IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-10508

YUMILICIOUS FRANCHISE, L.L.C., 

 Plaintiff - Appellee

v.

MATTHEW BARRIE; KELLY GLYNN; WHY NOT, L.L.C.; BRIAN GLYNN, 

 Defendants - Appellants

Appeal from the United States District Court 

for the Northern District of Texas

Before REAVLEY, JOLLY, and ELROD, Circuit Judges.

JENNIFER WALKER ELROD, Circuit Judge:

Yumilicious Franchise, L.L.C., a Texas frozen yogurt company, sued the 

defendant-appellants, franchisees based in South Carolina, after the franchise 

agreement between them soured. The franchisees responded with a

countercomplaint liberally sprinkled with counterclaims. In a series of rulings, 

the district court granted partial summary judgment in favor of Yumilicious 

and dismissed the remainder of the franchisees’ counterclaims with prejudice

for failure to state a claim under Rule 12(b)(6). Because the franchisees failed 

to plead the required elements of their statutory claims, failed to introduce 

facts suggesting non-economic injuries, failed to introduce evidence of 

fraudulent inducement, and contractually waived their right to punitive and 

United States Court of Appeals

Fifth Circuit

FILED

April 6, 2016

Lyle W. Cayce

Clerk

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consequential damages, we AFFIRM the district court’s grant of partial 

summary judgment and AFFIRM the dismissal of the franchisees’ remaining 

counterclaims.

I.

Yumilicious is a growing company that franchises frozen yogurt 

restaurants in Texas. In 2010, Matthew Barrie, Kelly Glynn, and Brian Glynn, 

the principals of Why Not, L.L.C., entered into an agreement to franchise two 

Yumilicious frozen yogurt locations in South Carolina. The franchise 

agreements bound Yumilicious and Why Not. Barrie, Kelly Glynn and Brian 

Glynn also personally guaranteed Why Not’s obligations under the franchise 

agreements.

Yumilicious filed this lawsuit against Why Not and the individual 

defendants (collectively “Why Not”) alleging Why Not breached the franchise 

agreement when it closed one of its stores without permission and failed to 

make payments for royalties and products. Why Not counterclaimed asserting 

breach of contract, fraud, fraudulent and negligent inducement, and violations 

of the Texas Deceptive Trade Practices Act, the Business Opportunity Act of 

Texas, and the Federal Trade Commission Act Disclosure Rules (the Franchise 

Rule). Why Not alleged that Yumilicious induced it to enter the franchise 

agreements by mentioning pending negotiations with national suppliers but 

that the South Carolina stores were doomed from the start because 

Yumilicious did not conclude those supply agreements. Ultimately, 

Yumilicious reached an agreement with a Texas regional supplier that would 

only ship products to South Carolina by the pallet, a quantity too large for one 

or two stores to use economically. Why Not also argued it was unable to obtain 

product from a national supplier at prices similar to the amount paid by Texas 

franchisees to the Texas regional supplier.

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The district court first dismissed Why Not’s breach of contract, negligent 

misrepresentation and fraud claims as inadequately pleaded and its Deceptive 

Trade Practices Act, Federal Trade Commission Act and Business Opportunity 

Act claims as time-barred. Yumilicious Franchise, L.L.C. v. Barrie 

(Yumilicious I), No. 3:13-cv-4841-L, 2014 WL 4055475 (N.D. Tex. Aug. 14, 

2014). Why Not amended its pleading by adding a fraudulent inducement

claim and asked for reconsideration of the time-barred claims. The district 

court concluded the statutory claims were not time barred but failed as 

inadequately pleaded. Yumilicious Franchise, L.L.C. v. Barrie (Yumilicious II), 

No. 3:13-cv-4841-L, 2015 WL 1822877 (N.D. Tex. Apr. 22, 2015). The district 

court also granted summary judgment for Yumilicious on Why Not’s 

counterclaims based on fraud, negligent misrepresentation, and fraudulent 

inducement and on its request for consequential and punitive damages and 

attorneys’ fees. Yumilicious Franchise, L.L.C. v. Barrie (Yumilicious III), No. 

3:13-cv-4841-L, 2015 WL 1856729 (N.D. Tex. Apr. 23, 2015). The district court 

sua sponte directed the parties to address whether Why Not’s remaining claims 

relating to the Franchise Disclosure Document failed as a matter of law or were 

inadequately pleaded. After briefing, the district court concluded those claims 

failed for lack of a private right of action under the Federal Trade Commission 

Act and dismissed them with prejudice. Yumilicious Franchise, L.L.C. v. Barrie 

(Yumilicious IV), No. 3:13-cv-4841-L, 2015 WL 2359504 (N.D. Tex. May 18, 

2015). The district court also found for Yumilicious on its breach of contract 

claims and ordered Why Not to pay damages. Why Not appeals the dismissal 

of its counterclaims. It does not challenge the dismissal of its contract claims

or the finding in favor of Yumilicious on Yumilicious’s breach of contract claim.

