Upon termination or non-renewal of my 360 Painting franchise, must I comply with the covenants not to compete?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR INDIANA FRANCHISEES
The Indiana Deceptive Franchise Practices Law (Indiana Code 23-2-2.7) contains certain laws governing the relationship between a Franchisor and Franchisee. Certain of these laws conflict with provisions contained in our customary Franchise Agreement and related documents. Set forth below is an overview of certain disclosures contained in the attached Franchise Disclosure Document which are amended by virtue of the Indiana law.
-
- The covenants of non-competition with respect to you, as an Indiana franchisee, will be limited to an area equal to the protected area granted to you and other Franchisees.
Item 17, Additional Disclosures. The following statements are added to Item 17:
The Illinois Franchise Disclosure Act governs the Franchise Agreement. Section 4 of the Illinois Franchise Disclosure Act provides that any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration outside of Illinois.
Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
WASHINGTON ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT, THE FRANCHISE AGREEMENT, AND ALL RELATED AGREEMENTS
The provisions of this Addendum form an integral part of, are incorporated into, and modify the Franchise Disclosure Document, the franchise agreement, and all related agreements regardless of anything to the contrary contained therein. This Addendum applies if: (a) the offer to sell a franchise is accepted in Washington;(b)thepurchaser ofthe franchise is a resident ofWashington; and/or(c)the franchised business thatisthe subject ofthe sale isto be located or operated,wholly or partly,inWashington.
-
- Conflict of Laws. In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, chapter 19.100 RCW will prevail.
ADDENDUM TO 360 PAINTING, LLC FRANCHISE DISCLOSURE DOCUMENT FOR MARYLAND FRANCHISEES
Additional Disclosures:
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 FDD, whether you must comply with non-compete covenants upon termination or non-renewal of your 360 Painting franchise depends on the state where your franchise is located. For instance, Indiana law modifies the standard franchise agreement, limiting non-competition covenants to the franchisee's protected area. Illinois law stipulates that the Illinois Franchise Disclosure Act governs the franchise agreement, and any provision that waives compliance with Illinois law is void. Similarly, Washington state law dictates that the Washington Franchise Investment Protection Act will prevail in case of conflicting laws.
These state-specific addenda indicate that the enforceability and scope of non-compete clauses can vary significantly. Some states may have stricter regulations that protect franchisees, while others may adhere more closely to the terms outlined in the standard 360 Painting franchise agreement. Franchisees in Maryland also have additional protections, as no statement can waive claims under state franchise law.
Therefore, it is essential for prospective 360 Painting franchisees to carefully review the state-specific addenda applicable to their location. These addenda modify the standard franchise agreement and may impact the enforceability of non-compete clauses. Franchisees should seek legal counsel to fully understand their rights and obligations in their specific state, particularly concerning termination, non-renewal, and post-term competition.