Besides termination or expiration, what other event triggers the post-term non-competition clause for a 360 Painting franchise?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to and not in limitation of any other restrictions on Franchisee contained herein, Franchisee and the Bound Parties agree that they will not, for two (2) years following the effective date of termination or expiration of this Agreement for any reason, or following the date of a Transfer by Franchisee, directly or indirectly, for and on behalf of itself, himself, herself or any other person or entity, (a) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business or (b) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business which is (i) located or operating within the Protected Territory; or (ii) within a radius of twenty (20) miles as the crow flies of the Protected Territory or (iii) located in or operating within twenty (20) miles of the primary office of any other existing 360 Painting Business or 360 Painting Business in development that has been assigned a protected territory.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 360 Painting Franchise Disclosure Document, the post-term non-competition clause is triggered not only by the termination or expiration of the Franchise Agreement but also following the date of a Transfer by the franchisee. This means that if a franchisee sells or transfers their franchise to another party, the non-compete obligations will immediately apply to the original franchisee.
The post-term non-competition agreement states that for two years following the termination, expiration, or transfer, the franchisee and any Bound Parties are restricted from having any direct or indirect interest in a Competitive Business or performing services for a Competitive Business. This restriction applies within the Protected Territory, within a 20-mile radius of the Protected Territory, or within 20 miles of any other existing 360 Painting Business.
This provision is designed to protect 360 Painting's business interests and prevent former franchisees from using the knowledge and experience gained during their franchise term to compete unfairly with the franchisor or other franchisees. Prospective franchisees should carefully consider the implications of this non-compete clause, especially if they plan to sell their franchise in the future, as it will restrict their ability to work in the painting and decorating industry for two years after the transfer.