Under what circumstances is the non-competition period for a 360 Painting franchise extended?
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, the non-competition period can be extended under specific circumstances related to defaults or court orders. The standard post-term non-competition period for a 360 Painting franchisee is two years following the termination or expiration of the franchise agreement or after a transfer by the franchisee.
However, this two-year restriction can be extended if the franchisee defaults under Section 18.1 of the agreement. In such cases, the restriction applies for the greater of two years from the termination date or two years from the date a court issues an order restraining the franchisee from violating Section 18.1. This means that if a franchisee breaches the non-compete agreement and a court order is required to enforce it, the non-compete period could effectively last longer than the initial two years from termination.
This provision protects 360 Painting by ensuring that franchisees who violate the non-compete terms do not gain an unfair advantage, and it gives the company additional time to safeguard its interests and confidential information. Prospective franchisees should be aware of these conditions, as any breach of the non-compete agreement leading to legal intervention could significantly prolong the period during which they are restricted from engaging in competitive business activities.