The US Court of Appeals for the Sixth Circuit affirmed a district court’s partial denial of a franchisor’s request for a preliminary injunction, finding that the franchisor’s inequitable conduct barred broader injunctive relief, even where the franchisor showed a likelihood of success on certain claims. Fetch! Pet Care, Inc. v. Atomic Pawz Inc., Case No. 25-1638 (6th Cir. Mar. 20, 2026) (Gibbons, Larsen, Murphy, JJ.)
Fetch! sued several former franchisee locations for breach of contract, trademark infringement, and trade secret misappropriation after the franchisees stopped paying royalties, downloaded client contact information, prepared transition plans, and continued operating competing businesses following termination of system access. Fetch! sought a temporary restraining order and then a preliminary injunction to bar operation of the competing businesses, use of alleged trade secrets, infringement of its registered trademarks, and interference with its business relationships.
The district court granted limited relief prohibiting use of Fetch!’s trademarks and restricting communications with existing Fetch! franchisees but declined to enjoin the defendants from continuing to operate competing businesses. The court concluded that although Fetch! was likely to succeed on certain claims, equitable relief was limited by Fetch!’s own conduct, including evidence that it aggressively marketed and sold its “2.0” franchise model while obscuring material differences from its legacy “1.0” model, and that it cut off certain franchisees’ system access under disputed circumstances. Fetch! appealed.
The Sixth Circuit emphasized that a preliminary injunction is an extraordinary equitable remedy and that equitable doctrines, including unclean hands, may independently bar relief. The Court agreed that the record supported a finding that Fetch!’s conduct in marketing and selling its 2.0 and managed-services franchises (particularly Fetch!’s removal of distinctions in disclosure materials and aggressive profitability representations) could constitute bad faith sufficient to deny broader injunctive relief.
The Sixth Circuit also addressed the three legacy 1.0 franchisees for which the district court had not applied unclean hands. Affirming on an alternative ground, the Court found that unclean hands likewise barred injunctive relief as to those defendants. The Court relied on evidence that Fetch! terminated or restricted their system access while they were current on payments and before they began operating competing businesses, and that Fetch! may have failed to comply with applicable state franchise law requirements governing notice and opportunity to cure.
Although it affirmed on unclean hands, the Sixth Circuit clarified aspects of its preliminary injunction jurisprudence:
- It rejected the district court’s suggestion that a heightened showing of irreparable harm applies when claims are subject to arbitration, confirming that the traditional four-factor test governs.
- It found that the district court erred in applying a clear-and-convincing standard for irreparable harm rather than the federal standard requiring a likelihood of irreparable injury.
- It explained that competitive harms, such as loss of goodwill and customer relationships, can qualify as irreparable precisely because they are difficult to quantify.
Because Fetch!’s inequitable conduct supported denial of broader relief, the Sixth Circuit affirmed the district court’s refusal to enjoin the defendants’ competing operations while leaving in place the narrower injunction prohibiting use of Fetch!’s trademarks and certain communications.