II.

We review a district court’s dismissal for failure to state a claim de novo. 

Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008). We take 

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all well-pleaded facts as true, viewing them in the light most favorable to the 

plaintiff (or here, the counterclaimant), and ask whether the pleadings contain 

“enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic 

Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility 

when the plaintiff pleads factual content that allows the court to draw the 

reasonable inference that the defendant is liable for the misconduct alleged.” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

We consider in turn each of Why Not’s claims that were dismissed under 

Rule 12(b)(6).

A.

Why Not alleged that Yumilicious’s conduct in negotiating the franchise 

agreements violated the Texas Deceptive Trade Practices Act (DTPA) and the 

Texas and South Carolina Business Opportunity Acts (BOA).1 The Texas 

Business Opportunity Act explicitly states that violations of its terms give rise 

to a deceptive trade practice claim under the DTPA but does not itself provide 

a cause of action. Tex. Bus. & Com. Code § 51.302. Therefore, the Texas BOA 

and Texas DTPA claims are properly considered a single claim under the Texas 

DTPA. Why Not, therefore, has one Texas statutory claim for violations of the 

Texas Deceptive Trade Practices Act’s ban on misrepresentation or omission.

Tex. Bus. & Com. Code §§ 17.46 (defining a deceptive trade practice), 17.50 

 

1 Why Not refers to the South Carolina Business Opportunity Act’s title in its 

countercomplaint and its briefing on appeal, but at no point does Why Not provide any 

citations to the relevant statutory provisions or to any cases applying the statutory provision. 

Any argument based on that statute, therefore, is waived and the claim is abandoned. See 

United States v. Scroggins, 599 F.3d 433, 446 (5th Cir. 2010) (“A party that asserts an 

argument on appeal, but fails to adequately brief if, is deemed to have waived it.” (quoting 

Knatt v. Hosp. Serv. Dist. No. 1, 327 F. App’x 472, 483 (5th Cir. 2009)); Fed. R. App. P. 

28(a)(8)(A) (requiring parties to brief arguments “with citations to the authorities”); Estraude 

v. Dept. of Agric., 166 F. App’x 712, 714 (5th Cir. 2006) (claim not adequately briefed is 

abandoned).

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(creating a private cause of action for a consumer injured through detrimental 

reliance on a deceptive trade practice).

The Texas DTPA makes it illegal for a seller or franchisor to “represent[] 

that goods or services have ... characteristics [or] benefits ... which they do not 

have” or to “fail[] to disclose information concerning goods or services which 

was known at the time of the transaction if such failure to disclose such 

information was intended to induce the consumer into a transaction into which 

the consumer would not have entered had the information been disclosed.” Tex. 

Bus. & Com. Code §§ 17.46(b)(5), (b)(24). In short, § 17.46(b)(5) bans 

misrepresentations made by a franchisor while § 17.46(b)(24) bans omissions 

made by a franchisor.

Why Not alleged that Yumilicious violated these provisions because: 

(1) Yumilicious failed to provide updated disclosures or an updated Franchise 

Disclosure Document (FDD)2; (2) the FDD Yumilicious did provide did not 

contain disclosures regarding approved vendors or distributors for required 

products; (3) the information disclosed by Yumilicious in the FDD 

underestimated start-up costs; and (4) the FDD included some but not all 

financial performance information previously disclosed by Yumilicious. 

Why Not also alleged that Yumilicious’s CEO made statements to Why 

Not indicating Yumilicious was preparing “to go national and supply products 

to stores outside Texas” and gave repeated assurances that Yumilicious was in 

the process of negotiating a contract with a national distributor who would 

offer fair shipping costs.

 

2 Why Not argues the FDD was not “updated” because Why Not received the document 

in May 2010 but it was dated June 8, 2008. Why Not did not suggest that any of the actual 

information in the FDD was erroneous or that Yumilicious omitted known material facts 

form the FDD. Furthermore, Why Not did not allege that it detrimentally relied on any of 

the disclosures in the FDD.

