October 20, 2025|Franchise Frontlines
October 20, 2025 | U.S. District Court for the Western District of Texas | Unpublished Opinion
Executive Summary
In an unpublished opinion, Judge Xavier Rodriguez of the Western District of Texas granted in part and denied in part a temporary restraining order sought by PSP Franchising, LLC (“Pet Supplies Plus” or “PSP”) against a former franchisee operating a competing pet-supply store at the former franchise location. PSP argued that the franchisee’s continued operations violated post-termination covenants, including non-compete, confidentiality, and trademark-use restrictions. The court found PSP had a substantial likelihood of success on the merits of its breach-of-contract claim because the franchisee appeared to be operating a competing business within the restricted area and had used PSP’s marks after termination. The court granted immediate injunctive relief preventing use of PSP’s proprietary marks and customer lists and requiring return of confidential materials, but it declined to issue a broad order shutting down the franchisee’s operations. The court concluded that PSP had not, at this early stage, shown irreparable harm warranting a full operational injunction, particularly given the franchisee’s de-identification of the store and the economic impact such an order would impose.
Relevant Background
PSP entered a ten-year Franchise Agreement in 2015 with SureFed Plus, LC, granting it the right to operate a Pet Supplies Plus store in San Antonio. The Agreement provided access to the PSP System, including SOPs, confidential information, supplier networks, support materials, and a suite of registered trademarks covering PSP branding and private-label products. The Agreement included post-termination covenants prohibiting the franchisee, its owners, and guarantors from operating or participating in a pet supply business within the former territory or a defined surrounding radius for two years. It also required immediate discontinuation of PSP trademarks and return of confidential information.
The franchisee developed multiple PSP locations across Texas but eventually closed two stores and returned development rights amid sustained financial losses. The franchisee alleged that PSP’s operational audits and supply disruptions exacerbated challenges. PSP’s parent company later filed for Chapter 11 bankruptcy in late 2024, and the franchisee elected not to renew the Franchise Agreement in early 2025. PSP issued an Expiration Notice reminding the franchisee of its post-termination obligations and setting a June 2025 deadline to remove all PSP branding.
Shortly after the Franchise Agreement expired, PSP representatives visited the San Antonio location and observed that the franchisee was still operating a pet-supply store at the same site using PSP trademarks, signage, private-label products, branded décor, and customer-facing materials. Customers complained about their inability to use PSP loyalty accounts, and receipts and signage still referenced PSP branding. PSP filed suit alleging breach of the Franchise Agreement, breach of the Guaranty Agreement, and Lanham Act violations. PSP moved for emergency injunctive relief to enforce de-identification, protect confidential information, and cease competitive operations within the restricted area.
Defendants responded that they had fully de-identified by May 19, 2025; ceased use of PSP customer lists; and begun transitioning to a broader retail model centered on farm-animal feed and supplies not permitted under PSP’s System. They denied using PSP’s confidential information and argued that a shutdown would cause severe economic harm to their family-run business and its employees.
Decision
The court applied the traditional four-factor standard for preliminary injunctive relief, beginning with the likelihood-of-success inquiry. Judge Rodriguez found that PSP had a strong likelihood of prevailing on its breach-of-contract claim. The franchisee had continued operating a competing pet-supply store in the same location within the contractual restricted area following termination, which, based on the allegations and record submitted, appeared to violate the non-compete and other post-termination obligations. The court also concluded that the non-compete provisions were valid and enforceable under Michigan law, which governs the Agreement, even if the restrictions might ultimately require some narrowing.
The court separately determined that SureFed and the guarantors had likely breached obligations prohibiting continued use of PSP trademarks and confidential information. PSP provided photographs, receipts, and declarations showing use of PSP marks—including the “Pet Supplies Plus” trade dress and private-label brands—after the Agreement expired. On these issues, the court agreed that PSP was entitled to immediate injunctive relief and issued a TRO from the bench enjoining further use of the marks and any customer lists or confidential material obtained during the franchise relationship.
However, the court found PSP had not met the irreparable-harm requirement for shutting down the store entirely. Several facts weighed against emergency closure. First, Defendants had already removed PSP’s marks, discontinued private-label products, and transitioned to non-PSP inventory, reducing the likelihood of ongoing customer confusion. Second, PSP’s concerns about misuse of confidential information were speculative at this early stage; the court noted that some SOP-related materials were generic, while other information had a limited shelf life. Third, the court held that any competitive harm from continued operations appeared quantifiable through monetary damages given the decade-long record of store sales and the damages formula in the parties’ contracts. Fourth, forcing the store to close would impose significant hardship, including job losses for seventeen employees, a factor weighing against injunctive relief in franchise cases involving local operators.
The court also found that an order shutting down a now-de-identified business would not materially advance the public interest. While upholding contracts is important, the court stated that closing the store before a full hearing risked unnecessary disruption to employees, customers, and the local market. As a result, the court denied the broader injunctive relief without prejudice and set a preliminary-injunction hearing for mid-November.
Looking Forward
This ruling illustrates both the strength and the limits of emergency remedies in franchise enforcement actions. On the one hand, the court reaffirmed that franchisors remain well-positioned to enforce post-termination obligations, particularly de-identification and trademark protection. Even when the franchise relationship ends amid operational tensions or external disruptions such as franchisor bankruptcy, courts will safeguard brand identity and confidential information. PSP’s ability to secure an immediate injunction on these points reinforces the importance of clear contractual provisions and the value of robust recordkeeping when documenting post-termination breaches.
On the other hand, the decision reflects a practical judicial approach to non-compete enforcement at the TRO stage. Courts may find that a franchisor is likely to succeed on the merits, yet still decline to shut down a former franchisee’s business before a fuller evidentiary hearing if the store has been de-identified, if claimed harms are quantifiable, or if a shutdown would inflict disproportionate hardship. For franchisors, this underscores the importance of timing and strategy when seeking injunctive relief. Rapid-action protocols—such as immediate brand takedown inspections, documentation of competitive operations, and focused evidence of irreparable harm—may be critical in achieving early closure of competing locations.
The case also highlights how courts assess the ongoing value and potential misuse of confidential information. Where a franchisee’s new business model diverges from the franchisor’s system or relies on product categories outside the franchised concept, claims of ongoing competitive misuse may receive heightened scrutiny. Maintaining clear confidentiality definitions, ensuring consistent distribution of SOPs and proprietary materials, and documenting how those materials provide system-level competitive advantages can help franchisors reinforce the necessity of post-termination restrictions.
As the matter proceeds to a preliminary-injunction hearing, franchisors can draw from this decision a reminder that strong contract language, thorough factual records, and careful attention to equitable factors remain essential tools for protecting brand standards, system goodwill, and territorial integrity when franchise relationships end.
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 APC 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.
