Will the one-year non-compete period for an Aerus franchisee be extended if the franchisee breaches the non-compete covenants?
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, the one-year non-compete period can be extended if a franchisee breaches the non-compete covenants. Specifically, the length of time in Section 6(B) of the franchise agreement will be tolled for any period during which the franchisee is in breach of the covenants set forth in that section. This means that if an Aerus franchisee violates the non-compete agreement, the one-year period will not begin until the breach has ceased.
For a prospective Aerus franchisee, this has significant implications. It means that engaging in competitive activities during the one-year period after termination or transfer of the franchise can lead to an extension of the non-compete obligation. The non-compete applies within the Area of Responsibility or within a ten-mile radius of any Aerus Business in existence or under construction as of the expiration or termination of the agreement or the transfer of the franchisee's interest.
This provision protects Aerus by preventing former franchisees from immediately competing and potentially taking away customers or utilizing confidential information gained during their time as a franchisee. It also motivates franchisees to adhere strictly to the non-compete terms to avoid any extension of the restrictive period. Franchisees should carefully consider the scope and implications of the non-compete agreement before signing the franchise agreement and ensure they understand what activities are prohibited and for how long.