Franchisors will often include non-compete provisions in their Franchise Agreements to protect their ability to sell new franchises in a geographic region that was formerly served by a terminated franchisee. A party seeking to enforce a non-compete agreement must plead and prove the existence of one or more legitimate business interests justifying the non-compete covenant and that the restriction is reasonably necessary to protect those legitimate business interests. Fla. Stat. § 542335(1)(b) and (c). Legitimate business interests under section 542.335(1)(b) include, among other things, client goodwill associated with a specific geographic location or specific marketing or trade area. Peter Mavrick is a Miami business litigation lawyer who has substantial experience with non-compete litigation, including injunction proceedings.
An example of this circumstance is the case of Peterbrooke Franchising of America, LLC v. Miami Chocolates, LLC, et al, 312 F.Supp.3d 1325 (S.D. Fla. 2018), where Peterbrooke Franchising of America, LLC (hereinafter “PFA”) was assigned a franchise agreement with Miami Chocolates, LLC (“Miami Chocolates”) and its owners (the “Franchise Agreement”). The Franchise Agreement contained a non-compete provision that prohibits a former franchisee from operating a competing business within twenty-five miles of its former location or at other franchise locations for two years. During the term of the Franchise Agreement, Miami Chocolates refused PFA’s requirement to change its point-of-sale system (used to record all sales). PFA terminated the Franchise Agreement. Miami Chocolates continued operating after the termination. The parties disputed whether Miami Chocolates took sufficient measures to disassociate itself from PFA and its trademarks. It was undisputed, however, that Miami Chocolates operated a competing business at the former franchise location after termination of the Franchise Agreement.
PFA filed a lawsuit against Miami Chocolates and its owners (the “former franchisees”). PFA moved for summary judgment, in part, based on its contention that the former franchisees breached the non-compete provision. Section 542.335(1)(c) states that “[i]f a person seeking enforcement of the restrictive covenant establishes prima facie that the restraint is reasonably necessary, the person opposing enforcement has the burden of establishing that the contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the established legitimate business interest or interests.”