected to use RICO to their advantage.
II. Civil RICO: As It Stands Today
A. The Statue
The Racketeer Influenced and Corrupt Organizations Act
(RICO) became law as part of the Organized Crime Control
*Mr. Modell is a shareholder, and Mr. Hauser an associate, with Larkin,
Hoffman, Daly & Lindgren, Ltd., in Minneapolis.

Act of 1970.' Civil RICO claims have been alleged under
this Act in numerous contexts in the past two decades. A
large number of these situations involve ordinary business
disputes, in which organized crime is not involved. While
this application of the statute may go beyond its drafters'
intention,2 such use is arguably consistent with the language
of the statute, which does not restrict its use to situations
involving organized crime.
Most RICO claims are brought pursuant to section
1962(c), which prohibits the conduct of an enterprise
through a pattern of racketeering activity.' While the
statute defines the elements of a RICO claim, it is loosely
drafted and susceptible to a number of interpretations. An
enterprise means any individual, partnership, corpora-
tion, association, or other legal entity, and any union or
group of individuals associated in fact although not a legal
entity. 4 A racketeering activity is defined as including
(continued on page 27)

Charles S. Modell

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