Amerispec, L.L.C. v. Omni Enterprises, Inc. et al

Filing 32

ORDER GRANTING 9 MOTION FOR PRELIMINARY INJUNCTION. Signed by Judge Thomas L. Parker on 5/16/2018. (Parker, Thomas)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION

AMERISPEC, L.L.C.,
Plaintiff,
v.
OMNI ENTERPRISES, INC., ARNOLD
MCLAURIN, and RENA MCLAURIN,
Defendants.

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No. 2:18-cv-02247-TLP-dkv
JURY DEMAND

ORDER GRANTING PLAINTIFF AMERISPEC, L.L.C.’S MOTION FOR
PRELIMINARY INJUNCTION
Plaintiff AmeriSpec, L.L.C. (“AmeriSpec”) seeks a preliminary injunction to enforce a
covenant not to compete provision in its contract with Defendants. (ECF Nos. 1, 9, 29.)
Defendants Omni Enterprises, Inc. (“Omni”), Arnold McLaurin, and Rena McLaurin
(collectively, “Defendants”) argue that the contracts have expired, so an injunction is not
warranted. (ECF No. 24.) The Court held a Preliminary Injunction Hearing on May 8, 2018, at
which Arnold McLaurin testified about his Declaration (ECF No. 24-1) and the Declaration of
Gale Colvin, AmeriSpec’s Brand Leader.

(ECF No. 29-1.)

For the following reasons,

AmeriSpec’s Motion is GRANTED, and the Court issues a preliminary injunction as described
below as to all Defendants.
BACKGROUND
AmeriSpec is a national franchisor of residential and commercial property inspection
services with 125 independently owned AmeriSpec franchises operating in 175 territories
throughout the country. (ECF No. 1 at PageID 2.) In 1995, Arnold McLaurin (“Mr. McLaurin”)

1

entered into an agreement to operate an AmeriSpec franchise for ten (10) years in a Designated
Territory covering an area around Fayetteville, Cumberland County, North Carolina (the
“Cumberland Franchise”). AmeriSpec and Mr. McLaurin renewed the Cumberland Franchise
for ten (10) years on November 9, 2005, with another Franchise Agreement (the “Cumberland
Franchise Agreement”). (ECF No. 1-1.) In December 2007, Mr. McLaurin, Rena McLaurin
(“Mrs. McLaurin,” collectively, the “McLaurins”), and their company, Omni, bought another
AmeriSpec franchise of a Designated Territory covering an area around Lexington, Lexington
County, South Carolina (the “Lexington Franchise”). (See ECF No. 1-2.) The parties entered
into a separate ten (10)-year Franchise Agreement for this franchise (the “Lexington Franchise
Agreement”).1 (ECF No. 1-2.) Defendants operated both Franchises out of a single building
behind the McLaurins’ home, located at 7363 Fire Department Road, Hope Mills, North
Carolina. (ECF No. 1 at PageID 1.)
The Franchise Agreements contain identical language regarding the grant and renewal of
the Franchises, stating in relevant part :
3.)

GRANT OF FRANCHISE AND RENEWAL OF FRANCHISE
(01) Subject to the provisions of this Agreement, the Company
[AmeriSpec] grants to the Franchisee a Franchise for a term of ten (10)
years, commencing on the date of this Agreement, to utilize the System of
Operation and to use the Names and Marks of the Company in the conduct
of a residential inspection business operated from one location to be
selected by the Franchisee and approved by the Company within the
geographic area (the Designated Territory) as described in Exhibit A.
*

*

*

1

The Cumberland Franchise Agreement and the Lexington Franchise Agreement are collectively
called the “Franchise Agreements.” Mr. McLaurin, with or without the other Defendants, also
bought other AmeriSpec franchises, but they are not at issue here.

