Sixth Circuit Affirms Denial Of Broad Injunctive Relief Based On Franchisor’s “Unclean Hands” In Franchise Dispute

Adding to case law addressing franchisor–franchisee disputes involving system departures and post-termination competition, the United States Court of Appeals for the Sixth Circuit issued its opinion in Fetch! Pet Care, Inc. v. Atomic Pawz Inc., 170 F.4th 546 (6th Cir. 2026), affirming a district court’s decision to largely deny a franchisor’s request for preliminary injunctive relief based on the equitable doctrine of unclean hands.

PROCEEDINGS AND RULINGS

Background: Fetch! Pet Care, Inc. (“Fetch!”), a nationwide franchisor of pet-care services, filed suit against 31 former franchisees asserting claims for breach of contract, trademark infringement, trade secret misappropriation, and civil conspiracy. Fetch! alleged that the franchisees coordinated an effort to exit the system and operate competing businesses using its proprietary information and client relationships. The franchisees, however, contended that they were driven to leave the system due to dissatisfaction with Fetch!’s newer franchise models, high fees, and failure to deliver promised support and profitability.

The dispute arose in part from Fetch!’s transition from its legacy “1.0” model to newer “2.0” and “managed-services” models, which imposed higher fees but promised enhanced support. After tensions escalated—culminating in rescission notices, formation of a franchisee association, and eventual system access termination—many franchisees launched independent competing businesses.

District Court’s Ruling: The district court granted limited injunctive relief prohibiting use of Fetch!’s trademarks and restricting communications with current franchisees, but denied broader relief preventing operation of competing businesses. The court determined that Fetch! failed to demonstrate entitlement to equitable relief, citing evidence that Fetch! engaged in inequitable conduct sufficient to invoke the doctrine of unclean hands. Specifically, the court found that Fetch! may have misleadingly marketed its newer franchise models, obscured financial realities, and cut off franchisees from its system before material breach.

Sixth Circuit Decision: The Sixth Circuit affirmed, holding that the district court did not abuse its discretion. The appellate court emphasized that the unclean hands doctrine may bar equitable relief where the plaintiff engages in bad faith, deceit, or unconscionable conduct related to the dispute. The court found sufficient evidence that Fetch!’s aggressive marketing, questionable financial representations, and termination conduct supported application of the doctrine.

The court also clarified that, while loss of goodwill and competitive harm may constitute irreparable injury, such harm does not overcome equitable defenses where a franchisor’s conduct undermines its request for relief.

Accordingly, the Sixth Circuit affirmed the partial denial of the preliminary injunction.

KEY TAKEAWAYS

This decision highlights the importance of franchisor transparency in franchise sales and operations. Courts may deny injunctive relief—even where franchisees breach agreements—if the franchisor’s own conduct contributes to the dispute. The case also reinforces that equitable defenses such as unclean hands can play a decisive role in franchise litigation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.