Menu
Blog Banner Image

The Franchise Memorandum

Tenth Circuit Upholds Preliminary Injunction Against Former Franchisee

The Tenth Circuit Court of Appeals recently upheld a preliminary injunction awarded to fitness chain franchisor Core Progression, enforcing a post-termination noncompete against a former franchisee in North Carolina. Core Progression Franchise LLC v. O’Hare, 2022 WL 1741836 (10th Cir. May 31, 2022). The district court had enjoined the franchisee from operating a competing business from the site of its former franchise, albeit under a new name. The franchisee appealed.

In upholding the preliminary injunction, the Tenth Circuit concluded that Core Progression had a substantial likelihood of succeeding on the merits because the record illustrated that the franchise agreement’s noncompete was enforceable and had plainly been breached. The court also found that Core Progression would suffer irreparable harm absent an injunction because the former franchisee’s use of Core Progression’s training system and marketing, and perceived affiliation with Core Progression, was likely to cause customer confusion and damage to the brand. In addition, the former franchisee’s competition threatened Core Progression’s efforts to expand into North Carolina. The court also concluded that the franchisee’s self-inflicted harm did not outweigh the potential harm to Core Progression from a loss of its trade secrets and other damage to its brand. To conclude its analysis, the court noted that Colorado law expressly mandates that enforceable noncompete agreements further the public interest in this context.

*Andrew Biddison is a Summer Associate for Lathrop GPM who contributed to the writing of this post.

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

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

Blog Authors