2

(03)2 If, upon expiration of the initial term or any renewal term of the
Franchise,3 the Franchisee has complied with all the provisions of the
Franchise Agreement which is then expiring, has operated the Franchised
Business utilizing and conforming to the System of Operation, has utilized
exclusively the Names and Marks in the operation of the Franchised
Business, and has upgraded the office of the Franchised Business to meet
the Company’s then standards, the Franchisee shall have the option to
renew the Franchise for an additional term as defined by the then
current agreement. To renew the Franchise, the Franchisee shall
execute the Company’s then current form of Franchise Agreement
and all other agreements and legal instruments and documents then
customarily employed by the Company in the grant of Franchises . . . .
The Franchisee shall give the Company not less than two hundreed
ten (210) days’ prior written notice of an election not to renew the
Franchise. Failure or refusal by the Franchisee to execute all
agreements and documents within thirty (30) days after delivery to
the Franchisee shall be deemed an election by the franchisee not to
renew the Franchise.
(04)4 If the Franchise is renewed, the then current franchise agreement
may contain terms inconsistent with those in this Agreement. To the
extent that it is impossible for the renewing franchisee to comply with any
such terms immediately upon renewal, the Company shall provide the
franchisee a reasonable period of time, as defined by the Company, unless
specifically otherwise provided in the agreement, for the franchisee to
comply with any terms that are in fact inconsistent with those in this
Agreement. All such terms and time periods will be addressed in writing
at the time of renewal.
(ECF No. 1-1 at PageID 34–35; ECF No. 1-2 at PageID 81–82 (emphasis added).)

The

Franchise Agreements also contain the following Noncompete Clause, which reads, in relevant
part:
15.)

COMPETITION

2

This is actually Section 3, Subsection 04 in the Lexington Franchise Agreement, but the
language is identical.
3
As defined in the Cumberland Franchise Agreement, “Term of the Franchise” shall mean the
initial term of the Franchise and all renewal terms if the Franchise is renewed. (ECF No. 1-1 at
PageID 33.)
4
Subsection (05) in the Lexington Franchise Agreement.

3

The Franchisee acknowledges the Company must be protected against the
potential for unfair competition by the Franchisee’s use of the Company’s
training, assistance, and trade secrets in direct competition with the
Company. The Franchisee therefore agrees that it shall not, during the
Term of the Franchise, either directly or indirectly, operate, own, be
employed by, or consult with, any business conducting any type of
residential inspections, or offering residential and commercial building
inspection services and other related services permitted under the
Agreement, other than one operated under this Agreement with the
Company.5 Further, the Franchisee agrees that it shall not, for a
period of one year following the effective date of termination or
expiration of this Agreement . . . either directly or indirectly operate,
own, be employed by, or consult with, any business conducting any
type of residential and commercial building inspections, or providing
residential or commercial property inspection services, within the
Designated Territory, within ten (10) miles of the Designated
Territory, or within a radius of ten (10) miles from the location of any
other AmeriSpec® office in existence at the time of expiration,
termination, or assignment of this Agreement.6
(ECF No. 1-1 at PageID 46; ECF No. 1-2 at PageID 93.)

Additionally, the Franchise

Agreements require any modifications to be in writing and signed by both parties. (ECF No. 1-1
at PageID 57; ECF No. 1-1 at PageID 104.)
From 1995 to 2015, the Court finds that the parties conducted business with one another
according to the Franchise Agreements.

Mr. McLaurin also served as a member of the

AmeriSpec National Franchise Council, which is a group of AmeriSpec franchisees who meet
quarterly to discuss issues related to the AmeriSpec franchise business. (ECF No. 1 at PageID
7.) It is undisputed that from 1995 until February 22, 2018, Defendants used the AmeriSpec’s
names and marks, its proprietary software—including training materials—email accounts,
website, and, for all intents and purposes, operated as an AmeriSpec franchise.7 Defendants have
also used the same phone number, 910-426-4747, during the terms of the Franchise Agreements
The Court refers to this clause as the “In-Term” Noncompete Clause.
Similarly, the Court refers to this clause as the “Post-Term” Noncompete Clause.
7
Mr. McLaurin confirmed this fact in his testimony, and Defendants’ counsel confirmed it
during the Hearing.
5
6

