Video Transcription

Hi, my name is Jeff Goldstein of the Goldstein Law Group. We represent franchisees on a national basis. What I wanted to do today is speak to you very briefly about a recent case regarding a termination where the franchisor has gone to court to stop the franchisee from operating. One of the requirements that the franchisor, or the party seeking a preliminary injunction, must show is that it would be irreparably harmed if the franchisee, or the other party, were not stopped by the court from operating.

This case is actually a little bit different than…a little bit of a different reverse in roles that appear in a usual case. The franchisee here went to court to stop the franchisor from terminating the franchise relationship. So the franchisee, who is the party moving to prevent the termination, was required to show irreparable harm. In other words, the franchisee had to show the court that if the court didn’t stop the franchisor from terminating it, it would have irreparable harm. Part of that is whether the party seeking an injunction would be able to be compensated by money damages after the termination, or if the court did not give the party seeking the preliminary injunction the right to continue to operate or not operate. To make matters easy in this case, the franchisee argued to the court that if the court didn’t stop the termination, it would not be able to be compensated later on by damages that it would seek against the franchisor.

In almost all these cases, the courts have found that the franchisee’s loss of his business is not an irreparable harm. It found that the franchisee could later seek damages for any injuries that it sustained. Once in a while, there’s an outlier by a court that finds that the franchisee would be irreparably harmed if the franchisor were permitted to terminate the franchisee. And there’s a recent case involving Domino’s, and I’m not picking on that particular franchisor, but in this case, the court found that the franchisee would suffer irreparable harm if he didn’t get the injunction preventing the franchisor from terminating him. In this case, the court said that the franchisee had operated for many, many years, had started when he was a deliverer of pizzas, and worked his way up to owning a store, and then worked in the store 60 hours to 90 hours a week. And the court found that the franchisee, even if he were to get damages, would not be able to be fully compensated if the franchisor took away his store.

Again, this is a unique case in two ways. One, the franchisee jumped into court before the franchisor. And number two, the court found that the franchisee would be irreparably harmed. In other words, his business could not be compensated later on for damages. This was a small victory for franchisees. It’s not one that franchisees necessarily can rely on around the country in bringing preliminary injunctions to prevent terminations, but it’s still an interesting recent case.

Thanks for joining us today, and we’ll see you on some other videos.

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