Does the All County covenant not to compete prevent my owners from being consultants for a competitive business?
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 restrict owners from acting as consultants for a competitive business under certain conditions. Specifically, upon termination or expiration of the Franchise Agreement, neither the franchisee nor any of their owners can have any direct or indirect interest in a Competitive Business, which includes acting as a consultant. This restriction applies for a period of 36 months, beginning on the effective date of termination or expiration. The non-compete is limited to the franchisee's Territory or within 50 miles of the outer perimeter of their Territory.
During the term of the agreement, All County requires franchisees to deal exclusively with them and not be involved with a Competitive Business. A "Competitive Business" is defined as any business that offers real estate property management services or products similar to those offered by All County. This exclusive dealing extends to the franchisee, their owners, and their immediate family members, preventing them from having any direct or indirect interest in a Competitive Business, wherever it is located. They are also prohibited from performing services as a consultant for a Competitive Business, regardless of location.
All County emphasizes that franchisees possess general skills and abilities and have other opportunities to earn a living. The franchisor states that enforcing the non-compete will not deprive franchisees of their personal goodwill or ability to earn a living. If All County seeks a court order to enforce the non-compete agreement, they will pursue an injunction against competition for two years from the date the order is issued.