4

to the present, and they executed an assignment of that number to AmeriSpec in the Cumberland
Franchise Agreement. (ECF No. 1-1 at PageID 66.) However, that phone number is still
operable at Defendants’ office where they are operating a property inspection business.
The Cumberland Franchise Agreement was supposed to expire on November 20, 2015,
(ECF No. 1-1 at PageD 34), but the parties continued to operate as if the contract remained in
full force and effect. Mr. McLaurin states in his Declaration that after the expiration of the
Cumberland Franchise Agreement, he “continued to remit services fees to AmeriSpec (which
AmeriSpec continued to accept) and [he] continued to use the AmeriSpec mark in connection
with [his] activities.” (ECF No. 24-1 at PageID 343.) “AmeriSpec knew that [he] continued to
use the mark and expressed no objection.” (Id.)
Mr. McLaurin recounts four other instances between June 2016 and June 2017 where
AmeriSpec, apparently recognizing the expiration date, either sent him proposed amendments or
new franchise agreements for his signature to extend the Cumberland Franchise Agreement.
(ECF Nos. 24-5–24-9.) Mr. McLaurin did not sign most of them. Nevertheless, throughout this
time—and up to February 22, 2018—Mr. McLaurin and Defendants continuously operated the
Cumberland Franchise by providing residential and commercial property inspection services as
AmeriSpec in the Fayetteville, North Carolina area and paid service fees to AmeriSpec. (See
ECF No. 24-1.)8

On March 31, 2017, Mr. McLaurin signed an Amendment extending the terms

and conditions of the Cumberland Franchise Agreement to May 1, 2017. (ECF No. 1-1 at
PageID 75.) Defendants executed a similar Amendment to the Lexington Franchise Agreement,
which extended its terms and conditions to November 20, 2017. (ECF No. 1-2 at PageID 118.)
8

Mr. McLaurin was also active on the AmeriSpec National Franchise Council until at least
September 2017 when AmeriSpec paid for him to attend the AmeriSpec National Convention in
Phoenix, Arizona, at which he participated in meetings and training sessions. (ECF No. 29-1 at
PageID 709.)
5

The Court finds no evidence from before February 22, 2018 that Mr. McLaurin or Defendants
notified AmeriSpec—either in writing or by their conduct—that they did not wish to renew the
Cumberland or Lexington Franchise Agreements.9
On February 23, 2018, Defendants opened a residential and commercial property
inspection business called “American Property Inspection Services.” (ECF No. 24-1 at PageID
346.) AmeriSpec learned of Defendants’ operation of American Property Inspection Services on
the same day that the McLaurins posted a flyer on Mrs. McLaurin’s Facebook page with the
following announcement: “New Name, Same Team! PASS THE WORD FROM…Arnold &
Rena McLaurin[:] Your Local AmeriSpec is now American Property Inspections.” (ECF No. 14.) Defendants advertised on their website for American Property Inspection Services that they
have been in the property inspection business “for twenty two years,” and that Mr. McLaurin
“started his property inspection business by purchasing a national franchise brand.” (ECF No.
1-5 at PageID 128–29.) For a time, Defendants used forms that mention both AmeriSpec and
American Property Inspection Services. (ECF No. 1-6.) Defendants admit they use the same
910-426-4747 telephone number and Fire Department Road address to run American Property
Inspection Services.
On March 8, 2018, as required by the Cumberland Franchise Agreement, AmeriSpec sent
Defendants a Cease and Desist Letter informing them that AmeriSpec understood that they were
violating the Noncompete Clause of the Franchise Agreements. (ECF No. 1-7 at PageID 141–
42.)

The Letter notified Defendants that they had thirty (30) days to cure their default or

otherwise respond to AmeriSpec’s efforts to contact them. (Id.) Defendants did not respond to
Mr. McLaurin did testify about conversations he had with Mr. Colvin’s predecessor, Ms. Teresa
Westphall. (See also ECF No. 24.) However, Mr. McLaurin admitted that he had never
mentioned anything to Mr. Colvin, who became Brand Manager in September 2017, despite
attending National Franchise Council meetings with him on at least one occasion.
9

