June 03, 2026|Franchise Frontlines
June 3, 2026 | United States District Court for the Southern District of Florida | Slip Copy — Not Yet Reported (2026 WL 1664109)
Executive Summary
In a slip-copy order, Judge Rodney Smith of the United States District Court for the Southern District of Florida denied a motion for a preliminary injunction brought by franchisor King Lombardi Acquisitions, Inc. (referred to in the opinion as “VR” or “Franchisor,” the franchisor of the VR® Business Brokers system) against its former franchisee, Adam Petricoff. Applying the four-part preliminary-injunction standard and, for the covenants, Florida’s restrictive-covenant statute (Fla. Stat. § 542.335), the court addressed whether VR could obtain extraordinary relief enforcing a twenty-four-month post-expiration non-compete and related post-termination obligations after the parties’ ten-year franchise agreement expired. VR argued that Petricoff had breached his post-termination covenants, was operating a competing brokerage through other entities, and threatened its confidential and proprietary information; Petricoff argued that he had transparently and substantially complied with his obligations, had conducted no competitive activity within the restricted area, and that VR could identify no legitimate protectable business interest. On the record developed at a two-day evidentiary hearing, the court held that VR had shown neither a substantial likelihood of success on the merits, nor actual and imminent irreparable harm, nor that the balance of equities and public interest favored the injunction, and it denied the motion.
Relevant Background
On June 24, 2015, Petricoff entered into a Franchise Agreement with VR, the franchisor of the VR® Business Brokers franchise system. The agreement granted Petricoff an exclusive territory limited to his approved office site in Charlotte, North Carolina, and a three-mile driving radius around that site, and it expired on its own terms on June 23, 2025, after a full ten-year term. Article 13.1 purports to prohibit Petricoff, for twenty-four months following expiration, from being connected with a “Competitive Business” anywhere in the State of North Carolina, at or within forty miles of the former site, within the former territory, or within forty miles of any other VR® office. Article 12 imposes various post-termination obligations, including ceasing use of the VR® marks, transferring listing agreements, telephone numbers, and domain names, de-identifying the office, and dissolving the operating entity.
VR filed suit on October 31, 2025, alleging that Petricoff breached the post-termination covenants by misappropriating confidential and proprietary information, operating a competing business through entities including NXT Chapter Advisors, LLC, and interfering with VR® client relationships. VR moved for a preliminary injunction seeking, among other things, to enjoin Petricoff from operating any competitive brokerage business within the restricted area and from using any VR® information. Pursuant to a court order, the parties conducted a two-day evidentiary hearing on April 14 and 15, 2026, at which both sides presented live testimony, offered exhibits, and argued the motion.
Decision
The court began with the settled standard that a preliminary injunction is “an extraordinary and drastic remedy” requiring the movant to “clearly establish[]” each of four prerequisites: a substantial likelihood of success on the merits, a substantial threat of irreparable injury, that the threatened injury outweighs the harm to the non-movant, and that the injunction would not be adverse to the public interest, with “[f]ailure to show any of the four factors” being fatal. Because VR sought to enjoin ongoing lawful conduct and alter the status quo, the court held it bore a heightened burden. And although Florida law governed enforceability of the covenants, the court noted the movant must still demonstrate, by a preponderance of competent evidence, that a covenant protects a legitimate business interest and that its restraints are reasonably necessary, and that a court may not enforce a covenant unsupported by such an interest. On this record, the court credited Petricoff’s testimony and found the testimony of VR’s CEO, Peter King, “largely conclusory and, on material points, unsupported by or contradicted by the documentary record.”
On likelihood of success, the court found VR had not shown a likely material breach of the post-termination obligations. It found the record established that Petricoff — acting through counsel — undertook “substantial, documented, and transparent” compliance: surrendering Office 365 credentials, transferring the domain, dissolving the operating entity within the contractual thirty-day window, and producing more than 40,000 records and over 6,800 CRM contacts, with VR’s own counsel acknowledging on a recorded transition call that the information provided was “very helpful.” The court further found VR had not shown a protectable interest. Crediting the sworn declaration of VR’s longtime former Director of Operations and Training that the methods and skills taught VR franchisees were his own and “not… unique to VR,” and finding VR’s “proprietary tool kit” to be generic, industry-standard, fill-in-the-blank forms, the court applied the principle that “information that is commonly known in the industry and not unique” is not a legitimate business interest. It also found no post-expiration competitive activity within the restricted area — no revenue, no diverted client, and no use of VR’s marks — and that the entity VR emphasized, NXT Chapter Advisors, LLC, operated more than forty miles from the former office and had signed no clients and generated no revenue there.
