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Ex-Franchisees Allowed to Compete, Court Rules
Minneapolis – July, 2007 -- John Holland defeated a franchisor’s efforts to put two Idaho ex-franchisees out of business by obtaining a ruling that the franchisor could not enforce the covenant not to compete against them. The Court found that, in order to be enforceable, the post-term non-competition agreement “must not be more restrictive than necessary to protect a legitimate business interest.” The Court went on to hold that, while the former franchisees could no longer use the franchisor’s trademarks and products in their independent businesses, they could not be stopped from operating their own independent repair businesses. The court refused to enforce the franchise agreement’s broad “non compete” clause, which would have put the franchisees out of business. See Novus Franchising, Inc. v. Oksendahl, 2007 WL 2084143 (D. Minn. 2007).