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the March 8, 2018 Cease and Desist Letter, and AmeriSpec filed its Verified Complaint and the
underlying Motion.
LEGAL STANDARD
Under Federal Rule of Civil Procedure 65(a), a district court may issue a preliminary
injunction prior to a trial on the merits. AmeriSpec, Inc. v. Psaris, No. 09-2360, 2009 WL
10698732, at *2 (W.D. Tenn. Sept. 10, 2009) (citation omitted). The procedures are less formal
and the evidence is less complete than at the time of trial, so “a party is not required to prove his
case in full at a preliminary injunction hearing[,]” and the court’s findings of fact and
conclusions of law are not binding at the trial on the merits. Certified Restoration Dry Cleaning
Network, L.L.C. v. Tenke Corp., 511 F.3d 535, 542 (6th Cir. 2007) (quoting Univ. of Texas v.
Camenisch, 451 U.S. 390, 395 (1981) (internal quotation marks omitted)); but see Leary v.
Daeschner, 228 F.3d 729, 739 (6th Cir. 2000) (noting that “the proof required for the plaintiff to
obtain a preliminary injunction is much more stringent than the proof required to survive a
summary judgment motion”).

A preliminary injunction is an equitable remedy, albeit an

“extraordinay” one, that the district court has the sound discretion to grant or deny.

See

Friendship Materials, Inc. v. Michigan Brick, Inc., 679 F.2d 100, 102 (6th Cir. 1982).
“A plaintiff seeking a preliminary injunction must establish [1] that he is likely to
succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of
preliminary relief, [3] that the balance of the equitites tips in his favor, and [4] that an injunction
is in the public interest.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008) (collecting
cases). These four considerations are “factors to be balanced and not prerequisities that must be
satisfied.” Certified Restoration Dry Cleaning Network, 511 F.3d at 542. (internal quotation
marks and citations omitted). A plaintiff must show that irreparable harm is likely, as opposed to

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possible, and that money damages would not provide the adequate redress. Winter, 555 U.S. at
7; Basicomputer Corp. v. Scott, 973 F.2d 507, 511 (6th Cir. 1992).
ANALYSIS
I.

Preliminary Injunction Factors
“[I]f a party demonstates substantial likelihood of success on the merits, the three other

factors will favor the party as well.” Total Car Franchising Corp. v. L & S Paint Works, Inc.,
981 F. Supp. 1079, 1081 (M.D. Tenn. 1997) (citations omitted). For AmeriSpec to succeed on
the merits of its Motion, it must show that it is likely to succeed on the merits of its argument
that the Post-Term Noncompete Agreement is still in effect. The parties’ briefing mostly focuses
on this factor, so the Court’s analysis does as well.
A.

Likelihood of Success on the Merits

AmeriSpec has alleged claims against Defendants, inter alia, for breach of the Franchise
Agreements’ In-Term and Post-Term Noncompete Clauses and post-termination obligations,
trademark infringement under the Lanham Act, 15 U.S.C. § 1501 et seq., and equitable estoppel.
(ECF No. 1 at PageID 16–27.) In addition to AmeriSpec’s other claims, the Court finds that it is
likely to succeed on the merits of its claims regarding the Noncompete Clause, making a
preliminary injunction appropriate.
1.

Applicability of the Cumberland Franchise Agreement

By its express terms, the In-Term Noncompete Clause was in effect during the “Term of
the Franchise,” or during the intitial term and all renewal terms, and the Post-Term Noncompete
period runs for one year from the effective date of expiration or termination of the Franchise
Agreements. (ECF No. 1-1 at PageID 46; ECF No. 1-2 at PageID 93.) Defendants submit that
the Post-Term Noncompete Clause in the Lexington Franchise Agreement, which they admit is

