What is the geographic scope of the covenant not to compete for an All County franchise after termination or expiration?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
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 restricts franchisees after the termination or expiration of their franchise agreement. This agreement stipulates that for 36 months, neither the franchisee nor their owners can have any direct or indirect interest in a Competitive Business. This restriction applies if the Competitive Business operates or provides services within the franchisee's Territory or within 50 miles of any point on the outer perimeter of their Territory.
This means that for three years after leaving the All County system, a former franchisee is barred from engaging in a similar business within their original territory or a 50-mile radius around it. This includes being an owner, investor, partner, director, officer, employee in a management or sales capacity, consultant, representative, or agent. The franchisee is also 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 All County or to All County or its designees.
All County also states that if it becomes necessary to enforce the Covenant Not to Compete by court order, they will seek to enjoin competition for two years from the date of issuance of the order. All County emphasizes that franchisees possess general skills and abilities and have other opportunities for exploiting such skills, so enforcing these covenants will not deprive them of their personal goodwill or ability to earn a living. This suggests that All County believes the non-compete is reasonable and necessary to protect its business interests while still allowing former franchisees to pursue other ventures.
Prospective franchisees should carefully consider the implications of this non-compete agreement. It is advisable to seek legal counsel to fully understand the restrictions and how they might impact future business opportunities after leaving the All County franchise system. Understanding the definition of "Competitive Business" is also crucial, as it will determine the scope of prohibited activities.