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Texas Federal Court Denies Area Franchisee’s Request for Temporary Restraining Order

Meanwhile, the Northern District of Texas has denied a request for a temporary restraining order against franchisor MMI-CPR, LLC in All Tech Repairs, Inc. v. MMI-CPR, LLC, 2019 WL 2286082 (N.D. Tex. May 5, 2019). MMI-CPR, a franchisor of cell phone and electronic device retail stores, sent a Notice of Termination of the Area Representative Agreement to All Tech Repairs. MMI-CPR wished to terminate the contract due to All Tech’s alleged failures to recruit enough franchisees and to properly support the existing franchisees within its territory. All Tech filed suit to force continued payment of royalty fees from MMI-CPR via temporary restraining order, among other claims.

The court held that All Tech did not satisfy all four elements necessary for a temporary restraining order. Specifically, All Tech did not show that it would suffer a substantial threat of immediate and irreparable harm for which it had no adequate remedy at law. Because the alleged harm was MMI-CPR’s withholding of royalties, the court found that All Tech did not lack a legal remedy. Further, the alleged harm — an inability to finance co-plaintiffs Mobile Solutions, Inc. and Mobile Solutions One, Inc., who relied on royalties from the Area Representative Agreement — was at least partially based on All Tech’s common ownership of the other companies rather than solely caused by a breach of the agreement. The court determined that this failure to carry the burden of showing irreparable harm, coupled with the fact that All Tech waited four months to file for a temporary injunction, and over two weeks to file for the temporary restraining order after MMI-CPR removed the case to federal court, was enough to deny All Tech’s request for temporary restraining order against MMI-CPR.

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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. 

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