8

still in effect, cannot enjoin Defendants from operating a property inspection business in the area
covered by the Cumberland Franchise Agreement. Defendants argue the Cumberland Franchise
Agreement expired on May 1, 2017, meaning the Post-Term Noncompete Clause expired on
May 1, 2018.10 While Defendants admit that the parties operated an AmeriSpec franchise under
some kind of contractual relationship in Cumberland County after May 1, 2017, they deny that
they were operating under the terms of the Cumberland Franchise Agreement, including the
Post-Term Noncompete Clause. (ECF No. 24 at PageID 321.)
The Court finds for the purposes of this Motion that the parties operated under the
Cumberland Franchise Agreement, or an implied contract containing its same terms and
conditions, until April 7, 2018, thirty days after Defendants failed to respond to AmeriSpec’s
Cease and Desist Letter. While the Cumberland Franchise Agreement states that the Franchisee
has the right to renew and that his failure to execute all agreements and documents for renewal
within thirty days constitues an election not to renew, the parties’ course of conduct as
Franchisor and Franchisee of the Cumberland Franchise was unchanged from 1995 to February
22, 2018. The Tennessee Supreme Court has held that “when parties continue to perform the
same services after a contract for a definite term has expired, it is presumed that they are
operating under a new contract having the same terms and conditions as the original one.” BSG,
LLC v. Check Velocity, Inc., 395 S.W.3d 90, 94 (Tenn. 2012) (quoting Delzell v. Pope, 200

In light of the undisputed evidence that Defendants’ opened a competing business in February
2018, the Court could view this assertion as an admission that they breached the Post-Term
Noncompete Clause. Under the Court’s analysis, however, because Defendants continued to
abide by the contract’s terms until February 2018, it will be treated as an admission that
Defendants breached the In-Term Noncompete Clause.
10

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Tenn. 641, 194 S.W.2d 690, 694 (1956) (internal quotation marks omitted) (stating the general
rule in the context of employment contracts)).11
This principle is consistent with the fact that Mr. McLaurin executed an Amendment on
March 31, 2017—which was not a new contract—but an extension of the terms and conditions of
the Cumberland Franchise Agreement. The Court infers from the parties’ conduct and the
extension of the Cumberland Franchise Agreement that the parties intended for the terms and
conditions of the Cumberland Franchise Agreement, and not some other arrangement, to govern
their relationship until a new renewal agreement could be signed. Cf. Freytag v. Crass, 913
S.W.2d 171, 173 (Tenn. Ct. App. 1995) (holding that parties continuing to operate under the
terms of the contract at its termination amounted to exercise of option to renew contract for
additional term); ServiceMaster Residential/Commercial Servs., L.P. v. Westchester Cleaning
Servs., Inc., No. 01 CIV. 2229 (JSM), 2001 WL 396520, at *3 (S.D.N.Y. Apr. 19, 2001).
Defendants cite the Astral case for the proposition that the mere “fact that the parties
continue to deal under some sort of informal arrangement does not, without more, mean that all
the terms of the expired formal contract continue to apply.” Astral Health & Beauty, Inc. v.
Aloette of Mid-Mississippi, Inc., 895 F. Supp. 2d 1280, 1282 (N.D. Ga. 2012) (quoting Town of
Webster v. Vill. of Webster, 280 A.D.2d 931, 933, 720 N.Y.S.2d 664, 667 (2001)) (internal
quotation marks omitted). But Defendants failed to include the next sentence in the Astral case
(which echoes Tennessee law): “However, the parties’ actions could create an implied contract
under which their rights and obligations continue to be measured as provided in the old
contract.” Id. at 1283 (internal quotation marks and citation omitted).

11

This at least suggests that an implied ten-year term could have been in effect, but the Court
needs not determine whether the term was for ten years or month-to-month, as AmeriSpec
contends. (ECF No. 1 at PageID 8–9.)
10

Mr. McLaurin claims that he did not intend to renew the Cumberland Franchise
Agreement, but there is no evidence he communicated that to AmeriSpec—even when he was
face-to-face with AmeriSpec management in National Franchise Council meetings—before
February 23, 2018. The only evidence is that Mr. McLaurin and Defendants “accepted the
benefits of franchise status and traded on the good will” of AmeriSpec until he abruptly switched
the name of his business. See ServiceMaster Residential/Commercial Servs., 2001 WL 396520,
at *3. This is significant not only because the Franchise Agreements include affirmative steps
the franchisee must take in order to effectuate the termination of the agreement, such as
providing express notice, but there are also express post-termination obligations for the
franchisee, such as returning AmeriSpec manuals and software, notifying the telephone company
of termination of the right to use the AmeriSpec phone number, and payment of fees (see ECF
No. 1-1 at PageID 52.) Defendants did not comply with these contractual provisions.
For these reasons, both parties engaged in conduct showing mutual assent to operate
under the terms and conditions of the Cumberland Franchise Agreement, which would create a
contract implied in fact. See Angus v. City of Jackson, 968 S.W.2d 804, 808 (“Mutual assent and
a meeting of the minds cannot be accomplished by the unilateral action of one party.”) (citation
omitted).
2.

