Brightstar Franchising, LLC v. Foreside Management Company, No. 1:25-cv-08741, 2025 WL 3022590 (N.D. Ill. Oct. 29, 2025)

Factual Background

This action is brought by a franchisor against its former franchisee and the franchisee’s principle executive for breache of the post-term noncompete, among other breaches. Plaintiff Brightstar Franchising, LLC (“Brightstar”) is the franchisor for BrightStar Care Agencies, which provide in-home care services within defined territories pursuant to a proprietary operating system developed since the company’s founding in 2005. Defendant Foreside Management Company (“Foreside”) is a former Brightstar franchisee for the territory of California, and is owned and managed by Defendant Mark Woodsum (collectively, “Defendants”).

Between 2014 and 2015, Mr. Woodsum entered into four franchise agreements with BrightStar (collectively, the “Franchise Agreements”), which he later assigned to Foreside. Sections 11 and 14 of the Franchise Agreements imposed various post-termination covenants and obligations including covenants for non-competition and non-solicitation, and the obligations to return confidential information, to transfer telephone numbers, and to cease use of BrightStar’s proprietary systems and marks. Section 15 set forth dispute resolution procedures, including an Illinois choice of law provision.

The parties also executed two Collateral Assignments for leases covering office locations in Newport Beach and Mission Viejo, California (the “Lease Assignments”). These agreements permitted BrightStar to assume possession of the premises upon termination or expiration of the franchise relationship. While the Newport Beach office involved third-party landlord, Foreside served as both landlord and tenant for the Mission Viejo office.

The Franchise Agreements expired on July 26, 2025. Foreside elected not to renew and instead began operating a competing business outside the BrightStar franchise system.

Procedural History

Two days after the Franchise Agreements expired, BrightStar filed suit seeking enforcement of the Lease Assignments and post-termination covenants. On August 4, 2025, BrightStar moved for a preliminary injunction, requesting immediate possession of the office locations and enforcement of the Franchise Agreements’ post-termination obligations.

Court’s Opinion

I. Choice of Law

Defendants first argued that California law governed the dispute, despite the Franchise Agreements’ Illinois choice-of-law provision.

Applying Illinois choice-of-law principles, the Court explained that contractual choice-of-law provisions are generally enforced unless the party challenging the provision demonstrates either that the chosen state has no substantial relationship to the parties or the transaction, or that application of the chosen law would contravene a fundamental public policy of a state with a materially greater interest in the dispute.

Defendants contended that applying Illinois law would violate California’s fundamental public policy because the restrictive covenants in the Franchise Agreements—which has a direct bearing on BrightStar’s likelihood of success on the merits—would be per se unenforceable under California Business and Professions Code § 16600, which voids contracts restraining lawful trade. The Court, however, noted that the California Supreme Court’s decision in Ixchel Pharma, LLC v. Biogen, Inc. clarified that § 16600’s per se invalidation applies primarily in the employment context, while restraints imposed in commercial relationships are evaluated under a reasonableness standard.

Attempting to avoid Ixchel’s commercial-relationship framework, Defendants sought to recharacterize the franchise relationship as analogous to employment. They argued that because franchisees are designated as independent contractors, the BrightStar–Foreside relationship should be treated as an employment relationship for purposes of § 16600.

The Court rejected this argument. It reasoned that Ixchel expressly identified franchise agreements as examples of commercial agreements not subject to § 16600’s per se rule. The Court further found that franchise agreements are business arrangements—not employment relationships—based on relevant statutory definitions under both Illinois and California law. It viewed the Franchise Agreements’ “independent contractor” language as merely a mechanism to avoid agency liability, not as evidence of an employment relationship.

The Court also declined Defendants’ attempt to limit Ixchel to in-term non-compete provisions, citing multiple federal decisions applying Ixchel’s reasonableness standard to post-termination restraints. Because Defendants failed to show that Illinois’s reasonableness standard would produce a materially different outcome than California’s, the Court enforced the Franchise Agreements’ Illinois choice-of-law provision.

II. Preliminary Injunction

Under Illinois law, a party seeking a preliminary injunction must make a threshold showing that (1) it is likely to succeed on the merits; (2) it will suffer irreparable harm absent injunctive relief; and (3) it lacks an adequate remedy at law. If the movant satisfies this showing, the court then balances the harm the movant would suffer without an injunction against the harm the nonmoving party would suffer if an injunction were granted and considers whether injunctive relief serves the public interest.

