Preliminary injunctions and TROs in franchise disputes

The federal four-factor test, the 14-day limit on a TRO without notice, the Lanham Act presumption, emergency arbitration, and a few state examples.

A preliminary injunction is a court order made before a case is decided that tells a party to do or stop doing something. A temporary restraining order (TRO) is a shorter, earlier version. Either side of a franchise dispute can ask for one. A franchisor may seek one to stop use of its brand after termination. A franchisee may seek one to keep operating while a termination is contested. This page describes the federal rules only in general. Your agreement, your court and a lawyer licensed in your state control what applies to you.

The federal test

In Winter v. Natural Resources Defense Council (2008) the Supreme Court said that a plaintiff seeking a preliminary injunction "must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Courts of appeals vary in how they apply it.

For registered trademarks, section 1116 of the Lanham Act adds a rebuttable presumption of irreparable harm once a plaintiff shows likelihood of success on the merits. See using the brand after termination.

Timing: TROs under Rule 65

Under Federal Rule of Civil Procedure 65(b)(2), a TRO issued without notice to the other side expires at the time the court sets, "not to exceed 14 days," unless the court extends it once for good cause for a like period or the adverse party consents to a longer extension. Filing in federal court also has a cost: the $350 statutory fee plus a $55 administrative fee, a total of $405 (the sum is our own addition of the two published figures). See going to court: costs and timing.

If the agreement requires arbitration

Many franchise agreements send disputes to arbitration, and your Item 17 row on dispute resolution shows whether yours does. The American Arbitration Association's Commercial Rules let a party needing emergency relief before the panel is formed notify the AAA and the other parties in writing. The AAA appoints an emergency arbitrator within one business day of notice, and that arbitrator sets a schedule within two business days of appointment. The arbitrator may enter an interim order if satisfied that the applicant has shown "immediate and irreparable loss or damage." That rule does not apply to cases under the Expedited Procedures. The same rules say a request to a court for interim measures is not a waiver of the right to arbitrate. See franchise arbitration clause explained.

State examples

  • Connecticut: if a franchise lease ends with the franchise, the franchisee has no right to occupy the premises as of the termination date in the notice unless granted a temporary injunction under the statute.
  • Minnesota: violations of Minn. Stat. 80C.14 can be enjoined. Irreparable harm is presumed only where the violator was required to register and did not, and a temporary injunction needs no bond (a TRO does).
  • Rhode Island, read from an archived copy (check the official text): the dealership statute treats a violation as irreparable injury for temporary injunction purposes.

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