What is the effect of a default under Section 18.1 on the non-competition period for a 360 Painting franchise?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
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 the 2025 360 Painting Franchise Disclosure Document, any default under Section 18.1 will effectively pause or 'toll' the non-compete obligations. This means the restriction applies for a period of two years from the date of termination or two years from a court order restraining the franchisee from violating Section 18.1, whichever is longer.
For a prospective 360 Painting franchisee, this implies that any violation of the non-compete agreement during or after the franchise term can extend the period during which they are restricted from engaging in competitive activities. This provision protects 360 Painting by ensuring franchisees do not breach their non-compete obligations without facing extended consequences.
This clause is significant because it provides 360 Painting with additional protection beyond the standard two-year non-compete period, especially if legal action is required to enforce the agreement. Franchisees should be aware that any breach, even a minor one, could prolong their non-compete obligations, potentially impacting their ability to pursue other business ventures in the painting and decorating services industry.