May 18, 2026|Franchise Frontlines
March 18, 2026 | United States District Court for the Western District of Texas | Unpublished Order
Executive Summary
In an unpublished order, Judge Xavier Rodriguez of the United States District Court for the Western District of Texas granted in part and denied in part franchisor PSP Franchising, LLC’s motion for a preliminary injunction against former franchisee SureFed Plus, LC and several guarantors following the expiration of a Pet Supplies Plus franchise agreement. PSP argued that defendants violated their post-termination obligations by continuing to operate a competing pet supply store at the former franchise location, using PSP’s proprietary marks, retaining confidential information, and interfering with PSP’s goodwill and refranchising efforts in the San Antonio market. Defendants argued that the store had been de-identified, that PSP’s alleged harms were speculative or compensable through damages, and that an injunction closing the business would impose substantial hardship. The court found that PSP had a high likelihood of success on its breach-of-contract claim, and it left in place injunctive relief barring defendants from using PSP’s proprietary marks and customer lists. But the court declined, on the record presented, to enjoin defendants from operating the competing store, holding that PSP had not shown a likelihood of imminent, irreparable harm. The ruling was expressly limited to preliminary relief and denied the broader injunction without prejudice to re-urging at summary judgment or trial.
Relevant Background
PSP Franchising, LLC franchises Pet Supplies Plus stores, a specialty pet food and supply concept with hundreds of locations across the United States. Its franchise system includes federally registered trademarks, proprietary products, supplier networks, store-design specifications, merchandising systems, marketing practices, inventory systems, customer-service practices, and standard operating procedures. PSP alleged that those materials and practices form part of a confidential franchise system developed over decades of franchising and operating pet supply stores.
In April 2015, PSP and SureFed entered into a ten-year franchise agreement for a Pet Supplies Plus store on Babcock Road in San Antonio, Texas. The individual guarantors agreed to be jointly and severally bound to the franchise agreement’s terms. SureFed later entered into a separate franchise agreement for an Austin location, but the San Antonio agreement drove the preliminary injunction dispute.
The San Antonio franchise agreement granted SureFed the right to operate a Pet Supplies Plus store under PSP’s system and to use PSP’s marks and confidential information. In exchange, SureFed and the guarantors agreed to post-termination restrictions, including a two-year covenant barring them from owning, operating, or having an interest in a competing business at the former location, within the protected territory, or within specified distances from PSP territories. The agreement also prohibited solicitation of the store’s customers, competitive contact with PSP suppliers or vendors, and employment of certain PSP-affiliated personnel. The agreement included language stating that breach of the noncompetition provisions would cause irreparable harm and that PSP would have no adequate remedy at law.
In March 2025, SureFed informed PSP that it did not intend to renew the San Antonio franchise agreement. Defendants contended that the franchise relationship had involved operational difficulties, including disputed audits, product-supply issues, financial underperformance, and challenges allegedly exacerbated by PSP’s parent company’s bankruptcy. After discussions about a possible sale or transition did not lead to an agreement, PSP issued an expiration notice stating that the agreement would expire on May 8, 2025. The notice reminded defendants of their post-termination covenants, required de-identification, and directed SureFed to stop using PSP’s proprietary marks.
Shortly after expiration, a PSP representative visited the San Antonio store and observed that defendants continued to operate a pet supply store at the former franchise location. According to PSP, the store still displayed the Pet Supplies Plus sign, used PSP-branded materials, sold PSP private-label products, and presented customers with materials indicating the store was undergoing a “makeover.” PSP also asserted that the store contained operational issues, including empty product displays and dead fish in aquariums, and that customers expressed confusion or frustration about the store’s status and loyalty-program benefits.
PSP filed suit for breach of contract and trademark infringement and moved for emergency injunctive relief. At an initial hearing, defendants represented that the store had been de-identified and no longer used PSP’s marks, branded materials, or private-label products. The court entered partial injunctive relief from the bench, barring defendants from using PSP’s proprietary marks and customer lists and requiring return of certain confidential materials. The court later held an evidentiary hearing on PSP’s request for broader preliminary relief that would stop defendants from operating the competing business at the Babcock location.
