United States District Court, D. New Jersey
INTERNATIONAL HOUSE OF PANCAKES, LLC, a Delaware limited liability company, IHOP IP, LLC, a Delaware limited liability company, Plaintiffs,
PARSIPPANY PANCAKE HOUSE INCORPORATED, a New Jersey corporation, Defendant.
David S. Sager, Lowenstein Sandler, Roseland, NJ, for Plaintiffs.
Jonathan D. Clemente, Clemente Mueller, P.A., Morristown, NJ, for Defendant.
WILLIAM J. MARTINI, District Judge.
This matter comes before the Court on Plaintiffs International House of Pancakes, LLC and IHOP IP, LLC's (" IHOP's" ) motion to preliminarily enjoin  Defendant Parsippany Pancake House Incorporated (" Pancake House" ) from using the " IHOP" brand name or any IHOP related trademarks, service marks, and trade names (" Marks" ) pursuant to Rule 65 of the Federal Rules of Civil Procedure. Pancake House does not oppose the motion. For the reasons that follow, IHOP's motion will be GRANTED.
I. FACTUAL AND PROCEDURAL BACKGROUND
On December 30, 2005, IHOP and Pancake House— through its president, Joseph Cregg— entered into a Franchise Agreement
(" Agreement" ) which gave Pancake House the right to operate an IHOP franchise at 792 Route 46 West, Parsippany, New Jersey, and the right to use IHOP's trademarks at that location so long as the Agreement remained in effect (Agreement, § 8.01). The Agreement also set forth the respective rights and obligations of IHOP and Pancake House. For example, Pancake House and Cregg agreed that Cregg would participate in the day-to-day operation of the franchise, comply with applicable laws, and adhere to certain business and ethical practices, as set forth in sections 10.5, 10.8 and 10.10.
The Agreement further set forth the specific grounds under which IHOP could terminate that Agreement, and thereby revoke Pancake House's right to use IHOP's Marks. Notably, the Agreement stated that IHOP could:
" terminate the Agreement immediately, without prior notice to Franchisee, upon the occurrence of ...
(e) [the] Conviction of Franchisee, or any of its principal shareholders, of a felony or any other criminal misconduct which is relevant to the operation of the franchise [or]
(f) If in Franchisor's reasonable judgment, Franchisee's continued operation of the franchise will result in an imminent danger to public health or safety."
However, as set forth in section 12.04, any termination of the Agreement by IHOP would also have to comply with the New Jersey Franchise Practices Act (" FPA" ), N.J.S.A. § 56:10-1, et seq. And under the FPA:
" [a] franchisor [may not] ... terminate ... a franchise without having first given written notice setting forth all the reasons for such termination ... to the franchisee at least 60 days in advance of such termination ..., except ... where the alleged grounds are the conviction of the franchisee ... of an indictable offense directly related to the business conducted pursuant to the franchise in which event ...