Is the post-term non-compete period for an Aerus franchisee tolled if the franchisee breaches the non-compete covenants?
Aerus Franchise · 2025 FDDAnswer from 2025 FDD Document
es 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.
Source: Item 23 — Receipts (FDD pages 74–305)
What This Means (2025 FDD)
According to Aerus's 2025 Franchise Disclosure Document, the one-year post-term non-compete period can be extended if the franchisee breaches the non-compete agreement. Specifically, the agreement states that the length of the non-compete will be tolled for any period during which the franchisee is in breach of the non-compete covenants. This means that if a franchisee violates the non-compete terms, the one-year restriction will not begin or will be suspended for the duration of the breach.
This provision protects Aerus by preventing a former franchisee from immediately competing against the system after termination, especially if they have already violated the agreement. It ensures that Aerus has the full benefit of the one-year non-compete period, regardless of any breaches by the franchisee. The tolling provision also applies to any period during which Aerus seeks to enforce the agreement, which means that the non-compete period can be extended while Aerus pursues legal action to stop the franchisee from violating the non-compete terms.
For a prospective Aerus franchisee, this means that strict adherence to the non-compete agreement is crucial. Any violation, even if unintentional, could result in an extension of the non-compete period. Furthermore, the franchisee should be aware that the cost of defending against any enforcement action by Aerus could also effectively extend the period during which they are unable to compete. This is a fairly standard clause in franchise agreements, as franchisors seek to protect their brand and market share after a franchise relationship ends.