1. The court ruling in Florida strengthens the chances of franchisors winning non-compete disputes against franchisees.
2. In the case of Peterbrooke Franchising of America, LLC v. Miami Chocolates, LLC et al., the judge held that a franchised retail chocolate store had an enforceable non-compete against a former franchisee who started a competing chocolate store.
3. Important issues regarding the enforceability of non-competes in the franchisor-franchisee context were left open and should be considered by franchisees challenging a non-compete in the future. 1. The franchise agreement between Peterbrooke and Miami Chocolates included a non-compete provision with a 25-mile radius.
2. Peterbrooke terminated the franchise agreement in late 2015, and Miami Chocolates continued to operate as a retail chocolate store in the same location.
3. Peterbrooke sued to enforce the 2-year non-compete provision.
4. Miami Chocolates argued that the non-compete provision was unenforceable because it was not supported by any legitimate business interest.
5. Florida Statute § 542.335 requires the enforcing party to demonstrate the existence of one or more legitimate business interests for a non-compete to be enforceable. 1. The court ruling made it more difficult for franchisees to challenge non-compete provisions in Florida by affirming a franchisor’s legitimate business interest in protecting a specific market’s appeal.
2. Former franchisees should investigate whether the franchisor has immediate plans to re-enter the market when defending themselves in a non-compete dispute.
3. If a former franchisee can show that the franchisor does not have legitimate and immediate plans to re-enter the market, it may weaken the franchisor’s argument for enforcing the non-compete provision. – Franchisors should remember that they may have additional legitimate business interests in non-compete disputes, such as relationships with current and prospective customers.
– The term “legitimate business interests” is not limited to those items enumerated by Florida Statute § 542.335, and the enforcing party can get creative in their arguments.
– Cantrell Astbury Kranz, P.A. is a litigation boutique that focuses on non-compete and unfair competition disputes, employment law, and business disputes throughout Florida and Georgia.
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