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Cleaning company granted injunction to protect its business

Posted: 9th July 2014   In: Dispute Resolution

A cleaning company has been granted an interim injunction preventing former franchisees from competing with it until disputed issues can be dealt with in court.

The company made the move to block two franchisees from competing for the same business in Bishop’s Stortford in Hertfordshire.

The franchise agreement had been terminated, although it was disputed as to which party had ended it.

The contract stated that after leaving the company, the franchisees could not provide domestic cleaning services to any former customers or to anywhere in the Bishop’s Stortford area.

The franchisees began advertising cleaning services in the town so the cleaning company applied for an injunction. The franchisees claimed they had not understood the terms of the contract when they signed it, and questioned its validity.

In cases such as this, where one or both parties can be put at a disadvantage by the other before a legal dispute is settled, the court must decide where the balance of convenience lies. This means which party will suffer the least by having its actions restricted until the dispute can be settled.

The court decided the balance of convenience lay in favour of the cleaning company because it could be badly affected if the franchisees were allowed to continue to compete for its customers.

Although the franchisees would be inconvenienced by not being able to offer their services in Bishop’s Stortford, they could still work in the surrounding area.

They were also not in a financial position to pay damages if their former company eventually won the case. On the other hand, if the contract dispute was settled in favour of the franchisees, then any loss of earnings could be more easily added to their final settlement figure.

The interim injunction was therefore granted until the dispute over the validity of the contract was settled.

Please contact Clare Jones if you would like more information about contract disputes or any other issues raised in this article.