The Indiana Franchise Disclosure Act and the Indiana Deceptive Franchise Practices Act, Ind. Code §§ 23-2-2.7-1—23-2-2.7-7 (1989) govern transactions in which a person offers or sells "franchises" as defined by the Acts. Both Acts define "franchise" as a contract by which:

1. Afranchisee is granted the right to engage in the business of dispensing goods or services, under a marketing plan or system prescribed in substantial part by a franchisor;
2. The operation of the franchisee’s business pursuant to such a plan is substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or its affiliate; and
3. The person granted the right to engage in this business is required to pay a franchise fee. Ind. Code § 23-2-2.5-1(a) and Ind. Code § 23-2-2.7-5

The Practices Act expressly provides for a cause of action against the franchisor in cases where a franchise agreement contains a provision prohibited by the Practices Act, and/or where the franchise agreement is terminated without good cause or not renewed without good cause. The Practices Act further requires at least ninety days notice for termination of a franchise or election not to renew a franchise, unless the franchise agreement otherwise provides. Ind. Code § 23-2-2.7-3. If the franchise agreement provides that the agreement may be terminated at any time, failure to give ninety day notice before termination is not in violation of the Practices Act. Snihurowycz v. AAMCO Transmissions, Inc., 418 N.E.2d 1190(Ind. Ct. App. 1981).

Indiana Code section 23-2-2.7-1 does not prohibit the provision for unilateral termination upon franchisee being in default three times. That section allows contract provisions permitting unilateral termination for good cause. The statute also states that material violation of the franchise agreement constitutes good cause but does not limit good cause to material violations. The contract only allows for unilateral termination upon three breaches or defaults. Without addressing whether the defaults amounted to a material violation of the franchise agreement, we hold that the contract does not permit termination without good cause.(Emphasis added)

A strong risk of consumer confusion arises when a terminated franchisee continues to use the former franchiser's trademark, actions which constitute a fraud.3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 25:31 (4th ed. 2005). Once a franchise contract is terminated, the former franchisee has no authorization or consent to continue to use the mark. Id. Use of the mark must cease once permission to use it no longer exists. Continued use of licensed trademarks by the franchisee after the franchise contract has been terminated constitutes breach of contract or trademark infringement. The terminated dealer who refuses to change the mark is an infringer.

Franchisor also needed to demonstrate that, once the agreement was terminated, Franchisees' continued performance of the acts sought to be enjoined would be a violation of Franchisor's legal rights.

The analysis under the Lanham Act for . . . unfair competition also applies to claims for unfair competition under Indiana common law. Felsher v. University of Evansville,755 N.E.2d 589, 598 (Ind. 2001) Indiana courts have created a cause of action for unfair competition, defined as "the attempt to create confusion concerning the source of the unfair competitor's goods. This common law tort was historically considered a subspecies of the class of torts known as tortious interference with business or contractual relations. (Internal citations omitted).

Unfair competition is always a question of fact. The question to be determined in every case is whether or not, as a matter of fact, the name or mark used by defendant has previously come to indicate and designate plaintiff's goods, or to state it another way, whether defendant, as a matter of fact, is by his conduct passing off his goods as plaintiff's goods, or his business as plaintiff's business. Vision Ctr. Northwest, Inc. v. Vision Value, LLC, 673 F. Supp. 2d 679, 683 (N.D. Ind. 2009)

Unfair competition . . . does not describe a single course of conduct or a tort with a specific number of elements; it instead describes a general category into which a number of new torts may be placed when recognized by the courts. The category is open-ended, and nameless forms of unfair competition may be recognized at any time for the protection of commercial values.

Although the law of unfair competition has been defined as the palming off of ones goods or services as that of some one else, and the attempt thereof, the tort of unfair competition is much broader and also includes actions for the interference with a contract or business relationship, as well as for predatory price cutting." (internal citations omitted). See also Moseley v. Secret Catalogue, Inc., 537 U.S. 418, 428, 123 S. Ct. 1115, 155 L. Ed. 2d 1 (2002) "Traditional trademark infringement law is part of a broader law of unfair competition that has its sources in English common law, and was largely codified in the Trademark Act of 1946 (Lanham Act)" (internal citations omitted).

Use of confusingly similar corporate, business and professional names has been labeled unfair competition by courts. See Moseley, 537 U.S. at 428; McCarthy, supra, at § 1:10. It is more precisely described as trade name infringement, which like passing off, is a subspecies of unfair competition. Keaton & Keaton v. Keaton, 842 N.E.2d 816, 820 (Ind. 2006)

There are several factors upon which a court must base the exercise of its equitable discretion when deciding whether to issue a preliminary injunction. The party seeking the injunction must make at least a prima facie showing of the violation of some legal right. Indiana Annual Conference Corporation v. Lemon(1956), 235 Ind. 163, 167, 131 N.E.2d 780, 782. The movant also must demonstrate that he will suffer irreparable harm if his request for a preliminary injunction is denied. Id. Indiana courts have also held that the party requesting a preliminary injunction must show the lack of an adequate remedy at law, McKain v. Rigsby, 250 Ind. 438, 444, 237 N.E.2d 99, 103(1968), although in this case, as in most cases, proof of one necessarily serves as proof of the other. Steenhoven v. College Life Ins. Co. of America, Ind.App., 458 N.E.2d 661(1984), 665, rehg denied, , Ind.App., 460 N.E.2d 973(1984). The extent to which the movant has shown the likelihood of success on the merits of his claim will affect the degree and likelihood of the potential harm the movant must demonstrate. SeeWells v. Auberry (1982), Ind. App., 429 N.E.2d 679, 683, trans. denied.
In addition,the court must weigh the relative potential harms to the parties stemming from the issuance of an injunction as well as the effect of the grant or denial of the injunction on the public interest. Rees v. Panhandle Eastern Pipe Line Co., 176 Ind.App. 597, 609, 377 N.E.2d 640, 648(1978).

There is a high risk of consumer confusion when a former Franchisee continues to operate under the Franchisor's trademarks because customers will continue to associate the former Franchisee with the Franchisor. Merry Maids Ltd. P'ship v. Kamara, 33 F. Supp. 2d 443, 445 (D. Md. 1998); see Precision Tune Auto Care, Inc. v. Pinole Auto Care, Inc., No. 00-1748-A, 2001 U.S. Dist. LEXIS 24840, at *14 (E.D. Va. Oct. 15, 2001). In such situations, courts have held that there is a likelihood of success on the merits for a claim of trademark infringement.