The Franchise Memorandum

A Minnesota federal district court has enjoined a former franchisee’s use of its franchisor’s trademarks and certain proprietary products, but has refused to prevent the defendant from operating a competing business. In Novus Franchising, Inc. v. Dawson, 2012 U.S. Dist. LEXIS 103025 (D. Minn. July 25, 2012), Novus, the franchisor, terminated Dawson’s franchise rights and alleged that Dawson breached that agreement’s post-termination obligations by operating a competitive automotive glass replacement and repair business under the name of CarMike, and by using the Novus trade name, trademarks, and products in connection with the new business.

The court granted a preliminary injunction to stop Dawson from using Novus’ trademarks and products. The court declined, however, to enforce the noncompete provision which applied to “all business products and services that compete with Novus businesses,” because such a provision was deemed broader than necessary to protect Novus’ legitimate business interests. Novus did not show the court that it would suffer irreparable harm if Dawson were to operate his business without using Novus’ products or services, nor did Novus show that the balance of harms or the public interest favored enforcement.