May 2013

FSRM Secures Restraining Order in Dispute with Franchisee

United States - Colorado

FSRM, Inc. secured a temporary restraining order in Denver District Court in a dispute with a franchisee. The order prevented the franchisee's sale of four Fantastic Sams salons and required the franchisee to comply with the franchisees' agreements with Fantastic Sams pending resolution of the case. Faegre Baker Daniels represented FSRM, and FaegreBD partner, Heather Carson Perkins, served as lead trial counsel on the case.

FSRM is the regional subfranchisor of the Fantastic Sams brand and franchise system. Franchisees sought to evade the provisions of post-termination covenants not to compete in two franchise agreements and in-term covenants in the other two agreements by selling two of the salons to their son and his new wife, who intended to de-identify the two salons, while the franchisees intended to continue to operate the remaining two salons through the end of those franchise agreements.

The temporary restraining order prevented the consummation of the proposed sale and expedited discovery ahead of a preliminary injunction hearing. Shortly before the depositions were to begin, defendants and their children (who by now had retained separate counsel) agreed to stipulate to a preliminary injunction prohibiting the consummation of the sale and requiring adherence to all terms in the franchise agreements pending outcome on the merits of the litigation.

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