Whether the Post-Term Noncompete Clause is Enforceable

The Post-Term Noncompete Clause must be valid and enforceable for AmeriSpec to
likely prevail on the merits. Under Tennessee law, covenants not to compete are disfavored but
are enforced if reasonable. Vantage Tech., LLC v. Cross, 17 S.W.3d 637, 644 (Tenn. Ct. App.
1999). “The question of what is reasonable usually involve[s] the duration and geographic scope
of the covenant, as well as other factors which balance one party’s right to earn a living and to

11

practice his trade against the other’s right to be free from unfair competition.” Servpro Indus.,
Inc. v. Pizzillo, No. M2000-00832-COA-R3CV, 2001 WL 120731, at *6 (Tenn. Ct. App. Feb.
14, 2001) (citing Central Adjustment Bureau v. Ingram, 678 S.W .2d 28 (Tenn. 1984); Allright
Auto Parks v. Berry, 409 S.W.2d 361 (Tenn. 1966)).

The Court finds the Post-Term

Noncompete Clause in both Franchise Agreements to be reasonable and enforceable against
Defendants. See, e.g., id. at *8 (examining other Tennessee decisions on covenants not to
compete to hold that franchisor “should be able to protect the value of its franchises by
preventing its former franchisees from competing against it” within 25 miles of the designated
territory for two years).
AmeriSpec cites a string of cases in which courts have consistently reviewed
AmeriSpec’s noncompete clauses in their franchise agreements, which are very similar to the one
at issue here, and upheld them as enforceable to protect its legitimate interests. The Court agrees
with the courts’ reasoning in these cases. See AmeriSpec v. Psaris, 2009 WL 10698732, at *3
(“AmeriSpec has a right to enforce its contracts, and, in seeking to enforce the franchise
agreement’s noncompete clause, AmeriSpec is only seeking the benefit of terms to which the
parties previously agreed.”).
Defendants thinly attack the enforceability of the Post-Term Noncompete Clause by
arguing that the Tennessee choice-of-law provision in the Cumberland Franchise Agreement,
(ECF No. 1-1 at PageID 55), is contrary to a “fundamental policy” of North Carolina because
North Carolina requires noncompete agreements to be in writing, see N.C. Gen. Stat. § 75-4.
Defendants also argue that an implied in fact noncompete agreement violates the Tennessee
Statute of Frauds, Tenn. Code Ann. § 29-2-101(5). The Court rejects these arguments, as both
parties signed the Cumberland Franchise Agreement, and the Court finds that its terms and

12

conditions governed the parties’ relationship until the effective termination date of April 7, 2018.
Thus, the Post-Term Noncompete Clause that the parties’ bargained for is enforceable against
Defendants.
B.

Irreparable Harm

AmeriSpec has shown through the facts of this case and extensive caselaw that this
Court’s failure to enjoin Defendants from operating a competing business in the territories
covered by the Franchise Agreements poses a substantial threat of irreparable harm to its
franchise business. Here, AmeriSpec has shown that it would suffer “the loss of customer
goodwill attributable to the display of AmeriSpec® Names and Marks in the Desigated
Territories” and cited caselaw showing that this “cannot be quantified in terms of monetary
damages alone.” (ECF No. 9-1 at PageID 182–83 (citing AmeriGas Propane, Inc. v. Crook, 844
F. Supp. 379, 390 (M.D. Tenn. 1993) (stating “[t]he loss of customer goodwill and injuries that
are a consequence of unfair competition are difficult to compute and can constitute irreparable
harm”) (internal citation omitted).)
Defendants claim that AmeriSpec assumes with no evidence “that the AmeriSpec mark
enjoys any goodwill within any of the Designated Territories,” and that any goodwill belongs to
Defendants through Mr. McLaurin’s personal experience, professional contacts, and community
involvement. (ECF No. 24 at PageID 330.) Defendants want this Court to somehow separate
the McLaurins’ personal goodwill from the corporate goodwill they enjoyed for more than two
decades. That is an impossible taks without speculation. Plus, this argument ignores that before
February 2018, Mr. McLaurin had been a property inspector for over two decades as an
AmeriSpec Franchisee and that Defendants had signed two Franchise Agreements
acknowledging that any goodwill derived from being an AmeriSpec francnhisee belongs to

