The Mister Softee franchise has sued Master Softee and sought a preliminary injunction against the former franchisee who was trying to use a similar name in his own non-franchised successor business after he terminated his franchise with the company. This case highlights one of the most important parts of a franchise agreement- the non-compete after your franchise relationship terminates. The franchisor wants to be sure you don’t use what you learned about its proprietary procedures and recipes to start a competing business. The scope of these non-compete varies but it is important to understand what restrictions will be imposed on you. The franchisor will act swiftly to protect its contractual rights and you’ll find yourself in court even before you open your doors.
Locally, the 7-Eleven franchise sued Rochester area former franchise owners for selling Slurpees and Big Bites deli sandwiches at a non- 7-Eleven convenience store in Brighton, New York that the family also owned. Franchisors will aggressively protect their reputation and brand. If they don’t, other investors and franchisees would not get the benefits they pay for in the franchise arrangement.
Cheaters rarely win, but a good attorney can help you minimize the financial damages if you find yourself in a similar situation. You may be able to defend or counter-claim against the franchise for breach of contract or violation of franchise laws. Most importantly, an experienced attorney can help you understand your obligations, restriction and rights under a franchise agreement.
You should seek professional legal advice both before entering and terminating a franchise agreement. There are attorneys with experience working with these agreements that practice in restaurant law, business law, franchise law and hospitality law. Armed with an understanding of your rights, restrictions and responsibilities, you can make informed business decisions and avoid potentially troubled waters.