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None of Why Not’s allegations satisfy the statutory requirements for a 

private cause of action under § 17.50. To begin, Why Not must allege 

Yumilicious committed a deceptive trade practice as defined by § 17.46. Why 

Not did not allege that Yumilicious knew any details about the start-up costs,3

financial performance, or other items discussed in the FDD that it allegedly

failed to disclose. Furthermore, Why Not acknowledged that it knew 

throughout negotiations that it would have to obtain supplies from the current 

supplier in pallet-sized orders. Section 17.46(b)(24), however, “requires 

intentional omission of a material fact by a Seller for the purpose of duping the 

customer.” Sidco Prods. Mktg, Inc. v. Gulf Oil Corp., 858 F.2d 1095, 1100 (5th 

Cir. 1988) (discussing then § 17.46(b)(23) which has since been renumbered 

(24)). Because “one cannot be held liable under the DTPA for failure to disclose 

facts about which he does not know,” Why Not did not allege any illegal 

omissions. Robinson v. Preston Chrysler-Plymouth, Inc., 633 S.W.2d 500, 502 

(Tex. 1982).

Nor do the statements made by Yumilicious’s CEO constitute 

misrepresentations under § 17.46(b)(5). Yumilicious’s CEO represented that 

the company was in negotiations with a national supplier when the company’s 

conversations with Why Not took place. The parties agree that Yumilicious 

was in such negotiations at the time. The failure of those negotiations does not 

make the prior statement false. Why Not did not allege that Yumilicious 

promised to conclude an agreement with a national supplier. Without an 

affirmative misrepresentation or material omission, Why Not’s claim did not 

state a deceptive trade practice under § 17.46(b)(5).

 

3 Why Not’s complaint acknowledges that start-up costs were inflated as a result of

errors made by other parties, rather than by Yumilicious.

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Even if Yumilicious’s conduct during negotiations did constitute a 

deceptive trade practice under the Texas DTPA, Why Not would also have to 

show that: (1) Why Not is a consumer protected by the DTPA; (2) Why Not 

relied on the information provided by Yumilicious in the Franchise Disclosure 

Documents; and (3) Why Not suffered injury as a result of its reliance on the 

information. Tex. Bus. & Com. Code § 17.50. Why Not pleaded none of these 

elements required for a valid cause of action. Dismissal with prejudice was 

appropriate.

B.

Why Not also counterclaimed that Yumilicious violated the Federal 

Trade Commission’s Franchise Rule by making the same incomplete 

disclosures that are the basis of Why Not’s Texas DTPA claim. The trial court 

dismissed this counterclaim with prejudice.

The Federal Trade Commission Act (FTC Act) does not provide for 

private causes of action. Fulton v. Hecht, 580 F.2d 1243, 1248 n.2 (5th Cir. 

1978). Why Not argues that the Texas BOA incorporates the FTC Act and the 

rules promulgated by the Federal Trade Commission and that any violation of 

an FTC rule is a per se violation of the Texas Business Opportunity Act and, 

through the Texas DTPA, creates a cause of action. We disagree. The Texas 

DTPA explicitly states that “a violation of a provision of law other than this 

subchapter is not in and of itself a violation of this subchapter [unless it] is 

declared by such other law to be actionable under this subchapter.” Tex. Bus. 

& Com. Code § 17.43. The BOA explicitly states that failures to comply qualify 

as deceptive trade practices and are actionable under the Texas DTPA, Tex. 

Bus. & Com. Code § 51.302, but no provision of Texas or federal law declares 

violations of the Franchise Rule are actionable deceptive trade practices under 

the Texas DTPA. The Texas BOA and the Texas DPTA both instruct courts to 

“follow the interpretations given by the Federal Trade Commission and the 

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federal courts to Section 5(a)(1), Federal Trade Commission Act, and 16 CFR 

Part 436.” Tex. Bus. & Com. Code §§ 51.004(b), 17.46(c)(1). These directives, 

however, do not declare any violation of an FTC rule recoverable under Texas 

law. They merely instruct Texas courts to conform their interpretation of Texas 

law to the existing federal precedent to the extent that the two bodies of law 

overlap.

Because no provision of Texas law directly incorporates the requirements 

of the FTC’s Franchise Rule, Why Not can only recover for any alleged violation 

of the Franchise Rule to the extent that the alleged behavior violates some 

other provision of Texas law. We have already concluded that Why Not failed 

to plead an actionable claim under the Texas Deceptive Practices Act. Texas 

law does not allow a claim arising from the same conduct based merely on the

FTC’s rules. Therefore the district court did not err when it dismissed Why 

Not’s FTC claims based on allegedly incomplete disclosure in the FDD. Even if 

violation of the Franchise Rule were a deceptive trade practice, Why Not’s 

counterclaims would nevertheless be subject to dismissal because Why Not 

failed to plead the other elements required by § 17.50, namely status as a 

consumer, detrimental reliance, and injury.

