Impairment of Franchise Rights Warrant the Issuance of an Injunction

By Fredrick P. Niemann, Esq. of Hanlon Niemann, a Freehold, NJ Franchise Law Attorney

The impairment of franchise rights has been found to constitute irreparable harm in the federal and state courts justifying the imposition of an injunction.

In one NJ federal district court case, a preliminary injunction requested an injunction case asserting antitrust violations and breach of a distributorship contract. The court held that ”the loss of business and good will, and the threatened loss of the enterprise itself, constitutes irreparable injury to the plaintiff sufficient to justify the issuance of a preliminary injunction”.

The reasoning was subsequently followed in another case where the district court held that” ”[A] judgment for damages acquired years after his franchise has been taken away and his business obliterated is small consolation to one who had a car dealership franchise for many years… the loss of business and good will, and the threatened loss of the enterprise itself, constitute irreparable injury to the plaintiff sufficient to justify the issuance of preliminary injunction”.

New Jersey courts have consistently found irreparable harm and issued injunctions to prevent interference with exclusive franchise rights, which are considered valuable property rights. The harm is irreparable because such rights can potentially yield substantial returns, which are very difficult to calculate when interfered with because the party with the right will never truly know how much could have been gained had they freely exercised it”.

Indeed, ”once the violation occurs, the character of the franchise as an exclusive property right is destroyed” because it will never know how much business has been subverted from the franchise.”

To discuss your NJ franchise matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com. Please ask us about our video conferencing consultations if you are unable to come to our office.

Posted in Franchise.