In The Filta Group, Inc. v. LXU, Ltd., No. 25-cv-914, 2025 WL 3718465 (M.D. Fla. Dec. 23, 2025), the United States District Court for the Middle District of Florida entered a preliminary injunction enforcing a franchise agreement’s post-termination restrictive covenants not only against the franchisee which signed the franchise agreement, but also against one of the franchisee’s employees who had not signed the franchise agreement and was not otherwise a party to any agreements with the franchisor. This is an important decision for franchisors as it clarifies against whom a franchise agreement’s post-termination restrictive covenants may be enforced.
In Filta, the franchisor and franchisee entered a franchise agreement which included post-termination restrictive covenants that, among other things, prohibited the franchisee from operating a competing business and from having any contact with previously serviced customers for a period of two years. Upon discovering multiple defaults of the franchise agreement, the franchisor served the franchisee with notices of default. After receiving the notices of default, the franchisee and its chief operating officer came up with a plan to preemptively terminate the franchise agreement and to transfer the entirety of the franchisee’s business to an entity owned by the chief operating officer. The franchisee later terminated the franchise agreement and then, a minute after terminating the franchise agreement, sent an e-mail blast to every one of its customers announcing the closure of the franchised business, but advising the customers that the franchisee had arranged for an alternative vendor to take over the services. Approximately an hour after that, the chief executive officer sent the exact same customers an e-mail advising the customers that his business would be taking over the provision of services, with the same management, employees and equipment, at a discounted rate.
Shortly after discovering that the franchisee and its chief executive officer had carried out their attempt to circumvent the franchise agreement’s post-termination restrictive covenants, the franchisor filed a motion for preliminary injunction. In response, the defendants argued that the court could not enter an injunction against the chief operating officer or his competing company because neither had signed the franchise agreement containing the non-competition provisions or any other agreements which would prohibit them from competing with the franchisor.
Following a two-day evidentiary hearing, the court entered a preliminary injunction enforcing all of the franchise agreement’s post-termination restrictive covenants against both the franchisee and the non-signatory chief operating officer and his company. The court reasoned that the franchise agreement’s post-termination restrictive covenants should be enforced against both the franchisee and its chief operations officer because they worked in “active concert” together to operate the competing business and because “to allow [the defendants] to circumvent the restrictive covenants would render the non-compete clause and non-solicitation clauses unenforceable by use of the simple expedient of performing all solicitations in the name of the corporate non-signatory.”
The franchisor was represented by Michael Joblove and Aaron Blynn.