What happens to the 7 Brew covenant not to compete if I breach the agreement?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
You, each owner, and your and their Immediate Families will each be bound by these competitive restrictions for two (2) years beginning on the effective date of this Agreement's termination or expiration. However, if a restricted person does not begin to comply with these competitive restrictions immediately, the two (2)-year restrictive period for that non-compliant person will not start to run until the date on which that person begins to comply with the competitive restrictions (whether or not due to the entry of a court order enforcing this provision). The running of the two (2)-year restrictive period for a restricted person will be suspended whenever that restricted person breaches this Section and will resume when that person resumes compliance. The restrictive period also will be tolled automatically during the pendency of a proceeding in which either party challenges or seeks to enforce these competitive restrictions. These restrictions also apply after a permitted transfer under Section 16 above. You (and your owners) expressly acknowledge that you (and they) possess skills and abilities of a general nature and have other opportunities for exploiting those skills. Consequently, our enforcing the covenants made in this Section 19.E will not deprive you (and them) of personal goodwill or the ability to earn a living. The terms of Section 12.B of this Agreement also apply to the competitive restrictions described in this Section 19.E.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, if a franchisee or related party does not immediately comply with the competitive restrictions outlined in the franchise agreement, the two-year restrictive period will not begin until the date they start complying. This means that any delay in adhering to the non-compete terms extends the overall period during which the franchisee is restricted from engaging in competitive activities.
Furthermore, the running of the two-year restrictive period is suspended any time the franchisee breaches the non-compete agreement. The suspension continues until the franchisee resumes compliance. This provision ensures that 7 Brew is protected from competitive actions, and the non-compete clock essentially pauses during any period of violation.
Additionally, the restrictive period is automatically extended during any legal proceedings where either party is challenging or trying to enforce the competitive restrictions. This "tolling" provision prevents a franchisee from circumventing the non-compete obligations by initiating legal action and then claiming the restriction period has expired. These stipulations collectively strengthen 7 Brew's ability to enforce the non-compete agreement and protect its market interests.