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Restrictive Covenants Franchise Agreements

Lathrop GPM

Michigan Federal Court Grants Franchisor’s Motion for Preliminary Injunction Against Former Restoration Service Franchisee

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A federal court in Michigan has granted a franchisor’s motion for preliminary injunction against former franchisees for violating the franchise agreements’ post-termination noncompete provisions. 1-800 Water Damage Int’l LLC...more

Polsinelli

Impact of the Texas Federal Judge Partially Blocking FTC Ban on Non-Competes for Franchisors and Franchisees

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As reported on July 3 by the Polsinelli Labor & Employment practice group alert, by order dated July 3, 2024 the Northern District of Texas granted a preliminary injunction preventing the Federal Trade Commission (FTC) from...more

Lathrop GPM

New Jersey Federal Court Partially Enforces Noncompete Covenant Against Former Franchisee

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A federal court in New Jersey recently granted a franchisor’s motion for a preliminary injunction, enjoining the former franchisee from using the franchisor’s marks and violating the franchise agreement’s noncompete clause,...more

Akerman LLP

New FTC Rule Spares Non-Compete Clauses That Bind Franchisees, But Bans Most “Worker” Non-Compete Clauses

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On April 23, 2024, the Federal Trade Commission (FTC) voted to issue a Non-Compete Clause Rule that would ban most non-compete clauses in agreements between businesses and their “workers.” The final rule will take effect 120...more

UB Greensfelder LLP

FTC Issues Rule Prohibiting Non-Competes

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On April 23, 2034, the Federal Trade Commission (FTC) issued a final rule intended to ban the use and enforcement of most non-compete clauses signed by workers. The new rule is not in effect yet. It will become...more

Foley & Lardner LLP

LeTip World Franchise LLC v. Long Island Social Media Group LLC

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In LeTip World Franchise LLC v. Long Island Social Media Group LLC, the U.S. District of Court for the District of Arizona granted a temporary restraining order in favor of a franchisor, LeTip World Franchise LLC (“LeTip”)...more

Lewitt Hackman

Franchisor 101: Getting Away With Tax (Franchisor) Evasion

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A Pennsylvania federal court refused to enforce non-competition and non-solicitation covenants in a franchise agreement of a nationwide tax preparation service franchisor. The court dismissed the franchisor’s request for...more

Troutman Pepper

Seventh Circuit Revives McDonald's Employee No-Poach Litigation

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In June of 2022, McDonald’s obtained a judgment on the pleadings, ending antitrust litigation challenging the legality of the no-hire restraints it previously included in its franchise agreements. More than a year later, the...more

Lathrop GPM

Minnesota Prohibits Certain Restrictive Covenants in Franchise Agreements

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Reflecting a shifting national landscape on restrictive covenants, the Minnesota Legislature recently adopted legislation that prohibits franchisors from placing certain nonsolicitation and no-poach restrictions in franchise...more

Lewitt Hackman

Franchisee 101: Court Taxes Franchisor’s Restrictive Covenants

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The Second Circuit Court of Appeals affirmed a district court’s order denying a franchisor’s request for preliminary injunction against a terminated franchisee to enforce covenants not to compete or solicit former clients....more

Lewitt Hackman

Franchisor 101: Court Hits Brakes on Former Franchisees

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An Ohio appellate court upheld the state trial court’s decision to grant a permanent injunction against two former franchisees of an auto body shop franchise working for a competitor in violation of the franchise agreement’s...more

ArentFox Schiff

FTC Contemplates Banning Non-Compete Covenants in Franchise Agreements

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On January 5, 2023, the Federal Trade Commission (FTC) published a proposed rule that, with limited exceptions, would both ban post-termination non-compete covenants in employment agreements and require rescission of existing...more

Kilpatrick

Class Action | Eleventh Circuit Reinstates No Hire Antitrust Claims Against Burger King

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Partner Jay Bogan recently discussed the Eleventh Circuit Reinstating No Hire Antitrust Claims Against Burger King....more

BakerHostetler

Decision Benefits Franchise Businesses and Finds Alston Bars Challenge to No-Poach Agreements

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In June 2021, the Supreme Court reaffirmed in NCAA v. Alston that antitrust claims under Section 1 of the Sherman Act “presumptively” call for rule-of-reason analysis and that only the rare case merits “quick look” or per se...more

BakerHostetler

Continued Antitrust Focus on the Labor Market in the Wake of NCAA v. Alston

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Almost one year has passed since the Supreme Court’s unanimous antitrust decision in NCAA v. Alston. That well-publicized decision affirmed the District Court’s rejection of the NCAA’s limits on education-related compensation...more

Lewitt Hackman

Franchisor 101: Competing With a Non-Compete Covenant?

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A federal court in Louisiana granted a preliminary injunction against a former franchisee of Liberty Tax Service for breaching post-termination covenants under a franchise agreement. Liberty Tax entered into franchise...more

Constangy, Brooks, Smith & Prophete, LLP

Antitrust In The Labor Market

That which is old is new again. The U.S. Department of Justice and plaintiffs’ lawyers are taking aim at non-solicitation agreements restricting mobility of labor. This isn’t something employers usually think about. ...more

Lewitt Hackman

Franchisor 101: Taking the Red Pill on Non-Competes

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Franchisors and franchisees in California have long conducted themselves based on precedent that voids post-termination covenants against competition in a franchise agreement in California. Recently, a franchisor’s ability to...more

Littler

Revisiting Restrictive Covenants in a Commercial Setting: The California Supreme Court Applies a Less Aggressive Approach

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California is known for having the most aggressive approach among the states regarding restraints on profession, trade, and business. Specifically, California Business and Professions Code section 16600 codifies this...more

Lewitt Hackman

Franchisee 101: Successor Slips Out of Non-Compete

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A Florida federal court granted a preliminary injunction against a terminated franchisee. The court enjoined the ex-franchisee from using the franchisor’s trademarks and trade dress. The court enforced the franchisor’s...more

Lewitt Hackman

Franchisor 101: Open Season for Poaching in Washington

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Washington State’s Attorney General settled a case against sandwich franchisor, Jersey Mike’s, over antipoaching provisions in its franchise agreements. Since 2018, Washington State has made agreements with more than 60...more

Fox Rothschild LLP

Just Signed! New Washington State Law Limits Use Of Non-Competes And No-Poach Agreements

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Yesterday, Washington’s Governor, Jay Inslee signed HB1450 [PDF] which targets the use of restrictive covenants in the State of Washington (the “Non-Compete Act”). The signing of the Non-Compete Act follows the recent...more

Troutman Pepper

Fast-Food Chains Agree to End Franchise No-Poach Restrictions

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In order to avoid a lawsuit by the Washington State Attorney General, seven fast-food chains with store locations nationwide agreed to no longer enforce “no-poach/no-hire” provisions in their franchise agreements and to...more

Seyfarth Shaw LLP

Seven Fast Food Franchisors Agree To Stop Using “No Poach” Agreements Just Days After Announcement of State Attorney General...

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We reported last week that the attorneys generals of ten states are investigating several fast food franchisors for their use of so-called “no poach” provisions in their franchise agreements. ...more

Lewitt Hackman

Tax Franchisee Terminated For Sharing Space With CannaBiz

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In Devore v. H&R Block, the franchisor H&R Block was found to have lawfully terminated a franchisee for violating an in-term non-compete covenant, because the franchisee permitted its office manager and prior operator of the...more

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