Does the non-solicitation clause prevent a former 360 Painting franchisee from interfering with customer relationships of other 360 Painting franchisees?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
- 18.2 Non-Solicitation.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, the non-solicitation clause in the 360 Painting franchise agreement does address the relationships between franchisees and their customers. Specifically, it states that for two years after the agreement expires or terminates, a former franchisee cannot directly solicit or disrupt the customer relationships of other 360 Painting franchisees. This restriction applies regardless of the reason for termination or expiration of the agreement.
This provision aims to protect the customer base that existing 360 Painting franchisees have worked to establish. It prevents a former franchisee from leveraging their past association with the brand to unfairly compete with other franchisees within the 360 Painting system. The clause covers both direct solicitation and any other actions that could materially interfere with those customer relationships.
This non-solicitation clause is a fairly standard practice in franchising, designed to maintain the integrity of the franchise network and protect individual franchisees from unfair competition by former franchisees who may have gained knowledge and access to customers during their time with the brand. The FDD also states that the franchisee acknowledges the difficulty of ascertaining monetary damages and the irreparable harm that would result from breaching this covenant, and agrees that the 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.
Prospective franchisees should carefully consider the implications of this non-solicitation clause, particularly if they plan to continue operating a similar business after leaving the 360 Painting system. Understanding the scope and duration of these restrictions is crucial for making an informed decision about investing in a 360 Painting franchise.