C.

Why Not also argued that the district court erred when it dismissed Why 

Not’s claims based on the Franchise Disclosure Documents with prejudice. We 

review a district court’s denial of leave to amend for abuse of discretion. 

Schiller v. Physicians Res. Group, Inc., 342 F.3d 563, 566 (5th Cir. 2003). 

“Although leave to amend under Rule 15(a) is to be freely given, that generous 

standard is tempered by the necessary power of a district court to manage a 

case.” Id. 

Why Not stated its motion to amend in only a single sentence in its 

response to Yumilicious’s second motion to dismiss. See United States ex rel. 

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Willard v. Humana Health Plan of Texas, Inc., 336 F.3d 375, 387 (5th Cir. 

2003) (“[A] bare request in an opposition to a motion to dismiss—without any 

indication of the particular grounds on which the amendment is sought—does 

not constitute a motion with the contemplation of Rule 15(a).” (citation 

omitted) (quoting Confederate Mem’l Ass’n, Inc. v. Hines, 995 F.2d 295, 299 

(D.C. Cir. 1993)). Why Not did not include its proposed amendment, as 

required by the Northern District’s local rules, nor did it make an argument as 

to why leave to amend was appropriate. When, after more than a year of 

litigation, Why Not’s assorted claims melted down, the district court was under 

no obligation to give Why Not leave to amend its countercomplaint. Given that 

more than fifteen months elapsed between Yumilicious’s first motion to 

dismiss the countercomplaint, which should have alerted Why Not to the 

potential deficiencies in its pleadings, and the district court’s dismissal of Why 

Not’s remaining claims, the district court did not abuse its discretion in 

dismissing the remaining claims with prejudice.

III.

After the district court dismissed Why Not’s contract claims, Why Not 

reframed the claims as torts on theories of fraud, negligent misrepresentation,

and fraudulent inducement. Yumilicious obtained summary judgment in its 

favor on these tort counterclaims and on its own affirmative claims for breach 

of contract and attorney’s fees. Why Not appeals the adverse summary 

judgment on its counterclaims but does not challenge the ruling on 

Yumilicious’s affirmative case. 

We review a grant of summary judgment de novo, applying the same 

legal standards used by the district court. Apache Corp. v. W & T Offshore, Inc., 

626 F.3d 789, 793 (5th Cir. 2010). Summary judgment is proper if the 

pleadings, the discovery and disclosure materials on file, and any affidavits 

show that there is no genuine issue as to any material fact and that the movant 

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is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a), (c); Little v. 

Liquid Air Corp., 37 D.3d 1069, 1075 (5th Cir. 1994). “Where the non-moving 

party fails to establish ‘the existence of an element essential to that party’s 

case, and on which that party will bear the burden of proof at trial,’ no genuine 

issue of material can exist.” Nichols v. Enterasys Networks, Inc., 495 F.3d 185, 

188 (5th Cir. 2007) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).

A.

The district court concluded that Why Not’s tort claim of negligent 

misrepresentation failed in part because Why Not introduced no evidence that 

Yumilicious’s actions caused injury and in part because it was barred by the 

economic loss rule. In Texas, the economic loss rule “generally precludes 

recovery in tort for economic losses resulting from the failure of a party to 

perform under a contract.” Lamar Homes, Inc. v. Mid–Continent Cas. Co., 242 

S.W.3d 1, 12 (Tex. 2007). “In operation, the rule restricts contracting parties to 

contractual remedies for those economic losses associated with the 

relationship, even when the breach might reasonably be viewed as a 

consequence of a contracting party’s negligence.” Id. at 12–13. Why Not’s fraud 

and negligent misrepresentation claims are based on its franchise agreements 

with Yumilicious. As the district court concluded, “[d]efendants’ fraud and 

negligent misrepresentation claims are tied directly to the Franchise 

Agreements and arise solely from the contractual relationship between the 

parties.” Yumilicious III, 2015 WL 1856729, at *7. Therefore, the economic loss 

rule dictates that any losses Why Not suffered as a result of the franchise

agreements give rise to claims sounding in contract, not tort.

