Preliminary Injunction Granted to Enforce Noncompete Covenant

Injunction to enforce. A former home inspection business franchisee was preliminarily enjoined by a federal district court in Memphis from violating the terms of a one-year noncompete covenant in his expired agreement with a franchisor. The term of the injunction would run from the date on which the franchisor filed its complaint against the franchisee. Nearly eight months had passed between the expiration of the parties' agreement in October 2008 and the filing of the franchisor's action on June 10, 2009. Although the franchisor's delay was not sufficient to entirely defeat the franchisor's request for relief, the franchisor could not be entitled to benefit from sitting on its rights, the court ruled. The term of the one-year injunction beginning on June 10, 2009, was sufficient, but not greater than necessary, to protect the franchisor from impermissible competition from the franchisee, the court reasoned.

The balance of the equities favored the grant of the injunction. Although an injunction would be burdensome to the franchisee because the competing business was the former franchisee's chief, if not only, source of income, the franchisee freely entered into the agreement. Further, the franchisee had benefited from the relationship over the five-year term prior to its expiration, the court noted. The franchisor had a right to enforce its contracts. In attempting to enforce the franchise agreement's noncompete clause, it was only seeking the benefit of terms to which the parties had previously agreed. Any harm to the franchisee was of his own making, the court observed.