The Franchise Memorandum

Continuing our yearlong series of retrospective articles looking back at the ten cases we identified as the most significant franchise decisions summarized in the first 100 issues of The GPMemorandum, this article will examine the impact of the Eleventh Circuit Court of Appeals’ decision in McDonald’s v. Robertson (1998). That decision was significant not for its result—the court upheld the trial court’s entry of post-termination injunctive relief for the franchisor—but for the type of proof the franchisor was required to present in order to obtain the relief. The Robertson court on appeal held that post-termination injunctive relief is appropriate only when a franchisor presents a strong showing that the underlying termination was lawful. While the court agreed with McDonald’s that the franchisor’s alleged subjective motive in terminating the franchisee was irrelevant, it held that the franchisor was required to show that it had complied with the franchise agreement in making the termination decision.

The Robertson decision certainly has not stopped franchisors from obtaining injunctive relief, though it continues to be cited both by franchisors seeking injunctions and franchisees opposing them. Accordingly, in the past four years, The GPMemorandum has reported numerous decisions granting injunctions to enforce franchisees’ post-termination obligations. Those subsequent cases, however, have not included much discussion of the concerns raised by the Robertson court. One conclusion to be drawn is that franchisors and their counsel have become increasingly aware of the need to make a strong showing of likelihood of success on the merits, so they have ensured that the termination has tracked the contract closely. Realizing that courts will not issue injunctive relief without some evidence that the parties’ franchise agreement has been terminated according to its terms, franchisors and their counsel also may be less willing to seek injunctions in cases in which the underlying termination is doubtful.