Is the Exit subfranchisor required to present evidence of irreparable injury to obtain injunctive relief against the franchisee?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
nts to Subfranchisor promptly upon expiration or termination of this Agreement, the parties agree that the provisions of this section shall in such instance be deemed to constitute an absolute assignment by Franchisee of all of its right, title, and interest in each such EXIT Realty Corp. Franchise Agreement and Approved Supplier Agreement to Subfranchisor or its designee.
36. INJUNCTIVE RELIEF
Subfranchisor will be entitled to seek the entry of temporary and permanent injunctions and orders of specific performance enforcing the provisions of this Agreement relating to: (i) the Proprietary Marks and the EXIT System; (ii) the obligations of Franchisee upon termination or expiration of this Agreement; (iii) assignment of this Agreement or ownership interests of Franchisee; (iv) the covenants not to compete; (v) confidentiality; or (vi) any act or omission by Franchisee, Franchisee's employees or Franchisee's agents that: (1) constitutes a violation of any applicable law, ordinance or regulation; (2) is dishonest or misleading; or (3) may impair the goodwill associated with the Proprietary Marks and the EXIT System. Franchisee agrees that any violations will cause serious, irreparable injury to the EXIT System that cannot be compensated for by money damages and that the provisions of this section are necessary to protect the legitimate business interests of EXIT and Subfranchisor and other franchisees including, without limitation, prevention of damage to or loss of goodwill associated with the Proprietary Marks, prevention of the unauthorized dissemination of marketing, promotional and other confidential information to competitors of EXIT and other franchisees, protection of EXIT's trade secrets, and the integrity of the EXIT System, and the prevention of duplication of the System. Franchisee will indemnify the Subfranchisor for all costs that it incurs in any such proceedings including, without limitation, reasonable attorneys' fees, expert witness fees, costs of investigation, court costs, accounting fees, travel and living expenses, and all other related costs incurred by Subfranchisor. Subfranchisor will be entitled to obtain injunctive relief against Franchisee enforcing the foregoing provisions without the need to present evidence of irreparable injury and without the posting of any bond or security.
37. EXECUTORY CONTRACT
The parties agree that this Agreement shall be construed as an executory contract.
38. HEADINGS
Paragraph or subparagraph headings are for reference purposes only and shall not in any way modify or limit the statements contained in any paragraph or subparagraph. All words in this Agreement shall be deemed to include any number or gender as the context or sense of this Agreement requires.
39. JOINT AND SEVERAL LIABILITY
If the Franchisee consists of more than one (1) individual, more than one (1) entity or a combination of individuals and entities, then the liability of all such individuals and entities under this Agreement will be deemed to be joint and several.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, in most cases, the subfranchisor is entitled to seek injunctive relief against a franchisee without needing to present evidence of irreparable injury or post a bond or security. This applies to provisions regarding the Proprietary Marks and the Exit System, obligations upon termination or expiration, assignment of the agreement or ownership interests, covenants not to compete, confidentiality, or any act or omission by the franchisee, their employees, or agents that violates laws, is dishonest or misleading, or may impair the goodwill associated with the Proprietary Marks and the Exit System.
However, there is an exception for franchisees in Indiana. If the franchise agreement is governed by Indiana law, a court will determine whether damages alone can adequately compensate the subfranchisor for violations by the franchisee or their shareholders, partners, or members. The court will also decide whether the subfranchisor must post a bond or other security in any injunctive proceeding and the amount of such bond or security.
This means that for Exit franchisees outside of Indiana, the subfranchisor has a streamlined path to obtaining injunctive relief, making it easier to enforce the franchise agreement. For prospective Exit franchisees in Indiana, the process for obtaining injunctive relief may be more complex, as a court will need to make specific determinations regarding damages and the need for a bond.