Cookie Dough Bliss Franchising, LLC v. Feed Your Soul Minnesota, LLC

Background

Cookie Dough Bliss Franchising, LLC, a franchisor of edible cookie dough businesses, sued Feed Your Soul Minnesota, LLC, and its owners, Gina Ehrisman and John Ehrisman. The defendants had operated a Cookie Dough Bliss store and food truck in Minnesota under a November 2021 franchise agreement. The parties disputed who breached the agreement, but agreed that it had ended by May 29, 2023.

After the agreement ended, the defendants began operating a cookie-dough treats business called “UnBakeable” at the same principal place of business. Cookie Dough alleged that the defendants’ use of the same Facebook website, a rebranded food truck, and a similar logo caused consumer confusion and violated the agreement’s noncompetition provision. That provision barred the defendants from participating in a competing business within a specified area for two years after termination. Cookie Dough ultimately limited its request for emergency relief to enforcement of that noncompetition provision.

Legal standard

The court treated Cookie Dough’s request for expedited relief as a motion for a preliminary injunction under Federal Rule of Civil Procedure 65. A preliminary injunction is an extraordinary remedy, and the moving party must address four factors: likely irreparable harm, the balance of harms, the likelihood of success on the merits, and the public interest.

Court’s analysis

The court found that Cookie Dough had not shown likely irreparable harm. It had not established consumer confusion and, according to the court, might have contributed to confusion by continuing to represent on its website that it operated a mobile concession trailer in Minnesota. Cookie Dough was also not currently registered to sell franchises in Minnesota, making the alleged harm to future refranchising uncertain and not immediate. The court likewise viewed the alleged risk that other franchisees would disregard their agreements as speculative. In addition, the franchise agreement provided for $100,000 in liquidated damages for each breach of the noncompetition provision, which weighed against finding that money damages would be inadequate.

The court also concluded that Cookie Dough had not shown a sufficient likelihood of success. Under Minnesota law, noncompetition provisions are disfavored but may be enforceable when they protect a legitimate interest and are no broader than necessary. The court questioned whether the provision served a legitimate purpose because Cookie Dough was not registered to sell franchises or otherwise compete in Minnesota. It also questioned the reasonableness of the geographic scope, which the court described as effectively covering a 130-mile radius around Minneapolis. Finally, the parties disputed whether the defendants used Cookie Dough’s recipes, whether consumers were confused, and which party contributed to any confusion. Because of those factual disputes, the court said it could not determine at that stage whether the agreement had been breached or by whom.

The balance of harms favored denying the injunction. The court said an injunction would put the defendants out of business, end a family’s primary source of income, and potentially cause the owners to default on a $230,000 loan. By comparison, the harm to Cookie Dough from denial was uncertain. The public-interest factor was neutral because both competition and enforcement of contracts serve public interests.

Disposition

The court concluded that three of the four factors weighed against granting preliminary injunctive relief and that the remaining factor was neutral. In Cookie Dough Bliss Franchising, LLC v. Feed Your Soul Minnesota, LLC, Judge Jerry W. Blackwell ordered that Cookie Dough’s Motion for Temporary Restraining Order and Preliminary Injunction in Aid of Arbitration was DENIED. The ruling concerned the requested preliminary relief; the opinion did not finally decide the parties’ underlying contract dispute.