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Court Watch
The Georgia Court of Appeals found that both in-term and post-termination covenants not to compete in a bakery/deli business franchise agreement were unreasonable and unenforceable in Atlanta Bread Co. Int'l, Inc. v. Lupton Smith, CCH 13,911 (Ga. App. May 14, 2008).
Sean Lupton-Smith owned several Atlanta Bread Company franchises. On Feb. 14, 2006, Atlanta Bread Company notified Smith that it intended to terminate his franchise effective Feb. 24. Atlanta Bread stated that the termination was due to Smith operating a competing business called PJ's Coffee Shop using Atlanta Bread's methods and proprietary information. Smith filed a lawsuit seeking to enjoin the termination and obtained a temporary restraining order. Eventually, the TRO was lifted, and Atlanta Bread purchased the assets of the former franchised stores. Smith then amended his complaint to seek damages for wrongful termination of the franchise agreement. The trial court entered partial summary judgment for Smith, denied Smith's motion for partial judgment on the pleadings, and denied Atlanta Bread Company's motion cross-motion for summary judgment.
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