PSP Franchising, LLC v. Surefed Plus, LC, No. SA-25-CV-00544-XR, 2025 WL 3035112 (W.D. Tex. Oct. 20, 2025)

Factual Background  

In PSP Franchising, LLC v. Surefed Plus, LC, franchisor PSP Franchising, LLC (“PFP”) sought a temporary restraining order (“TRO”) against its former franchisee, SureFed Plus, LC (“Surefed”), and four individual guarantors (collectively, “Defendants”), alleging breach of post-termination covenants and trademark infringement.

PSP is one of the nation’s largest specialty pet food retailers, operating approximately 700 stores nationwide, including more than 80 in Texas. In addition to its retail operations, PSP also has its own line of private label products and operates under a comprehensive franchise system built around federally registered trademarks and detailed Standard Operating Procedures (“SOPs”) governing all aspects of store operations.

In April 2025, PSP and Surefed entered into a ten-year franchise agreement granting Surefed the right to operate a PSP-branded store in San Antonio within an exclusive two-mile territory. Surefed is owned and operated by Defendant David Barksdale, who had substantial prior experience in the animal and pet food industry.

Importantly, the Franchise Agreement granted Surefed access to PSP’s trademarks, SOPs, and confidential information and contained post-termination covenants, including a non-compete prohibiting the operation of any business deriving 20% or more of its revenue from pet food, supplies or related products.

In March 2025, after nearly ten years of operation, SureFed informed PFP that it would not renew the franchise agreement, citing serious operational challenges. On May 8, 2025, PSP issued a formal expiration notice, reminding Surefed of its post-termination obligations and setting June 5, 2025 as the deadline for de-identification.

Shortly thereafter, a PSP team leader visited the San Antonio store and observed continued use of PSP-branded materials, SOP violations, and customer complaints. He also discovered flyers announcing a “makeover,” directing customers via QR code to a Google document soliciting customer information and preferences.

Procedural History

On May 16, 2025, PSP filed suit alleging breach of contract and willful trademark infringement under the Lanham Act and simultaneously moved for emergency injunctive relief. Defendants filed their response shortly before the hearing and represented that they had timely de-identified the store. The court issued a limited injunction prohibiting Defendants from using PSP’s trademarks and customer lists, while taking PSP’s remaining requests under advisement pending further briefing.

Court’s Analysis

To obtain a preliminary injunction, PSP was required to demonstrate: (1) a substantial likelihood of success on the merits; (2) a substantial treat of irreparable harm if the injunction is not granted; (3) that the threatened injury outweighs any harm that may result from the injunction to the non-movant; and (4) that the injunction will not undermine the public interest.

Likelihood of Success on the Merit

The court found PSP likely to succeed on its breach of contract claim, particularly as to the enforcement of the post-termination non-compete. Applying Michigan law pursuant to the franchise agreement’s choice of law provision, the court held that the non-compete was reasonable and enforceable under the “rule of reason” applicable to business-to-business agreement.

The court further concluded that SureFed likely breached the non-compete by continuing to operate a pet supply business at the former franchise location. Although Defendants asserted that they also intended to sell farm-animal products, an activity outside the scope of the franchise agreement, the court found the record sufficient to establish a likely breach. There is no evidence showing that pet supplies would account for less than the prohibited revenue threshold, and the nature of the ongoing operations supported a finding of non-compliance. The court was also satisfied that PSP had demonstrated resulting economic damages.

Irreparable Harm

However, despite PSP’s likelihood of success on the merits, the court denied broader injunctive relief based on PSP’s failure to establish irreparable harm. This is where the court focused the bulk of its analysis.

As a threshold matter, the court rejected PSP’s reliance on contractual language acknowledging irreparable harm, holding that such provisions are not dispositive. PSP further advanced three theories of irreparable harm, all of which the court found insufficient.

First, PSP argued that Defendants’ continued operations created customer confusion. The court found this argument largely moot following de-identification. The court also noted Defendants’ argument that any confusion prior to de-identification was attributable to PSP’s own conduct, as PSP failed to update its website to remove Defendants as a location. The court observed that directing customers to a closed location, rather than to an underperforming one, appeared equally detrimental to PSP’s reputation.

Second, PSP contended that Defendants’ access to its SOPs and confidential information created an unfair competitive advantage. The court rejected this theory, noting that Defendants cited dissatisfaction with the PSP system as a reason for non-renewal and intended to abandon it rather than exploit it. The court further found that much of the alleged confidential information lacked independent competitive value. Some materials were not confidential at all (such as accounting procedures), marketing materials had a limited shelf life, and PSP’s pricing strategies were designed for a national franchise system and were ill-suited to a small, independent family-owned business.

Critically, the court held that any harm arising from the misuse of confidential information was compensable through monetary damages. The franchise agreement included a damages formula, and the parties’ decade-long financial relationship provided ample records to calculate losses, undermining PSP’s claim of irreparable injury.

Third, PSP argued that Defendants’ continued operation would undermine confidence in the PSP franchise system and deter prospective franchisees in the San Antonio market. The court found this theory speculative and unsupported by the record, noting that PSP already had prospective franchisees interested in the area. The court further observed that other factors, such as the recent bankruptcy of PSP’s parent company, could independently affect franchise recruitment. Moreover, loss of market opportunity, the court concluded, is compensable through damages and does not constitute irreparable harm. Accordingly, the Court found that PSP failed to irreparable harm.

Balance of Hardship

Because PSP failed to establish irreparable harm and Defendants would suffer substantial hardship if they were forced to cease operations, the balance of hardships weighed against granting the TRO.

Public Interest

The court also held that the public interest weighed against injunctive relief. Enjoining Defendants’ operations would close a local business and result in the loss of 17 jobs, a consequence the court found inconsistent with the public interest under the circumstances.

Conclusion

Ultimately, the court granted limited injunctive relief prohibiting Defendants from using PSP’s trademarks and customer lists but denied PSP’s remaining requests for injunctive relief, including enforcement of the post-termination non-compete.

Key Takeaway

This case highlights an unexpected result where a franchisor successfully showed likelihood of success on the merits but could not establish irreparable harm. Although courts have often treated violations of non-compete provisions as almost automatically irreparable, PSP Franchising demonstrates that such assumptions are no longer guaranteed.

Indeed, in a decision issued the same month on similar facts, the Northern District of Illinois characterized non-compete provisions as a “canonical form of irreparable harm” and a prime candidate for injunctive relief. BrightStar Franchising, LLC v. Foreside Mgmt. Co., No. 1:25-cv-08741, 2025 WL 3022590 (N.D. Ill. Oct. 29, 2025). The contrast underscores that irreparable harm remains a fact-intensive inquiry, one that can vary significantly by the evidentiary record presented.

For franchisor litigators, this case is a cautionary reminder not to be complacent on the irreparable-harm prong, even where enforceability of a non-compete appears straightforward. For franchisee counsel, it provides a roadmap for leveraging operational facts to defeat injunctive relief. And for transactional attorneys, the decision offers a practical lesson: franchisors should promptly remove terminated franchisees from websites and marketing materials, and carefully consider whether damages formulas or overbroad confidentiality provisions may later undermine a claim of irreparable harm and the ability to secure injunctive relief.

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