Affirming a preliminary injunction reported in Issue 144 of The GPMemorandum, the United States Court of Appeals for the Seventh Circuit has found that a five-unit Steak N Shake franchisee would suffer “irreparable harm” if terminated for failing to comply with new policies governing pricing. Stuller, Inc. v. Steak N Shake Enterprises, Inc., 2012 U.S. App. LEXIS 17921 (7th Cir. August 24, 2012). The court based its ruling on evidence submitted by the franchisee that the pricing policy “would be a significant change to its business model and it would negatively affect its revenue, possibly even to a considerable extent.” Given that prospect, the court agreed with the district court that the franchisee’s failure to follow the new policy would not cause “self-inflicted” harm. The court noted that the franchisee’s subsequent victory on summary judgment on July 12, 2012, as summarized in our last issue of The GPMemorandum, also supported affirmance of the preliminary injunction, because that ruling increased the plaintiff’s ultimate likelihood of success on the merits of the case.
The Franchise Memorandum