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Bankruptcy Keyed to Howard 7th Ed.
Silk Plants, Etc. Franchise Systems, Inc. v. Register (In re Register)
Citation:
95 B.R. 73 (1989)Facts
On March 8, 1986, Perry Elton Register and Martha A. Register executed a franchise agreement with Silk Plants, Etc. Franchise Systems, Inc., granting them the right to operate a Silk Plants, Etc. specialty retail store selling artificial flowers, plants, and related items. The franchise agreement included a covenant-not-to-compete that prohibited the Registers from engaging in any capacity in a business offering similar merchandise for two years after termination of the agreement within a ten-mile radius of their store. On March 15, 1988, the Registers filed a Chapter 13 bankruptcy petition. On May 18, 1988, through an agreed order, the Registers rejected the franchise agreement pursuant to their rights under the Bankruptcy Code. Following rejection, the Registers began operating a business substantially similar to their former Silk Plants, Etc. franchise. Silk Plants, Etc. then filed an adversary proceeding seeking to enjoin the Registers from operating the competing store, arguing that such activities violated the covenant-not-to-compete.
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