When Will Courts Issue Preliminary Injunctions to Enforce Restrictive Covenants in Franchise Agreements?
By Barbara A. Bagdon and Mary M. Kellerman
Franchise agreements almost always include covenants not to compete. Enforcement of these covenants comprises an increasing amount of litigation between former franchisees and their franchisors. Often, litigation involving restrictive covenants centers on the question of whether a court should issue a preliminary injunction to enforce the noncompete agreement, potentially forcing a former franchisee to cease operation of its business. This article will analyze recent case law regarding the enforcement of restrictive covenants in franchise agreements and identify where franchisors have succeeded and where they have failed in their attempts to obtain preliminary injunctive relief to enforce noncompete provisions in franchise agreements.