A COBB COUNTY judge has held that two rules the Atlanta Bread Co. cited to strip a franchisee of five restaurants were unenforceable and cleared the way for a trial on other issues that could cost the company $16 million.
Judge Dorothy A. Robinson of Cobb County Superior Court last month granted partial summary judgment to the ex-franchisee, Sean Lupton-Smith, who lost his franchises when he opened a PJ’s Coffee & Lounge at Atlantic Station. He won on claims that Atlanta Bread could not enforce rules prohibiting him from working in a “baker/deli business” or opening a similar venture within 20 miles of an Atlanta Bread Co. location.
“If Plaintiff Lupton-Smith were to take a position of janitor in a deli, he would be in violation” of the first restriction, wrote Robinson, who nixed the second reason by noting that courts have held territorial restrictions unenforceable if they are subject to change through no action of the franchisee.
But Robinson found that a trial was needed to decide whether Lupton-Smith disclosed trade secrets and whether Atlanta Bread wrongfully terminated the franchise agreement.
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