Decision
The court first held that PSP had a high likelihood of success on the merits of its breach-of-contract claim. Defendants continued to operate a pet supply store at the former franchise location after expiration of the franchise agreement, despite post-termination noncompetition obligations. The court noted evidence that the competing business generated approximately 95% of its revenue from pet supplies, notwithstanding earlier representations that defendants intended to transition toward farm animal supplies. The court also observed that the competing business may have violated the noncompete by borrowing employees from SureFed’s Austin Pet Supplies Plus location.
That merits finding is important. The court did not suggest that the franchise agreement was unenforceable, that PSP’s post-termination covenants lacked value, or that defendants had a right to disregard their contractual obligations. To the contrary, the court found PSP highly likely to prevail on breach. The limiting issue was whether PSP had established the additional requirements for the extraordinary remedy of preliminary injunctive relief.
The court then examined irreparable harm. It rejected the proposition that the franchise agreement’s irreparable-harm clause, standing alone, satisfied PSP’s burden. Although the parties had agreed that breach of the noncompete would cause irreparable harm, the court held that such stipulations do not, by themselves, prove irreparable harm for purposes of preliminary relief. The court also declined to adopt a per se rule that breach of a franchise noncompete automatically establishes irreparable injury. Instead, it required PSP to show actual evidence of likely, imminent, non-compensable harm in the specific circumstances of the case.
The court considered PSP’s argument that defendants’ access to PSP’s confidential information, including through the still-operating Austin franchise, gave defendants an unfair competitive advantage in San Antonio. The court found the theory underdeveloped on the record presented. It reasoned that even if SureFed had opened a competing store outside the restricted area, SureFed would still have had access to certain PSP materials through the Austin franchise. The court also found that PSP had not shown that defendants relied on PSP’s confidential information to plan events and promotions at the Babcock store, particularly where PSP acknowledged that some promotional strategies were not unique to its system. The court further noted that PSP had not terminated the Austin franchise, despite contractual rights it argued could allow termination based on SureFed’s San Antonio breach.
The court next addressed customer confusion, brand harm, and reputational injury. It recognized that injury to goodwill may support irreparable harm in appropriate circumstances, but found PSP’s proof insufficient to justify closing the business at the preliminary stage. The court treated confusion before de-identification as relevant to causation and damages rather than ongoing emergency relief. After de-identification, the court found that customer reviews and calls showed some awareness that the store was operating as “Pets Plus,” not Pet Supplies Plus. The court also noted that PSP did not allege that the name “Pets Plus” infringed PSP’s marks. In the court’s view, defendants’ messaging about continuity—same location, staff, and management—did not necessarily amount to misrepresentation because those elements of continuity were factually accurate.
The court also rejected PSP’s showing on lost sales and franchise-development harm as insufficient to establish irreparable injury. Lost sales, the court reasoned, generally constitute economic harm, and PSP had access to customer and sales data that could support a damages analysis. The court also found the future-franchisee theory too speculative. PSP pointed to an existing franchisee with rights to develop additional San Antonio stores, but that franchisee had signed its development agreement while SureFed was still operating the Babcock store as a PSP franchise, and the development-area documents excluded the Babcock location. The court concluded that PSP’s request appeared to focus in part on access to attractive real estate rather than preventing an irreparable injury that could not be addressed through damages.
PSP also argued that defendants might be unable to satisfy a monetary judgment. The court found that argument insufficient because PSP had not shown that the individual guarantors, who had agreed to joint and several liability, would be unable to pay an eventual damages award. Without that evidence, the court would not treat collectability concerns as a basis for broader preliminary injunctive relief.
Finally, the court emphasized that equitable relief must serve a remedial purpose, not a punitive or deterrent function. PSP argued that anything short of an injunction would reward deliberate breach and encourage other franchisees to ignore noncompetes. The court acknowledged that PSP was likely to succeed on the merits, but reasoned that defendants still faced potential damages, attorneys’ fees, and contractual consequences. The court held that preliminary injunctive relief should prevent irreparable harm, not punish a likely breach.
The balance of hardships and public interest also weighed against a broader injunction. The court found that shutting down the competing business would impose substantial injury on defendants, close a local business, and cost employees their jobs. Because PSP had not shown likely irreparable harm, those hardships weighed against the requested broader injunction.
