March 20, 2026|Franchise Frontlines
March 20, 2026 | United States Court of Appeals, Sixth Circuit | Published Opinion
Executive Summary
In a published decision, the Sixth Circuit affirmed a district court’s partial denial of a franchisor’s request for a preliminary injunction against more than thirty former franchisees accused of breaching their agreements and operating competing businesses. The franchisor argued that the franchisees misappropriated confidential information, infringed trademarks, and violated non-compete obligations. The franchisees countered that they were forced out of the system due to the franchisor’s conduct, including changes to its business model and operational decisions that undermined their ability to perform. The court upheld the district court’s application of the unclean hands doctrine, concluding that the franchisor’s conduct could be considered in evaluating equitable relief, and that the record supported limiting injunctive relief to trademark-related restrictions while denying broader enforcement.
Relevant Background
Fetch! Pet Care, Inc. operates a nationwide franchise system providing pet-care services. Historically, the system operated under a “1.0” model in which franchisees managed their own operations and paid royalties based on revenue. In 2018, the franchisor introduced a revised “2.0” model, which imposed higher fees but offered centralized sales and marketing support. A further “managed services” model provided more extensive franchisor involvement and was marketed as a more passive investment opportunity.
Following the introduction of these models, disputes arose between the franchisor and multiple franchisees. The franchisees alleged that the franchisor misrepresented the profitability and operational characteristics of the new models and failed to deliver promised support. Several franchisees experienced financial difficulties, and some began coordinating efforts to exit the system. As tensions escalated, the franchisor terminated access to its operational systems for certain franchisees, effectively preventing them from continuing to operate under the brand.
The franchisor then filed suit against thirty-one former franchisees, asserting claims for breach of contract, trademark infringement, misappropriation of trade secrets, and related causes of action. It sought a temporary restraining order and preliminary injunction to prevent the franchisees from operating competing businesses and using its proprietary materials. The district court granted limited relief related to trademark use but denied broader injunctive relief. The franchisor appealed.
Decision
The Sixth Circuit affirmed, focusing primarily on the district court’s application of the unclean hands doctrine. The court emphasized that a preliminary injunction is an equitable remedy that requires the moving party to demonstrate that the circumstances clearly justify such relief. In that context, courts may consider whether the party seeking relief has engaged in conduct that undermines its claim to equitable protection.
The court concluded that the district court did not abuse its discretion in determining that the franchisor’s conduct supported application of the unclean hands doctrine. The record included evidence that the franchisor aggressively marketed its newer franchise models while allegedly obscuring key operational and financial realities. Testimony from franchisees suggested that the models were presented as profitable or passive investment opportunities, while actual performance fell short of those expectations. The district court credited this testimony and found that the franchisor’s conduct could be viewed as inequitable in relation to the disputes at issue.
The court also addressed the franchisor’s decision to terminate franchisees’ access to its system. The record supported the finding that certain franchisees were cut off from operational tools while they remained current on payments and before they began operating competing businesses. The district court determined that this conduct could be viewed as a precipitating factor in the franchisees’ subsequent actions, and therefore relevant to the equitable analysis. The Sixth Circuit deferred to the district court’s credibility determinations and factual findings in this regard.
Although the court upheld the denial of broad injunctive relief, it did not reject the franchisor’s claims outright. The district court had granted limited relief prohibiting use of the franchisor’s trademarks and restricting certain communications, and the appellate court left those restrictions in place. The court also clarified aspects of the preliminary injunction standard, including rejecting the application of a heightened “clear and convincing” standard for irreparable harm and reaffirming that a plaintiff need only demonstrate that irreparable injury is likely in the absence of an injunction.
Looking Forward
This decision illustrates how equitable considerations may shape the outcome of franchise enforcement actions, particularly at the preliminary injunction stage. Courts evaluating requests for injunctive relief may look beyond the existence of contractual rights and examine the broader context in which disputes arise, including the franchisor’s conduct in developing, marketing, and administering the franchise system.
At the same time, the decision does not undermine the enforceability of franchise agreements or the availability of injunctive relief in appropriate cases. The court’s ruling was grounded in the specific factual record before it, including disputed evidence regarding how the franchisor’s newer models were presented to franchisees and how operational decisions affected their ability to perform. The continued enforcement of trademark protections in this case reflects the courts’ willingness to grant targeted relief even where broader equitable concerns are present.
For franchisors, the case underscores the importance of alignment between system development, franchise sales practices, and ongoing operational support. Representations regarding performance, structure, and support should be consistent with the realities of the system, and operational decisions—particularly those affecting franchisees’ ability to function within the system—may be scrutinized if disputes arise.
From a litigation perspective, the decision highlights that equitable defenses such as unclean hands may influence the availability and scope of preliminary relief. While such defenses are fact-specific and require a substantial evidentiary showing, they can affect how courts balance the equities between franchisors and franchisees in contested disputes. Maintaining consistency in both contractual enforcement and system-level conduct remains an important component of mitigating that risk.
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 Partner 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.