13

AmeriSpec. (ECF No. 1-1 at PageID 42; ECF No. 1-2 at PageID 89.)12 The Court will respect
the terms of the Franchise Agreements.
In Cumberland County, Defendants went from being AmeriSpec Franchisees to operating
a competing business overnight in violation of terms and conditions that they agreed to.
AmeriSpec satisfies its burden by showing that this conduct threatens its entire franchise model
and its ability to find a willing candidate to open an AmeriSpec franchise in Cumberland County.
See Psaris, 2009 WL 10698732, at *3.

The Declaration of Gale Colvin states that other

AmeriSpec franchisees in the Carolinas have expressed concern that Defendants immediately
opened a competing business in the marketplace with knowledge of AmeriSpec’s entire
playbook. (See ECF No. 29-1 at PageID 718.) Since May 2017, AmeriSpec has also received at
least four leads for purchasing franchises in Defendants’ old territories (id. at PageID 716–17),
and AmeriSpec’s counsel conferred with Mr. Colvin during the Preliminary Injunction Hearing
to confirm that there is one serious candidate for opening a franchise in Cumberland County.
Even if, as Defendants argue, they are no longer using any of AmeriSpec’s names, marks,
or proprietary information, there is evidence that they were when they launched “American
Propery Inspection Services.” (ECF No. 1-6.) “There is a recognized danger that former
franchisees will use the knowledge that they have gained from the franchisor to serve its former
customers, and that continued operation under a different name may confuse customers and
thereby damage the good will of the franchisor.” ServiceMaster Residential/Commercial Servs.,
2001 WL 396520, at *3 (citing Jiffy Lube Int'l, Inc. v. Weiss Bros., Inc., 834 F.Supp. 683, 691–
92 (D.N.J. 1993); Economou v. Physicians Weight Loss Ctrs of America., 756 F. Supp. 1024,
1032 (N.D. Ohio 1991) (parenthetical citations omitted)). The flyer that Defendants posted
12

Mr. McLaurin further admitted during his testimony that all of his professional and community
involvement as a property inspector had been as an AmeriSpec Franchisee.
14

saying that their local “AmeriSpec” is now “American Property Inspections” is confusing, to say
the least.
C.

Balancing of the Equities

Defendants do not address the balance of the equities in their Response, but their counsel
made it clear during the Preliminary Injunction Hearing that an injunction would burden the
McLarins by effectively closing their property inspection business. The Court recognizes that an
injunction would have serious consequences for Defendants. However, the Court is persuaded
by the line of cases cited by AmeriSpec and finds that this preliminary injunction against them is
a product of Defendants’ own making. See, e.g., Total Car Franchising Corp., 981 F. Supp. at
1081 (expressing sympathy to small-business defendant but finding that rule of law required
defendant to comply “with the terms of the Agreement that provided him with substantial
benefits for more than two years”); Psaris, 2009 WL 10698732, at *3. This Court finds it
inequitable for Defendants to be able to reap the benefits of being AmeriSpec Franchisees and to
try to see how far they could push the operation of their Franchises beyond the reach of the PostTerm Noncompete period that they expressly bargained for. The evidence also indicates that
operating American Property Inspection Services is not Defendants’ only source of income, and
Mr. McLaurin retains his licenses as a real estate broker and general contractor. (ECF No. 24-1
at PageID 338.) Thus, the balance of the equities tips in AmeriSpec’s favor.
D.

