Extending Non-Competition Injunction to Third Parties
After we obtained injunctions enforcing post-term non-competition provisions against a franchisee and its owners, a terminated franchisee teamed up with its former manager to create two new competing businesses. Since the former manager was not a signatory to the original franchise agreement, her position was that she had no connection to the former franchisee and was free to pursue business endeavors.
This is not how we saw it. Not only were the businesses being operated out of defendants’ former franchised locations — they were using the prior franchisee’s forms.
We moved to extend the injunctions to all those acting in concert with the terminated franchisee to violate the injunction, including the former general manager. We presented evidence that the former manager and the competing businesses were merely acting as conduits through which defendants were continuing to engage in competing services, in violation of the injunctions. We proved that the new entities were using assets of the former franchisee and fell within the scope of people who may be enjoined from a competing business.
The Court accepted our evidence and extended the injunctions to the former manager and the two businesses.