After the Aerus franchise agreement expires or terminates, what is the geographic scope of the non-compete restriction?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. For a period of one (1) year after the expiration or termination of this Agreement or the transfer of all of Franchisee's interest in this Agreement, neither Franchisee, nor its Operating Principal, shall, within the Area of Responsibility or within a ten (10)-mile radius of any Aerus Business in existence or under construction as of the expiration or termination of this Agreement or the transfer of all of Franchisee's interest in this Agreement, (1) promote the sale of, or sell, directly or indirectly, any products or services that are similar in nature to, or that are substitutes for, the Products, or (2) undertake or participate in any business or activity that is competitive in nature with the System or any of the Products, or with Company's, or any of Company's Affiliates', now existing or hereafter developed businesses or systems. Franchisee agrees that the length of time in this Section 6(B) will be tolled for any period during which Franchisee is in breach of the covenants set forth in this Section 6(B) or any other period during which Company seeks to enforce this Agreement
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, after the franchise agreement expires or terminates, the franchisee and its Operating Principal are subject to a one-year non-compete restriction. This restriction applies within the franchisee's Area of Responsibility or within a ten-mile radius of any Aerus business in existence or under construction at the time of expiration or termination.
During this one-year period, the franchisee and its Operating Principal are prohibited from promoting the sale of, or selling, directly or indirectly, any products or services that are similar to or substitutes for Aerus's products. They are also barred from undertaking or participating in any business or activity that is competitive with the Aerus system or its products, including any of Aerus's or its affiliates' existing or future businesses or systems.
It's important to note that the length of this non-compete period can be extended if the franchisee breaches the non-compete covenants or if Aerus has to take legal action to enforce the agreement. This means that any violation of the non-compete terms could result in a longer period of restriction, potentially impacting the franchisee's ability to engage in related business activities for an extended time after leaving the Aerus franchise system.
This type of non-compete agreement is common in franchising to protect the brand's market share and confidential information. Prospective Aerus franchisees should carefully consider the implications of this restriction and how it might affect their future business plans should they decide to leave the franchise system.