Green Acres has won its bid to secure an injunction against former South Auckland franchisees Garth Ruebe and Gwyneth Ruebe.
The injunction prevents the Ruebes from providing lawn mowing services to Green Acres customers and from carrying on a lawn mowing service in competition with Green Acres.
The decision was made following arbitration under Barry Patterson, QC. While the details of the arbitration remain confidential, the award was entered as a judgement in the High Court in Auckland.
Green Acres said that Mr and Mrs Ruebe operated a sub-franchise in South Auckland from 26 January 2004 until 26 January 2014.
"When their sub-franchise agreement expired the Ruebes had a right to renew for a further ten year term, but chose not to exercise it. Instead they removed Green Acres livery from their vehicle, changed their telephone numbers, handed back the Green Acres operations manual and set up their own business.
"They contacted the customers they had acquired while they were Green Acres sub-franchisees and offered to continue servicing them. "
Green Acres applied to the High Court for an interim injunction against the Ruebes pending arbitration.
They lost that application in March this year, but His Honour Justice Lang directed that the dispute should be substantively resolved at arbitration and that the process should be expedited.
"We brought this case to protect our brand, our intellectual property, our franchise agreement and the businesses of 600 other people trading under the Green Acres name around New Zealand," said Logan Sears, Green Acres CEO.
"The court order is consistent with Green Acres' interpretation of the franchise agreement. When the agreement ends, it is Green Acres, not the franchisee, who retains the right to deal with customers previously serviced under its banner. It also confirms that an exiting franchisee may not provide services in competition to Green Acres."
"Franchising is a major contributor to the New Zealand economy," he added. "It promotes independent business ownership and business excellence. But for it to function effectively franchisors must have confidence that their agreements can be upheld. I hope that this result has set a precedent that will provide some certainty for the franchising sector."
The Court order confirms that Green Acres may apply for damages and costs.