Are the non-competition, non-solicitation, and confidentiality covenants in the 360 Painting Franchise Agreement different from the Personal Covenants?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
(iv) General. The parties acknowledge that the covenants contained in this Section 18 are based on the reason and understanding that Franchisee and the Bound Parties will possess knowledge of Franchisor's business and operating methods and confidential information, disclosure and use of which would prejudice the interest of Franchisor and its franchisees.
18.2 Non-Solicitation.
Franchisee and the Bound Parties agree that while this Agreement is in effect and for two (2) years after expiration or termination of this Agreement for any reason, or following the date of a Transfer by Franchisee, they will not directly solicit or otherwise materially interfere with or disrupt the customer or vendor relationship between Franchisor and any of their respective customers and vendors or between any other 360 Painting franchisee and its customers and vendors.
18.3 Trade Secrets and Confidential Information.
Franchisee acknowledges and agrees that in connection with the operation of 360 Painting Businesses and the System, Franchisor has developed competitively sensitive proprietary and confidential information
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 41–42)
What This Means (2025 FDD)
According to the 2025 FDD, Section 18 of the 360 Painting Franchise Agreement outlines restrictive covenants and confidentiality provisions that apply to franchisees and related parties. These covenants include non-competition during the term of the agreement and for a period after termination or transfer, as well as non-solicitation of customers and vendors. The agreement also addresses the protection of trade secrets and confidential information. These covenants are designed to protect 360 Painting's business interests and confidential information.
The non-competition covenant during the term of the agreement prevents the franchisee and related parties from having any direct or indirect interest in a Competitive Business or performing services for a Competitive Business within the Protected Territory or a 20-mile radius of it. A Competitive Business is defined as any business offering painting, decorating, and wall finishing services. After the agreement terminates, the non-competition covenant extends for two years, restricting involvement with a Competitive Business within the Protected Territory or a 20-mile radius.
The non-solicitation covenant prohibits franchisees and related parties from directly soliciting or interfering with the relationships between 360 Painting and its customers or vendors, as well as relationships between other 360 Painting franchisees and their customers or vendors, both during the term of the agreement and for two years after its termination or transfer. Franchisees also acknowledge that they will gain knowledge of 360 Painting's business and operating methods, and that disclosing or using this confidential information would harm 360 Painting and its franchisees.
These covenants are acknowledged by the franchisee as necessary to protect 360 Painting's interests, and the franchisor is entitled to injunctive relief in the event of a breach or threatened breach. If any part of the restriction is deemed unreasonable, a court may reduce the time or distance to what is considered reasonable. The provisions of Section 18.1 are tolled during any default under this section, and the restriction applies for the greater of two years from termination or two years from a court order restraining the Bound Party from violating Section 18.1.