Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: Former Fantastic Sams franchisee alleged to have violated noncompete provisions, (Aug 4, 2016)

A former Fantastic Sams franchisee was liable for breach of contract, trademark infringement, unfair competition, trade dress infringement, trademark dilution, and trade dress infringement arising from his failure to comply with the post-termination obligations under the license agreement, according to a complaint filed by the franchisor in the federal district court in Houston (Fantastic Sams Franchise Corp. v. Mosley, August 3, 2016).

The complaint states that Gerald Mosley entered into a license agreement with Fantastic Sams Franchise Corporation to operate a Fantastic Sams hair salon. The license agreement required, among other things, that upon its expiration Mosley: (1) cease using the Fantastic Sams Marks and any trade dress imparted by Fantastic Sams; (2) transfer the telephone numbers used while operating the Fantastic Sams franchise to Fantastic Sams; (3) refrain from participating in a competing business, within a five-mile radius of the former franchise location, for a two-year period; and (4) not conduct any business that creates the impression that the license agreement is still in force. The license agreement expired on April 17, 2016, and Mosley did not seek to renew it for another term.

According to the complaint, after the license agreement expired, Mosley, and/or those acting in concert with him, operated a competing salon, under the name "Shear Perfection of Cypress", that is located less than five miles from the former franchise location. The competing salon: (1) uses the same phone number as the phone number used in the former franchise location; (2) uses the Fantastic Sams Marks; and (3) holds itself out to being affiliated with Fantastic Sams.

Fantastic Sams asserts claims of breach of contract, trademark infringement, unfair competition, trade dress infringement, trademark dilution, and trade dress infringement arising from Mosley’s violation of the license agreement’s non-competition provision and his unauthorized use of Fantastic Sams’ trademarks, trade name, and trade dress in commerce.

The action seeks: (1) an injunctive order directing Mosley, and all those acting in concert or participation with him, to comply with the post-termination obligations under the license agreement; (2) to enjoin them from infringing upon Fantastic Sam’s trademarks and trade name, holding themselves out to be affiliated with Fantastic Sams, and engaging in unfair competition with Fantastic Sams; (3) attorneys’ fees and costs; and (4) such further relief as the court may deem just and proper.

The case is No. 4:16-cv-02318.

Attorneys: Dawn R. Tezino (MehaffyWeber) and Scott McIntosh and Jonathan Labukas (Quarles & Brady, LLP) for Fantastic Sams Franchise Corp.

Companies: Fantastic Sams Franchise Corp.

News: FranchisingDistribution TexasNews