During the last 12 months or so, franchise precedents rendered in the areas of covenants of noncompetition and trademark infringement have been numerous. There have been over 15 opinions issued covering this subject—an unusually large number. And there have been three nonsignatory precedents issued. Not a large number in itself, but opinions addressing whether a nonsignatory to the franchise agreement can be bound to the terms of the agreement are generally rare. Let’s examine a couple of the cases from each of these categories.

Noncompetes and Trademark Infringement Cases

When someone purchases a franchise, he becomes a member of a special club. He becomes a licensee with the right to use the franchisor’s marks and systems. He also is entitled to any other rights granted under his franchise agreement, but he also becomes subject to the responsibilities of an ex-franchisee when the franchise agreement expires or otherwise is terminated in accordance with its terms. Two of these responsibilities are cessation of the use of the franchisor’s trademarks, and forfeiture of the right to use the franchisor’s system.