Appellant franchisees sought review of an order from the Superior Court of Los Angeles County (California), which, in a dispute concerning the termination of the parties' franchise agreement, granted respondent franchisors' motion for a preliminary injunction to prohibit the franchisees from continuing to represent themselves as franchisees and from using franchise trademarks
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Overview
The franchisees alleged that they were fraudulently induced to enter into the agreement. The franchisors contended that the franchisees breached the agreement. The franchise agreement contained an arbitration provision that excluded disputes in which injunctive relief was sought. In the motion for a preliminary injunction, the franchisors asserted that the franchise relationship was properly terminated and that the injunction was warranted to prevent further economic harm. The court held that the trial court properly granted the injunction. The franchisors established the likelihood of prevailing on the merits by presenting evidence that the franchisees had failed to make royalty payments and to pay advertising fees. The trial court could presume irreparable injury under the circumstances, and after weighing the balance of harms, an injunction prohibiting use of the franchisors' trademark was appropriate. The unclean hands doctrine did not preclude injunctive relief because the alleged misconduct did not affect the equitable relations between the parties. Interim injunctive relief under Code Civ. Proc., § 1281.8, was an appropriate provisional remedy in connection with arbitration
Outcome
The court affirmed the trial court's order
California Business Lawyer & Corporate Lawyer, Inc. is a Corporate Defense Attorney
Overview
The franchisees alleged that they were fraudulently induced to enter into the agreement. The franchisors contended that the franchisees breached the agreement. The franchise agreement contained an arbitration provision that excluded disputes in which injunctive relief was sought. In the motion for a preliminary injunction, the franchisors asserted that the franchise relationship was properly terminated and that the injunction was warranted to prevent further economic harm. The court held that the trial court properly granted the injunction. The franchisors established the likelihood of prevailing on the merits by presenting evidence that the franchisees had failed to make royalty payments and to pay advertising fees. The trial court could presume irreparable injury under the circumstances, and after weighing the balance of harms, an injunction prohibiting use of the franchisors' trademark was appropriate. The unclean hands doctrine did not preclude injunctive relief because the alleged misconduct did not affect the equitable relations between the parties. Interim injunctive relief under Code Civ. Proc., § 1281.8, was an appropriate provisional remedy in connection with arbitration
Outcome
The court affirmed the trial court's order
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