A franchisor sought an interlocutory injunction restraining former franchisees from breaching post‑termination obligations and effectively continuing operations, while the franchisees sought an injunction preventing termination of their businesses.
Applying the interlocutory injunction test, the court found a serious issue to be tried and concluded the franchisor had a strong prima facie case that the franchisees breached contractual prohibitions against common ownership and multiple franchise interests.
Both parties demonstrated potential irreparable harm, but the court held the franchisor’s harm to goodwill, reputation, and system integrity—combined with the franchisees’ inability to satisfy damages—tipped the balance of convenience.
The court emphasized the franchisor’s duty to maintain the integrity of its system under franchise legislation and the risk posed by a rogue franchisee operating contrary to contractual obligations.
