Arizona court rules in favor of noncompete: 5 things to know

An Arizona federal court recently granted a franchisor company's motion to temporarily restrain a former franchisee from operating a competing business in a noncompete lawsuit, law firm Lathrop GPM wrote in a Feb. 19 article published by JDSupra.  

Here are five things to know:

1. The company, LeTip World Franchise, franchises professional development and networking. In 2020, LeTip and Long Island Social Medial Group entered into a franchise agreement to operate a LeTip-franchised business in New York. 

2. According to the article, after the franchise agreement was terminated, Long Island Social Media Group started a competing business networking company. LeTip alleges the new company purposefully scheduled its launch party a day before a LeTip meeting to recruit LeTip members. 

3. LeTip sued and moved for a temporary restraining order and preliminary injunction alleging the company violated the franchise agreement’s post-termination noncompete provision.

4. The court found the post-termination noncompete covenants were reasonable in time and geographic scope. 

5. While the court found the noncompete to be too broad to prohibit competition near other LeTIp markets, it also found LeTip would suffer irreparable harm from Long Island Social Media Group's breach of the noncompete. 

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