Why Not argues that Formosa Plastics Corp. v. Presidio Eng’rs and 

Contractors, Inc., exempts its claims from the economic loss rule. 960 S.W.2d 

41 (Tex. 1998) (rejecting the independent injury requirement for fraudulent 

inducement claims). This argument fails—the district court relied on the 

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economic loss rule only in relation to negligent misrepresentation claims, not 

the fraud or fraudulent inducement claims. Because “[t]he Formosa opinion’s 

rejection of the independent injury requirement in fraudulent inducement 

claims does not extend to claims for negligent misrepresentation or negligent 

inducement,” D.S.A., Inc. v. Hillsboro Ind. Sch. Dist., 973 S.W.2d 662, 663 (Tex. 

1998), the district court did not err when it granted Yumilicious summary 

judgment on Why Not’s negligent misrepresentation claim.

B.

Why Not alleged that it was fraudulently induced to enter the franchise 

agreements by Yumilicious’s CEO, who assured Why Not that Yumilicious 

could supply the South Carolina locations at prices identical to those paid by 

the Texas locations. Why Not failed to introduce any evidence of the CEO’s 

statements in the summary judgment record. To the extent these claims rely 

on Yumilicious’s statements about negotiations with a national supplier, Why 

Not has not introduced any evidence that Yumilicious made false statements 

or material omissions. “[P]leadings are not summary judgment evidence.” 

Wallace v. Tex. Tech Univ., 80 F.3d 1042, 1047 (5th Cir. 1996). Without 

affidavits, declarations, depositions testimony or some other concrete evidence 

in the record concerning the CEO’s statements or Yumilicious’s deliberate 

misstatements about negotiations with suppliers, Why Not did not create a 

triable issue of fact on its fraudulent inducement claims. Even if Why Not had 

introduced evidence showing a triable issue of fact on whether Yumilicious 

made misleading statements, the franchise agreement contains an explicit 

clause stating that “Franchisee acknowledges that it has conducted an 

independent investigation of the business venture contemplated by this 

agreement” and explicitly disclaims reliance on any express or implied 

statements about potential volume, profits or success of the business. Under 

Texas law, a statement disclaiming reliance is sufficient to waive fraud-based 

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claims. See Schlumberger Tech. Corp. v. Swanson, 959 S.W.2d 171, 181 (Tex. 

1997) (“Reliance is an element of fraud .... [A] release that ... disclaims reliance 

on representations about specific matters in dispute, can preclude a claim of 

fraudulent inducement.”).

C.

The individual counter-plaintiffs pleaded a claim for consequential and 

punitive damages. The district court granted summary judgment in 

Yumilicious’s favor based on the waiver agreements that Why Not’s principals 

signed as part of their personal guarantee contracts. The individual counterplaintiffs argue they are not bound by the waiver clause in the franchise 

agreements because they signed no documents containing any waiver.

Kelly Glynn, as a principal of Why Not, executed the franchise 

agreement that contained a section titled “XIX.K WAIVER OF PUNITIVE 

DAMAGES.” This provision explicitly waives punitive damages and limits 

each party in the agreement to “equitable relief and to recovery of any actual 

damages it sustains.” The clause is in boldface and all capital letters. It 

complies with Texas’s requirement that damages waivers be conspicuous. See

Dresser Indus., Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 511 (Tex. 1993) 

(“A term or clause is conspicuous when it is so written that a reasonable person 

against whom it is to operate ought to have noticed it. A printed heading in 

capitals ... is conspicuous.” (quoting Tex. Bus. & Com. Code § 1.201(10))). All 

of the individual counter-plaintiffs executed personal guarantees containing a 

clause in which they made “all of the covenants, representations, warranties 

and agreements of the Principals set forth in the Franchise Agreement ... 

including ... Section XIX.K.” The personal guarantee, therefore, binds the 

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individual counter-plaintiffs to the damages waiver contained in the franchise 

agreement and waives their claims for punitive and consequential damages.4

IV.

This lawsuit between a frozen yogurt maker and its former franchisee 

involves a large serving of claims and counterclaims piled precariously 

together. This saccharine swirl of counterclaims suggests that litigants, like 

fro-yo fans, should seek quality over quantity. Because Why Not failed to plead 

the required elements of its statutory claims and failed to create a triable issue 

of fact on its tort claims, we AFFIRM the district court’s judgment dismissing

Why Not’s claims and granting partial summary judgment to Yumilicious.

 

4 Why Not also argues the waiver clause does not restrict it from recovering attorneys’ 

fees but, as the district court tartly observed, Why not failed to argue an entitlement to 

attorneys’ fees under any provision of Texas Law. Yumilicious is therefore entitled to 

summary judgment on Why Not’s claim for attorneys’ fees.

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