The court therefore granted PSP’s motion only in part. Defendants remained enjoined at the San Antonio location from using PSP’s proprietary marks and from using customer lists prepared or maintained while the franchise and guaranty agreements were in effect. The court otherwise denied PSP’s preliminary injunction request without prejudice to re-urging the issues at summary judgment or trial.
Looking Forward
This decision should not be read as a refusal to enforce franchise post-termination obligations. The court found that PSP had a high likelihood of success on its breach-of-contract claim and left in place relief protecting PSP’s marks and customer lists. The court’s narrower holding was that, on the specific preliminary-injunction record, PSP had not shown enough likely irreparable harm to justify closing the former franchise location before summary judgment or trial.
For franchisors, that distinction matters. A strong noncompetition covenant and a strong merits case may not be enough for emergency relief if the record does not show imminent harm that damages cannot address. Courts may look beyond contractual irreparable-harm language and ask what evidence shows actual confusion, actual misuse of confidential information, non-compensable loss of goodwill, inability to calculate damages, or genuine risk that defendants cannot satisfy a judgment.
The decision reinforces the value of building the evidentiary record early. Franchisors seeking to enforce post-termination covenants should document the timing and completeness of de-identification, customer confusion, continued use of marks, use of customer data, solicitation of customers or vendors, employee transfers, supplier communications, and any operational problems that customers may associate with the brand. General concerns about goodwill may carry less weight than specific evidence connecting the former franchisee’s conduct to harm that cannot be measured or repaired later.
The confidential-information discussion also offers a practical lesson. Franchise systems often rely on operating manuals, marketing plans, supplier information, pricing strategies, customer data, and field-support materials. But a court may require evidence that the former franchisee actually used those materials in the competing business, particularly where some practices are common in the industry. Franchisors should consider how they can prove access, retention, use, and competitive effect rather than relying only on the existence of confidential materials.
The case also illustrates how ongoing relationships with the same operator can complicate an irreparable-harm argument. PSP continued to have a separate Austin franchise relationship with SureFed while arguing that SureFed’s access to PSP information created unfair competition in San Antonio. That fact-specific circumstance gave the court a reason to question causation and urgency. Franchisors managing multi-unit operators should coordinate enforcement strategy across locations and consider whether continued access to system materials at one location may affect arguments about misuse at another.
The customer-confusion analysis underscores the importance of immediate and complete de-identification. PSP obtained relief protecting its marks and customer lists, but the broader request became more difficult after defendants represented that the store had de-identified. Franchisors should move quickly when marks, signage, private-label products, loyalty programs, websites, social media, receipts, or in-store materials create confusion. The longer the dispute shifts from trademark misuse to operation of a de-identified competing business, the more likely a court may focus on damages, market impact, and evidentiary proof of non-compensable harm.
The court’s lost-sales discussion also provides guidance. Franchise agreements often include damages formulas tied to royalties, advertising fees, gross sales, or other measurable economic inputs. Those provisions remain important, but they may also affect the irreparable-harm analysis. Where a court believes lost sales, lost royalties, or lost customers can be calculated through system data, it may hesitate to grant emergency relief absent additional evidence of reputational injury, market disruption, or unquantifiable harm.
The ruling further shows that courts may scrutinize requests to close an operating local business. Even when a franchisor shows likely breach, an injunction that shuts down a business, eliminates jobs, or ends the operator’s income stream may require a particularly strong showing of irreparable harm. Franchisors should be prepared to address the equities directly, including why narrower relief, damages, de-identification, preservation orders, or expedited merits proceedings would not adequately protect the system.
This case also provides a useful reminder about remedy framing. Courts may resist arguments that preliminary relief is necessary to punish breach or send a deterrent message to other franchisees. Franchisors can better position their requests by tying the injunction to concrete protective purposes: preventing ongoing confusion, protecting confidential information, preserving customer relationships, preventing misuse of marks, or maintaining the integrity of a defined development territory.
Taken together, PSP Franchising is a cautionary but useful decision for franchisors. It confirms that courts may recognize a likely breach of post-termination obligations while still requiring a developed, fact-specific showing before ordering the extraordinary remedy of closing a former franchisee’s competing business. For franchisors, the lesson is not to retreat from enforcement. The lesson is to match strong contract language with strong evidence, move quickly on de-identification and confidential information, and present irreparable harm in concrete operational terms that a court can distinguish from ordinary economic loss.
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.
