What is the consequence if a 360 Painting franchisee violates the non-compete provision after termination?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee further understands and acknowledges the difficulty of ascertaining monetary damages and the irreparable harm that would result from breach of these covenants, and agrees that, in the event of the actual or threatened breach of this Section 18 by Franchisee or any of its partners or shareholders or any member of the immediate family of Franchisee or any of its partners or shareholders, Franchisor shall be entitled to an injunction, without bond, restraining such person from any such actual or threatened breach, in addition to any other relief to which Franchisor may be entitled in law or equity.
If any part of this restriction is found to be unreasonable in time or distance, such time or distance may be reduced by appropriate order of the court to that deemed reasonable.
Franchisee further acknowledges and agrees that the provisions of this Section 18.1 shall be tolled during any default under this Section 18.1, and that the restriction shall be applicable for the greater of two years from termination or two years from a court issuing an order restraining the Bound Party from violating this Section 18.1.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, if a franchisee violates the non-compete agreement, 360 Painting is entitled to seek an injunction without bond. This means 360 Painting can ask a court to order the franchisee to stop the violating behavior immediately, without having to put up any money as security. This is in addition to any other legal or equitable remedies that 360 Painting may pursue. The non-compete agreement is detailed in Section 18 of the Franchise Agreement.
The FDD also states that it is difficult to ascertain monetary damages from a breach of the non-compete and that such a breach would cause irreparable harm to 360 Painting. This acknowledgement strengthens 360 Painting's case when seeking an injunction, as it demonstrates the significant and unquantifiable damage the breach could cause. The franchisee acknowledges this difficulty and potential harm within the agreement itself.
Furthermore, the non-compete period can be extended if the franchisee is in default of the agreement. The restriction applies for the greater of two years from termination or two years from a court issuing an order restraining the franchisee from violating the non-compete. This means that any violation effectively pauses the clock on the non-compete, ensuring 360 Painting is protected for the full duration of the originally agreed-upon term. If any part of the restriction is found to be unreasonable, the court may reduce the time or distance to what is deemed reasonable.