Likelihood of Success

BrightStar asserted two breach-of-contract claims—one arising from the Franchise Agreements and the other from the Lease Assignments. To demonstrate a likelihood of success, BrightStar was required to show the existence of enforceable contracts, its own substantial performance, Defendants’ breach, and resulting injury.

The Court first addressed the Lease Assignments. It found that the Lease Assignment for the Newport Beach Office was likely valid and enforceable. However, the Court concluded that BrightStar failed to meet its burden with respect to the Mission Viejo Office, because Foreside was both the landlord and tenant of that property. As a party cannot contract with itself, the underlying lease, and any subsequent assignment, was void.

The Court further held that the post-termination non-compete in the Franchise Agreements was enforceable under Illinois’s reasonableness standard because it was narrowly tailored in scope and duration—limited to defined territories, lasting only 18 months.

Defendants did not dispute BrightStar’s performance under the Lease Assignments but argued that BrightStar failed to comply with the Franchise Agreements’ pre-litigation mediation requirement. The Court rejected this argument, holding that claims for injunctive relief were expressly exempt from the mediation prerequisite.

For breach of the Lease Assignments, because Defendants had vacated the Newport Beach Office by the time the motion was heard, the Court found it unnecessary to resolve that issue further.

BrightStar alleged breaches of multiple post-termination obligations under the Franchise Agreements, and the Court found a likelihood of success as to each. The Court concluded that Defendants likely breached the confidentiality provisions by continuing to use BrightStar’s customer information, regardless of whether the information was used for a prohibited purpose, as the contract barred its use for any purpose. The Court rejected Defendants’ argument that the information was not confidential merely because customer identities were publicly known, noting that non-public data associated with those customers remained protected.

The Court also found a likely breach of the non-compete covenants, as Defendants did not dispute that they were competing with BrightStar and soliciting its customers, arguing only that the covenants were unenforceable under California law. Further, BrightStar demonstrated a likely breach of provisions prohibiting Defendants from holding themselves out as affiliated with BrightStar, supported by evidence that Defendants referenced their prior BrightStar franchise experience in emails.

The Court additionally found likely breaches of obligations requiring the return of confidential materials, the transfer of BrightStar telephone numbers, the cessation of use of BrightStar’s proprietary programs, branding and marks. Although BrightStar also alleged a failure to provide certain contact and obligation information, the Court declined to rule on that issue because Defendants had since produced employee and client lists and BrightStar elected not to pursue outstanding third-party obligations.

Finally, the Court found that BrightStar sufficiently demonstrated resulting injury, concluding that Defendants’ continued exploitation of BrightStar’s goodwill, confidential information, and proprietary systems constituted harm.

Irreparable Harm and Inadequate Remedy at Law

The Court found that BrightStar sufficiently demonstrated both irreparable harm and the inadequacy of legal remedies.

First, the Court recognized that the breaches of non-compete and non-solicitation covenants constitute a well-established form of irreparable harm, with damages that are unquantifiable. It concluded that the harm flowing from Defendants’ conduct could not be readily reduced to monetary terms.

The Court further held that Defendants’ continued use of BrightStar’s confidential information supported a finding of irreparable harm. BrightStar’s proprietary systems and client relationships had been developed over many years, and Defendants’ exploitation of that information threatened to erode BrightStar’s goodwill, resulting in intangible injury not susceptible to precise calculation.

Finally, the Court agreed that BrightStar’s broader franchise system would suffer harm if Defendants were not enjoined, as allowing such conduct to continue could embolden other franchisees to disregard their post-termination obligations. Defendants’ argument that monetary damages would suffice was rejected as insufficient under the circumstances.

Balance of Harm and the Public Interest

Defendants argued that the harm they would suffer if an injunction were granted outweighed any harm to BrightStar, asserting that enforcement would result in the loss of employment for approximately 400 employees. The Court rejected this argument, finding that any such harm was self-inflicted, stemming from Defendants’ decision not to renew the Franchise Agreements and their subsequent breach of post-termination obligations. The Court further noted that Defendants could resume operations upon expiration of the eighteen-month non-compete period.

Defendants also contended that injunctive relief would harm the public interest by disrupting continuity of care for their clients. The Court disagreed as BrightStar provided evidence that it was able and prepared to fill any service gap resulting from the injunction. The Court emphasized that the public interest is also served by enforcing valid commercial agreements and protecting contractual expectations.

Accordingly, the Court granted BrightStar’s motion for a preliminary injunction.

This Case Report was prepared by Shan Wen, an associate in the Franchise and Distribution Practice Group of Mortenson Taggart Adams LLP. Shan can be reached at swen@mortensontaggart.com