Non-Competes & Restraints of Trade

Non-Competes

Carmen D. Caruso Law Firm has successfully resolved claims against franchisees accused of violating their in-term covenants not to compete based on their operation of other businesses. No client in that situation has lost his or her franchise.

Regarding post-termination non-competes, Carmen D. Caruso has preserved his client’s’ right to remain in business after the expiration or termination of their franchises by establishing different arguments on the facts of different cases, including:

  • That the franchisor’s breaches of the franchise agreement preclude it from enforcing the non-compete clause; or
  • That the franchisor was guilty of “selective enforcement” of its non-competes, making it inequitable to enforce the clause against our client; or that the non-compete was overbroad.
  • We have confronted systems in which the franchisor cannot demonstrate the existence of sufficient protectable interests, where the franchisees are not using the franchisor’s trademarks and receive no trade secrets or other valuable confidential information from the franchisor.
  • In representing a high school class ring distributor, we entered the case after our client had already been held in contempt for violating an injunction enforcing a post-termination non-compete by allegedly having his children conduct business in his stead.  After a federal court evidentiary hearing, the district court not only denied the contempt petition, it also vacated the underlying injunction for lack of proof.

On the franchisor side, we have overcome many of the same arguments.

  • Carmen won at an evidentiary hearing in federal court in Ohio
    to enforce a non-compete against a franchisee that was seeking to break away, who argued “selective enforcement.” We anticipated that argument and were prepared with evidence from the company president to refute it.
  • In Puerto Rico, Carmen successfully enforced a non-compete on behalf of a franchisor, refuting the ex-franchisee’s claim to have an oral agreement not to enforce it.

Restraints of Trade

Carmen has significant experience with alleged restraints of trade in violation of antitrust and related laws.

  • Carmen and his former partners successfully defended a restaurant franchisor against allegations that it unlawfully controlled the resale prices for its units (an alleged tying claim).
  • Carmen and his former partners advised a national pizza franchisor on how to structure its “spice supply” agreement to avoid becoming an unlawful tying arrangement.
  • Carmen and his former partners successfully obtained price concessions from a local franchisor that was demanding deep discounts for its company-owned stores and rebates for its franchisee’s purchases by threatening claims under the Robinson-Patman price discrimination act.
  • Carmen advising a national light bulb manufacturer if purchasing arrangements by a cooperative would violate the Robinson-Patman Act and assisted in-house counsel in negotiating more favorable, lawful arrangements.
  • Carmen successfully prosecuted a group boycott claims on behalf of an excluded supplier to national retail system.
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