February 18, 2026|Franchise Frontlines
February 18, 2026 | United States District Court for the District of Utah | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Ted Stewart of the United States District Court for the District of Utah denied a franchisor’s motion for preliminary injunction in a post-termination franchise dispute. Larada Sciences, Inc., doing business as Lice Clinics of America (“LCA”), sought to enjoin its former franchisee, The MIH Group, LLC, from operating competing lice treatment clinics and from using LCA’s proprietary information following expiration of the parties’ franchise agreements and interim operating period. LCA argued that the former franchisee breached non-compete and confidentiality covenants and that immediate injunctive relief was necessary to prevent irreparable harm. The court concluded that LCA failed to demonstrate irreparable harm, emphasized the significant delay in seeking relief, and found that the requested injunction would effectively grant the franchisor most of the ultimate relief sought. The motion was denied.
Relevant Background
LCA manufactures and markets lice-treatment devices, products, and services and grants franchises to independent clinics. MIH entered into a series of franchise agreements with LCA in 2014 and operated LCA-branded clinics in Michigan, Ohio, and Florida. The parties later entered into a consulting agreement and, in 2022, executed a modification agreement extending the franchise term through September 1, 2023.
After expiration of the extended term, MIH continued operating during what the agreements described as an “Interim Period.” In January 2024, MIH informed LCA that it intended to terminate several franchise agreements and continue operating its clinics under a different brand name. LCA subsequently filed suit seeking declaratory relief and specific performance, alleging breach of non-compete and confidentiality provisions. It later moved for a preliminary injunction prohibiting MIH from using LCA’s proprietary information and from competing during the pendency of the litigation.
The non-compete covenants at issue included a prohibition on operating another lice-treatment clinic during the term or any interim period, and a two-year post-expiration covenant prohibiting operation of a competing business at the former clinic premises.
Decision
The court began by reciting the familiar four-factor test for preliminary injunctions: likelihood of success on the merits, irreparable harm, balance of hardships, and public interest. The court also noted that preliminary injunctions are “extraordinary” remedies and that requests which effectively grant the movant all the relief it seeks are “specifically disfavored” and subject to closer scrutiny.
The court focused first on irreparable harm, emphasizing that it is the “single most important prerequisite” for injunctive relief. LCA asserted that MIH’s continued operation would damage goodwill, send negative signals to other franchisees, and create unfair competition. The court characterized these assertions as conclusory and unsupported by evidence. It further observed that LCA did not present evidence demonstrating ongoing misuse of proprietary information.
The court also found LCA’s delay significant. According to the record, MIH informed LCA in January 2024 of its intent to terminate and operate independently. LCA filed suit in June 2024 but did not seek preliminary injunctive relief until August 2025—nearly twenty months after it first learned of the alleged breach and almost a year after filing the action. The court explained that delay does not automatically bar injunctive relief, but it can undermine a claim of urgency and irreparable harm. LCA offered no explanation for the delay and did not identify new conduct justifying emergency relief.
In distinguishing other franchise non-compete cases in which preliminary injunctions were granted, the court noted that in those matters the franchisor moved promptly upon learning of the competitive activity. Here, the extended lapse of time weighed against a finding of immediate, irreparable injury.
Turning to likelihood of success, the court observed that the enforceability of the non-compete provisions was disputed and that MIH had raised arguments concerning LCA’s own performance. While the court did not definitively resolve those issues at this stage, it concluded that LCA’s right to relief was not “clear and unequivocal.” In any event, without a showing of irreparable harm, even a substantial likelihood of success would not warrant injunctive relief.
On the balance of hardships, the court credited MIH’s assertion that the requested injunction would effectively shut down its business operations, whereas LCA’s asserted harm was largely economic. The court also concluded that the public interest would not favor an injunction that interfered with an operating business in the absence of a clear showing of entitlement.
For these reasons, the court denied the motion.
Looking Forward
Although unpublished and fact specific, the decision underscores several practical considerations for franchisors enforcing post-termination covenants.
First, timing matters. Courts evaluating requests for preliminary injunctions often examine whether the franchisor acted promptly after learning of competitive activity. Extended delay—particularly where litigation has already been filed—may undermine assertions of immediate and irreparable harm. This does not mean that delay is dispositive in every case, but it may significantly affect the equitable analysis.
Second, conclusory assertions of goodwill damage or “negative market signals” may be insufficient without evidentiary support. Courts generally require concrete evidence of ongoing misuse of proprietary information, diversion of customers, or other non-compensable injury. Purely economic losses are often viewed as compensable through damages.
Third, requests that effectively grant all ultimate relief—such as shutting down a former franchisee’s business—may be treated as disfavored injunctions requiring heightened scrutiny. Franchisors seeking interim relief may benefit from tailoring requests narrowly and supporting them with specific factual showings.
This decision should not be read as weakening the enforceability of franchise non-compete or confidentiality provisions. Rather, it reflects the rigorous evidentiary standards courts apply when extraordinary interim relief is sought. Careful documentation of post-termination conduct, prompt action, and a well-developed record may materially affect the outcome in future enforcement efforts.
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.