On irreparable harm, the court held VR’s claim rested “almost entirely” on the statutory presumption under Fla. Stat. § 542.335(1)(j), which was unavailable because VR had not established the violation of an enforceable restraint in the first instance. The court found VR could identify no specific lost customer, diverted listing, dollar amount of lost revenue, or injury to goodwill, and that any such damages could be remedied with money. Most pointedly, the court held the Franchise Agreement “itself forecloses VR’s irreparable harm theory” because Section 13.1(a)(ii) fixes “liquidated damages” of “$1,000 per week” for a non-compete violation. Reasoning that VR could not “simultaneously maintain” that this sum “fully and adequately compensates it” and that the same breach is “so grave that no amount of money can remedy it,” the court found the two positions “irreconcilable” and, at a minimum, an ambiguity to be “construed against” VR as the drafter. The court added that the balance of equities and public interest did not favor an injunction that would bar Petricoff from practicing his profession “across an entire State and materially beyond” absent evidence of a violation, noting Florida’s policy against enforcing overbroad restraints. The court denied the motion.
The franchise relevance is direct rather than analogous: the dispute turns on a franchisor’s effort to enforce post-expiration and post-termination covenants in its own form Franchise Agreement against a departed franchisee, and the court’s reasoning ties the outcome to features common to franchise systems — asserted proprietary “systems” and training, brand de-identification obligations, and drafter-supplied liquidated-damages and covenant language.
Looking Forward
This is a single trial-court order, on a preliminary record, applying Florida law, and it decides only that VR did not carry its burden for extraordinary relief — it is not a merits adjudication and does not bind courts elsewhere. Still, its reasoning may inform how other courts approach franchisor covenant-enforcement motions, and it offers cautionary, defense-side lessons worth absorbing before a system finds itself in the movant’s position. The first concerns protectable interests. The court found, on this record, that VR had not shown its training and “tool kit” were anything more than generic, industry-standard material — a gap it treated as fatal to the likelihood-of-success showing. Franchisors that intend to rely on confidentiality and proprietary-system interests may wish to build the evidentiary foundation for protectability well before litigation: treating genuinely sensitive systems and data as confidential in practice, restricting and marking access, and being able to articulate what distinguishes protected material from the general knowledge and skill any operator in the field would acquire.
The second lesson is a drafting caution with wide application. Here, the franchisor’s own $1,000-per-week liquidated-damages provision supplied the court a ready basis to conclude the alleged injury was compensable in money and therefore, on this record, not irreparable, and the court read any tension in that provision against VR as drafter. A franchisor that wants to preserve an injunctive option could consider addressing that tension expressly in its form agreements — for example, by stating that covenant breaches may cause harm not fully compensable in money and that injunctive relief may be sought in addition to, rather than instead of, any liquidated sum — recognizing that a court applying its own jurisdiction’s law will ultimately decide what such language accomplishes. The order is also a reminder that ambiguities in a unilaterally drafted franchise agreement may be construed against the franchisor.
Finally, the order underscores the value of coming to court with a concrete record. The court repeatedly contrasted “generic recitations of franchise-system harm” with the absence of any identified lost customer, diverted listing, or dollar figure, and it noted that the franchisor had continued to feature the former franchisee on its own websites and had a documented history of letting other former franchisees operate independently in their former territories — conduct the court viewed as undercutting the claimed urgency. The defense-side takeaway is not a litigation script but a discipline: franchisors seeking emergency relief should be prepared to document specific, concrete post-termination breaches and actual, imminent, non-monetary harm attributable to the particular defendant, and should ensure their own conduct is consistent with the irreparable-harm story they intend to tell.
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 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. It was drafted with the assistance of an artificial intelligence system. AI systems can make mistakes, including in describing legal authority. Readers should independently confirm any legal authority before relying on it.
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