Facts

Plaintiff Flip Flop Shops Franchise Company LLC is a franchisor of retail stores that in its role as franchisor, provides certain proprietary information that is necessary for franchisees to successfully own and operate a Flip Flop Shops franchise.

Flip Flop Shops filed suit against former Flip Flop Shops franchisees, defendants Amy Neb, Chad Neb, Swagger LLC, Kings X, LLC, and Polu Lani LLC, relating to their franchise agreements.

PLAINTIFFS' CONTENTIONS: Plaintiffs asserted claims of various breaches of the franchise agreements and filed motions for preliminary and permanent injunctive relief.

On March 31, 2017, plaintiffs and defendants stipulated to the voluntary dismissal without prejudice of plaintiffs' first, second, third, fourth, fifth, sixth, ninth, tenth, and eleventh claims for relief in the second amended complaint. On the same date, the court approved the stipulation, leaving only plaintiffs' seventh claim for relief for breach of the royalty and brand contribution provisions of the franchise agreements and eighth claim of relief for breach of the non-compete provision of the franchise agreements. In its motion for partial summary judgment, plaintiffs moved for summary judgment on the two remaining claims for relief.

DEFENDANTS' CONTENTIONS: Defendants denied the allegations.

Result

The court granted Flip Flop Shops' motion, permanently enjoining one of its former franchisees from both holding over after the franchise was terminated, and from operating a competing chain of similar stores. The court ordered defendants and its officers, agents, servants, employees, and attorneys permanently restrained and enjoined from operating the terminated stores, and from using plaintiffs' proprietary system, confidential information and marks. Defendants were also ordered to comply with the Non-Competition Provision required of defendants under the franchise agreements.

Other Information

The court awarded Flip Flop Shops damages for the franchisee's violation of a non-competition covenant with 18 percent interest, plus reasonable attorney fees and costs incurred by Flip Flop Shops in obtaining the injunctive relief.