Is the non-compete agreement for Aerus still in effect after the franchise agreement expires or terminates?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
6. Exclusivity and Non-Competition.
- A. During the Term, neither Franchisee, nor its Operating Principal or any other owner, shall (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, (2) undertake or participate in any business or activity now existing or hereafter developed businesses or systems, or (3) use any of the Customer Data for any reason other than operation of the Franchised Business. Further, Approved Locations may be used for the operation and conduct of the Franchised Business only and for no other use. Franchisee may not use the Marks in connection with any business or activities other than the Franchised Business. Company may in the future modify, expand or supplement the System or modify or add to the Products offered hereunder and Company or any of Company's Affiliates may in the future develop or offer new businesses or systems. In either event, if Company determines, in its reasonable discretion that any behavior of Franchisee previously not in violation of this Section later violates this Section, Company may require that Franchisee cease any such behavior upon written notice to Franchisee.
- 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
- C. This Section 6 shall survive the expiration or termination of this Agreement. No claim Franchisee may have against Company, whether or not arising from this Agreement, shall
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the non-compete agreement remains in effect for a period after the franchise agreement expires or terminates. Specifically, for one year following the expiration, termination, or transfer of the franchise agreement, the franchisee and their Operating Principal are restricted from engaging in competitive activities within the Area of Responsibility or within a ten-mile radius of any existing or under-construction Aerus business.
This restriction includes not promoting or selling products or services similar to Aerus's products, and not participating in any business that competes with Aerus's system, products, or any of its affiliates' existing or future businesses. The agreement also specifies that the duration of this non-compete period can be extended if the franchisee breaches the non-compete terms or if Aerus needs to take legal action to enforce the agreement.
This non-compete clause is designed to protect Aerus's market share, customer relationships, and proprietary business methods. It prevents former franchisees from leveraging the knowledge and experience gained during their time with Aerus to directly compete against the brand in the same geographic area shortly after their departure. This is a fairly standard practice in franchising to protect the brand and other franchisees in the system.
It is important for prospective Aerus franchisees to understand the scope and limitations of this non-compete agreement. They should carefully consider the geographic area covered by the restriction and the types of activities that are prohibited. Franchisees should also be aware that any violation of the non-compete agreement could result in legal action and potential financial penalties.