December 31, 2025|Franchise Frontlines
December 31, 2025 | U.S. District Court, Northern District of Georgia | Slip Copy
Executive Summary
In a year-end 2025 order, the U.S. District Court for the Northern District of Georgia addressed a restrictive covenant dispute arising from the sale of a business and subsequent executive employment. Plaintiffs Art Is Love Holdings, LLC and Tara Art, LLC sued their former Chief Executive Officer, alleging breach of both a purchase agreement and an employment agreement after he began advising a company operating in the commercial art space. The court held that the one-year employment non-compete was likely reasonable and enforceable under Georgia law and that plaintiffs were substantially likely to succeed in showing a breach. Nevertheless, the court denied a temporary restraining order (“TRO”) because plaintiffs failed to demonstrate actual and imminent irreparable harm. The court granted expedited discovery and set the matter for a preliminary injunction hearing.
Relevant Background
Art Is Love Holdings acquired Tara Materials, Inc. in 2022. As part of the transaction, the seller group, including defendant David Twite, executed a purchase agreement containing five-year restrictive covenants. Simultaneously, Twite entered into an employment agreement that imposed a one-year post-employment non-competition covenant covering participation in any “Restricted Business” within the United States and other geographic areas where the company conducted business and where Twite performed duties.
After his termination in May 2025, Twite formed a new venture focused on using AI tools to improve operational efficiency. Plaintiffs alleged that Twite communicated with and advised Grand Image Ltd., a company that curates and consults in the commercial art sector. Plaintiffs asserted that such activity violated both the purchase agreement and the employment agreement and sought emergency injunctive relief.
Decision
The court first evaluated whether plaintiffs demonstrated a substantial likelihood of success on the merits, beginning with the enforceability of the employment non-compete under Georgia law.
Georgia’s Restrictive Covenants Act, O.C.G.A. §§ 13-8-50 et seq., governs enforceability. The statute presumes reasonable a post-employment restriction of two years or less and applies “much less scrutiny” to covenants ancillary to the sale of a business.
The court found the one-year duration presumptively reasonable. It also upheld the nationwide geographic scope. Twite had acknowledged in his agreement that the company’s business was national in scope and that his duties were national in reach. Under O.C.G.A. § 13-8-56(2), geographic territory may include areas where the employer does business, and there was no mismatch between plaintiffs’ operations and the territorial restriction.
As to scope of prohibited activities, the covenant restricted participation in businesses that “create, commission, license, curate, manufacture, and/or consult related to art and related products,” but only to the extent Twite engaged in such lines of business or had confidential information about them during his employment. The court concluded that the restriction was sufficiently tailored and did not bar employment in “any capacity,” but only within defined business lines connected to Twite’s former role.
Turning to breach, the court determined that Twite’s admitted communications with Grand Image regarding operational improvements constituted “participation” in a Restricted Business. At the TRO stage, plaintiffs showed a substantial likelihood of success in proving breach of the employment agreement.
However, the motion failed on irreparable harm. Although loss of goodwill and customer relationships can constitute irreparable injury, plaintiffs presented no concrete evidence of lost customers, diverted opportunities, or imminent solicitation. The court held that speculation about potential harm was insufficient and that a contractual clause reciting irreparable harm did not relieve plaintiffs of their burden. As the court noted, contractual stipulations regarding injunctive relief are accorded “little to no weight” absent evidence of actual harm.
Accordingly, the court denied the TRO, granted expedited discovery, and scheduled a preliminary injunction hearing.
Looking Forward
For franchisors and brand owners, the decision offers several practical lessons.
First, courts applying Georgia law will enforce well-drafted executive non-competes, particularly where they are tied to a sale of business and where the executive held national responsibilities. Carefully drafted definitions of “Restricted Business” that tie prohibited activity to actual business lines and confidential information materially strengthen enforceability.
Second, geographic scope remains defensible when aligned with the company’s operational footprint and the executive’s actual duties. Nationwide covenants are not inherently unreasonable for national businesses.
Third—and critically—enforceability is not enough. Even where a court finds likely breach, injunctive relief requires concrete evidence of imminent irreparable harm. Generalized assertions of competitive risk or loss of goodwill will not suffice. Franchisors seeking emergency relief should be prepared with specific evidence of customer solicitation, diversion, misuse of confidential information, or threatened employee raiding.
Finally, contractual recitals of irreparable harm, while helpful for signaling intent, do not substitute for proof. Courts will independently evaluate whether the movant has carried its burden.
In sum, this case reinforces that restrictive covenants can be powerful tools in protecting brand value and confidential information, but successful enforcement—particularly on an emergency basis—requires disciplined drafting and equally disciplined evidentiary preparation.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
