For many years, franchisors have been resigned to the fact that post-termination noncompetition covenants are not enforceable against California-based franchisees because California law prohibits them and applies even if the franchise agreement incorporates the more favorable law of the franchisor’s home jurisdiction.

But in the wake of a 2020 California Supreme Court case called Ixchel Parma v. Biogen, several franchisors have successfully challenged this conventional wisdom. Most recently, in BrightStar Franchising, LLC v. Foreside Mgmt. Co., 2025 WL 3022590 (N.D. Ill. Oct. 29, 2025), a federal court in Chicago required a California-based former franchisee to cease operating a competitive business under a different name in violation of the franchise agreement’s post-termination noncompetition covenant. The franchisee cited substantial authority for the proposition that such covenants are unenforceable against franchisees under California law. But the court agreed with the franchisor that the cited authority all predated the Ixchel case. Although that case did not involve franchising, the Chicago court interpreted the decision to narrow California’s statutory per se ban on noncompetes to the employment context and instruct courts to analyze restraints on “business operations in a commercial dealing”—like franchising—under a more forgiving reasonableness standard. This reasonable standard, the court held, did not conflict with Illinois law, so it applied even more favorable Illinois law to the noncompete analysis.

The decision, which is not binding on other federal courts, establishes a roadmap for other franchisors to attempt to enforce their franchise agreements’ post-termination noncompetes against California-based franchisees under the right circumstances.