U.S. Sixth Circuit Court of Appeals affirms denial of broad injunctive relief in Pet Care franchise dispute

This alert follows up to a prior client alert from last year about a franchisor-franchisee dispute originally arising out of the United States District Court for the Eastern District of Michigan. The United States Court of Appeals for the Sixth Circuit has now weighed in. In Fetch! Pet Care, Inc. v. Atomic Pawz Inc., 170 F.4th 546 (6th Cir. 2026), the Sixth Circuit underscores how a franchisor’s lack of transparency in franchise sales and support can foreclose injunctive or other equitable relief—even where competitive harms by franchisees are evident.

In this case, the Sixth Circuit affirmed the district court’s order granting only narrow injunctive relief (prohibiting use of the franchisor’s marks and certain communications with existing franchisees) and otherwise denying a broader preliminary injunction. Among other things, the Sixth Circuit found that the franchisor’s “unclean hands” barred most equitable relief sought by the franchisor.

The facts are slightly complicated. The franchisor (Fetch! Pet Care) is a pet care business that was acquired in 2020 by Phoenix Brands. Fetch! operated on two primary franchise models: a legacy “1.0” model with revenue-based royalties and limited corporate support, and a later “2.0” model (including a sales and marketing call center) with higher fees. There was also a subset of the “2.0” model that used a premium “Managed-Services” or “investor” model with more direct corporate involvement. After widespread dissatisfaction among several newer “2.0” model franchisees (including the formation of a franchisee association and initiation of arbitration, and failed mediation attempts), the franchisor observed that certain franchisees were downloading client information and starting competing businesses. The franchisor cut multiple franchisees off from the franchisor’s system without notice.

The franchisor filed an amended complaint against 31 former franchisees, asserting claims for breach of contract, federal trademark infringement, misappropriation of trade secrets, and civil conspiracy to commit tortious interference with business relations. The district court entered a narrow temporary restraining order (TRO) and, after a two-day evidentiary hearing, granted limited preliminary relief enjoining trademark use and certain communications with existing franchisees but otherwise denied the franchisor’s broader request to halt the franchisees’ competing operations. The franchisor appealed the ruling.

The Sixth Circuit held that the district court did not abuse its discretion in denying injunctive relief against the “2.0” and “Managed-Services” franchisees based on the doctrine of “unclean hands,” which is an equitable doctrine that effectively holds the plaintiff to the same good faith demands as is required of the defendants.  Here, the Sixth Circuit found multiple examples of problematic behavior by the franchisor to warrant application of the “unclean hands” doctrine:

• The franchisor removed disclosures distinguishing the “1.0” and “2.0” franchise models from later Franchise Disclosure Documents (FDD). Notably, the 2018 FDD included a sub-section in Item 19 titled “Comparison Between Fetch! 2.0 and Fetch! 1.0” with side-by-side columns; by the 2023 FDD, these distinctions were removed and replaced with general performance metrics reflecting high maximum gross sales. This removal coincided with the change in ownership of the franchisor.
• The franchisor aggressively marketed the opportunity—including through promotional videos referencing the ability to generate $900,000 in annual gross sales and consultants telling prospective franchisees that existing locations were “bringing in a million dollars in total revenue”—while obscuring the full nature of the business and expected financial performance.
• The franchisor also promoted the managed-services model as a “passive income” investor opportunity.
• Multiple franchisees credibly testified they were unaware of the differences between the models, could not achieve profitability under “2.0,” and were effectively forced out, supporting the district court’s bad-faith finding.

Despite some factual differences and the fact that the first material breach was by the franchisees, the Sixth Circuit also affirmed denial of broader injunctive relief as to the “1.0” franchisees on “unclean hands” grounds—notably basing its affirmance on unclean hands rather than the first-material-breach defense relied upon by the district court. For example, the franchisor preemptively cut off those franchisees’ system access, while they were current on payments and before they operated competing businesses or misused confidential information. The legacy franchisees consistently and credibly testified that, until the franchisor cut their access, they had no intention of leaving or competing. The Sixth Circuit also noted that state franchise statutes (in this case, Washington, Illinois, and Iowa) requiring at least thirty days’ written notice and a reasonable cure period likely were implicated when the franchisor terminated access without notice. Given the equitable taint, the Sixth Circuit affirmed the denial of broader injunctive relief (although it kept the narrow prohibition on trademark use for these franchisees).

This decision is pertinent for both franchisors and franchisees. For franchisors, it is clear that transparency in franchise sales materials and disclosure documents is critical. By removing or obscuring the “1.0” and “2.0” model differences and touting performance that is not supported by data, the franchisor undercut its own ability to obtain equitable relief when the franchisees left and began to operate competing ventures. Cutting off franchisees’ access to essential systems without notice—particularly while payments are current and before proven misconduct—was a material factor in the court’s finding that the “unclean hands” doctrine defeated the franchisor’s request for a preliminary injunction. Finally, the Sixth Circuit clarified the standard for irreparable harm, indicating that competitive harms can qualify as irreparable injury.  However, the court determined that the “unclean hands” doctrine can still bar injunctions despite strong showings on other factors.

For franchisees, the demonstration of evidence that a franchisor misled franchisees about business models or financial performance provided a powerful unclean-hands defense to injunctive relief. However, a franchisee using the franchisor’s trademarks or confidential information after separation is still a risky strategy as courts may still enter orders halting trademark use and misuse of trade secrets even while denying broader restraints on competition. At the end of the day, however, a party’s ability to provide documented, credible testimony will carry significant weight at the preliminary injunction stage, where trial courts receive strong deference on witness credibility.

In summary, the Sixth Circuit denied broad injunctive relief largely because the franchisor’s own conduct—aggressive, opaque franchise marketing and cutting off access without notice—tainted its request for equitable relief. At the same time, the court clarified that in the Sixth Circuit, irreparable harm only requires a showing of likely injury—not clear and convincing proof—and that competitive harms may satisfy that standard. Nevertheless, courts in the Sixth Circuit will withhold equitable relief on the grounds of “unclean hands” where a franchisor’s misconduct directly relates to the underlying dispute.