What remedies does 360 Painting have in the event of a breach of the non-competition agreement?
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, the franchisor is entitled to specific remedies if a franchisee breaches the non-competition agreement. Given the difficulty of calculating monetary damages and the potential for irreparable harm, 360 Painting can seek an injunction without posting a bond. This legal action would restrain the franchisee, their partners, shareholders, or immediate family members from continuing or threatening to breach the agreement. This remedy is in addition to any other legal or equitable relief that 360 Painting may pursue.
The non-competition restrictions outlined in Section 18.1 are subject to certain conditions. If any part of the restriction is deemed unreasonable in terms of time or distance, a court may reduce the restriction to a reasonable level. Furthermore, any period of default under Section 18.1 will extend the duration of the non-competition restriction. The restriction will apply for either two years from the termination date or two years from the date a court issues an order preventing the franchisee from violating Section 18.1, whichever is longer.
These measures are designed to protect 360 Painting's interests and the interests of its franchisees by preventing unfair competition from former franchisees who may have gained knowledge of confidential business practices and customer relationships. The ability to seek injunctive relief is a strong deterrent against violating the non-competition agreement, as it can quickly halt any competitive activities that could harm the 360 Painting system.