Menu
Blog Banner Image

The Franchise Memorandum

Court Issues Preliminary Injunction Against Franchisees Who Failed to Follow Promotion
Posted in Terminations

A United States District Court in Colorado last week issued a preliminary injunction against Steak ‘n Shake franchisees who were terminated for failing to honor the system’s mandatory promotional programs. Steak ‘n Shake Enters., Inc. v. Globex Co., 2013 U.S. LEXIS 125330 (D. Colo. Sept. 3, 2013). Specifically, the franchisees refused to comply with the chain’s “$4 meal” menu, and a codefendant had failed to open stores required under an area development agreement. The injunction order prohibits the defendants from operating certain terminated restaurants and using the Steak ‘n Shake trademarks.

Despite ordering deidentification of the restaurants, the court did find that the franchisor was required to show that its termination was “proper” before the trademark injunction would be granted. The terminations were proper, the court held, because the former franchisees knowingly refused to adhere to the system’s maximum prices for specified menu items. That violation of the franchise agreement, along with the area developer’s failure to open the requisite number of stores, provided sufficient “likelihood of success on the merits” to support the preliminary injunction on the breach of contract and trademark infringement claims.

Email LinkedIn Twitter Facebook

The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

About this Publication

The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

To subscribe to monthly emails for The Franchise Memorandum, please click here

Topics

Archives

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors