For how long after the termination or expiration of the 360 Painting franchise agreement does the post-term non-competition clause apply?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
ectly, for and on behalf of itself, himself, herself or any other person or entity, during the term of this Agreement, (a) have any direct or indirect interest as a disclosed or beneficial owner in a Competitive Business (as defined below) or (b) perform services as a director, officer, manager, employee, consultant, representative, agent, or otherwise for a Competitive Business which is located (i) within the Protected Territory, or (ii) within a radius of twenty (20) miles as the crow flies of the Protected Territory, or (iv) within a radius of twenty
- (20) miles as the crow flies of any other 360 Painting Business or 360 Painting Business in development that has been assigned a protected; or (v) within the United States of America; or (vi) within the world.
- (ii) Post-Term Non-Competition. 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 P
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 lasts for two years after the termination or expiration of the franchise agreement. This restriction also applies for two years following the date of a transfer by the franchisee.
Specifically, the franchisee and any bound parties agree not to have any direct or indirect interest in a Competitive Business or perform services for a Competitive Business. This includes being a director, officer, manager, employee, consultant, representative, or agent. The restrictions apply if the Competitive Business is located or operating within the Protected Territory, within a 20-mile radius of the Protected Territory, or within 20 miles of any other existing 360 Painting business.
It's important to note that these restrictions can be extended. The agreement states that the provisions of Section 18.1, which includes the non-compete clause, will be tolled during any default under that section. This means the restriction will 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 Section 18.1. This could effectively lengthen the non-compete period if a franchisee violates the agreement and is subject to a court order.