The Public Interest

As stated in the Psaris case, “[t]here is a general public interest in the enforcement of
contracts.” 2009 WL 10698732, at *3; see also AmeriGas Propane, 844 F. Supp. at 390
(“Tennessee has a strong public policy in favor of upholding contracts”). AmeriSpec, like all
franchisors, has a clear interest “in protecting the value of the basic product is has to sell: its

15

franchises.” Servpro, 201 WL 120731, at *7 (citations omitted). Thus, this fourth factor weighs
in favor of AmeriSpec.
II.

Duration of Preliminary Injunction
Because AmeriSpec has a strong likelihood of prevailing on the merits and the other

factors weigh in its favor, a preliminary injunction is warranted. AmeriSpec seeks to have the
injunction run from a period of one year from the date the Court issues the injunction. However,
the parties bargained for the one year to run from the date of the termination or expiration of the
Cumberland Franchise Agreement, so the one-year period will run from April 7, 2018.
The parties appear to agree that Defendants have not attempted to operate a competitive
business in the area covered by the Lexington Franchise Agreement, and AmeriSpec maintains
that the Lexington Franchise Agreement expired under the Amendment on November 20, 2017.
Therefore, the Post-Term Noncompete Clause in the Lexington Franchise Agreement is in effect
until November 20, 2018. While there is no evidence that Defendants are currently trying to
perform property inspections in Lexington County, the Court finds Defendants’ establishment of
a competing business during the noncompete period in the same office where they previously
operated the Lexington Franchise makes it likely that AmeriSpec will prevail on the merits of its
claims—and poses enough of a threat of irreparable harm—that this Order also ENJOINS
Defendants from operating any competing business in the Designated Territory of the Lexington
Franchise Agreement from the date of the entry of this Order until November 20, 2018.
AmeriSpec also requests a preliminary injunction enforcing all post-termination and postexpiration obligations of the Franchise Agreements. (ECF No. 9 at PageID 159.) Other than the
Post-Term Noncompete Clause in the Franchise Agreements, the 910-426-4747 phone number
was the only post-termination and post-expiration obligation that the parties raised in the Motion

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and the Preliminary Injunction Hearing. The Court declines to to enter a blanket preliminary
injunction order enforcing all post-termination and post-expiration obligations of the Franchise
Agreements, but the Court does ORDER that Defendants, through their counsel, shall work with
AmeriSpec in effectively transferring the 910-426-4747 phone number to AmeriSpec within ten
(10) days from the entry of this Order.
CONCLUSION
Thus, the Court GRANTS AmeriSpec’s Motion for Preliminary Injunction and ENJOINS
all Defendants as follows: Arnold McLaurin, Rena McLaurin, and Omni Enterprises, Inc.—as
well as their agents, successors, and assigns, and all others in active concert or participation with
them—shall not, for a period of one year from April 7, 2018, directly or indirectly operate, own,
be employed by, or consult with any business conducting any type of residential and commerical
building inspections, or provide residential or commecial property inspection services, within
Cumberland County, North Carolina, or within ten miles of the outer border of Cumberland
County, or within a radius of ten miles from the location of any other AmeriSpec location in
existence since April 7, 2018. The Court also ORDERS that Defendants, through their counsel,
shall work with AmeriSpec in effectively transferring the 910-426-4747 phone number to
AmeriSpec within ten (10) days from the entry of this Order.
Moreover, Arnold McLaurin, Rena McLaurin, and Omni Enterprises, Inc.—as well as
their agents, successors, and assigns, and all others in active concert or participation with them—
shall not, for a period of 188 days, or up to and including November 20, 2018, directly or
indirectly operate, own, be employed by, or consult with any business conducting any type of
residential and commerical building inspections, or provide residential or commecial property
inspection services, within Lexington County, South Carolina, or within ten miles of the outer

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border of Lexington County, or within a radius of ten miles from the location of any other
AmeriSpec location in existence since April 7, 2018. The Court finds that under the Franchise
Agreements and on the appearance that AmeriSpec appears fully solvent, the posting of a bond is
not warranted.
SO ORDERED, this 16th day of May, 2018.
s/ Thomas L. Parker
THOMAS L. PARKER
UNITED STATES DISTRICT JUDGE

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