Does the All County covenant not to compete apply if I transfer or assign the Franchise Agreement?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
- 23.4. Covenant Not to Compete. Upon the termination or expiration of this Agreement in accordance with its terms and conditions, including the transfer or assignment of this Agreement or any interest in the Business, you agree that, for a period of thirty-six (36) months commencing on the effective date of termination or expiration neither you nor any of your owners will have any direct or indirect interest as a disclosed or beneficial owner, investor, partner, director, officer, employee in a management or sales capacity, consultant, representative or agent or in any other capacity in any Competitive Business operating or providing services within your Territory or within 50 miles of any point on the outer perimeter of your Territory. You are prohibited from selling or transferring any of the accounts or clients of the Business to anyone except to another All County® business that has been approved in writing by us or to us or our designees.
- 23.5. Commencement by Order. If it becomes necessary to enforce the Covenant Not to Compete by court order, we will seek to enjoin competition for two years from the date of issuance of the order. You and your owners expressly acknowledge that you possess skills and abilities of a general nature and have other opportunities for exploiting such skills. Consequently, enforcement of the covenants made in this Article will not deprive you of your personal goodwill or ability to earn a living.
Source: Item 23 — Receipts (FDD pages 43–157)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, the covenant not to compete does apply upon the transfer or assignment of the Franchise Agreement. Specifically, upon the termination or expiration of the agreement, including through transfer or assignment, the franchisee agrees to not have any direct or indirect interest in a Competitive Business. This restriction lasts for 36 months, beginning on the effective date of termination or expiration. The restriction applies within the franchisee's territory or within 50 miles of the outer perimeter of their territory.
This means that if you transfer your All County franchise to a new owner, you cannot immediately open a competing property management business nearby. The non-compete aims to protect All County's brand and the interests of other franchisees by preventing former franchisees from using their knowledge and experience to directly compete in the same area shortly after leaving the system.
The FDD also states that All County can seek a court order to enforce the covenant not to compete, potentially extending the non-compete period to two years from the date of the order. The document clarifies that franchisees possess general skills and abilities and have other opportunities to earn a living, so enforcing the non-compete will not deprive them of their personal goodwill or ability to earn a living. This suggests All County believes the non-compete is reasonable and necessary to protect its business interests without unduly restricting a franchisee's future employment options.